Sam Lakha, Manager, Volans Outreach.
Blog Action Day:The Vision of Dr. V – Harbinger of a “New Economy” – Madurai, India
On the surface, India is quite frightening. It has a population of 1 billion and growing- most of them living in squalor. Raw sewage flows through many streets and traffic is so chaotic that getting into a car is a death defying act. Yet India is touted as the frontier of the new economy, and on this trip I understood again why this is so.
It is not because of its pioneering ICT service industry. Rather, India is home to some of the most innovative business models that showcase what our “new economy” should be based upon – a combination of markets and values where the latter take precedence. As we search our way out of the present global economic mess, we would do well to examine business models that seek to do more than pad the pockets of company managers and faceless shareholders.
Take the example of Aravind Eye Care Hospital where I just spent several days this week. Aravind’s efficiency and cost effectiveness astounded the investors with me on this trip, – who were amused to learn that its operational model is based on McDonalds. But Aravind isn’t about making hamburgers all over the world – it is about giving sight to the blind. Aravind’s productivity is staggering. On a daily basis, 6,000 outpatients come to its 5 hospitals and every day it performs 850 to 1,000 sight restoring surgeries. It reaches out to the reluctant vision impaired through its screening eye camps, examining 1,500 people a day and transporting 300 of them to the hospital for surgery. And it runs classes for 100 residents and fellow and 300 technicians and administrators. All in a day’s work.
But the most amazing aspect of Aravind is that 55% of its patients receive their eye care – including examinations, diagnosis, surgeries, hospitalization and follow up – for free. Another 22% receive these services at a highly subsidized rate. The remaining 30% pay about US$1 per consultation and have their choice of accommodations, much like what airlines do in offering first, business and economy class. First class rooms go for US$3 a day, the other two for $1.50 and $1 a day, respectively. Surgery for paying clients is between $110 and $240, depending on the nature of the surgery. To give a point of comparison, it costs Aravind about $10 to conduct a cataract operation. It costs hospitals in the US about $1,650 to do the same.
One of the reasons Aravind has managed to keep costs down is its creation in 1992 of Aurolab, a pioneering initiative that produces high quality, low costs intraocular lenses, sutures, surgical instruments and eye-care related pharmaceuticals. How affordable? Aurolab has reinvented pricing, bringing the cost of IOLs, for example, from US$ 150 to US$2, creating pressure on mainstream pharma to reduce its prices. Aurolab today has ISO 9001 certification, US FDA approval and CE Mark certification and exports to 120 countries.
Since its inception to 2007, Aravind has performed over 3 million vision restoring operations – and despite the fact that 70% pay nothing or next to nothing, the hospital has a gross margin of 40%, freeing it of donor dependency for expansion and R & D costs.
The above paragraphs describe Aravind’s astounding efficiency. Yet what makes it an illustration of what a “new” economy could look like is its humanity. Its founder, Dr. Venkataswamy (Dr. V), did not set out to run a profit-maximizing business. He set out to restore sight to the blind. A deeply spiritual man, his leadership began with the pursuit of self-knowledge and a vision bigger than what defines present day corporations. The question that propelled him was “How can my work make me a better human being and make a better world?” If only corporate leaders on Wall Street could ask the same question.
Dr. V died in 2006 at the age of 86. Aravind started as an eye care service with 11 beds. Today it has grown to a chain of hospitals in India. How does it maintain its quality and keep attracting paying patients who cross subsidize the poor? Aravind does not provide a “product”. It provides a caring and complete service to rich and poor alike. Its founder’s impact is evidenced through his colleagues – young and young at heart - whose deep commitment and humanity are underpinned by the belief that to those to whom much is given, much is expected.
The address for this blog entry is: http://www.volans.com/2008/10/the-vision-of-dr-v-harbinger-of-a-new-economy-madurai-india/.
- Pamela HartiganSOCIAL ENTREPRENEURIAL SOLUTIONS FOR PHARMA INDUSTRY
From Mumbai –
I was last in Mumbai 37 years ago – and while I have been to India many times since, I had not been back to this city since then. Yet as my ancient black and yellow cab sputtered through town from the airport, I reflected on how little seems to have changed. The Indian economic “miracle” has certainly not reached the masses of people in this city of 13 million.
And yet, things have changed, in some cases dramatically. Certainly even 5 years ago I would not have been coming to a “roll up your sleeves” workshop with the world’s largest multinational pharmaceutical companies, their investors and social entrepreneurs for the purpose of identifying tomorrow’s business opportunities to provide access to medicines to low income populations. And what has changed even more has been the relative openness on the part of pharma companies to consider the drug development and distribution models that social entrepreneurs are testing, perfecting and growing to reach hundreds of thousands of people that pharma does not – because the profits are too low relative to the effort it takes to reach them.
Today, Thulsi Ravilla who heads up the renown Aravind Eye Care hospital in India and Chris Elias who leads PATH based out of Seattle and working globally, described what they did - and how - to an attentive group of major investors and pharma representatives. I truly relished sitting back and listening to questions from an almost incredulous audience who could not quite believe that Aravind, a hybrid non-profit, can provide quality and complete eye care, including cataract surgery, to half its needy clients for free - and still make solid profit by servicing paying clients – allowing Aravind to sustain itself and grow.
Chris Elias got the same excited reaction as he described how PATH, also a hybrid non-profit, worked with a Chinese drug development company and succeeded in bringing down the cost of Japanese Encephalitis (JE) vaccine from US$4.05 a dose to $0.16 a dose, allowing countries suffering from JE pandemics to prepare effectively to stave off outbreaks. The reason PATH is successful in these relationships has to do with sharing the risk with indigenous drug development companies as well as building the technical capacity of staff in these companies in the process.
And lest the group think that these two examples were unique, I shared more examples, including an alternative drug development group, Institute for One World Health - a pioneering non-profit pharmaceutical company in the US. IOWH has challenged successfully the assumption that pharma R&D is too expensive to create the medicines needed by the poor. Riders for Health, on the other hand, focuses on distribution of essential drugs and vaccines to rural communities by dealing with an overlooked problem – maintenance of vehicles – motorcycles and four-wheeled drives. Training health care workers on how to maintain these vehicles and building local capacity to service them, Riders has reduced the cost of fleet maintenance by 62% a year – and improved rural health dramatically in the African countries where it works. And to showcase how to creatively and successfully guarantee quality and consistency of drugs, I provided the example of the CFW Shop model in Kenya that takes advantage of local entrepreneurial drive in Kenyan communities to create a network of drug stores and medical clinics owned and operated by Kenyans trained in health care. These franchises, with an annual cost per client served of US1, have served over 2 million to date CFW’s inception ten years ago. Today, there are 68 shops in Kenya. The plan is to ramp up to 14 countries in the next five years.
Tomorrow we reconvene to consider the most pressing issues for pharma companies in emerging markets, the options, and how to move forward on opportunities. Hopefully today’s examples of innovators working at the “bleeding edge” of these markets will provide a source of inspiration in our deliberations.
Hearty congratulations to Sophia Tickell, Director of Pharma Futures and Chairperson of SustainAbility and Maggie Brenneke at SustainAbility and their colleagues for this pioneering, timely and stimulating effort.
The address for this blog entry is: http://www.volans.com/2008/10/social-entrepreneurial-solutions-for-pharma-industry/.
- Pamela HartiganSilver lining around capitalist market cloud
Long-standing Wall Street institutions are collapsing overnight, the role of the US Federal Reserve is being transformed, investors everywhere are losing complete confidence in the US market and opponents of free market capitalism are pointing to the US situation as proof positive that capitalism without government oversight leads to disaster. It is in this context that entered my classroom in Uris Hall, home of Columbia University’s Business School, to a room-full of 45 MBA students who had signed up for my course, Social Entrepreneurship: A Global Perspective – an elective. Dean Hubbard, head of the Business School, had only hours before gathered the students and faculty to share his insights on the impact of the Wall Street earthquake on the Business School. After all, many of Columbia’s MBAs are recruited directly into Lehman, Merrill Lynch, AIG to name the most recent victims of the debacle.
But the justified mood of gloom and doom stayed outside my classroom. Instead, we talked about the huge opportunity the situation presents to revamp unfettered capitalism which has benefitted a few hugely, some to a degree, but which has excluded the majority of the world’s population from many of the positive aspects of globalization. And because young people are by nature optimistic – and because all people desperately want to believe that change from the current situation is possible – we engaged in an energizing discussion about the emergence of a new breed of entrepreneurs, managers and employees who want more from life than a fat paycheck. I bombarded them with examples from all over the world of individuals who have used their talents to create and run enterprises that are, as US entrepreneur Bo Peabody notes, “fundamentally innovative, philosophically positive and morally compelling” – infecting those who work with them with the belief that they, too, can be agents of change.
But the challenge now – and the chance we have – is to re-examine how these kinds of companies can grow beyond being inspiring classroom anecdotes. Unless we take advantage of the present situation to revamp the way our capital market ecosystem works, our corporate leaders, no matter how well-meaning they may be, will always be slaves to the tyranny of the market.
The address for this blog entry is: http://www.volans.com/2008/09/silver-lining-around-capitalist-market-cloud/.
- Pamela HartiganAmEx nurtures non-profit execs — some reflections
This week’s issue of Business Week (August 11) included an interesting article by Alison Damast entitled ‘American Express Nurtures Nonprofit Execs’. The piece reported on an initiative spearheaded by the company to work with selected nonprofit employees to improve their leadership skills. The initiative is a response to the growing concern in the US that by 2016, more than half a million new senior managers will be needed for these charities — and AmEx is not alone in doing something about this. Others include IBM and Bank of America.
There is no doubt that the non-profit sector all over the world needs the kind of expertise that is readily available in the business world, including general management, market research, strategic and financial planning, human resource management, internal and external monitoring and evaluation systems, marketing and communications, legal advice, accounting and auditing, information systems, to name a few. In fact, Volans offers to match corporate employees with specific business-related skills with high impact social enterprises needing such skills for a specific period of engagement. And so we applaud the initiative taken by AmEx in that regard.
But let’s be clear. What AmEx is doing is more about management and business skill development than leadership. In fact, we posit that Fortune 500 companies would be much better served in the area of staff leadership development by sending their middle and senior staff to spend some time working with social entrepreneurs and their organizations than by shuttling them to off-site leadership seminars run by expensive consulting firms equipped with batteries of tests and games of dubious medium and long term impact.
As Kouzes and Posner have noted, “Contrary to the myth that only a lucky few can ever decipher the mystery of leadership, our research has shown us that leadership is an observable, learnable set of practices” (The Leadership Challenge, Jossey-Bass, 2007, p. 16.) But to observe leadership, you have to be with leaders and be exposed to circumstances that call upon you to draw upon your own leadership capacities. You need to have a safe environment to practice these new skills and approaches.
And the need for leadership at all levels of a company is as urgent as the need for management skills in nonprofits. In fact, in the 2008 survey of CEOs by PricewaterhouseCoopers (PWC), the top qualities sought in employees after business and technical expertise are experience of overseas and global markets followed by leadership capabilities and creative thinking. Where are those opportunities to develop leadership and creative thinking plus lean about new market opportunities?
Based on our extensive evidence, we strongly believe they lie in the world of social enterprise. Indeed, we have found that those corporate professionals who have had their personal and professional skills tested in the complex and challenging world of social enterprise have gained considerably more self-confidence, self-mastery and new insights than had they attended a host of well designed leadership workshops in cloistered conference settings. The benefits of developing leaders through secondments to social enterprises will echo throughout the company as these leaders bring their learning back into the organization.
The address for this blog entry is: http://www.volans.com/2008/08/amex-nurtures-non-profit-execs-some-reflections/.
- Pamela Hartigan