“Technology and Rural Development”
How do you package 35 years of learning from developing social enterprises and base of the pyramid approaches into viable ideas that can work at major scale? One Indian social enterprise--Technology and Action for Rural Advancement (TARA)--has come up with an innovative model it believes can deliver impact at a scale that social enterprises have not yet been able to reach. Dr. Ashok Khosla, the chairman of TARA’s parent company, Development Alternatives, and Shrashtant Patara, the CEO of TARA, laid out this ambitious vision during a talk with Yale School of Management students on September 12, 2017.
TARA shares a deep relationship with Yale SOM, having partnered with Yale students five of the last nine years through SOM’s Global Social Entrepreneurship course. Through this course, students have seen TARA’s work firsthand in India and have helped the organization tackle tough management challenges, such as analyzing potential export opportunities, honing the business model for rural solar micro-grids, , and identifying measures of success for each of its regional and local training centers. Patara also visited Yale last fall, presenting on TARAs unique business model, the evolution of the organization, and its fundamental belief that, “development is good business.”
TARA’s work is structured around the goal of creating sustainable livelihoods at scale. In practice, this has led to more than $150 million in investments and programs in workforce training, incubating bottom of the pyramid companies, affordable housing, waste management and recycling, and solar micro-grid development. TARA is a nonprofit that sits under the umbrella of the Development Alternatives Group, along with a second nonprofit, The Society for Development Alternatives. The three entities coordinate to develop an ecosystem for innovation and delivering impact through various channels they categorize as the “I Track: Innovation, Implementation, Influence, Incubation, and Impact.”
TARA plays the role of the “incubation engine,” moving a new product or business from inception to piloting to spin-off as a separate business. Patara describes this process as, “bridging the gap between the laboratory and the market, debugging the models, and bringing them to market.” Typically this process takes three to six years. Once a project is commercially viable, TARA helps transition it into its own business entity, retaining significant equity. Some of the businesses that have come out of this model include TARA Livelihood Academy, which provides job and leadership training, TARA Machines, which sells low-cost brick-making machines to rural entrepreneurs, TARAbazaar, a marketplace for low income populations, and TARAgrams, a platform for artisans to showcase their products made out of recycled materials. The organization has also developed products such as a water purification tablet, an eco-friendly brick kiln, water storage devices, and technology to build inexpensive residential housing.
In 2016 TARA set up a holding company, TARALife Sustainability Solutions, that brings together several of TARA’s subsidiary companies. The goal of the new holding company is to group companies to work together synergistically, instead of building only individual companies. Dr. Khosla frames this challenge as needing a model with the speed and scale that can create a “quantum jump” from the work has done TARA in the past. TARA is looking to bring a new model to the entire base of the pyramid economy in India, which, Dr. Khosla believes, TARA can bring about through rapid scaling of new rurally-based, multi-use infrastructure units called TARAHubs.
TARAHubs will bring together TARAbazaar, TARA Machines, TARAgrams, and TARA Livelihood Academy in one space to create an aggregated economic center of activity. The center will include a market for necessities, a bazaar for higher-end products, training and career services opportunities, a farmers’ kiosk, spaces for local entrepreneurs, a telemedicine lab, and an aggregation point for TARAgram products to be delivered out of the rural community. The goal behind TARAHubs is to increase the purchasing power of rural consumers by providing them with new employment, training, and commercial opportunities and to then provide a ‘one-stop-shop’ for customers’ shopping needs. By looking at the base of the pyramid as both consumers and producers, TARA believes that it can build a whole new structure for rural Indians to engage in economic activity, with TARA playing an active role at every step in the supply chain.
The organization is entering relatively unchartered waters, but with 800 million potential consumers and 200 million potential producers, TARA believes that they have an incredible market opportunity at hand. The first TARAHub is slated to open in December 2017 and the organization is currently raising $32 million to roll out an additional 150 TARAhubs and 1,200 to 1,350 franchise-owned hubs over the next five years. If TARAHubs is successful, the organization believes it can achieve an IRR of more than 20%.
TARA is, however, well aware of the risks ahead in trying to bring this new idea to scale. When asked about the biggest challenge facing TARAHubs, Dr. Khosla remarked, “The strongest challenge we face is criticality. Like an airplane flying, if we don’t move fast enough the model will stall and fall from the sky. It is a race against time because if we can’t prove it, it will set [this type of model] back by a decade.” For those interested in seeing social enterprises work at scale and who believe in the commercial and social impact success of base of the pyramid business models, you should keep a close eye on TARA realizing their vision for a quantum jump.