Fighting Back from Failure: A Tale of Early Social Enterprise

As I mentioned in Part 1 “SAI’s first leg of journey, started in January, 2014 ended in May, 2014 with a big failure. We were back to square one from where we had started”. My second part will focus on how we started turning adversities into opportunities and made a come-back when future looked bleak. 

There is a saying that ‘it is easy to quit when going gets tough’ but when we have to quit anyway, why quit now? Why shouldn’t we continue our struggle little more and see what happens? Who knows? We may get a push – support may come from nowhere and helps us achieving what had become un-achievable. This is what happened with SAI-Sustainable Agro ((http://sustainableagroinc.com/) – a target which initially looked easy, turned out to be impossible one but was finally achieved – on time and in the manner it was visualized.

After the big failure, my motivation level was very low. I needed inspiration, and what could be a better place than Navsari, Gujarat to get this inspiration. Navasari is a historical place where the Parsi community, while migrating from Persia/Iran landed first time in India, notable among them was ancestors of Jamshedji Tata. Navasari is also historical because Dandi is only 30 kms away where Gandhiji started his Civil Disobedience Movement. I got an opportunity towards end of May, 2014 to visit this place on an evaluation assignment.

Saifee Villa at Dandi

I visited ancestral home of ‘Tatas’ and tried to feel what they would have felt when they first landed in India. What opposition they would have faced? How they persisted when all the odds were against them? When I visited Dandi I went to Saifee Villa, where Gandhiji stayed night before he was arrested. I re-read his writings many times “……I want world sympathy in this battle of right against might” which he wrote on 5^th April, 1930. I also remembered Nelson Mandela’s words “….I learned that courage was not the absence of fear, but the triumph over it”.

Finally I decided that I will continue to struggle – I won’t quit. My visit to Odisha afterward from 29^th May to 5^th June, 2014 was most crucial ones. I went and asked paper industry officials if they can suggest any field site where I can pilot SAI’s model. They advised me to explore Kashipur block of Rayagada, Odisha. 

Ancestral Home of Tata at Navasari, Gujarat

At that time the paper industry had a very peculiar issue. In 2013 they had negotiated with a well known private sector bank to provide loans to farmers in Kashipur for plantation. Based on bank officials’ assurance they had mobilized farmers. They also negotiated with fertilizer dealers, tractor providers etc. to provide inputs to farmers on credit so as not to miss the planting season. The cost of inputs could be paid once the bank releases loan to farmers. 

However, for some reasons the bank declined loan applications of 28 farmers. As a result, the farmers as well as paper industry’s officials got in a fix. They had taken the inputs on credit, and now the dealers were arguing with them to get the payment. The farmers also needed next installment for the cultural practices like soil work and fertilizer application.

The paper industry’s officials asked me if SAI can settle the outstanding loan and support these farmers. I took some time to discuss with my Director and Advisers.    

Meanwhile I wrote a detailed mail to the agency for incubation support which had turned down SAI’s application, explaining why the agency is important for us and what value can be added by the collaboration. I also requested permission to make a presentation to its jury. They accepted my request and scheduled the presentation on 7^th June, 2014. I worked hard with my advisers to make a strong pitch, and did my best on the scheduled time and date. I received a mail on 12^th June that SAI has been selected for 2014 incubation support. The fortune wheel had started turning in SAI’s favour.

I wrote to all my contacts and network to help me finding field staff. In one way the climate/weather supported us. When the nation was worried about the drought due to delayed monsoon, we were busy - trying hard to put a team and start field operations as soon as possible.

During my following visit to Odisha from 25^th June, 2014 I met a strange person at Rayagada Railway station at 2.00 O’clock morning who knew everything about me though I was meeting him for the first time in my life. He directed me to focus on what I am doing (Jo karne aaya hai wahi kar). He also mentioned interesting statement directed at a family, but targeted at me. He said ‘people don’t know what may happen next moment, but they carry many baggages’. Initially I thought it was for other family as they were carrying many luggages, but upon deep thinking I realized I was also doing the same. I had embarked to an unknown journey, but was carrying many apprehensions which were holding me back. I wrote about this in my blog ‘Lessons from Life’ at http://www.lflindia.blogspot.in/2014_06_01_archive.html  

The rain in Odisha arrived around mid July, after a delay of one month. By that time we had put a two members’ team in the field. After the initial orientation, the team immediately went into the action and started mobilizing prospective farmers for piloting SAI’s crop-plantation model.

Meanwhile I learned that a team from ICRISAT is working in Rayagada with District Agriculture Department to promote pigeon pea cultivation (pulses). I immediately contacted them for getting the seeds for field testing. Similarly, I wrote to Odisha University of Agricultural Technology (OUAT) to get Groundnut seeds for field trials. They were more than happy to help me out.

My field team was working tirelessly and by early August, 2014 about 18-20 farmers agreed to collaborate with us in our crop-plantation model. I accordingly placed an order with paper industry and deposited money to purchase clonal sapling from paper industry and crop-seeds with ICRISAT and OUAT.

I also started working with those 28 farmers whom loan application was turned down by the bank as they immediately needed to complete soil work and apply next dose of fertilizer.

As per SAI’s policy farmers have to put Rs.1000/- per acre as their contribution, which is added to total cost of production. Whenever we asked the farmers for their contribution they told us that they had collected the money last year by selling their goats and mortgaging their land, and they are not in a position to do it again. They also did not have trust anymore on outsiders like us; therefore we were not able to extract exact information on what happened and where the money had gone.

The pieces of puzzles started coming together when I enquired further from paper industry. I learned that the bank had insisted that each farmer has to open bank account with minimum deposit of INR2500/- per farmer. Many of these poor farmers had collected money by selling their assets. Now, the bank refused to offer them loan and the money was lying in their account idly.

I was told that each farmer has to visit again to the city branch at Rayagada to close the account. It costs each farmer at least INR300 and one full day to travel and complete the process of closure of account. This may seems small amount for us, but not for these farmers. What’s a pity? We, the outsiders keep cheating these people, and then say why they don’t believe us.

Currently, my field team is assisting these farmers to write the application and take them to city to close their bank accounts. It would give SAI needed amount as farmers’ contribution.

One day I sat down to see how far we have achieved the initially planned target, and the magic figure of 100 acres emerged out. The 28 farmers whose loan SAI is taking over has 31 hectares, which is 77.5 acres (31 x 2.5 = 77.5 acres). My field team has now added 25 acres with new farmers which ultimately turn out to be 102.5 acres. We achieved the un-achievable in less than 100 days. Recently, seven more farmers approached us with a request to take over their loan from the bank, and now we are working with them.

As Nancy Duarte mentioned in her book Resonate “....it takes gutsy intuitive skills to move toward an unknown future that involves unfamiliar risks and rewards. Many times the future cannot be quantified with statistics, facts, or proofs and leaders have to let their gut lead them into uncharted territories”.

My third and final part will be on the lessons learned where I would highlight 11 key lessons for fighting back from failure.

Jitendra Sinha

CEO, SAI-Sustainable Agro

Failing Down and Fighting Back: A Tale of Early Social Enterprise

The Forbes magazine states that nine of ten social enterprises fail in its first year. Without knowing this truth SAI-Sustainable Agro (http://sustainableagroinc.com) religiously followed it and joined the crowd in first year of its incorporation. It fought its way out later and managed to pull itself from the failure. Recently, it was declared as Top 10 Social Enterprises in India in two national competitions.

The note below tells the story of failure and fighting back of SAI-Sustainable Agro. In this first part I will mention about the beginning of journey and stumbling blocks which finally led to our failure. The second part will focus on how SAI fought back and achieved its target.

As you might know SAI-Sustainable Agro is driving a new movement which aims to redefine people living at the Base of Pyramid (BoP) as valuable partners for businesses –achieving their livelihoods as well as catering to raw material needs of the companies.

Though most part of year 2013 was spent in initial set-up - getting incorporated, developing polices, identifying operational areas, putting management, advisory and field teams etc. the real journey started from the beginning of 2014.

As a promoter of SAI I visited Hyderabad, India from 3 January, 2014 to get personal guidance and mentoring from two of SAI’s advisers, who are well established in their fields and have gone through the difficult path which SAI has to go through. One of the advisers taught me the ABCD of the social ventures and suggested me to visit some of the similar social enterprises. He also suggested me to explore agencies which provide incubation support to new social enterprises. The other adviser oriented me on the technicalities of SAI crop-plantation model for transforming wasteland to provide livelihoods to small and marginal farmers and raw materials to industries.

After meeting them I came down to Bhubaneswar, Odisha to plan SAI’s field operations. There, I and one of the SAI’s Directors from Odisha developed action plan to initiate field operation. He had worked in NGO sector for more than 35 years and liked the idea of working in same sector through promoting business model.

We initially planned for promoting SAI’s crop-plantation model in 100 acres. We also identified other sources of revenue generations. One source of revenue generation was cutting and selling of matured Eucalyptus tree to a paper mill. These trees were planted under social forestry programme about a decade ago, however the farmers did not get any market to sell.

Other source of revenue identified was promoting cashew processing and marketing. During my earlier tenure in Odisha, I had promoted afforestation programme through cashew plantation. I learned that the two community based cashew processing units had closed down once the project was over. The local communities were willing to re-start the operation if finance and market support were provided.

We also hired one person as Field Coordinator. We had pin-pointed one village in Rayagada block of Gajapati for piloting the SAI model. I made regular visits to the village in January-February to discuss with village community. They finally agreed for piloting crop-plantation model in 100 acres of which 40-50 acres were private/individual land and 50-60 acres were community land.

However, during one such visit I started experiencing the rough weather. SAI Field Director started making excuses for not accompanying in the field or attending important meetings. He also expressed his inability to pay his initial contributions towards the SAI seed capital though he agreed before. Meanwhile, the Field Coordinator quit the job within a month for not getting desired support and supervision.

Sensing the trouble I took the charge as Chief Executive Officer (CEO) of SAI through Directors’ resolution on 17 February, 2014. I had been avoiding taking the charge earlier, and preferred working only as Promoter. Due to my earlier engagement with a well reputed agency I was not supposed to get into business/collaboration with its clients/partners for two years after leaving the job. It was only one year since I had tendered my resignation. At that time there was high probability that SAI business may overlap with its clients (so far we have avoided).

During one of my field visits to Odisha one person came to meet me and offered his services. He worked under me 10 years back when I was in-charge of another programme in Odisha. He informed that his contract with a government agency was ending soon and he is ready to work full time with us. Since he was an experienced person and worked with me before I offered him State Manager position with a salary which he told he was getting, though it was high for SAI.

I came back to Gajapati, Odisha within a week after taking charge as CEO to implement first business to generate some revenues. However I learned that traders from neighboring state came and took away all the matured wood trees we had surveyed. I extended my stay to investigate what had happened, and concluded that it was an insider’s job –somebody who knew about SAI’s business passed the information to traders. Though we lost our first business and revenue stream but it was the farmers who were at receiving end as the traders took away their materials at less than half of the price SAI had agreed.

During my extended visit I learned that a Senior Scientist from herbal product manufacturing company was visiting Gajapati. I immediately got in touch and scheduled a meeting with him. During the meeting the Field Director started promoting his NGO, and I had to remind that he is attending the meeting in the capacity of Director of SAI. The personnel from herbal product manufacturing company showed keen interest.

During early April, 2014 I got a call from this company to visit and discuss my proposal at its head office in New Delhi. He and his team were very supportive to SAI’s idea and we talked on joint collaboration. The herbal product manufacturing company had tie up with Odisha Forest Department for collection of minor forest produce as raw materials for its herbal production unit, but was facing difficulty in collecting; aggregating and transporting them to its manufacturing unit.

During this period, I also made contacts with an agency providing incubation support for early social enterprises. Such incubation support would have helped SAI to build its capacities as Pvt Ltd company and prepare for scaling and getting further investment. The head of the agency suggested us to put a proposal, which we prepared and submitted.

SAI’s operations seemed to be coming back on the track after the first setback. However, the bigger setback was yet to come.

In April, 2014 I took three weeks off and went to Iran for my other assignment with UNDP/GEF and Govt of Iran’s MENARID project. As a promoter I needed to earn money to sustain both – my company and family.

When I was abroad I got a mail from the State Manager that the cashew traders have increased raw cashew price by 150%. I could not understand the reason as there was no price rise for the processed cashew and we had a direct dealing with the local community. The cashew processing would have become unattractive venture with this price rise of the raw materials. I wrote to Field Director to inquire, but did not get any response.

The State Manager’s behavior was getting strange as most of the time he was not responsive. Meanwhile, the good news came from herbal product manufacturing company that our proposal has been selected, and its unit head is visiting Bhubaneswar during first week of May, 2014 to meet government officials where SAI representative should be present.

As I was still outside India I wrote to Field Director and State Manager in Odisha to attend the meeting. The Field Director did not respond, but the State Manager confirmed that he will attend. The representative from herbal product manufacturing company gave him the venue and time for the meeting.

Till one day before the State Manager was accessible on his mobile phone, however, very strangely he switched off mobile on the meeting day and remained traceless. He did not attend the meeting, and we lost the contract.

After two days when he switched on his mobile phone I squeezed him. He informed that he was doing two full time jobs - with SAI as well as with government project where his contract was extended. He thought that being based 1500 kms away at Mumbai I won’t be able to find out. Since the government officials were supposed to attend meeting at Bhubaneswar he got afraid that he would be caught and switched off his mobile. I asked him to immediately resign. As SAI advisers were not aware of this rapid development, they expressed their dis-pleasure over my move, and I had to later explain to them the reasons behind his termination.

I also realized that Odisha Director had his own personal interest and priorities. Therefore, as a promoter of SAI I asked him to step down and submit his resignation.

As these two people hailed from Gajapati, SAI’s work in Gajapati could invite more trouble. Therefore, we wrapped up SAI’s operation in Gajapati, Odisha. By that time SAI had spent significant time and amount of money.

One more bad news had to come. Towards end of May, 2014 I got a mail from agency for incubation support that our application has been rejected.

SAI’s first leg of journey ended in May, 2014 with a big failure. We were back to square one, from where we had started.

Why we failed after having a good start and after recovering from first set-back? What were the reasons of our failure? I reflected back to draw the learning, which are detailed below:

1. Inexperienced Leadership: Though I had visited a couple of other similar ventures before I did not have any prior experience in managing a Private Limited Company. During my involvement I learned that it is a different ball-game altogether, and though I have to be passionate about my idea, I also need to be practical. I need to look into different aspects (system, legal, team, communication, cash flow management) of the company affairs while putting my foot firmly on the ground.
2. Inefficient Management: Our dependence on Field Director for managing field activities boomeranged. This resulted in bad management of company affairs in the field, as he started trying to turn company’s ideas into his NGO's ideas. Probably I was too naive to gauge his real interest. I should not have believed anybody blindly. I had done that mistake, as I thought our 10 years old association was a good experience of working together. I had forgotten that we worked together in different capacities: where I was representing a donor and he was a recipient from NGO. There is a saying that ‘we should not teach new skills to old people’. I tried doing that and in the process burned my hand.
3. Vested Interests: Mr. Robert Kyosaki mentioned in his book ‘Guide to Investing’ (pp334) that ‘more businesses fail from the inside than from the outside’. SAI is a living example of this statement. Our two insiders - Field Director and State Manager turned every stones to make SAI a failure for their vested interests. No matter how hard we tried all efforts were going waste.
4. Losing Focus: One of the big mistakes we did was focusing more on revenue generation than solidly putting our core model on the ground. It was not that we had forgotten to put SAI crop-plantation model to test in the field, but somehow it was getting a lower priority. We started looking into other avenues of revenue generation, and therefore, had spread our energy too thin. We learned from the failure is to ‘focus than diversify’. We should have first put the simplified model in the field, and then gradually start complementing it with other similar activities.

I would end part one of my learning with a dialogue from popular Hindi movie ‘Om Shanti Om’. In the movie, Indian actor Shahrukh Khan tells “……just like in the film, in our life too finally in the end everything is okay …happy ending. ………and if it is not happy, then it is not the end. The film is not over yet. Picture Abhi Baaki hai – the movie is on”.

My next part will focus on how we turned adversity into opportunities and how SAI achieved its magic figure of 100 – Power of 1, a trade and success formula of SAI, and in the way declared as Top 10 Social Enterprises in India.

As I mentioned in blog earlier (http://www.lflindia.blogspot.in/2014_07_01_archive.html), ‘…..success is one step away when defeat has come. Those who persist are successful; those who accept (defeat) perish’. That is law of nature; it has its own filtering process.

Jitendra Sinha

CEO, SAI-Sustainable Agro

Struggling to Survive or Enjoying the Life?

More often we blame indigenous communities and forest dwellers for destroying the nature. Are they struggling to survive or enjoying the life?   Are they agent or victim of environmental

degradation? I probed deeper on this issue in the remote areas of Odisha, India.

God has blessed Koraput-Rayagada belt of Odisha with natural beauty –mesmerizing view of springs, waterfalls, forest, colorful birds, clouds coming down to touch the earth –a heaven for urban people, like me.

The area is inhabited by ‘Kondh’, an indigenous community in India, known as Acumen in Agriculture.  They are subsistent farmers with full of local wisdom and Indigenous Traditional Agriculture Knowledge (ITAK). They are now more involved in cutting and selling wood than farming.

 

I followed them to understand their livelihoods. They are also my potential clients as my rural development company ‘SAI-Sustainable Agro (http://sustainableagroinc.com/)  is working in this region with its innovative one acre model through which one family get assured of earning US$1000 annually from 1 acre barren land.

As the local train reached Rauli- a small station, indigenous people thronged with bundles of firewood.  They all were going to Tikri, nearest township to sell the wood. It was haat day– weekly market there.  As the journey was for another hour, I started talking to them. What I learned from women like Takiri and Baidi that their agriculture is ruined. Lack of rain at the beginning of cropping season and heavy rain afterwards washed away their crop. 

Many of the males have migrated and women are bearing the brunt – they have to feed the remaining family members, old aged and young children. As cutting of standing trees is banned, they axed the trees few days before and wait. Then, they go to forest very early in morning, cut the dried tree, catch the train and come to weekly market. It’s a full day exercise, for which they hardly get Rs.80-100 (US$1.5) for a bundle. 

They do not have any asset left at home, whatever little left, they are selling. I could see people carrying poultry and utensils. They know that cutting forest trees is harmful, but they do not have any choice.   

They are trapped in downward poverty spiral - exploiting the nature to survive, the exploitation of nature further impoverishes them, making survival more difficult. They do not see any way out. 

Jitendra Sinha

CEO – SAI Sustainable Agro (http://sustainableagroinc.com)