SELCO: Determining a path forward

Series: Yale-Design Observer Design and Social Enterprise
Format: Raw, online case
Topics: Finance, Marketing, Public Policy, Design, Innovation, Energy, Social Enterprise, Sustainability
Initial date of publication: November 2009
Geographic setting of case: India
Access:  Available free online at http://nexus.som.yale.edu/design-selco. Teaching note available to faculty at accredited business schools, email case.comments@yale.edu

Overview: Harish Hande and the company he founded, SELCO, provide solar electricity to India's poor. SELCO had become known for devising innovative solar solutions. The SELCO design process began with an extensive needs assessment of a particular segment or activity. Sometimes this meant redesigning the solar equipment and sometimes this meant restructuring activities so that solar energy could power a client’s needs.

Hande realized early in SELCO’s history that the success of solar installations for the poor would depend on designing creative financing solutions for its customers. Many thought the capital expense of purchasing solar panels and batteries put this technology out of the reach of those at the bottom of the income-generating pyramid. But, SELCO spent time cultivating India’s banks and microfinance organizations to convince them of the efficacy of solar power. Over time, the company formed partnerships with these institutions to craft financial instruments that allowed entrepreneurs and families to repay the capital expenses associated with installing solar equipment.

However, SELCO’s careful process of needs assessment, design, financing, and service was time-consuming and costly. The company had provided energy solutions for over 100,000 households in its fifteen years of existence, allowing customers to increase their income and quality of life. However, India’s developmental problems were daunting; over 400 million individuals were in poverty. Observers wondered if SELCO’s activities could be scaled up to extend solar energy's benefits to more people.

In 2009, SELCO was considering its plans for how the company might expand. The company decided to institutionalize its design process by building an innovation center. SELCO also added products that provided energy solutions beyond solar. Some within the company were hoping the company would go “deeper” and look at designing solutions for even poorer members of the Indian population. Others were hoping that the company would go “wider” and expand beyond its current geographical areas in Karnataka and Gujarat. Whatever its direction, the strategic choices the company made at this point in its evolution would be crucial to determining its continued success.