Filipino yuppies talk propoor biz in Davos
They were yuppies (young upwardly mobile professionals) who left the corporate world to take the off-the-beaten path of social entrepreneurship. They found their calling in building businesses that help the poor without relying on charity.
Microventures cofounder Mark Ruiz and Gandang Kalikasan cofounder and president Anna Meloto-Wilk—who were among the Filipino delegates to the World Economic Forum (WEF) annual meeting in Davos—shared their experience in driving social innovation and transformation through social entrepreneurship in a chat with the Inquirer on the sidelines of the forum.
“You need to have a product that can compete. You can’t bank on your advocacy and say that: ‘You buy my shampoo because it helps the community, because the shampoo needs to clean your hair also,’” Wilk said.
Gandang Kalikasan is the maker of Human Nature, which produces a line of all-natural cosmetic products, aiming to combine eco-friendly business practices, fair trade and policies that benefit the poor, so that farmers and workers receive above-average wages and full benefits.
While Wilk has made her own mark, she admits to being highly influenced into the social development agenda by her father, Antonio “Tony” Meloto, founder of Gawad Kalinga and recipient of the 2006 Ramon Magsaysay Award for community leadership.
“You can’t market on the basis of pity. It has to be on the basis of quality, design and innovation,” added Ruiz, who cofounded in 2007 Microventures with Bam Aquino, now an administration senatorial candidate for the midterms elections in May.
Microventures’ centerpiece program is Hapinoy, which creates sustainable distribution channels and business development strategies to empower the marginalized micro-retail sector of the Philippine economy, the sari-sari stores. Hapinoy assists 7,000 sari-sari stores under its network.
Ruiz is also a founding partner and advisory board member of Rags2Riches, another social business enterprise, which helps urban poor communities create fashion-designer items from upcycled materials.
Rags2Riches is run by Ruiz’s wife, Reese, who is part of the WEF’s pool of Young Global Leaders.
Both Wilk and Ruiz were invited by the WEF to Davos as part of the social entrepreneurship network nurtured by the Schwab Foundation, put up by WEF founder Klaus Schwab and his wife, Hilde. The two Filipinos have been recognized by the foundation for excellence in social entrepreneurship.
Based on Schwab’s definition of social entrepreneurship, these are those that “pursue poverty alleviation goals with entrepreneurial zeal, business methods and the courage to innovate and overcome traditional practices.”
The Schwab Foundation likens a social entrepreneur to a business entrepreneur, who builds strong and sustainable organizations, which are either set up as not-for-profit or for-profit companies but with the goal of social innovation and transformation in various fields, including education, health, environment and enterprise development.
The social entrepreneurship community in the Philippines can be categorized into three:
— Nongovernment organizations (NGOs) trying to become more “sustainable” or acting like a business enterprise.
— People from the corporate world taking the leap to build social enterprises.
— Fresh graduates starting from scratch and building social enterprises on a trial-and-error basis.
Wilk and Ruiz, both Ateneo de Manila graduates, are biased for the second category because this was their story.
Wilk had worked with Ogilvy advertising and Nestlé and very early on was a production assistant at broadcasting giant ABS-CBN. Ruiz had worked at Unilever Philippines’ sales team before becoming a social entrepreneur.
Different skill set
“I think some NGOs are trying to make the transition but finding a bit of difficulty. It’s a different skills set, different discipline altogether,” Ruiz said, adding that many social enterprises have indeed evolved from the NGO community.
Ruiz said he wished there would be more people from the corporate world taking the big leap. Those who do are a rarity while an increasing number is coming from the third category of fresh graduates—young, idealist people eager to make their mark.
“I guess it’s the second group (those from the corporate world) who can make the easiest transition because they have the sustainability factor going for them,” Wilk said.
“So what we’re doing now in Human Nature is to also help with the third group, the fresh grads, the young people so they will have a shorter learning curve and learn from our mistakes.”
Last Christmas, Human Nature created a distribution platform for young social entrepreneurs, choosing 10 products from fledgling social enterprises and including them in her company’s Christmas lineup. They were promoted on Human Nature’s website and their products distributed in its branches.
Baptism of fire
“It was really a baptism of fire for them in a sense because this is the only way they can learn the skills like production planning, forecasting, inventory management, financials and even simple things like [institutionalizing] delivery receipts and documentation. It also forces them to really work on the pieces of their business that are not as sexy or exciting,” Wilk said.
A lot of fresh graduates like to do marketing, packaging or product development, but nobody wants to do the “boring” but “essential” legwork, such as securing a permit from the mayor of the local government unit or lining up at the Bureau of Internal Revenue to get official receipts, she added.
Wilk said it was part of her company’s advocacy, apart from helping chosen communities and employees, to “make it a bit easier for the younger ones to get going” in social entrepreneurship.
Wilk, British husband Dylan and her sister Camille launched Human Nature’s first line of products in 2008. Human Nature now has a main flagship store and 26 franchise branches. It has 200 employees and 50,000 registered dealers selling its products through an Avon-style model.
A common challenge to social entrepreneurs is usually scaling up their business. For Ruiz, it’s a matter of coming up with the right business model.
Hapinoy seeks to help micro-retailers grow their business and create alternative channels, but in reality, it cannot control the nanays (mothers) who own these stores, the ones who become their “business partners.”
“Before we could take care of the distribution, we would bring the products to the sari-sari stores and then we realized that was not our core business. Our core business is really organizing the nanays and seeking various partners to provide other services. Duplication doesn’t make any sense. So, while distribution is important, that’s not our core competency,” Ruiz said.
As a result, Hapinoy stuck a partnership with Tao Community, which is very good in logistics and distribution.
“That allows us to focus on our core: Training and capacity building for store owners and access to new business opportunities through partners,” he said.
For the microfinance or lending to the entrepreneurial poor, Hapinoy teamed up with CARD Inc., one of the largest microfinance institutions in the country.
“Anyone who wants to work with communities, with the marginalized sector in development work will have challenges. It’s really changing the mindset because in the course of trying to empower them, trying to improve their quality of life, it’s not easy,” Wilk said.
She said some people who started out poor—even if they started earning as much as office workers did—still acted as if they were poor. This meant they still borrowed money left and right and they don’t save, mostly living only for the moment.
Wilk said one of the most important lessons her group learned was not to get frustrated easily with the poor.
“Nobody taught them to have that kind of mindset or the same discipline that we’ve had because we had education or grew up in good families. That’s why I think Mark (Ruiz) is smart to really focus on their core business which is values formation: training, scale-building of mothers and sari-sari stores,” she said.
Wilk said that in her company, the human resource department was not the traditional HR team in a sense that her HR people needed to be financial stewards, guidance counselors, psychiatrists and, sometimes, financiers.
“It’s an opportunity to really unleash a sleeping giant. The majority of our population is still poor. Right now, they’re deadweight. But we convert that deadweight into assets if we know how to really catalyze and empower, and make them become assets for the Philippines,” she said.