Corporate social responsibility, not philanthropy
Belgian clean-tech company Vyncke designs and constructs decentralised biomass power stations all over the world. Together with Indian energy and process specialist Forbes Marshall, the company set up M-Power in 2013 to provide sustainable energy solutions for communities in poor, isolated areas of India. This is still the mission today and partly thanks to three of our MBA students, M-Power can now grow without losing sight of this mission. Benjamin Corvilain, Christian Andres Lesmes Abril and Jean-Erik Verbeke spent two months working on a consultancy project. Jean-Erik tells the story.
Why M-Power? “We were fascinated by renewable energy. That's why we chose a project in this sector”, answers Jean-Erik. “And we absolutely wanted to gain experience on a continent other than Europe or South America – Benjamin and I are Belgian and Christian is Colombian. That made India the perfect solution. But it was mainly the vision and enthusiasm of co-founder Dirk Vyncke which made us keen to take part.”
With M-Power, Dirk Vyncke wishes to make all the difference in remote villages which have little or no access to electricity. “For him, the solution lies in decentralised hybrid systems which use renewable energy sources such as the sun and wind, with biomass as a back-up. After all, solar and wind energy are not constantly available. Depending on the specific location, M-Power will develop the most suitable mix.”
The joint venture had already been operational for three years, but the management was not completely satisfied with the results: it seemed very difficult to set up new projects. Benjamin, Christian and Jean-Erik were asked to assess how things could be improved. They divided their project into three phases: (1) a thorough study of the market, players and possibilities, (2) an in-depth analysis of the existing organisation using the McKinsey 7S model* and (3) a proposal for improvement.
From left to right: Christian Andres Lesmes Abril, Kelly Mermuys (M-Power), Benjamin Corvilain and Jean-Erik Verbeke
During a five-week tour of India, the students visited various M-Power initiatives including a school project in Hyderabad and a project in conjunction with a multinational in Vadodara. They also spoke with many different people who were involved with the projects. For example, in Pune they spent time with the management of Forbes Marshall to check how they interpreted M-Power's mission. Finally, in New Delhi they met with representatives of the Ministry of New and Renewable Energy. “We often felt a little uncomfortable during the meetings”, remembers Jean-Erik. “Being picked up in a taxi to take you from one appointment to the next is one thing, but at 50 °C… no air conditioning can cope with that. We were dripping with sweat.”
“Back in Belgium, we processed all the information which we had collected, examined various alternative business models and proposed a new approach. Why? M-Power had also tried to work for companies, installing solar panels on the roof of a multinational in Vadodara, for example. But this was distracting them from their original mission. And these kinds of projects mean you operate in a market which is already very competitive. It would be difficult to make it work.” According to Jean-Erik, the school project in Hyderabad exposed another issue: “It is completely dependent on philanthropic finance, which offers too little security in the long term. For us, the solution seemed obvious: to focus once again on the initial mission, but in a different way.”
Model for sustainable growth
“The model which we ultimately selected and which M-Power could relate to is something which you could call the chicken farm model. Imagine that in a remote village with no electricity, there is a chicken farm. In this case, M-Power could suggest putting solar panels on the farmer's buildings. The farmer would pay for the installation and M-Power would then lease the panels back for a monthly fee, handle the running of the installation and supply the electricity to the rest of the village at a keen price. The farmer would get his electricity for free. M-Power would also teach him how to improve his operational management with the aid of the electricity generated.”
“Do you know what I really like about it? M-Power is not a non-profit organisation. People and planet are important but so is making a profit, because in the long term this is the only way to keep a company going. Staying dependent on donations is not sustainable.” He adds enthusiastically: “I really believe that the future lies in business models which are self-sufficient, not in philanthropy. Countries like India need entrepreneurs who create jobs and companies that can grow.”
Did he learn anything that would be of use in his current job? “I learned never to give up”, laughs Jean-Erik. “We had divided the roles neatly between ourselves: Christian was our financial man, Benjamin was in charge of the strategy and I was the doer. I organised all the appointments and meetings. Even though I've always worked in sales, I've never had to work as hard to pin down appointments as I did in India. I called and called. If people actually picked up the phone, they generally said I should call back later. I always did what I was told, only to hear yet again that I should just… call back later. Why? Indians don't like saying no. It took an awful lot of effort, but we got our meetings in the end. For me, it was a masterclass in cold calling.”
The project at M-Power was not a normal consultancy project, but a Global Social Project (GSP). Jean-Erik has no doubt about the added value that it has offered for their MBA: “Christian works in private equity, Benjamin is an entrepreneur and I am responsible for the sales & marketing of a multinational. Thanks to this project, we were introduced to a completely different world. India was a huge culture shock for all three of us: the poverty which we saw there was pretty confrontational. So is a consultancy project useful for an MBA? Certainly, particularly if it is a GSP. With our background, we wouldn't have learned anywhere near as much from a normal consultancy project with a European company. We have now gained additional life experience. Afterwards, our fellow students all said they regretted not having chosen a similar project themselves.”
Read more about their adventures in India on their blog 'From Vlerick to India: an MBA journey'.
* The McKinsey 7S model evaluates an organisation on the basis of seven dimensions: strategy, structure, systems, style, shared values, skills and staff.