Companies in India increasingly identify efficiency as an opportunity, and not just a duty - leading to some rather bold ambitions, says Martin Wright.
If innovation's the sexy face of sustainability, then efficiency is the boring flip side. But it often drives the shinier stuff. When all resources are at a premium, says Samir Saran, former Vice-President of Reliance and now senior fellow at the Observer Research Foundation, then innovation is essential for any business seeking to survive. "It's not so much a case of 'frugal innovation', more that frugal is innovation. The companies that are unable to be frugal in their consumption of resources … will be companies unable to compete."
Viraal Balsari, an independent consultant on energy and environment, agrees. "Sustainability in an Indian context is essentially about efficiency: human efficiency, resource efficiency and, above all, cost efficiency. Indian companies are now terrified about costs, and very keen to manage them. So if you go and say, 'This is your investment, this is your payback time, this is how much your costs will come down', they understand that. Then you're getting down to brass tacks."
It has an obvious appeal. When Asian Paints succeeded in eliminating all liquid waste, Chief Strategy Officer Manish Choksi said simply: "It's no longer an economic burden."
"Over the last few years, the economics has evolved as resource prices have risen", comments Vishwesh Palekar, Senior Vice President for Innovation at Mahindra & Mahindra. "So all sorts of investments [which might have had a philanthropic basis] – whether it's water conservation or renewable energy – become a firm business proposition, with a sustainability theme." As an aside, Mahindra is just launching its first electric sedan car, the Reva E2O: a 'business proposition' which Palekar admits is also a "leap of faith".
But cautious resource management isn't the whole story (which is just as well, or it could get quite boring). Sometimes sustainable innovation pursued, if not for its own sake exactly, but with a fearless commitment to what Rohan Parikh, Head of Green Innovation at Infosys, terms "unreasonable goals", can produce surprising results.
When the company decided to eliminate artificial lighting during daytime, [see top photo] he says, they discovered that, "We not only saved electricity; we saved on the heating load, so we reduced the size of our chillers, and therefore we reduced the size of our transformers and the size of our diesel generator sets." And it didn't end there. Maximum daylight meant huge window spaces with wide-open views of sky and trees, so the workforce was happier and more productive too.
Engaging staff in sustainable endeavours reaps its own rewards, adds Parikh, citing a neat gizmo which sends a text alert to let you know you've been away from your computer for half an hour and left the power on. "It's much more effective than just badgering them about efficiency", he says.
Setting "big, bold, hairy, ambitious goals", as Gaurang Pandya, MD of Carrier India (one of Infosys's partners in its cooling research – see 'Designs to keep India cool'] is a great way of motivating people internally. Whether driven by concern over resources or not, leading Indian companies are developing a taste for bold and hairy. Johnson Matthey aims to halve its environmental footprint per unit produced by 2017, from a 2007 baseline. Alcatel Lucent's going even further. "The single biggest operating expense for our sector is the power it takes to run telecoms networks", explains Arun Seth, its India Chairman. "So we've created a consortium of 60 members from around the world, with the aim of completely redesigning the infrastructure to bring down the energy use of telecoms technology companies by 1,000 times." Which you have to admit is a seriously bold goal.
Collaborations such as this are an increasing feature among Indian innovators – and necessarily so, believes Vivek Sharma, Ventures Technology Manager at BP India. "There are too many people working alone", he says. "There are big structural gaps in the way industry is set up: so academic researchers operate in isolation, business operates in isolation. There's no Indian equivalent of a Silicon Valley", where businesses come together in a bubbling ferment of bright ideas. Ligia Noronha, Executive Director of TERI, agrees: "The worst thing for innovation is people not talking to each other – not connecting to each other. You have to instil a collaborative culture." Partly in response to this thinking, BP is launching a new $100 million venture fund focused on cleantech and applied innovation, which will be incubated at the Indian Institute of Management in Ahmedabad.
"This appetite for collaboration is really encouraging", says Dhananjay Tapasvi, MD of Johnson Matthey Catalysts. "There's a danger in just having atomised, isolated innovation stories. There are so many exciting things happening, and across so many sectors. And not just blue sky thinking, either: this is near-term stuff. It's amazing to think where this could go!"
It's all a far cry from what could be described as the comparatively sober, 'traditional' Indian corporate approach to sustainability, rooted in a long tradition of philanthropy. It's a tradition which has been absorbed smoothly into the relatively recent concept of corporate social responsibility (CSR) [see 'How the Indian Companies Bill could transform CSR in India'].
But a philanthropic approach to sustainability doesn't sit comfortably with the growing number of Indian business leaders who prefer to see new approaches and solutions as an opportunity, not an obligation. And moreover, an opportunity which can deliver social goods at least as effectively as charity, if not more so…
As Meeta Singh, General Manager of Sustainability at Unilever, India, puts it: "If communities fail, then business cannot thrive. That's why there's a link between business and development."
"Take our work on water", continues Singh [see 'From dry season crops to detergents: tackling water shortage in India']. "If people have a decent water supply, they can produce more crops, be more prosperous, and that means they can afford to buy more of our products. If there's food or water insecurity, people won't have the money to spend on one of our creams. It's the same thinking with the shakti ammas project [which trains village women as sales entrepreneurs; see below, 'Women lead, men follow']. We wanted to reach new markets for our products, in areas beyond the range of traditional retail outlets. And we found that the best way we could do so was one which also financially empowered rural women. It put money directly in their pockets, which we know they use for food and their kids' education."
In some ways, it's a model closer to social entrepreneurship, without any softening of clear business goals. Sachin Joshi, Director of the Confederation of Indian Industry, cites the example of Jain Irrigation. Its success is built on building close relationships with the farmers (many of them far from prosperous) who constitute its customer base, he explains. "Jain were willing to talk to each farmer, to find out exactly what they needed, which crops they were growing and when, what size their fields were, the soil composition and so on – and then design a solution specifically for them."
Getting to know the customer meant getting to see other opportunities, too, Joshi continues. "They realised the seeds the farmers were using weren't the best quality, so they started supplying improved ones. And then they found out the farmers weren't getting the best deal for their produce, so they went into food processing … And it was all based on pure business logic. If the farmer's income increases, then Jain's income increases. So the company is very clear: they will not get into a business unless it increases the incomes of the people in the value chain by, say, two or three times. And that's how Jain has become such a successful company."
There are echoes of this in a new initiative from YES Bank, which allows rural migrants to transfer money home via small shops, rather than queue for hours at one of the few bank branches which deal in such remittances. It's proved very popular: over 300,000 users have now remitted INR5 billion through the system. "People were wasting half a day standing in a queue", says YES's President of Responsible Banking, Namita Vikas, adding, only half-jokingly: "We knew that, where there's a queue, there's a pain – and where there's a pain, there must be a demand to alleviate it – and that's a business opportunity!"
"It's all about finding the sweet spot between 'doing good' and 'doing well'", says Meeta Singh. "The [Government's] 2% rule [which stipulates that businesses of a certain size must donate 2% of their profits for charitable work] is missing the point. It has to be about the whole 100%. That's the only way to make sure you really have a positive, lasting social impact." "So the only purely charitable work we do is disaster relief: everything else is tied in with our business. If it's not about building the business, we won't touch it. And that, I am convinced, is the best way in which we can do good."
Over the last decade, over 45,000 women have been enrolled as shakti ammas (which means ‘powerful mothers’), selling Unilever products such as soap and shampoo around their home villages. The ammas receive training in how to run a small business, and some are taught how to give basic health and hygiene education, too.
Now the ammas are being joined by men: around 30,000 shaktimaan, usually husbands or brothers of an amma, are being given bicycles so that they can travel around nearby villages, selling Unilever products to stallholders. “Effectively, we’re creating family enterprises. It means we double our market reach, and the family doubles their income”, says Unilever’s Meeta Singh.
Several pilot schemes are exploring other possibilities, including helping villagers open bank accounts and selling telecom services.
In the ten years that the project has been running, technology has transformed it. Where once a van toured round the villages with replenishment stock which may or may not have been needed, now growing numbers of shakti entrepreneurs use their mobiles to order precise quantities of what they need via a simple app. As Singh puts it: “The spread of mobile coverage in rural areas has made so many things possible: you may not have a decent road, you may not even have water, but you’ll have a network connection.”
Photo: Infosys / Creatas / thinkstock