Entrepreneurship vinay

8/7/2019 Entrepreneurship vinay

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TYBMS PROJECT | Vinay Raghavendran

ENTREPRENEURSHIP RUSTUM SENGUPTA-BOOND


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RUSTUM SENGUPTA-BOOND 2011

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Entrepreneur defined:

An entrepreneur is a person who has possession of a new enterprise, venture or idea and is accountable for the inherent risks and the outcome. The term wasoriginally a loanword from French and was first defined by the Irish -Frencheconomist Richard Cantillon. Entrepreneur in English is a term applied to aperson who is willing to launch a new venture or enterprise and accept fullresponsibility for the outcome. Jean-Baptiste Say, a French economist, isbelieved to have coined the word "entrepreneur" in the 19th century - he definedan entrepreneur as "one who undertakes an enterprise, especially a contractor,acting as intermediatory between capital and labour".

Entrepreneurship defined:

Entrepreneurship is the act of being an entrepreneur, which can be defined as"one who undertakes innovations, finance and business acumen in an effortto transform innovations into economic goods". This may result in neworganizations or may be part of revitalizing mature organizations in response toa perceived opportunity. The most obvious form of entrepreneurship is that of starting new businesses (referred as Startup Company); however, in recentyears, the term has been extended to include social and political forms of entrepreneurial activity. When entrepreneurship is describin g activities within afirm or large organization it is referred to as intra-preneurship and may include

corporate venturing, when large entities spin -off organizations.

Entrepreneurial types:

There are innumerable types of entrepreneurs.

Entrepreneurs can be divided into following types-

A ccording to type of business:

1.

Business entrepreneur

2. Trading entrepreneur 3.

Industrial entrepreneur 4.

Corporate entrepreneur

5.

Agricultural entrepreneur


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A ccording to use of technology:

1.

Technical entrepreneur

2. non-technical entrepreneur 3.

professional entrepreneur

A ccording to motivation:

1.

pure entrepreneur 2.

induced entrepreneur

3.

motivated entrepreneur 4.

spontaneous entrepreneur

A ccording to growth:

1.

growth entrepreneur 2.

super growth entrepreneur

A ccording to stages of development:

1.

first generation entrepreneur 2.

Modern entrepreneur

3.

Classical entrepreneur

O ther C lassifications:

1.

Innovating entrepreneur 2.

Adoptive or imitating entrepreneur

3.

Fabian entrepreneur 4.

Drone entrepreneur

5.

Social entrepreneur


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Social entrepreneur:

A social entrepreneur is motivated by a desire to help, improve and transformsocial, environmental, educational and economic conditions. Key traits andcharacteristics of highly effective social entrepreneurs include ambition and alack of acceptance of the status quo or accepting the world "as it is". The socialentrepreneur is driven by an emotional desire to address some of the big socialand economic conditions in the world, for example, poverty and educationaldeprivation, rather than by the desire for profit. Social entrepreneurs seek todevelop innovative solutions to global problems that can be copi ed by others toenact change.

Social entrepreneurs act within a market aiming to create social value throughthe improvement of goods and services offered to the community. Their mainaim is to help offer a better service improving the community as a whole and arepredominately run as non profit schemes.

Social entrepreneurs make significant and diverse contributions to their

communities and societies, adopting business models to offer creative

solutions to complex and persistent social problems.

O bjective of the project:

To study a live example of an entrepreneur who has brought about change in thesociety through innovative implementation of ideas, Its impact o n the societyand country as a whole and the challenges social entrepreneurs face during theentire process of converting a simple idea into reality.And to get a brief overview of the importance of social entrepreneu rship.


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BOOND

Mi i

The B mi i i t so l e some of the b i es t globa l cha llenges - adequa telighting, access to c lean dr ink ing wa ter and pes t con trol affec ting the remo teareas of the wor ld. Through its innova tive env ironmen t fr iend l produc ts andsus tainab le bus iness or ien ted approach.

A R S

R (R ) S F & Boond Off i (C orporate )

R uss gradua ted from INSEAD w ith a burn ing des ire to do some thing d ifferen t and work for deve lop ing those less for tuna te than h imse lf. He has been a banker for S tandard Char tered Bank in S ingapore, a consu ltan t for De loitte Consu ltingin US and a researcher for I COS V ision Sys tems in Belgium, hav ing lived andworked in f ive coun tr ies across the g lobe. He a lso ho lds a Mas ters in E lec tr ica l Eng ineer ing from Un ivers ity of Californ ia, Irv ine bes ides the MB A fromINSEAD.

Af ter qu itting h is f inance job in Sep tember 2009, R uss has been work ing w ithNG Os, manufac turers and v illagers to des ign and deve lop the Boond produc ts,mode l and supp ly cha in. is respons ibility is to make Boond work and becomesus tainab le on its own two fee t. He ge ts h is energy from the rea li ation tha t heis work ing on some of the b igges t cha llenges tha t the wor ld has ever faced andevery m inu te tha t he pu ts into Boond he lps to make a soc ial impac t.


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H ow it all started?

Rustam Sengupta's tours to his native village in West Bengal and other remotecorners of India brought him face to face with a stark reality: People in thesevillages have no access to electricity or clean drinking water. After one such tripin August 2009 he decided to call it quits at an MNC bank in Singapore, wherehe was earning a fat salary of US $ 1,20,000 per annum (excludingcommissions) as finance manager at their fixed income side and change thissorry situation.The very next month Rustam came to India and started Boond, a not -for-profitorganisation, with a small team that aims to provide solar light, clean drinkingwater and pest control to one million people by the end of 2012. To this endBoond sells something called the 'Boond Development Kit' consisting of a solar

lamp, water filter (a 22-litre double candle ceramic water filter with twochambers separated by a ceramic membrane; advantages: roots out 90 per centbacteria and very much suited to pond water) and mosquito ne t at a highly-subsidized cost with the help of distribution partners in India's remotest areas,NG s, social investors, micro finance institutions and banks.

This is how Boond works: You buy the kits online by making a payment for theneedy in some remote Indian village and Boond delivers it to them with the helpof their channel partners, mostly unemployed village youth, who in turn get athree per cent commission.

Just recently, Boond succeeded in sending 90 kits to families in Ladakh that wasdevastated by a landslide.

"While the government and other help aid agencies offered food and builtcamps there was no electricity and water was contaminated leading to chronicdiseases. Because of our kits, 90 families that were completely devastated havebeen able to jumpstart their lives," he says proudly about his team.

Ask 29-year-old Rustam, who was born and brought up in Delhi and did hismasters in electrical engineering from University of California, Irvine besidesan MBA from INSEAD, Singapore, why he is doing what he is doing and heexplains: "I wanted to start a social enterprise that would cater to basicrequirements of India's poor. I always believed in doing social work."However,social entrepreneurship is not a bed of roses in India, he soon realized.


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Th e iness M ode l

The Boond Collabora tive Bus iness Mode l (BCBM is the base for the ir sus tainab le bus iness wh ich they be lieve is a sound rec ipe for deve lop ing peop lestuck in the pover ty trap. Th is mode l be lieves in a ho listic approach w ithpar ticipa tion of a ll stakeho lders for so lving deve lopmen tal prob lems andbr ing ing peop le ou t of the pover ty trap. The mode l is bo th sus tainab le andsca lab le as it invo lves loca l peop le in its opera tions and re lies on four Ps Prov ide, Produc ts, Personne l and Prof iciency. The BCBM has been deve lopedby R us tam Sengup ta from Boond and is a par t of h is on-go ing deve lopmen tal econom ic research.


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H ow is Boond creating an impact?

Boonds solution to this problem of access is through the development of locally managed distribution centers and agents who sell productivi tyenhancement items on credit.Boond ensures that the products match the needsof the community through rural feedback based designs (often extremely robust& low maintenance) and has a low cost commission based peer to peer salesmodel.

Some products are bundled (as the Boond Development Kit) together to reducelogistical and transportation overheads. Boond opens distribution centers inremote rural areas and trains local youth (commission based) to sell and servicethe products, thereby also providing them livelihood.

Rose, an agent in Manipur (remote state of India) has sold over 120 kits (withsolar lamps, filters & nets) last month alone.

Who is it targeting?

Boond works with people in the remote rural areas of I ndia . It tries to createentrepreneurs who sell and service 'productivity enhancement goods' whilebringing access to light, clean water and pest control to their communities.

India is the 6th largest energy consumer in the world but 25% of its citizen or

300 million people still live in complete darkness or with rudimentary lightingThis retards their productivity and causes a significant increase in green housesgases (C 2) in the atmosphere as kerosene lamps are used instead.

According to WH , 10% of the global disease burden could be reduced byimproved access to water and sanitation and by a staggering 15 pe r cent in theworst? affected countries like India. Diseases like cholera, typhoid and diarrheaare rampant in India mostly due to bad water.


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H ow Boond actually works:

Boond operates by four key actors:

1 . Y ou T he Social M inded I ndividual

You are instrumental in development and we promise you that your effort,however small, will have a sustainable social impact in the Boond movement.

You, as a Boond supporter, will pay for buying the Boond developmentproducts (Solar Lamps, Water filters and mosquito nets). This is important sincethe consumer in the remote areas does not have the money on hand for a lumpsum payment to purchase these products and neither do we. Hence your supportwill help us get these products manufactured and transporte d to the remoteareas. But this is not charity and you will get 100% of your money back after one year. During this time, the consumers will pay back the cost of the productsin small low interest installments, which Boond will collect and accumulate andpay back to you from the Boond.net site after a year. Hence you are the mostimportant part of this chain as without you, we will not be able to get theproducts manufactured or shipped.

2 . Boond T he facilitator & aggregator

We will get these products (Solar Lamps, Water purifiers and mosquito nets)

built at a low cost and transported to the remote areas.We will collect your money from the Boond.net website, and with it, we willget the products manufactured from our dedicated manufacturing partners. T heBoond products have been specially designed by us and the manufacturerskeeping in mind the segment being addressed and utilising innovativemethodologies to keep costs low while maintaining a robust and long lastingcommodity.

We manufacture the products in bulk keeping low overheads and also store the

lamps and purifiers in a warehouse in Delhi. We also constantly talk to NG sand other development organizations for growing our business and getting theproducts to as many people as possible. We are a for-profit business because werealize that in order to be sustainable we need money and since we dont want todepend on grants or aid, we charge a small commission on the products(explained more in our financial transparency section).


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3 . Boond O fficer T he Sales and C ollection Expert

We employ local young educated people on a commission basis as our sales andcollection agent who also spread awareness and conduct education campaigns inthe villages.

The Boond fficer is a resident of the village and is selected and recruited for us by our NG partner working in that area. He works on a commission basisand educates, sells and collects payments from the rural consumers. Hiscommission is based not only on the number of products sold but also the kindof person he sells it too (for example reaching a product to someone who isbelow the poverty line - earns him a higher commission). He is very importantto the Boond movement because he ensures that our products reach the rightplaces, and we can penetrate deep into areas where even government support isnon-existent. He receives basic tools and training from Boond and alsoaccessories like a Boond shirt, i-card, business card etc.

This gives him respect and credibility on the ground and we have seen that ashis self-respect soars, he stays motivated to work towards our goals better. TheBoond fficer is like a micro entrepreneur and his/her development is also akey secondary goal for Boond. He/She is our representative and also helps usconduct difficult research and validate our hypothesis.

4.

Consumers

Poor

without

access

to

the

basics

We are passionate to reach those who have been deprived of the opportunity togrow and develop, and plan to reach 1 million individuals by end of 2010.

Most of the Boond consumers live below the poverty line or on less than$2/day. They have no access to proper lighting, clean water or pest control andhence their productivity is very low. Life is unfair for these peop le and our efforts are necessary to get them out of this poverty trap. By providing themadequate light, clean water and pest control we take a small step in generating

the opportunity to create a better future for them. But during our research, wealso discovered that the one thing that is most important to them, even whilethey struggle to live on a daily basis, is respect. Hence, we do not believe incharity but want to provide them the respect that they get from ownership and asa consumer.


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Social entrepreneurs h ip ch allenges in Ind ia:

In the wes tern coun tr ies (referr ing major ly to the Un ited S tates), the concep t of Soc ial En trepreneursh ip s tar ted w ith a b ig bang and then began to spread likewildf ire among researchers, academ icians, trad itiona l en trepreneurs and theinves tor commun ity, qu ick enough to form it s own ecosys tem. Th is ecosys temeven tua lly s tab ili ed and a lready s tar ted to produce the k ind of large sca leimpac t tha t soc ial en trepreneurs a imed for. Th is happened qu ite smoo thly and

fas t as the ir pr ior se tup of bus iness en trepreneur ial ecosys tem was a lready inplace and a ll tha t they had to do was to adop t to the pr inc iples and few newcha llenges spec if ic to soc ial en trepreneursh ip. On the o ther s ide, soc ial en trepreneursh ip in the Ind ian con tex t is s till in its nascent stages and hassevera l fac tors wh ich fac ilitate as we ll as hamper its grow th. Le t s have a look at some of the fac tors wh ich is h inder ing it s fas t-paced grow th in Ind ia andposs ible so lutions to them.


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Educational System

Entrepreneurship in India is still locked and tied up with many dependencieswith the educational system in the country. To the common man in India,entrepreneurship is the new cup of tea for the B-school grads. This is becausethese are the only class of people who get to learn the business concepts, marketstrategies, organization management principles and much more. Eventually theybecome confident enough of taking up the initiatives of starting and setting uptheir own ventures. This may seem to be the obvious way out, but look at theproblem beneath this.

(Social) Entrepreneurship is all about innovation, focus, and dare to take risk.Any ordinary graduate from an engineering or science backgro und may have theabove characteristics, but still may not even think of setting up a firm on hisown as he feels the lack of proper understanding of the process to start, setupand sustain a company. This is because this niche knowledge is still tied uplargely with the B-schools. This gap in the educational system in India shouldbe closed and graduates from all disciplines and backgrounds should have theknowledge on business and entrepreneurship opened up to them in order to taketheir core technical knowledge, passion and thirst for social change to the nextlevel. nly then social entrepreneurship in India can become a large scalephenomenon and a tool for social change and not just a career choice for the b -school grads.

F inancial System

Being well known that ma jority of our country belongs to the lower and middleclass families, how fair is it to expect the youngsters from these families to takerisk by not opting to choose the white collar jobs that they get after graduationand instead take up a loan for a huge amount and experiment with a new venturethat they have in mind. Firstly, it is not quite easy to obtain a loan from a bank in India for a business start-up, leave about the case of a social start-up. Either

one has to directly get into the network of social investors, venture capitalistsand other funders; or put up your social enterprise plan in a fewnational/international business plan competitions and win a couple of them tothen take forward your plan more easily to the venture capitalists and investors.Though one may argue that indeed this facilitates people with the right ideasand plans to get the financial access through this means, again it is a question of what percentage of ideas really passes through this kind of filter mechanism


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annually in India. ne solution to this problem will be to make access to finance a mainstream and open process for business and social entrepreneursby the banks and other regulatory bodies.

Social System

India, still being a developing country has more ba sic areas as targets of socialimpact when compared to the developed nations. The 3 basic necessities of roti(food), kapda (clothing), makaan (shelter) are still distant to a large populationand this can form the largest base of target for social enterpr ises. The next areaof target would be the bottom of pyramid from rural areas who have the basicnecessities for survival but who are yet to get the urban experience of life. Thesebecome the ma jor targets for penetration of urban facilities, products andopportunities. This class of people requires the next level of necessities education, technology and infrastructure. But the inherent problem is that thereceiving end is at a slower pace when compared to the giving end. Longimbibed cultural and traditional mind set of the rural populations hamper thequick adoption of what social enterprises are trying to provide. This has alsobecome a ma jor challenge for social enterprises especially in the rural areas.

The urban class can be targets of social business models working in the areas of waste management, climate change, and environmental issues. They can alsoeasily be integrated into the entrepreneurial ecosystem by providing the right

kind of platform to participate in and contribute to the social impact. But thedown side is that ma jority of the educated urban class has been isolated fromsocial change. Not many of the well settled population think about how they canbe part of the social change system. New and easy ways (like volunteering,seed-funding etc.) to integrate them into the change process could be part of theagenda of some social enterprises to enhance their impact .


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T he I mportance of Social Entrepreneurship for D evelopment

Especially since Muhammad Yunus, founder of the Grameen B ank and arenowned example of a social enterprise, won the Nobel Peace Price in 2006there is increasing interest in social entrepreneurship for development yet thecurrent academic literature does not provide is a sufficient link between socialentrepreneurship and economic development policies. How important are socialentrepreneurs for economic development? What value is created by socialentrepreneurship?

The social entrepreneur sector is increasingly important for economic (andsocial) development because it creates social and economic values:

1 . Employment D evelopment

The first ma jor economic value that social entrepreneurship creates is the mostobvious one because it is shared with entrepreneurs and businesses alike: joband employment creation. Esti mates ranges from one to seven percent of peopleemployed in the social entrepreneurship sector. Secondly, social enterprisesprovide employment opportunities and job training to segments of society at anemployment disadvantage (long-term unemployed, disabled, homeless, at-risk youth and gender-discriminated women). In the case of Grameen the economicsituation of six million disadvantaged women micro -entrepreneurs were

improved.2 . I nnovation / N ew G oods and Services

Social enterprises develop and apply innovation important to social andeconomic development and develop new goods and services. Issues addressedinclude some of the biggest societal problems such as HIV, mental ill-health,illiteracy, crime and drug abuse which, importantly, is confronted in innovativeways. An example showing that these new approaches in some cases aretransferable to the public sector is the Brazilian social entrepreneur Veronica

Khosa, who developed a home-based care model for AIDS patients which later changed government health policy.

3 . Social C apital

Next to economic capital one of the most important values created by socialentrepreneurship is social capital (usually understood as the resources whichare linked to possession of a durable network of ... relationships of mutual


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acquaintance and recognition"). Examples are the success of the German andJapanese economies, which have their roots in long-term relationships and theethics of cooperation, in both essential innovation and in dustrial development.The World Bank also sees social capital as critical for poverty alleviation and

sustainable human and economic development. Investments in social capital canstart a virtuous cycle

4 . Equity P romotion

Social entrepreneurship fosters a more equitable society by addressing socialissues and trying to achieve ongoing sustainable impact through their socialmission rather than purely profit-maximization. In Yunuss example, theGrameen Bank supports disadvantaged women. Another case is th e Americansocial entrepreneur J.B. Schramm who has helped thousands of low -incomehigh-school students to get into tertiary education.

C onclusion:

To sum up, social enterprises should be seen as a positive force , as changeagents providing leading-edge innovation to unmet social needs. Socialentrepreneurship is not a panacea because it works within the overall social andeconomic framework, but as it starts at the grassroots level it is oftenoverlooked and deserves much more attention from academic theor ists as well

as policy makers. This is especially important in developing countries andwelfare states facing increasing financial stress.

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