Rice Husk Power in India: Guest Blogger Samir Shah

Samir Shah, a classmate at Darden, guest blogs today on a visit our class had from Chip Ransler, co-founder of Husk Power Systems, which delivers power to over 50,000 rural Indians in a financially sustainable, scalable, environmentally friendly, and profitable manner. Samir’s post below:

****************************************

What stinks?

Look around your immediate location.  Take a second to analyze what’s there, the purposes those things serve, and how they could be made better.  It might be a small issue like the ergonomics of your computer mouse, or something more significant, like the difficulty of keeping documents organized (As you might have guessed, I am looking around my own desk right now).  Take another second to think about how you would fix it, and what you would need to accomplish that fix.

So what stinks?  And how can you make it less stinky?  Chip Ransler, co – founder of Husk Power Systems recently discussed this idea with our Entrepreneurial Thinking class.  He felt that ‘what stunk’ was the fact that 350 million individuals in rural India lived lacking reliable electrical power.  What stunk even more is that these individuals could not be part of the economic revolution currently revitalizing and invigorating much of the country.  Rice, a large agricultural product, produces a waste product, rice husks, which were also being wasted.  That stunk too.

Now what do you do?  You found something that stinks, something that needs a solution.  Ransler and his partners found a way, through technology and the free market, to develop a power system that used rice husks to generate electricity for villages in rural India.  Facing obstacles like working with clients who are not easy to reach, ‘not in tune’ with paying for electricity (read: they usually steal it), a 40% payment default rate, and a corrupt government, Husk Power has grown to reach these rural Indians and provide power solutions to more and more people.

It has been largely successful, and the exact details of their growth story are made clearer on the company website. The story of Husk Power Systems is inspiring and compelling, and Ransler brought forth some key ideas in developing solutions for problems that stink.  So what ideas are relevant for aspiring entrepreneurs and creative thinkers?

1. Get it done.  Put your feet to the fire and get your idea out there.  You need to have passion that borders on insanity and be willing to go to the mat for your idea and vision.  Be ready to sacrifice (Ransler, along with his partners, lived in rural India for months at a time to get the system running properly), adapt, and give up what is secure.  Finally, talk to people.  Then, talk to more people. After you finish talking to everyone, find some more people to talk to.  Communicate your idea so that you can find a way to put things together.
2. Know your customer and frame your idea properly.  Husk Power wasn’t giving away electricity, but selling power units to a market that had a demand for energy.  They tailored their product to their market, and made sure it was a sustainable way to earn revenue, grow, and maintain the initial objective of fixing what stinks.
3. Ransler talked about the concept of second and third right answers.  I probably need more time to digest this idea, but he noted that while developing a power solution was the first right answer, subsequent right answers came from adapting ideas to develop the target market – for HusK Power, this included selling smaller amounts of power, and having customers prepay for power, bringing the default rate from 40% to 0%.  These second and third right answers have helped Husk Power develop and grow, reaching more people in an ever expanding market, which has in turn helped them develop their technology and infrastructure and continue the cycle upward.

Ransler didn’t talk much about the effect of injecting this power system on rural Indians.  I can only imagine how the company has allowed thousands of people to expand their productivity.  He did give us one quote from a local resident, who noted that “We gained independence from England 60 years ago, but it feels like we just gained our independence today”.  I have to admit, this quote choked me up just a little bit – the image of rural Indians being empowered was an inflection point in the presentation being made – things didn’t stink as much for these folks anymore.

Having visited India, and having family who grew up in lower class areas of the country, I can empathize with this quote, and it made me stop thinking about the story of entrepreneurship and start thinking about the power of the free market to fix what stinks.  In what some might call the heart of human poverty, an idea and product have been developed to promote social good and economic development.

So what stinks?  What can you do to fix it?

Samir Shah

Indian Entrepreneurship & Emerging Market Innovation

A post from the randoms bucket….

• Indian Entrepreneurship: I had been putting off this blog post for a while following my trip to India, mainly because I didn’t have a good enough memory of the specifics to give an accurate and compelling description of my trip to the Dharavi Slums. Luckily, my friend did an absolutely killer job of bringing it to life – please please read it.

• Emerging Markets & Innovation: Additional thanks to Sean for linking to a great Economist article on innovation in emerging markets. Some really interesting examples of how innovation in emerging markets take shape. Consumer research is often necessary, but hard to compile in normal ways (hence the interesting things that companies like Unilever are doing in China). At the same time, even when you know what a customer wants, how do you actually distribute it in an emerging market that may have different forms of distribution than the ones your company typically uses? And how do you reach consumers- especially poor ones? Companies must have a definable strategy in place. Awesome article.

Before Sean sent the article, I had actually just been talking about this with some other students today- Tara and Gaurav (Tara has an awesome cooking blog…). They were teaching us to cook a few “beginner” Indian dishes (toor dal, okra and bengan bartha…mmmm) and we talked about the changes that American companies who were successful in India had made. For example, McDonald’s only serves chicken in India, not beef. And Pizza Hut “Indianized” their pizza, putting Indian spices and traditional chicken on top, rather than sticking with American flavors! Dominoes, on the other hand, did not, and are faring much worse.

All for now. More later.

Ride the Train, See the Culture (India Post #2)

Took me a week longer to get to this than I thought….and it didn’t help that I kept falling asleep at 9:30 every night…..

Last post I talked about the kaizen and later this week I’ll talk about entrepreneurship in the slum we visited, but today I’ll post a little about the cultural aspects of our visit . As we were in the plant all week working, our tourism was limited to the Sunday after we arrived and the Sat/Sun following the week of work (we flew out Sun night). Rather than give you the play-by-play, which would be boring, I thought I would pull out some of the more interesting highlights and cultural differences, in no particular order. To put it simply, though, India blew my mind.

I’ve posted all my pictures on Picasa- here’s the link if you’d like to look. I’ll also call out a few specific ones below.

Train Rides: On the suggestion of one of our group, we jumped on the train that went through Mumbai, and I’m glad we did- it was my favorite part of the that day. I took a pretty good video of it –  the train has fully open doors so you can lean out, which I do while filming, and then give a quick pan around the compartment. (see India Train Ride Below)

The woman who is patting the man’s head about 15 seconds in is a hijra– a “third gender”. This could encompass a hermaphrodite, a eunuch, a transvestite, and any variation of a number of themes that deal with a middle ground between traditional male and female. While everyone we met told us that Hijra are considered good luck omens, and it is unlucky to refuse them small change, or berate them (and you might get cursed in return), they are very low caste, and are not allowed to work “normal” jobs and are kept removed from “normal” culture in their own living groups. A few outside reports indicate systemic violence against hijra, but I don’t have enough information to speak accurately to that.

Colors & Energy: I’ll get more into the energy aspect of this tomorrow when I talk about entrepreneurship, but the general energy and bright colors of the city really drove the pace of life. Everything was always moving and changing. Traffic is a great example- it is the most insane thing I’ve ever seen, yet there were no accidents. People make turns across lanes of incoming traffic- no signal, just plunging in and hoping other cars stop. And they all know to stop! It’s a delicate and dangerous dance, but exhilarating to be in!Streets and buildings are draped in colors of everyday life- laundry hanging off balconies, revamped American advertising pasted up and changed to reflect India.

Race: One of the more shocking moments was seeing a Benetton store and realizing that most of the models for India Benetton are white!  I’ll let anthropologists discuss the ramifications of color identity in a post-colonial society- for now I’ll just say that there are a lot of TV ads (for products like Oil of Olay) focused on “turning skin fairer.”  This attention to “fair” skin became very clear to the members of my group who were blond. While I myself was not subject to to the rapt attention of the masses, the “blonder” contingents of our procession were. The tall, blond male in our group was called “Brad Pitt” several times, and at the Gateway to India, people would come up to take pictures with him. Many people also tried to sneak in photos with the two girls in our group- they would stand next to them, then raise their camera phone and try to get a quick picture of them standing next to the girls. No one wanted a photo with me though. Our tour guide asked if I was an “americanized” Indian. I’m not. Nor am I Harman Baweja, no matter what one blind hotel concierge thought…..

Hospitality: While the hotel we stayed at was obviously very hospitable (nice job ITC Maratha– great buffet, gorgeous place, great service), everyone we encountered outside the hotel was welcoming as well.

While occasionally beggars and street vendors could really cling to you, and one of our party had to knock a few hands away from his wallet, for the most part we were made to feel very welcome. Everyone speaks a little English, and most people speak very good English, so you are able to get around. People ask where you’re from, and want to tell their experiences with other Americans (if any) and seem genuinely happy to see you visiting their country. I only felt unsafe once, in a somewhat “iffy” section of a large market section of town, and even then, I felt safer than I do sometimes in D.C. Everyone really wanted to engage in conversation they wanted to ask questions, they wanted to hear what we thought, they wanted to warn us not to eat the street food….everyone was extraordinarily welcoming.

Poverty: What was most striking about Mumbai- which kinda reminded us of L.A., given the crazy freeway and the spread-out nature of the city (and a few palm trees here and there)- was the close proximity of wealth and poverty. While I’m sure there are “nicer” sections of the city and “poorer” sections of the city, the two are integrated quite often. There’s an enormous amount of construction, and new buildings seem to spring up in the middle of desolation. Million-dollar rowhouses on the beach are next to shanty-towns slums; shopping centers have security guards checking everyone who enters….and I believe, stopping beggars from entering. The city is moving at such a pace that these two populations are thrown into contact again and again, until growth draws it’s breath once more and sends them hurtling apart till the next conflict zone.

It is the hardest thing in the world to look a child in the eyes and refuse to give money you know you can spare, but we were warned time and time again not to, as most of that money goes to “bosses” who run the beggars, and also leaves you vulnerable to another hundred beggars who suddenly appear as your money comes out. That reasoning doesn’t make it easier though…..

It was definitely a fantastic experience, and I don’t think I’ve really thought and worked through it all yet. So I apologize if these seem to be random and unconnected mumblings. I enjoyed my time in Mumbai- although I was ready to go home, I was also sad to leave. There is a passion and energy and drive there that I connected very strongly with- I’ll speak to that more in my next post, when I talk about the businesses in the slums we visited.

Danaher Kaizen & Sandwich Example (India Post #1)

I’m back! It was an amazing trip, and there’s tons to tell….there were three main themes of the trip, so I’ll separate the blog posts into those segments – #1 will focus on the Kaizen exercise; #2 will concentrate on the culture; #3 will focus on entrepreneurship and innovation, including a visit to a series of businesses in a Mumbai slum. So….on to #1!

First and foremost, a huge thank you to Danaher for hosting this trip. They generously took care of our hotel, food, and car transportation in India, and made us feel safe and welcome at all times. Thank you for that, for allowing us to work in the Portescap plant for a week on this exercise, and for teaching us the Danaher kaizen methods. I don’t want to share anything proprietary, so I’m a little limited, but I’ll explain what I can.

Our Team: Our group of 8 Darden students (and one former student, now a Danaher employee), was split into two groups, and each group was given a production “cell” to focus on, along with targeted improvements (space usage, productivity, etc.). This “kaizen” exercise used a process developed across Danaher, called DBS (Danaher Business Systems). Our job was to apply that process to our cell, work with the line workers to find areas of improvement, and implement new changes to those areas for quantifiable improvement. My team is shown below (huge thanks to Anant, Sharad, Siddarth, and Rutesh for all they taught us). The entire line of operators were women. Tiny, under 5′ women who worked on tiny, delicate motors.

How it Works: To explain it without using DBS terms, or violating confidentiality, I’ve created a Fake Sandwich Production Line example. Imagine you have a line of 5 workers who make you sandwiches. Delicious sandwiches, but it takes them too long to make them, and your wife/husband says you have to improve the cost structure of your sandwiches, since you’re eating the family out of money.

1. Watch It: You would start by figuring out what each worker is doing….What exactly is going on in that line? To do this, you watch it. For several hours, standing there with a timer in hand, just watching….and you figure out how it goes. One worker toasts the bread, then passes it to the mustard guy, who spreads mustard on it, then passes it to the veggie guy. The veggie guy puts on tomatoes and lettuce, then passes it to the meats guy, who adds in salami and ham, then passes it to the plating guy, who cuts it, plates it, adds a glass of milk and hands it to you. Great, now you know the process!
2. Calculate It: You take your notes back and look at them, and try to figure out how timing across the line works. So, for instance, the toast guy stands there waiting for the toast for 30 seconds, doing nothing. And while everyone else’s job takes under 15 seconds, the veggie guy takes 45. So he’s slowing them down. And you look at the workers, and the time, and try to figure out how a different allocation of resources makes everything faster and cheaper. You ask questions like: Does this process have to stay in this order? Do we need this many operators? What’s the slowest part of this (the bottleneck?) How can we speed this up? By asking these questions, you begin to realize opportunities to improve things just by working on operator loading (how much work they do) and order. So perhaps the toasting guy goes and cuts the tomatoes while waiting for the toast the pop. Or perhaps the mustard guy and the toasting guy become the same guy, because together those two jobs only take 35 seconds, and since the veggie guy takes 45, that still would be under the slowest part of the process.
3. (UPDATE – Takt Time): My teammate Benson reminded me of an important point- takt time. Takt time is basically the max time in total to make One Unit- the max time allowed per unit to meet demand. In Benson’s words, “For example, if your sandwich shop was open for 20,000 seconds per day (roughly 5.5 hours) and your avg demand was 50 sandwiches per day, your takt time would be 400 seconds (roughly 6.5 minutes).   So you know you have to load your operators such that every 400 seconds you have a sandwich on a plate ready to serve.” You need to know the takt time in order to know the max time each of your operators can spend, so that as you make decisions for step ii, you’re keeping the time below the takt time.
4. Change It: Once you have that data, and you’ve made some decisions on what can change, you go back and make some changes. You teach the toast guy how to cut tomatoes, or you add mustard to his job, or you switch the veggie and meat guys…whatever the data told you, you change.
5. Improve It: While you’re doing this all, you’re also looking for ways to create efficiencies and speed the jobs. Maybe the toaster can be set to 4 instead of 5, speeding the process by 10 seconds. Perhaps the meat doesn’t come pre-sliced, but it could (from the supplier for free). Maybe the tomato guy is slicing them too thin or too thick. You make these changes to improve things.That’s not a full Kaizen process, nor does it show the depth of DBS guidance, but I wanted to avoid oversharing, and that should at least give you a general breakdown of what we did. But with motors, not sandwiches…..

Learnings: It was a truly incredible learning process. DBS provides all the templates and tools to guide you, but the process requires you to think in a specific way that takes time. For the first two days, it was difficult to really see areas of improvements to watch a process and visualize small, specific changes that would improve it by seconds or milliseconds. After that it began to come more easily, and you started to naturally notice areas of possible improvement more easily.

Learning to work with the line workers was a challenge given language barriers, but with the help of Anant and Sharad, we were able to translate back and forth, and eventually workers began trusting us enough to come straight to us with issues and communicate via hand signals. That was especially true for the “lead girls” who managed the workers directly, as they understand each step in the process and are best able to articulate small improvements that impact each activity.

Buy-in from the operators is key for ensuring adherence to the changes; if the workers are not bought in, the changes won’t last and the impact will be minimal. Also, no matter how long you watch a process, the workers are doing that process nearly 1,000x per day- THEY are the voice of experience here, and know better than anyone the changes that would help. So it’s integral that you solicit and follow their suggestions.

One of the key features of this approach (that my teammate Tim reminded me of), was a daily “report out” where we reviewed key steps, findings, and goals for the next day, and presented those to management. This feature kept us accountable, ensured we planned out the next day, and allowed us the chance to receive in-the-process feedback from those who had done this before. And knew where we could improve.

I could write a ton more, but I’ll leave it at that. Hopefully this gives you some idea of what the “kaizen” exercise was like. Tomorrow I’ll talk about the culture, and what we saw out in the city, and while working with our India friends.

Left for India- Check Back 3/16

(for those who love xkcd, skip to the bottom…)

I won’t have much internet access in Mumbai- not enough to blog with (probably). I’ll be writing several blog posts, but doing it old skool (with a Pen & Paper!!) so that I can type them up when I get back and post them in order. Hopefully that’ll be interesting. So don’t forget about me…..check back March 16th! In the meantime, I leave you with the brilliant xkcd:

Bored With the Internet