Find new opportunities to create business value
Social innovation need not be a one-off project or initiative within a company. Supported by an entrepreneurial mindset, it can be a constantly evolving process that generates new sources of social value while supporting a company’s business growth and market competitiveness.
Since 1999, the diversified conglomerate ITC in India has continuously found ways to create business value through social innovation. Initially ITC was looking to expand its agricultural exports business, which was uncompetitive due to downstream costs in the supply chain. After a thorough evaluation of how to most effectively intervene in the supply chain, ITC discovered that the mandi (physical auction platforms) where farmers brought their produce and sold to intermediaries were in need of disruption. In 2000, ITC implemented e-Choupal, a technology-enabled portal that discloses ITC’s purchase price right alongside mandi prices. Farmers can check these prices at any of e-Choupal’s 6,500 rural internet kiosks, and those who choose to sell to ITC get their produce quality checked by the kiosk manager and deliver the produce directly to ITC’s nearest warehouse.
“Social innovation can create enduring value to all the stakeholders by continuously reconceiving the past and reimagining the future, as ITC e-Choupal has demonstrated. We call this a “forever start-up mind set”.
Sivakumar Surampudi, Group Head, Agri and Information Technology Businesses, ITC Limited
Higher price transparency and lower handling and commission fees increase the farmers’ margins by over 25% on average and, in the 15 years since its implementation, ITC has directly reached 4 million farmers across 40,000 villages and has grown its export sales by more than 600% to $600 million annually.
As exports grew, ITC started exploring new businesses that build on e-Choupal’s strengths. In 2002, the company launched its packaged foods business, which grew to $1 billion in revenues by 2015. Despite being a late entrant in the market, its flagship brand of wheat flour, Aashirvaad, became a market leader within 18 months of its launch. e-Choupal was key to Aashirvaad’s success, as it allows ITC to aggregate produce by crop variety and quality to create customized flour mixtures – a valuable feature in the Indian market where consumer preferences for taste vary significantly across regions. Farmer incomes increased significantly as a result – both because those who grew superior-quality wheat for the first time were receiving a price premium, and because e-Choupal sent direct market signals to farmers about which varieties to start planting to get a better harvest price. In addition, the e-Choupal ecosystem trained farmers and installed large watershed projects, raising farm productivity and incomes.
In hindsight, ITC views the business opportunities that emerged out of these initial efforts to re-engineer its value chain as “e-Choupal Version 1.0”. Subsequently, the company launched versions 2.0 and 3.0, each time adding new revenue streams. Version 2.0 reconceptualized e-Choupal as a platform that channels sales of agricultural inputs and other services to farmers, while Version 3.0 offers the e-Choupal platform to external partners for a fee. ITC is now developing Version 4.0, focused on adapting e-Choupal to emerging concepts such as the “sharing economy”.
The continuous evolution of the e-Choupal platform is supported by a project management methodology internally branded as “Roll Out, Fix It, Scale Up”. Once the company has 60-70% clarity on a new business model, it is rolled out live, refined with input from multiple stakeholders and scaled up.
Home page image: REUTERS/Amit Dave