SPECIAL REPORT

The Shakti Revolution
How the world’s largest home-to-home operation is changing lives and stimulating economic activity in rural India
BY GAVIN NEATH AND VIJAY SHARMA
R O J A M M A I S A S I N G L E M OT H E R

with two daughters living in Kurumurthy, a small rural village 150 kilometres south west of Hyderabad in Andhra Pradesh. Until five years ago she scraped an existence by working in her mother’s field, earning barely enough to live on herself, let alone bring up two children. Then her life changed beyond recognition. Today she earns around 650 rupees (US$16) a month, is widely recognized and respected in her community, and has become a role model for other women wanting to raise themselves out of poverty. What changed was a visit to her village by a representative from Hindustan Unilever and her decision to become a Project Shakti entrepreneur. Hindustan Unilever, the Indian arm of global consumer goods company Unilever, is one of India’s leading businesses, with an annual turnover of US$2.3 billion and a history in India stretching back a hundred years. It markets such well-known international brands as Lipton, Lifebuoy, Surf, Vim and Pond’s, as well as local brands, such as Kissan, Annapurna, Lakme and Wheel. Unilever has always held the firm belief that the private sector can contribute to social development by creating win-win solutions to social challenges through innovative strategies that meet both business and social objectives. It was this philosophy that prompted Hindustan Unilever to create Project Shakti, a unique micro-enterprise initiative that is both a catalyst for rural wealth creation and a successful business operation.

Meeting the challenge before she became a Shakti entrepreneur is no different from that of hundreds of millions of others trapped in the vicious cycle of poverty. (See Figure 1) The micro-finance revolution has resulted in eight million Indians receiving micro-credit, 95 percent of whom are women, and three in four recipients crossing the poverty line.
ROJAMMA’S PLIGHT

i-Shakti provides villagers with access to computers that are housed in the homes of Shakti entrepreneurs.

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While there is only enough micro-finance available to meet one tenth of the demand, micro-credit will only work over the longer term if there are scaleable and sustainable opportunities for micro-enterprise. For decades Hindustan Unilever has held a leading position in most of the product categories in which it operates, with half its sales in India’s 5,000 towns and the other half in villages with populations of 2,000 or more. As the Indian economy opened up in the 1990s and competition increased, the company realized that to grow its business, it had to seek sales from the 550,000 villages with under 2,000 inhabitants, which account for 87 percent of the population. This was easier said than done. The challenge of reaching these villages was immense. Poor or non-existent transport links made it impractical to set up a conventional retail distribution network and, although their collective purchasing power is considerable, most villagers are unable to afford to spend more than a few rupees on products. If that wasn’t challenge enough, most rural villages in India are inaccessible through conventional broadcast media and widespread illiteracy renders press advertising ineffective as a communications medium.

aids to overcome widespread literacy. Over the last two years Shakti Vani has raised health and hygiene awareness in over 50,000 villages. The third Shakti component, being piloted in Andhra Pradesh, is an IT initiative called i-Shakti that is designed to meet villagers’ information needs and provide both private and public sector organizations with communications access to “media dark” areas. Village “kiosks” containing internetlinked computers, mostly housed in the homes of Shakti entrepreneurs, provide free and interactive information on a wide range of topics, including health, agriculture, education, finance, employment, and entertainment. All content is voice-enabled so that illiterate people can use it.

The economic and social impact has proved to be a great success for women in India and for Hindustan Unilever. Launched in 2000, by late 2007 some 46,000 Shakti entrepreneurs had been appointed and trained, covering 100,000 villages in 15 states and reaching over three million households in rural India. This makes it the world’s largest sustained home-to-home retail operation. Already a multi-million dollar business, by 2010 it will represent a significant share of Hindustan Unilever’s overall
PROJECT SHAKTI

The Shakti solution
W H AT WA S N E E D E D was a totally new type of business model. Hindustan Unilever’s solution, called Project Shakti (“strength” in Sanskrit), was as innovative as it was ambitious. The company decided to set up a direct-to-consumer retail operation by creating a network of entrepreneurs to sell its products door-to-door, and to produce a range of affordable products in small sizes to meet the needs and pockets of lowincome consumers. These are mostly single-use sachets selling for as little as 50 paise (half a rupee) each. The company decided to tap into the growing number of women’s self-help groups in India by making presentations at rural group gatherings, initially in Andhra Pradesh. At these meetings, disadvantaged women, including Rojamma, are identified and invited to become Shakti entrepreneurs. Considerable investment is then made in training and coaching these women from extremely poor backgrounds to become highly competent and confident business operators. Each Shakti entrepreneur invests US$220 in stock at the outset—usually borrowing from self-help groups or microfinance banks—and aims to have around 500 customers, mainly drawn from her village and from smaller villages nearby. Most generate monthly sales of around US$225, netting a monthly average income of US$16. After paying a few dollars a month for the loan, she is left with about $150 annually. With an average rural household income of $250, this represents a substantial increase for most families. For single mothers like Rojamma, it is a far cry from the handful of rupees she used to earn working in her mother’s field. Shakti Vani (“Voice”) takes Project Shakti a stage further. Hindustan Unilever trains local women to give talks to villagers about basic health practices, such as good hygiene, disease prevention and pre- and post-natal care, using visual

FIGURE 1: BREAKING THE POVERTY CYCLE

LOW INCOME

X

Microcredit

+

Microenterprise opportunity

LOW INVESTMENTS

X

LOW SAVINGS

X

Source: Unilever

INDIA’S POPULATION DISTRIBUTION
POPULATION Less than 200 200-499 500-999 1,000-1,999 2,000-4,999 5,000-9,999 10,000 and above TOTAL
Source: Unilever

NUMBER OF VILLAGES 114,267 155,123 159,400 125,758 69,135 11,618 3,064 638,365

% OF TOTAL 17.9% 24.3% 25.0% 19.7% 10.8% 1.8% 0.5% 100%

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business and generate an annual combined income for Shakti entrepreneurs of over $25 million a year. While the financial benefits are easy to measure, Shakti’s social impacts are harder to quantify. For the thousands of women like Rojamma who have become Shakti entrepreneurs, this initiative has changed their lives in ways that are much more profound than the income they earn selling soaps and shampoos. It has brought them self-esteem, a sense of empowerment and a place in society. A recent independent study showed that Shakti women are more confident about socializing, more likely to take lead roles in public activities, and enjoy higher recognition and social status among local people. As Rojamma herself says: “Today everyone knows me. I am someone now.”

Lessons learned
S O W H AT L E S S O N S C A N B E L E A R N E D ?

Firstly, that for a project like Shakti to be scalable and sustainable it has to be commercial and profitable. This is not a corporate social responsibility program. It is a business initiative with social benefits. Secondly, developing a business model like Shakti is not for the faint-hearted or short-sighted. It took us a long time and considerable refinement to get it right. This required unswerving senior-level commitment and considerable patience and persistence, not traits quoted companies are

always noted for. Hindustan Unilever was willing to accept lower rates of return in the short-term because it was prepared to take a long view. Thirdly, selecting the right person to become a Shakti entrepreneur was key. We learned from experience that it had to be someone for whom earning $16 a month fundamentally changed her life, rather than made life a little easier. This means that the majority of our entrepreneurs are women from families living below the poverty line. This brings its own set of challenges. It is difficult for women on low-incomes to visit the homes of those who are better off, while the caste system adds an extra layer of complexity. This meant teaching a lot of “soft” skills, such as confidence-building, as well as “hard” skills, such as selling and book-keeping. Finally, we could not have achieved what we have without strong support from over 300 partners, including NGOs, banks and both state and local government. While many recognize the potential for economic growth through encouraging women to become entrepreneurs and are keen to partner, not all government departments and NGOs are yet comfortable about working with the private sector, and convincing them sometimes proved a challenge.

Future plans
H I N D U S TA N U N I L E V E R

Unilever distributor Aruna Roshanagari doing her accounts in her shop in Pepalpahad, a village in Andhra Pradesh.

intends to keep developing Project Shakti until it achieves its target of reaching 500,000 villages through 100,000 entrepreneurs and 600 million consumers by 2010. Project Shakti has the potential to make an even more fundamental contribution to improving the wealth and quality of life of India’s rural poor. Shakti entrepreneurs, Shakti Vanis and i-Shakti together represent a huge inter-connected network and a major communications channel, opening up a huge flow of information and education to vast tracts of rural India. We are continually exploring ways in which Shakti can create an even bigger impact on health and hygiene and take both business and social development to the next level. We are currently talking to several potential partners, including our Lifebuoy soap brand, about creating a comprehensive health program to reduce the huge numbers of children who die every year in India from diarrheal disease, many of whose lives could be saved through hand washing with soap and water. Shakti Vani already runs an extensive hygiene education program with Lifebuoy to create awareness about the importance of hand washing with soap. We are now looking at how Project Shakti could link together the many development agencies, health ministries, pharmaceutical companies and technical experts that deliver curative as well as preventative programs to tackle this dreadful disease. With the ambitious goal of “no child dying from diarrhea in a Shakti village,” we hope to co-create a partnership model that demonstrates what can be achieved if all actors in society apply their skills and capabilities to a task that is clearly defined and potentially achievable.

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Whatever the primary purpose and objectives of each partner, whether developmental or commercial, creating convergence between different activities is the key to progress. A big part of the solution to development lies in working together and using infrastructure, whether developed by the public or private sector, for the benefit of all.

Conclusion on building its sales and market share in rural India, it is equally committed to improving the lives and livelihoods of people in India. What this project has shown is that so much more can be achieved by looking at social and commercial challenges through the same lens, rather than seeing them as distinct and and separate activities. Project Shakti’s role in creating incomes for rural women and helping to empower them is more important than sales alone. The health of our business is inextricably linked with the health of society. In the end it is in all our interests, whatever our motives, for people to have access to a better quality of life and more opportunities for personal development. For Rojamma it has not only transformed her standard of living and sense of self-worth, it has also allowed her to educate her daughters, giving them the chance in life she didn’t have.
WHILE UNILEVER IS INTENT
Gavin Neath is Senior Vice-President, Corporate Responsibility, Unilever. Vijay Sharma is the former head of Shakti, Hindustan Unilever. For more details about Project Shakti please contact Manu Sood at Hindustan Unilever in India on 00 91 9999 021777 or at: manu.sood@unilever.com

Shakti entrepreneur Rojamma (right) has used her income to educate her daughters, giving them the chance in life she didn't have.

Future challenges
N OW T H AT T H E S H A K T I N E T WO R K is well-established, it can be opened up to other stakeholders, including government agencies and other private sector firms. The partnerships we have developed so far to build the network have worked on the basis of mutual trust and mutual benefit. The real test will come when the network is used by many more organizations and we have no illusions about how challenging this will prove. It will mean public sector partners having to recognize that companies involved in social development work also need to meet business objectives and make profits if their participation is to be sustainable and scalable. Similarly, private sector partners will have to appreciate that government bodies have strong political constituencies to answer to, as well as social development objectives.

An open-air lesson in personal hygiene by a Shakti Vani communicator.

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