December 17th, 2015 SFIN 6009, Project 3: PROBLEM SOLVING Complied by: Komal Faiz, Manpreet Juneja, Jyotish Sonowal, Hala Beisha, Jenny Whyte
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THE CHALLENGE “Motivation is the catalyzing ingredient for every successful innovation.� -Clayton Christensen The Global Stage of Complexity The numbers are truly staggering. The world’s global population is expected to continue to increase and to rise from around 7bn today to 11bn in 2100 (Carrington, 2014). This dramatic rise in population is not limited to one area, but is seen to be predominately occurring in the global south. Over the last number of years there has been a dramatic growth in the number of people moving to urban centers from rural areas. It is estimated that almost 1/6 of humanity now live in urban centers (Brant, 2001). This global shift from rural to urban happens for a variety of reasons, but typically people undertake the shift to take advantage of new forms of employment opportunities and amenities which do not exist in rural areas. The people migrating to the already bustling urban spaces, often lack the resources to access adequate solutions for shelter. Navigating beyond the rules and regulations of city planning, these new urban dwellers create or acquire precarious shelter infrastructure to call home. These crowed, informal spaces, lead to complex issues of poor waste management leading to lack of adequate sanitation, limited access to government provided power, water and often precarious employment opportunities. Despite this however, the informal urban populations continue to grow at a rapid rate, with the people shaping and creating, through ingenuity and community, a place to call home (Brant, 2009). The Hult Prize Challenge The people who inhabit these lively informal communities, represent an underserved consumer community that has high potential for participation in growth, trade and prosperity beyond what is already existing (Prahalad, 2010). In response to the Hult Challenge 2016, we have aimed to build a sustainable, scalable and fast growing social enterprise which creates the conditions for participation in social good, by better connecting people, goods, services and capital. This paper will begin by focusing on how our previous work on problem finding and framing led us to identify the potential of where our role in this vast market could be. We will be providing an understanding of how our choices were made based on both theory, and upon comprehending the opportunity through the examination of a localized issue. Finally, we will take you through a formulated solution we know to be a malleable, scalable and sustainable social enterprise which has the potential to change lives while making great environmental impact.
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IDENTIFYING POTENTIAL "The real act of discovery consists not in finding new lands but seeing with new eyes" Marcel Proust Dharavi, India:
Figure 1: Why Dharavi? Project Two Output (Khoj, 2015)
Dharavi is the largest slum in Asia. It sits on prime real estate, just on the edge of the Mumbai, the financial, commercial and entertainment capital of India. Migrants from all over India have populated this area for decades, developing a thriving informal economy of amenity shops and multiple small scale industries. Business people have developed a booming export distribution network for these industries, with quality clothing, leather, pottery and sorted recycling made and processed in Dharavi, landing around the world (Dharavi, 2012). When looking at such complex issues, it is important to identify and focus on specific points of high impact intervention. Working through our Project Framing outcomes, we took a closer look at the potential of the community, small scale industry and the opportunity to utilize waste as a resource, to create a social enterprise. It is within and at the intersection of those frames that our possible solution began to form around the economic and social impact of using waste as a resource.
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Local Context of Waste Management: MUMBAI
Figure 1: Solid Waste Generation Prediction, Mumbai City (Metric Tones) (Rodes, 2011)
According to Mumbai’s Municipal Solid Waste Law enacted in 2000, all households, businesses and industries are required to separate waste into ‘wet’ or ‘dry’ for municipal pick up or private disposal. The terminology of ‘wet and dry’ adds to the already existing confusion and difficulties around waste sorting. The law prohibits landfilling of biodegradable waste. However, there is no tracking or enforcement of this law and limited municipal services which actually offer pickup. Door to door collection by the municipality is limited to 15% of Mumbai households (Rode, 2011). As a result, despite laws, Mumbai generates approximately 8836 Metric Tons of waste per day, a staggering amount which goes directly to landfill. This amount is expected to increase steadily throughout the next 20 years and is projected to be over 10,000 Metric Tons per day by 2035 (Rode, 2011). The landfill which houses this waste, is an area, 111 hectors in size, just outside Mumbai (Rode, 2011). Here it rots, slowing decomposing, creating toxic soil and groundwater for generations to come.
Solid waste in Mumbai city (Metric Tons) (Rode. S, 2011)
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This does however, create a thriving informal recycling economy in Dharvi. A large percentage of dry recyclables - paper, plastic, metals, and glass—are recycled by waste pickers who pick and sort waste within the city limits as well as travel to the landfills to collect plastic to be exchanged for cash at recycling facilities. This recycling sector is considered to be ‘informal’ since it is not regulated by government agencies, and there are no set rules for pricing recyclable materials or protections for the health and safety of the waste pickers (Gaia, 2015).
Figure 3: Waste Pickers in Dharavi (Waste Pickers Deserve Respect, 2010)
The processing of collecting and processing recycling is well established in Dharavi with a record of 722 scrap and recycling units (Slum Dwellers Federation, 2015). The industry functions on principles of generating profit by selling repurposed material which has high costs associated with making and acquiring such material. A waste picker in Dharavi makes an average income of 2-3 US $ per day. These environmental entrepreneurs work to protect the livelihood of the planet day in -day out, but for them, it is merely the means to economic prosperity. Their business has high environmental impact, with every piece of material reclaimed, saves materials from migrating into oceans and landfills. Repurposing also curbs the environmental footprint of making new plastic. These people were the inspiration for our business model.
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COMPREHENDING THE OPPURTUNITY Innovators need a heavy dose of faith. They need to trust their intuition that they are working on a big idea. That faith need not be blind.” Clayton Christensen The hidden potential of the Circular Economy: The Circular Economy is a growing global knowledge movement which challenges business and consumers to reconsider how our “take-make-dispose” consumption patterns that are linear in nature, and leading humanity to consumptive peril. Worldwide, waste management systems are not designed or not functioning to recoup the valuable energy which comes at end of a products life cycle in any strategic way (AB, 2012). Looking to natural systems, it is clear that systems which function with return balance in mind, can offer both economic gain, and contribute to environmental sustainability. This eco-conscious cycle of return is the core of our business model. Considering this in relation to Mumbai’s Waste Management systems design, we recognized their model of waste management to be a flawed liner system. The flaws in this linear system offered multiple points of intervention in: waste sorting, waste collection and in waste disposal.
Figure 4: Current Waste Cycle in Mumbai (Dhara, 2015)
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A System of Opportunity: Waste Sorting: We recognize a main issue in the system of current waste management practices to be in the sorting of waste which occurs in every household. Households are not sorting their waste properly for a variety of reasons. Even with the laws in places, education around what ‘dry and wet’ waste, and why sorting is important, poses a challenge when people are standing over the bin. Dry waste materials are often not cleaned properly to be processed for reusing and repurposing. Wet waste is a broad category that often lands materials in landfills which are dry, but covered in food residue. Wet waste, also includes food scraps and food waste which if sorted as only organic material, can be used as a valuable commodity. Waste Collection: Only 15% of Mumbai households are privy to household municipal collection services (Rode, 2011). Most residences dump their waste in community bins. Considering the limited collection services available for Mumbai residents, this poses great opportunity for intervention. Governments cannot be the only service providers for this massive daily task of waste management. Looking to waste management schemes across the world, we saw governments offloading these services to private companies willing to provide the services, with high efficiency, at a lower cost than governments could. Toronto for example has saved, 11.8 million, tax payer dollars by employing Green for Life private waste management company (News, 2013). These waste management business are highly profitable, using the collected sorted waste as opportunity for revenue.
Figure 5: Solid Waste components in Mumbai City (Metric Tons). (Rode, 2011)
Waste Disposal: Global environmental waste innovators around the world are leading their communities away from landfills and harsh fossil fuel consumption and instead capturing and burning the gas accrued in the natural decomposition phase which all organic matter goes through. This biofuel technology exists in many scales and forms, ranging from million dollar facilities to DIY backyard projects. The process of biogas became a growing interest for us, as the amount of biodegradable material which is produced in Mumbai is a larger segment of waste then any other.
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Biogas Potential: Waste to Energy Through the containment of organic matter from air, a natural process of anaerobic digestion occurs when organic matter (food waste, excrement, agricultural waste) is mixed with water. Microorganisms form and stabilize the organic matter causing a release of biogas, a mixture of mainly methane and carbon dioxide (Biogas, 2011). This gas can then be bottled and burned as an alternative to fossil fuel. The process around creating the gas, can be aided and hindered by many factors, making it a valuable, but finicky technology. The technology, has been developed successfully on a small scale and has helped millions of off grid consumers produce, clean, free gas to cook with their homes (Homebiogas). However, when the mass of organic matter increases, the processing requires more controls around temperature, requiring energy and water to monitor the system (Migel, 2015). This technology is quite developed in India but the Rules and regulations in India also are quite specific around the type of biogas systems people are allowed to have. Currently there are however, 4 million household biogas units in India (Biogas, 2015), with around 20 public and private existing bio-gas facilities within Mumbai (Gobind, 2015).
Figure 6: Large Scale Biogas Processing (Biogas, 2015)
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FORMUATE A SOLUTION “Leaps of abstraction occur when we move from direct observation (concrete data) to generalization without testing." Peter Senge Developing a Successful Social Enterprise: We recognize that by initiating the right social actors in this complex, yet malleable system of waste, we can respond to the issue of waste management and take advantage of the opportunity for action required, to transform social relations, create a framework for achievement and purpose a new cultural orientation towards waste management (Philip, 2014). Turning to social enterprise literature, we were cautioned about the possibility that even powerful and promising ideas can languish, and lack sufficient backing to grow and scale (Mulgan, 2016). In an attempt to avoid failure, we present here the outlines of a pilot project, our minimal viable product, an innovation which can happen on a relatively small scale, with the understanding that order to build resilience our model, it must be adaptable and specific to the community we choose to work within (Ries, 2011). Here development can occur slowly, over time, in attempts to validate our learning for future growth. Criteria for Ideation: In problem framing we developed a set of criteria to measure our ideation against. In order to move forward with a solution it must: o! o! o! o!
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Double income in five years Utilize resources that are available and accessible Be driven by local talent Scalable within context and across the globe
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Dhara is the Hindi word for continuous flow, and that is what our social enterprise is all about. It really is very simple. Dhara fills the need for an effective waste management body to by employing local people to educate customers on how to effectively sort waste into organic and recycling and then manage a regular and efficient collection service for customers. Once sorted waste is collected, our workers distribute the collected materials to industries which can recoup the value, and provide Dhara with revenue and growth profit. We believe this social enterprise to be explained in detail in the following pages, hits our criteria for an impactful, scalable growth model solution, build by local people for a local issue, which has potential to double income over the next 5 years. !! !! !! !!
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Double income in five years Utilize resources that are available and accessible Be driven by local talent Scalable within context and across the globe
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Figure 7: Dhara: The Continuous flow (Dhara, 2015) ** A specific location which meets a set of specific criteria, is the starting point of this pilot. We will keep the location of biogas facilities and recyclers, which will buy the waste, close, while we develop an awareness as to the logistical complexity of transporting waste in urban settings.
Experience Cycle: 1.! Mumbai is mandated to sort their waste. 2.! Apartments have no municipal collection services. Dhara provides the collection service for free, tracking and incentivizing customers with points for sorting properly. 3.! Team up with local Dharavi NGO who provide people looking for work and facilitate waste management training programs. 4.! Clean sorted collected organic matter is delivered to biogas facilities to be use in energy production. In return, we create partnership with experts in biogas field. 5.! Recycled waste is sorted into glass, paper, plastic and sold to recyclers in area for profit. 6.! Point collected from proper waste sorting then used on Dharavi Market Platform feeding profits back into the community that employees are coming from
Figure 8: Dharavi Market Website (Online Market, 2015)
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BUINESS MODEL GENERATION: Key-Concept:
Figure 9: Dhara through Business Model Canvas (Osterwalder, 2015) The Core customer segment of our business model are the Households belonging to upper-Middle class with a monthly household income of about 3000 USD or more. This customer segment is educated and aware, they realise their civic responsibilities but have hectic and busy schedules. They are always short on time. We are offering them free- assistance to sort their waste through our free door-to-door waste collection service and facilitating it by giving them a unique Dhara-Bin which is designed to encourage and facilitate easy sorting of waste. We also offer them Resource-Points everytime they sort their waste. Which they can use to purchase useful products from an online community market called Dharavimarket.com Because we are basically using a freemium model of service, we plan to recover most of our investment cost from selling Recyclables, Compost and Bio-fuel incentives. We also plan to re-invest our profits to build our own bio-fuel facility to make the most out of bio-fuel technology. ** Further Breakdown of this model, to follow.
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A BUSINESS BUILD ON OFFER: Our business model epi-center is offer driven, our service of pick up and sorting is the main driver of the model. The features of our business models can be described using a mixture of business model patterns discussed in Business Model Generation (Osterwalder, 2010). Free as a Business Model: Our service is completely free for our customer as we are financing our business from another customer segment, our recycling and biofuel facility clients who we deliver sorted waste too. Beyond- Profit (Triple Bottom Line): All businesses must generate profit to survive, but our model is not looking to maximize growth for earning, we are looking to maximize growth for impact. The model developed to become a Triple Bottom Line Model, whereby in the pursuit of social value creation, we’ve combined social impact, sustainability and profitability (Osterwalder, 2010).
Successful Service Interaction: Our offer is successful only if the interactions with our clients are successful. Our employees will be entering customer’s homes, thereby creating a very personal moment. In building the long term relationship we will have to build, trust, respect, familiarity and consistency to legitimize our service.
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Dhara’s User Incentives: Design is how you treat your customers. If you treat them well from an environmental, emotional, and aesthetic standpoint, you’re probably doing good design. — Yves Behar
Free Door to Door Pick Up: Once signed up for the service online, users will be given a minimalistic ‘Dhara Bin’ to help them sort their waste into green organic and blue recycling material (see Appendix A for prototype). Users will be given literature, as well as interactive and in person explanations as to the specifics of how the waste is to be sorted. Anyone in the household can do it properly. Every day, a member of the DHARA team will come to collect the waste and change the bin liner (exact time of day to be determined with the participation of the user community). Point Based Incentive Program: Each household bin will be coded with a barcode which if the waste is properly sorted into only organic waste, and clean dry recycling, they’re barcode will be scanned and points will be accrued. Access and offers from local community markets: The points accrued will be linked to an online system which the user can access from a computer login. Each time a customer sorts waste they will receive 10 resource-points, after reaching every 1000 resource-points a customer will get a Green-Ninja badge for their continued efforts and they will be able to reimburse the points to purchase useful products at Dharavi Market online store. They will also be able to share their achievements on social media sites such as Facebook, etc. Enabling Action for a better environment: By participating in our program, users will be championed as green energy activators who are not only positively contributing to the health of the earth through effective waste management, but also helping support a community of people within their midst.
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Dhara’s Employee Incentives: Social connections have a strong association with increased well being both physical and emotional. - Eedlbrock, 2001 Incentives for our Employees are important. We believe in creating a culture of belonging through our employee benefit program. In shifting the system from ‘picking’ to ‘collecting’ we are hoping to generate a shift in how people who manage waste are perceived. The cultural notions held about waste pickers, as being dirty or scavengers, is a shift we are hoping to initiate by professionalizing people who collect waste for the good of the community. In empowering under-employed people to become the regulators of an environmental movement, we hope to generate a create a cycle of waste management which is valued and appreciated (Nagle, 2013).
Self Identity: Training: Training will be done in partnerships with current NGOs and by the pilot project management team. Extensive development on creating a cohesive and inclusive team will be initiated. Group training with, food provided will give time for relationships to form between workers and management. A specific and engaging curriculum will be developed to explain to our employees the proper sorting procedures. In doing so, this will ensure that workers will have informative knowledge in their back pocket to provide education to households that are not sorting their waste effectively. Training on the tracking and collecting procedures will be experiential and participatory in nature, in addition, the team will visit the various facilities we will be diverting the
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waste to. In doing so an understanding of what happens beyond collection is firmly grasped, and a deeper sense of intrinsic motivation is developed. Feedback: We are committed to having our workers involved in the development of effective waste management procedures. Daily briefs with management personal will be a time for open and honest conversation about issues with current practices or needs for future growth. Employees will be empowered to participate in making this organization the best it can be. Stable Income: Daily Wage: This is a part time position, for workers, however all workers will be paid a full day’s wage. Every employee that works for DHARA will be paid a minimum wage of $7 a day, for 4 hours of work. Tools and Equipment: Equipment Procedures: Understanding that waste collecting and sorting can be physically hard on our employee’s bodies we will be developing rules for maximum loads to be collected and sorted on a single run. Four wheel pull carts will be used to aid the process of waste collection (see appendix B for prototype). The metrics for maximum load carried on a four-wheel pull cart for a women and men are based off of the Ergonomics Group of Eastman Kodak Canada, who complied data from a variety of studies. The maximum load on average will be 200 kg, with a maximum transport distance of 30 meters. These figures will help guide the logistical framework of our waste management system and factor into the specifics of the location we seek to pilot in (OSH, 2015). Prioritizing Safety and Professionalism: Gloves and closed toe shoes will be required for all workers. Uniforms will be given to distinguish our workers and professionalize the industry of waste workers. Culturally waste workers are normally considered dirty and unfortunate, but in Indian cultures, uniforms denote respect. Advice and Counselling: Community Session: We will be partnering with local NGOs to develop employee benefits. Each month we will run a community session with a partner organization after the shift, to engage workers on matters or health and finance. SNEHA will be our partner organization which will provide health check ups and advice for both workers and their families. Credit Consumer Association will be partnered with to aid workers on issues of financial matters. Employees will be encouraged to share needs which we can use to organize community sessions. Eventually, we would like to consider adding a child care component to the employee benefit plan, but that will come in time as more money is available within the organization.
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ASSESSING SUCCESS OF THE PILOT: We will be measuring the success of our pilot through customers, employees and metrics assessments. Our growth will depend on incorporating valuable feedback gathered through surveys, check ins, assessments and keeping our connection to the community.
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REVENUE ANALYSIS:
Inference: 1000 Kg of recyclables generates approximately 105 US $ per day
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COST ANALYSIS:
Fixed Cost Type Office (per month) electricity+ internet rent misc+ food etc maintenance
Running Cost Amount ($)
Type
Per year
Amount ($)
Human Resource (per month) 30 4 office people 550 Waste-pickers (15) 40 sorters (5) 8 supervisors (2) screeners (3)
per month
One time Cost
628 per month 7536 Per year
Website+coding+database 804 Bins 2250 Uniforms+gloves+shoes+masks
1490 445 450 250
420 weighing machine
200
450 barcode reader
50
4674 Fridge+AC+stove
660
56,088 shelter+composting
5957
Per city
shared transport for green
149
per month
149
Equipment Depreciation
Amount ($)
750 Compactors
Transport
Per year
Type
9,502
1788 500
COST REVENUE ANALYSIS:
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With an initial Investment of approximately 76,000 USD our business will reach break-even in 3 years. We then re-invest in scaling across the city and investing in our own Bio-gas facility to gain direct profits. We also hope to scale in different cities across the country by the end of 2019. SCALING UP:
The plan to open a 15-20 metric ton biogas facility in Mumbai will be established through identifying and tracking daily metrics how much organic waste we collect. Thereby, understanding we can expect per day, based on amount of units we are working with, an investment can be made understanding our investors ability to recoup value in biofuel from the waste collected. Expanding our business will require principles of open innovation. During this phase, we will be seeking to create value for the company by systematically collaborating with researching and development teams in the biogas industry.
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At this point, we will move to invest further in the Dharavi community. Fuel canisters filled in our biogas facility will be distributed to small scale makers in Dharavi market space which require energy for their craft. We will also be selling canisters for a reduced rate to customers participating in Dhara’s program. MALLEABILITY OF MODEL: Waste management, although not always mandated by government, is an issue everywhere across the world (220 million tons of waste generated each year worldwide). We believe this model can be scaled to common markets across the world. Nearly 2% of the world’s population rely on waste picking for their sustenance (World Bank, 1988). By creating a formalized and professionalized industry for waste management at the source of the processes, in home waste, we can help mitigate the danger waste pickers face sorting waste in the landfills.
Figure 10: A Women Waste Worker community (Gaia, 2015)
IMPLCATIONS: We have realized through our analysis of existing cycle of waste that the root cause of the problem is at the source, where waste is generated and disposed at first place. By offering assistance to people so as to ensure proper waste sorting, we can drastically cut down the waste ending up in land-fills. Through our model we are trying to change existing perceptions about waste. By offering incentives to both waste-pickers and waste producers we are reframing the conversation and pointing out that waste has value and hence our effort in encouraging responsible waste-handling will not only serve their immediate needs but also ensure a sustainable future.
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There is a Global awakening towards climate change with governments at the Paris Conference setting targets for a global temperature cap of three degrees. In order to achieve these targets, our reliance on linear cycles of fossil fuel consumption must cease. Biofuel technology is a viable alternative which we have the ability to create. Through seeing waste as a resources, a virtuous cycle of disruption will occur in the energy and plastic production industry.
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Appendix: A. Dhara Prototype
Dhara Prototypes (Dhara, 2015)
B. Sorting area requirements: Case Study of Existing Dry-Waste Collection Centers, Bangalore.
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C. Understanding Categories of Recyclable wastes to expect in our facility.
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