In this episode of The Workwise Pod, hosts Sujatha Rao and Deepak Menon speak to Ravi Sreedharan about what for-profits can learn from nonprofits. Ravi is the founder and director of Indian School of Development Management (ISDM); he spent 24 years in the corporate sector before switching over to the social sector in 2011. In this conversation, Sujatha, Deepak, and Ravi talk about what complexity means in the business world versus in the social sector, the future of social entrepreneurship, and why it can be hard for individual for-profit enterprises to change without a systemwide shift.
Here are some excerpts from the conversation.
What can the social sector teach businesses about complexity?
Deepak: Can you just explain a little bit more about the leadership quality that you saw in the social sector, and the complexity of the problems that you saw?
Ravi: In [the] corporate world, there was always a formula to solve a problem. Here [in the social sector], there was no formula; there was a starting point. There are diverse aspirations, complex needs, forces that [have] exist[ed] for thousands of years. And you’re dealing with real [problems].
First of all, I don’t think a manager in the commercial world would recognise the complexity because there is a myth that ‘my corporate job was very complex, because it involved 80 countries, it involved a balance sheet of so many billion dollars’—a numerical complexity. Here, there was a social complexity, and the moment it’s social, it’s [to do with] human being[s], which is very, very complex. There it was a balance sheet, and it was a process that was far more problematisable and solvable. So that is one complexity that I don’t think we recognise at all when we come from one side.
The second side is, there is a belief that everything can be captured in a data point. And thereby it’s easier to solve a math problem. Because once I have data, I can solve the problem. And if I don’t have data, I can’t solve the problem right here. And thereby there’s a tendency to use data a little excessively when you come in as a corporate guy. [I’m] not saying you shouldn’t, but it’s not easy to capture data for what does it mean to be a mother who ties a towel around her child while she goes to sleep hungry at night?1 What data is going to capture that? I remember talking to [this person called] Periodi (in Yadgir). For six years in Yadgir, our work didn’t show any change in the results. And in the sixth year we are having a conversation with Periodi, asking him how things are going. “It’s going really well.” “How are you saying it’s going really well? Because the data shows there is no change at all.” He says, “No, the children are very happy.” “How do you know children are very happy?” “They’re playing, they come and talk to me. They are running around. They are burping”—that was a data point he gave. Now, I can’t imagine saying in the corporate world that my customer burped. But these are important things to understand. It is completely different. It is so complex, and you have to figure that out.
How do you operate in a pluralistic society, where you respect everybody’s opinion, desires, and aspirations?
The third thing is, how do you work in a system that is democratic? We know that a good society is driven by liberty, equality, and fraternity. The corporate world has completely avoided that. And how that is happening in today’s society is a wonder for me. Samaaj, sarkar, bazaar—these are the three pillars for any good society. How do you operate in a democratic society, in a pluralistic society, where you respect everybody’s opinion, desires, and aspirations?
Why should social complexity matter to the commercial sector?
Sujatha Rao: I’m imagining myself as the CEO of a commercial organisation, and let’s say I’ve been manufacturing furniture…I’ve been doing this for a significant period of time. I might sit back and ask myself the question, is my space as complex as the social space that Ravi is talking about? And while I acknowledge that the social space complexity requires me to pause and not jump into solutions, or to collaborate, or to look at my people quite differently, does it make sense for me in my context?
Ravi: That’s a beautiful question, Sujatha. And I’ll be honest. Initially, I used to think that it’s fine to be that way. Today I have come to the point, it’s not fine to be that way. And it’s almost like climate change. Can I keep producing something at the risk of the climate getting destroyed in, let’s say, 100 years from now, when I’m not alive?… Earlier, because I didn’t have that 100-year vision, I used to say, how does it matter? I’m not breaking the law… I am now completely convinced that you don’t have a choice but to accept the complexity. What the corporate world has done is to conveniently define their system in a very narrow sense—I follow the laws of the land. Don’t now say that I’m not doing anything.
I’ll give you a very interesting example…and it can apply to a furniture start-up also. So [this guy is] starting some venture where he wants to organise the car cleaners of the city because he believes that’s a huge opportunity. Every rich guy in this country, in the city, has a car; one thing they all need to do is to have the car cleaned. So I’m now going to uberise. And ‘uberise’ has become this new English word, which is, I will organise them, I will create an app, I will create access, and I will learn, etc. And I’m thinking, this is the classic capitalist mindset. You’re trying to make money. You’re not trying to solve anyone’s problems. Even if you’re trying to solve the problem, you’re trying to solve the problem of the person who doesn’t really have a problem, because that person can find ways of paying. You need to solve the problem of the car cleaners versus the car owners. That mindset doesn’t exist.
Now, if you agree that all of us are part of the citizenry, whether I’m in the corporate [sector], the social [sector], whether I’m in the state—if we have to agree on what is a desirable or an aspirational society, and if that definition revolves around just, equitable, humane [systems], or justice, equality, fraternity, then that has to guide what you’re doing. Today, unfortunately, that has been conveniently kept aside.
Is social entrepreneurship the future of all businesses?
Deepak: This new trend of social entrepreneurship is trying to balance a business model with a social problem. Do you see that, over time, all businesses will become social enterprises? Right now, we see that there is a commercial world, there is a nonprofit world, and there is a social entrepreneurship world. But essentially all businesses are social enterprises any way.
Ravi: So social enterprise is a good thing. There’s no doubt about that. But enterprise management, the way it is [done], is a bad thing. If you manage a social enterprise, the way your business is traditionally managed, where you narrow your boundaries, and you have a very narrow view of what success is, you have a serious problem. And that’s the biggest danger to social enterprise. And today, that force of the management view is not easy to run against, because that’s a huge tide. And some small enterprises claim that ‘I will go against that’, I think you’re fooling yourself—it’s like, you try to push the waves back, but you’re just going to finally give up and tire yourself. So management has to change.
If you don’t bring a healthy respect for human beings and the planet, you will have a serious problem.
Now, social enterprise, impact investment, pay for performance, social stock exchange—these are all newfangled ideas to figure out how to bring the money. So the objective is good. But if the way you do it is not correct, it can turbocharge a bad thing. And that’s the risk you have with social enterprise, impact investing, and all this sort of newfangled stuff that’s happening. You’re all good intentions. But if you don’t bring that transformational nature of management, the collaborative nature of work, a healthy respect for human beings and the planet, respect for the ideas of justice, equality, and fraternity, you will have a serious problem. But if we can figure out how the management itself can change, then social enterprises can be a very, very powerful way [to create change].
How can for-profits that are willing to change take a more equitable approach?
Sujatha Rao: Let’s talk about a commercial enterprise CEO or manager, who has begun to realise that the way that they had been operating and the techno-managerial systems that they had put in place are not right. And they do want to make this change. Looking at the nonprofit world, what could be one or two things that could kick-start these little levers [so] that we begin to change, that could help them move closer towards the kinds of organisations and workspaces we are looking at—just, equitable, flourishing?
Ravi: There is no easy answer to that question, Sujatha, because I’m in a system, and you’re telling me to change while the system remains the same. I as an organisation can’t change because there’s no way I [can] succeed, all I will do is I’ll set myself up for failure. So what can I learn from the social sector’s structures? It’s very simple. How do I ensure that there is a voice of the common man in any business that is done?
Now, in the democratic system, we have created a way to get the voice of every person in the state. In the market space, we haven’t figured that out. But the principle of, how do I involve human beings in deciding whether I’m doing a good job or not, in the reward structures that I get [is fundamental to a democratic system]. There are ideas that are talked about in the corporate world. How do I give a lower cost of funds for somebody who’s great on ESG (environmental, social, and governance) guidelines? Now, those are [some] ways of doing it—and there must be more ways of doing this sort of stuff—but that’s the principle that we have to follow.
In the absence of a systemic shift, can individuals exercise agency?
Deepak: Ravi, the system’s not going to change. But we also know that humans have a power to change the system. If you were to go back to a bank, let’s say HSBC, having spent the last 10–12 years in the nonprofit sector, and having [had] these complex thoughts and experiences, how would you be different as a manager?
Ravi: This is a very personal question for me.
The first thing is, I had a certain arrogance when I was in the corporate world, and I lost the humility that I had as a lower-middle-class child. [I thought,] I’m in control, I know what’s going on, I can make things happen. I need to lead people, I need to show the way, so there’s an arrogance. So if I were to go back, I would resort to humility. I think somewhere the business world has forgotten or lost that understanding of how a Gandhian idea can be very powerful in leading change-making… and so on and so forth. It’s become very techno-managerial.
The second thing is that I think businesses will…I hate to use the word ‘profit’…but will derive a lot of value if they believe in the agency of the people versus creating pigeon holes for people to say, this is your job. And I don’t need you to comment on anything other than that. In fact, there are business processes (such as the quality circles used in Japanese manufacturing) built on the idea that the greatest ideas can come from anywhere. In fact, more likely from the field rather than from the conference rooms and chambers that we sit in. So how do you create some frameworks and systems to believe in that agency and bring those ideas to bear on the work that you do? That will be the second thing.
The third is that, and this is the one that is very personal to me, you don’t realise that when you’re in a job, that job defines the person that you are. And eventually, you become a person who is a function of all the jobs that you did over a 10-year, 20-year period. And I try and say this to youngsters, and I’m not sure I’m able to communicate, that the career path you choose will make you a certain [kind of] person when you’re 50. And if I had somebody who had explained this to me in a manner that I would have understood when I was 20, my career choice would have been very different.
You can listen to the full episode here.
- People facing poverty see stomach binding as a way to deal with hunger pangs. In the 2022 Global Hunger Index (GHI), India ranks 107th out of the 121 countries with sufficient data to calculate 2022 GHI scores. With a score of 29.1, India has a level of hunger that is serious.