11 Mar Overcoming the challenges of a Social Business in the education space

Education may not always be thought of as a segment where much innovation can happen, but there is a growing interest among entrepreneurs to innovate and provide inspirational education experiences and a new breed of innovative social enterprises are emerging that focus on this area. These maybe in schools where content formats are enhanced to create new and modern learning experiences, or in vocational projects enabling skill development; aided by technology and innovation.

However, the road ahead to success is extremely tough and difficult; replete with failures and few successes. This is primarily because of the nature of this segment, which exhibits the following characteristics –

1. Educationists can’t say ‘No’ while are too young to express their core problems in correct terms. Due to this, the resulting social enterprise may not be able to create an ideal business model.
2. Education is state driven, be it school or college, government or private. As such there are many rules, regulations, processes and standards to be followed.
3. . Education in the skill development sector is easier, but to maintain affordability and to scale profitability is a big challenge
4. Education projects are a dime a dozen today, making it difficult to be unique and get finance from angel investors or social investors.
5. The gestation period, as well as the scaling period become long and uncertain, leading to financial shortfalls and if they not addressed, closure!

To sum up, to be able to overcome and meet the challenges in this sector of social business one has to be tenacious and willing to accept failure and above all willing to make tough decisions. Unfortunately, and in the words of Kintze, “When faced with two equally tough choices, most people choose the third choice: to not choose.”

I know of some strategies and work ‘arounds’ which were used successfully in the education sector and I will illustrate with a true story of a company who pioneered the concept of remote learning a decade ago. I will quote the experiences of Triton E-Ready Solutions (in India) and E-Ready Technologies Inc. (in the US).

In the year 2006, a couple of professionals from the software industry business, identified a need in the school education segment, where study showed that starting from class VIII, students were not able to cope with science and math, with the result they greatly depended on tuition, which were expensive. Those who could not afford tuition dropped out of school. The average rate of tuition for each subject in the urban areas came to Rs. 2000 per month per subject and in the rural areas was approx. Rs. 500 per month per subject.

These professionals were sure that through software on the internet, they could create a Learning Management System, in such a way, that would be able to raise the quality of tutoring and bring down price points and costs by leveraging common resources across a large base of children. They started a company called E-Ready Solutions, with a capital of 50 Lac raised from personal funds and friends. Thus, the problem of start up funds solved through personal networks and personal net worth.

Once the designs were ready, in 2007, they established an incubation center at Rockville, Maryland, USA. With access to free domain support, they created an unparalleled product called X-Cellerate STEM.

At that time, the US Department of Education was struggling with a downward curve in science and math subjects in their own schools and the concept presented by E-Ready appealed to their needs. They created a working group, with E-Ready and the Technology Council of Maryland to work on this project. The software was showcased at the National STEM summit in Washington thus creating global branding.

E-Ready then launched their software in India, but were faced with all the above mentioned hurdles! By June 2008, they were down to Rs 1 Lakh in the bank ($2200). With nowhere to go, the CEO and another employee spent that money to buy 2 tickets to the US, leaving Rs. 10,000 to spare for expenses. They made a very tough choice between an expense and an investment.

Once in Washington, they met with all their contacts they made at the National STEM summit to deliver a message – ‘If we can make such a great software like STEM, we can make as good a software for your business needs’. In 10 days they signed a contract to build an e-Business portal for Washington Post, received advance payments, and turned around the company finances. Thus, they subsidized their expense on STEM, by using their branding and skill for another commercial job and generated a secondary pool of funds through cross funding.

Back home in India, to overcome barriers like regulations, long gestation periods and uncertainty, they built content based on the CBSE and ICSE curriculum for classes VIII to XI. This meant that they had zero dependency on government agencies for content. They partnered with the Citizens Service Centers initiative of the government of India to provide education services in rural areas, thus leveraging Government networks to deploy and scale. The program was rolled out in Maharashtra, through a partner company called SPANCO, in 3200 locations and covered nearly 10,000 poor children with virtual tuition costing Rs. 50 per month per subject. E-Ready had created partner ecosystems to achieve their goals and later on, they brought in English Language Learning and other skill development courses as well.

The above example has been detailed not to glorify an organisation, but to point out how one can create ways and means to survive and thrive in the education space. Share your opinion about this topic with the Ennovent Network – a global community of entrepreneurs experts and mentors.

Rohit Shipstone is a Business Growth specialist, Innovator, Strategic Marketer and member of the Ennovent Pool. To access Rohit Shipstone’s expertise in product development for low-income markets, new business model evaluation, strategy, marketing and sales, write to aparna.bhat@ennovent.com