Thursday, August 02, 2012

The complex simplicity of running a social enterprise

Teaching a course on Social Entrepreneurship has constantly left us with a problem: it is impossible to define a social enterprise with myriad forms of incorporation and objectives of entities that claim to be or perceived as social enterprises. So we usually end up using the Sankara philosophy of Neti Neti [not this, not this] to arrive at a description of a social enterprise. In Aravind Eyecare, we however, found the answer. A social enterprise? Idam Ittham! This is it! There is enough literature on Aravind - a slightly dated Harvard case, two cases by IIM Ahmedabad and other writing that puts the essence of the social and the enterprise nature of the organization. This book ties the loose ends and provides a comprehensive picture. Given that Pavithra is a family member and very much a part of the Aravind system one would have thought that there would be issues in dealing with the difficult questions of succession, inter-generational leadership and growth. But the authors are candid and take these issues head on.

Let us unpeel the Aravind model. This model is about providing choices. There is no verification on affordability. Patients can choose to pay or take the free treatment. “Zero can be a legitimate price point… these price points are built around a culture that respects every patient’s right to selection” [p.75]. Aravind overcame the problem of mis-targeting in cross subsidization by offering the same services [doctors, technology for treatment], but differing facilities [beds on the floor for free patients]. During the earlier days the technology, providing intra-ocular lenses for paying cataract patients and spectacles for non-paying patients made the difference sharper. But Aravind was not about keeping the differences. It strived to remove even these differences by investing in research, technology that brought price points down while being self-sustaining. How did they do it?

Unlike many non-profit-non-governmental organisations that have the us-versus-them attitude towards corporate businesses, Dr. Govindappa Venkataswamy [Dr.V, the founder] and his team had a never ending curiosity. How does the standardization of McDonalds apply to cataract? How to ensure the productivity of human resources and physical infrastructure is used to the maximum? How to cut idle time and utilize the resources, to ensure a fall in the per-unit cost. “Say an average practitioner uses his surgical microscope 20 times a month… at Aravind our utilization is actually 20 or 30 times higher. So our average cost per case is drastically lower than his.”[p.88]. Once that was achieved, the headroom available for pricing significantly increased. Doctors were to be used for what they specialize in. For support services there were others who were trained. Having a large number of interns and trainees brought enthusiasm, youthfulness and curiosity and cut costs significantly. And unless there were large numbers, there was no learning for the doctors. They became better by seeing diverse patients. On the other side there was a big problem of avoidable blindness. In Madurai. In Tamilnadu. In India. In Africa. Across the World. “If somebody is blind, that’s our problem” [p.13] was the Aravind vision. Once the issue was articulated in this manner, the business model that emerged would blindly chase the blind and not the bottom line. The problem was immense and it needed to be solved in the lifetime of Dr.V. This race against could be won only with dedication, tirelessness and perseverance of climbing the Everest.

This task could not be measured by pay-packets, bonuses and stock options. This business model of Aravind explained what could tick. At one end was a well-knit [almost joint] family who supported each other and lived for a common cause, led by the patriarch Dr.V. Nobody dared to question him. He came with a moral superiority. That was the team. At the other end was spiritualism he brought that ensured moral suation. That was motivation. Dr.V could easily switch between the writings of Aurobindo and the business model of Burger King. It was seamless. These provided an operational framework. As one of the volunteers summed up “We need to do what we need to do attitude. No cheesy, frou-frou notions of doing well by doing good’. It was kind of just – doing.[p.71]. It was not a charitable operation running on external grant funding. “The founders did not want the eyesight of the community held ransom by external resources” [p.83]. There was a single-minded consciousness that resources were to be generated internally and accruals would be used for operations, and growth.

How does one ensure that everybody gets the same treatment, irrespective of payment? The systems at Aravind are designed to operationalize certain core principles. So to ensure equity of care .. the organization intensively monitors clinical outcomes across paid and free services, and all its surgeons are rotated between free and paying patients”. [p.115].

The ruthlessness in being self-critical on operations, on tasks not achieved, on ambition is the stuff that dream enterprises are made of. The story of Aravind is all about this purpose. The maxim is do the work, resources [money] will follow. The story of how one family could produce so many eye surgeons, get them all to work in difficult conditions and rope in their spouses and grow at a pace that would find a private equity guy salivate is the stuff that Aravind is made of. It has all the ingredients of an ideal social enterprise. Dynamic leadership, audacious vision, dedicated team, operations that are clinically precise and superb implementation and decision making driven by sound business sense and spirituality. So what happens when the leadership passes to the next generation, when centrality of decision-making moves away from conviction of one person to systems, when a perfect social enterprise faces growth and inter-generational shift?

The cracks set in. Once the organization is large it brings in hierarchies, it is complex to manage and it needs sufficient funding just to ensure the support systems are in place. The next generation of leadership does not own the passion, it is handed down.The world around has significantly changed. How does the organization respond to these changes? If others embraced spirituality would it help? Would it sound hollow?

With the passing of Dr.V, these questions haunt the next generation. The decisions have to be taken by them, and they cannot look to the wise counsel of the old man. The frustration shows:  This large scale model just isn’t sustainable.. A lot of people don’t want to deal with the heat, the wait and the crowd. We’re turning into a hospital for the masses.[p.255]. The arguments are that the bottom of the pyramid itself is moving up. There is also consciousness that there are specialized eyecare hospitals that are taking away the paying patients. Should the model of getting more and more patients through eye camps be done away with? How does the imperative of the changed external environment, changed leadership and aspirations of the ‘poor’ patients to have quality eyecare – not only in treatment but also facilities that are not differentiated between the haves and the have-nots? Is the traditional stance on self-reliance pointlessly restrictive? [p.276].

The book asks the right questions, articulates the dilemma of social enterprises come up only when the visionary is no longer around. When the seemingly unreasonable and convoluted logic of business and spirituality does not work, the articulation has to be on more concrete terms. Aravind has effectively served the cause it set out to in 1976 but the challenges of re-definition are thrown up now. Irrespective of how the present leadership responds, it faces a daunting task of living up to the image and the vision of Dr.V. An impossible and frustrating task that is fraught with the risk of being accused of mission drift. That phase of Aravind has started and it will be watched carefully.

Pavitra and Suchitra have woven a wonderful tale of Aravind and bundled all these issues into a highly readable book. If one needs to understand the unreasonableness and complexity of a social enterprise, this is the book to read.

Infinite Vision
How Aravind Became the World’s Greatest Business Case for Compassion
Pavithra K Mehta and Suchitra Shenoy
Collins Business
pp.269. Price Rs.499.

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