“I have not failed. I have just found 10,000 ways that won’t work” – Thomas Edison

At the very core of entrepreneurship is innovation– and in many cases – also failure. The reality is that a journey towards successful innovation, as an entrepreneur or otherwise, is never without trial and error.

In fact, the term innovation itself refers to the notion of doing something differently to create more value. This state of value creation can only be achieved when multiple new ideas – such as products, services, processes or otherwise – are piloted, scrapped and improved upon over a period of time.

Early-stage entrepreneurs can especially benefit by being open to failure because only when solutions are tested, feedback shared and iterations made can true innovation occur. A transparent and collaborative approach to failure promotes adaptive planning and encourages rapid, as well as flexible, responses to change.

If dynamic entrepreneurs can leverage the concept of admitting failure, they can often identify forward-thinking approaches and generate social and commercial success through their startup ventures.

With the above in mind, Ennovent recently spoke with Ashley Good, Founder and CEO of Admitting Failure, and David Damberger, featured TED speaker on the topic of admitting failure and current Strategy Advisor for New Product Development at M-KOPA in Kenya, about why organisations must make admitting failure a priority.

What are the benefits of admitting failure?

Ashley: The idea behind admitting failure is to fail forward. The first benefit is the learning you get. Basically when you do any project, if you fail at it the return on investment is lost so the only return on investment you can gain is a learning return and failing forward is all about maximizing your learning.

Admitting failure also creates space for innovation. Because, to try anything new you need a space where failure where is allowed so that you can push boundaries and be innovative. Otherwise the risks will always outweigh the benefits of trying anything new.

David: While admitting failure is an easy concept to talk about, it is much harder to implement, especially in the development sector for social enterprises and NGOs. For me the key benefit is the learning and feeling of community that comes from accepting mistakes.

It is very hard for individuals to see failures as failures and you often need a community that works together to reflect on areas where they may have been weak so that new ideas and approaches can be shared. Only when this sharing occurs can innovation then take place.

Do you feel enterprises that focus on developing solutions for low-income markets are better placed to address some problems as compared to development agencies?

Ashley: Social enterprises are better placed in two ways. Firstly, they are designed to be financially sustainable and easily bend and adapt to the needs of the market. The progression of their idea therefore becomes easier to scale. Secondly, these enterprises are accountable to their customers, meaning the people who are in need of the innovations. This is compared to NGOs where the donor is the main beneficiary rather than the community the innovation is meant to help.

That saying, NGOs continue to play an important middle role between private companies that primarily innovate for profitability and the government, which often cannot innovate too much or change too rapidly.

David: Yes and No. A social enterprise to me is just like a normal enterprise. The difference being that they are tackling social problems and have patient investors that are ready to accept low returns for a long time in lieu of social impact. Broadly, social enterprises are better placed as they have a market-linked approach and are dependant on the market accepting the solution to succeed. Moreover, they are ready to try multiple things differently and make quick pivots, which is not something you will see many NGOs doing. However, in saying that I do believe that in sectors like health, education and water often a private public partnership works better.

Why do we need an open culture of failing?

Ashley: Around the world our education systems have trained us into becoming robots that are really good at memorising and accomplishing linear tasks. However, most of the social problems we are facing are complex and non-linear and require thinking that is not process focused. Including failure as an element of our work life is a means of changing the way that we are conditioned to think. To challenge the status quo, failure is required. And ultimately, social enterprises are already challenging the status quo that businesses only exist to make a profit.

David: To be innovative we need to fail. Look at the culture prevalent in the west coast of USA. There, if you are not taking a risk and being innovative people look down on you. That kind of culture came about because a few people stood up and said:“I don’t care what you think, I am going to go ahead and do it anyway.” As those people succeeded, the startup concept got traction and it became cool to take risks and become entrepreneurs. Similarly to make admitting failure an accepted concept we need enough mentors, experts and investors to support entrepreneurs in failing forward and incorporating that learning into the future of that enterprise.

Within the development sector, some publications and bloggers came out saying that “admitting failure” has become the new “green” or “sustainability” fad and it is often more of a PR exercise for companies – what are your thoughts on that?

Ashley: It could be a fad. But does it matter? From what I have seen there is a real need for better learning and innovation within the social and development sector. I see admitting failure as one piece of the puzzle. There are hundreds of people working at creating innovation in the social sector and admitting failure is a new technique that can play a really crucial role in aiding the process of innovation.

David: I agree (laughs). The development sector overall is good at creating fads, take sustainability for example. But, the reason that they are now referred to as ‘fads’ is because of the huge traction it has received from organisations globally and because everyone is doing it. What we need to realise is that all of these are just concepts used to answer the overarching problems.

Similarly admitting failure is just one tool to improve accountability and transparency in an organisation. There is this thinking that an organisation just needs to focus on two or three things like green or sustainability to make a difference and so they become buzzwords. The reality is that these are complex problems and concepts like admitting failure is just the activity you do to help you learn. The ultimate goal here is to learn and innovate.

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Admitting failure is a core component of organizational culture. Try new concepts; secure feedback from clients and stakeholders and work to incorporate principles of agile development into your business approach.

Only through continuous experimentation, feedback and failing forward can Ennovent fulfill its mission to Discover, Startup, Finance and Scale the best innovations for sustainability in low-income markets. What steps are you taking in your organisation towards admitting failure? Please share your questions, comments and insights.

Join the Ennovent Network now and connect with entrepreneurs, investors, experts and mentors to accelerate innovations for low-income markets: http://bit.ly/YIe65s

Although tropical rainforests cover only 6% of the earth’s land surface, they remain an important global center of biodiversity and ecosystem services. Specifically, tropical forests play a key role in sequestering and storing carbon, controlling diseases and facilitating pollination.

Tropical forests also provide important resources to the communities who live in their midst. They allow for the sustainable exploitation of non-timber forest products such as fruits, medicinal plants or herbs, which are critical for the income generation abilities of local communities and survival of mankind as a whole.

Tropical forests, however, are also one of the most threatened ecosystems globally and for-profit enterprises can greatly complement the valuable work of NGOs and governments to reduce the pressure on tropical forest biodiversity. With this in mind, WWF Switzerland worked with Ennovent, a company focused on accelerating sustainable innovations for low-income markets to launch the Tropical Forest Challenge in May this year. This exciting global initiative was aimed at discovering the best for-profit solutions from around the world that have a positive impact on tropical forest biodiversity.

The challenge used Ennovent’s online platform to crowd-source relevant solutions and impressively, 306 solutions were nominated for the challenge with over 70 applications being received from Latin America, Africa, South East Asia and beyond. More than 2,300 votes were then gathered from the public to choose the most high impact applications.

Following the voting process, over 30 experts in the fields of forestry, development and business independently assessed the applications. These companies were then further evaluated by 11 distinguished experts that formed the final Jury panel on criteria such as the environmental, social and economic impact these companies had on forest biodiversity and local communities, the potential to generate financial returns for impact investors as well as the potential for the winning companies to be scaled up locally, regionally and globally.

Both WWF Switzerland and Ennovent are proud to announce that in the end it was Runa (www.runa.org) and Planting Empowerment (www.plantingempowerment.com) that were selected as the winners for the Company and Startup category respectively.

Runa is an innovative Ecuador-based organization creating US markets for guayusa, a rich tasting naturally caffeinated tea sustainably grown by indigenous farmers. Since inception in 2009, Runa has generated over $100,000 of direct income to over 2,000 farming families – representing an impressive average farmer income increase of 30% – and has planted over 150,000 trees.

Planting Empowerment on the other hand is focused on developing mixed native species agroforestry projects that provide alternative income streams to slash and burn agriculture for smallholder farmers in Panama – encouraging tropical forest conservation. The company leases plots from small landholders to encourage long-term land tenure and stewardship of natural resources while providing hands-on forestry management skills and traditional classroom knowledge. To date Planting Empowerment has planted more than 27,500 trees and has ensured that farmers are earning 45% more than previous income levels.

The challenge offered these winners important rewards such as global visibility, networking and capacity building opportunities through challenge partners, GoodCompany, Sustainatopia and Thomson Reuters Foundation. These Challenge rewards are important as many early-stage entrepreneurs face resource gaps – such as networks and training – that inhibit their ability to scale high potential ventures.

The jury also selected four finalists within each category that are also doing their part to positively impact tropical forests. These impressive finalists are Ecoplanet Bamboo, Wildlife Works, Rainforest Expeditions, Chicza, Floresta Holdings Ltd, Ecotech Timber, Maya Mountain Cacao and Eco-Fuel Africa.

It is said that we must be the change we want to see in the world. Organisations such as our finalists and winners are doing just that. Together, they are doing their bit to change the lives of thousands of local communities and their families while sustainably preserving tropical forests in their home regions. They are truly some of the best for-profit enterprises from around the world that are making a positive impact on tropical forest biodiversity.

Read more about the winners and finalists here.

In late 1997 Himanshu Sheth found himself waiting anxiously for the first batch of 100 wagons using Coir Atlas products – cost-effective and eco-friendly replacements for wooden scantlings and pallets – to arrive with their cargo safely unscathed on the other side of India.

Sheth had begun conceptualizing Coir Atlas earlier in the year, as a response to a call-to-action from India’s industry giant Tata Steel for a ‘green’ alternative to conventional timber packaging products – like wood separators or runners.  The issue was (and remains) simple; wooden logs are used to support the steel during transportation, which directly contributes to the destruction of over 400,000 trees every year in India and beyond.

A marketing consultant with a Bachelor’s Degree in Science from Ranchi University, Sheth knew he had sufficient technical know-how and passion, to respond to Tata’s challenge.

Sheth began experimenting with several synthetic options that simulated wooden logs, only to wonder if perhaps bamboo was a more innovative and sustainable approach. After significant research Sheth learned that in addition to its strength, because bamboo grows up to six times faster than trees, it can be grown in higher concentrations with limited effects of deforestation when harvested.

With this breakthrough, Sheth combined the tensile strength of bamboo with coir – a natural fibre extracted from the husk of coconuts – and launched the first field test to identify if 100 wagons could cross India’s unpredictable landscape to deliver undamaged product. And arrive safely, they did – all 100 in fact.

His field test exceeded expectations. However, the coir, which was being sourced from Kerala, was expensive and financially unsustainable. Ever the responsive entrepreneur, Sheth modified the product by replacing coir with jute – a long, soft, shiny vegetable fibre that can be spun into coarse, strong threads. The jute was not only locally available but also reduced time and labor costs.

Over the next several years Sheth worked to further test and refine his breakthrough product. In 2002 Coir Atlas was further validated with 400 + wagon loads successfully arriving at their destination, in 2005 Kharagpur and Indian Value Engineering Society tested and certified the strength of the product and later in the year he was granted a patent for his innovation.

But more than just preserving India’s forests, Sheth saw the chance to integrate employment opportunities for rural women into his business model as Coir Atlas grew. He partnered with the All Indian Women’s Conference (AIWC) to employ women from the low-income rural areas to work on a daily basis supporting field tests – compensating them between Rs. 200 – Rs. 300 per day. This was three times what the women would normally make – the additional income, Sheth noted, would often be funnelled into school for their children.

Recognizing the continued potential of the business, Sheth wants Coir Atlas to expand across India, so the environmentally-friendly nature of his products can have a positive impact both on tropical forests and also the livelihoods of rural women. He is aiming to build business opportunities with most of India’s steel companies, so he can transition the country to a fully sustainable model of transportation.

Yet, despite the environmental and social benefits Sheth had integrated – by design – into the Coir Atlas business model, he requires the financial resources and capacity building opportunities to scale up his model and generate a more widespread impact.

This is why Sheth has recently joined Ennovent’s Global Network. While the directory provides him with access to investors, he is also able to collaborate with like-minded individuals and experts in technology and marketing to move his venture forward.

Now instead of looking back on how far Coir Atlas has come since that first testing day in 1997, Sheth is focused on the future.  “The added visibility may help me persuade more and more companies to adopt the Coir Atlas product and make it an industry norm – saving several thousands of trees every year,” highlights Sheth.

About Ennovent

Ennovent accelerates innovations creating a sustainable impact on low income people. They work with a global network of entrepreneurs, investors and experts to discover, finance and scale up the best innovations. They envision sustainable living for people at the base of the economic pyramid. Click here to learn more about the Ennovent Global Network.

It is no secret that chocolate can have a powerful effect; comforting, calming or even energizing, depending on your sweet tooth.  But more than just inducing various emotional states, chocolate can also contribute to social change – and no one recognizes this more than the innovative team behind Maya Mountain Cacao, Alex Whitmore and Emily Stone.

Everything changed for Whitmore when he took his first bite of stone ground chocolate; from this first sweet, rich taste, Whitmore was so inspired that he decided to create a chocolate company. But beyond just aspiring to become the world’s next great chocolate producer, Whitmore wanted to create a company with a conscience.

To do so Whitmore started travelling the globe seeking new sources of sustainably harvested cacao. It was on this rather epic journey that Whitmore stumbled upon the lush – albeit tiny – country of Belize and its high quality cacao crops.

The reality in Belize, Whitmore learned, is that despite 44% of the country’s land is protected Belize continues to face ongoing ecological threats – especially related to tropical forests. These threats include industrialization of agricultural production through mono-crops and the discovery of crude oil in the southern region where most of the country’s cacao is grown.

Although cacao is important to satisfying a sweet craving, the crop represents a source of economic and environmental preservation potential for Belize.

As a shade crop cacao prevents deforestation while providing a cash source for cacao-farming families. Cacao is grown organically and mostly in an agro-forestry-based system, allowing for high biodiversity levels and income diversification for families.

The Maya of Belize have been producing cacao for decades, but have historically had only one market option to sell their beans; as a result, the industry has never reached a state of financial viability.

Recognizing this, and the economic potential of the cacao industry in Belize, Whitmore proposed the introduction of a competitive market for Belizean cacao to bring new services, ideas, pricing models, and meaningful relationships to local farmers.  The goal was to catalyze a renewed interest in cacao farming to help local communities earn an income, while also preserving tropical forest biodiversity.

While researching the above concept Whitmore met Emily Stone, a graduate of the Green Corps Field School for Environmental Organizing. Bonded by the concept of sustainable cacao, together they worked to find a way to establish direct relationships between chocolate companies and the cacao farmers. The goal was to build relationships so the farmers could generate an income while producing quality, sustainably sourced cacao for global consumption.

Recognizing the business potential, Stone travelled to Belize and, with the help of a young local Mayan famer, began truly laying the groundwork for Maya Mountain Cacao. She worked with farmers to get organic certification, eliminate the use of pesticides and increase overall yields. At the same time, Stone also started encouraging reforestation practices essential for the sustainable cocoa plantation. Impressively, due to outreach and their full launch, in 2011 Maya Mountain Cacao’s over 60 farmers received organic certification.

After 3 months of education, in January 2011 Maya Mountain Cacao made a direct investment in cacao production and started buying from the region’s local farmer. With a strong contingent of organically certified supplies, Maya has exported 26 metric tons organic cacao so far in the 2012 season, securing the highest possible price from the world market.

Since the company’s launch farmer income has grown an average of BZ $56.70 from the sale of cacao. For subsistence farmers this is a small, but meaningful, increase that can be used to pay for a child’s education, invest in new tools for the farm or to begin generating savings for the future.

In addition to their for-profit business, in 2011 Maya started partnering with local NGOs to invest in seedling farming for long-term reforestation. As a part of this project Maya is helping to scale the overall cacao production levels in Belize, looking beyond just their operations. Overall, the seeding project is set to yield 50,000 cacao trees to be planted in July and August.

With their impressive launch and success throughout the last year, Whitmore and Stone are now focused on drawing attention to the fact that catalyzing market access can directly contribute to protecting tropical forests.

This is why they’ve applied to the WWF Switzerland Tropical Forest Challenge – which seeks to identify the best for-profit solution impacting tropical forest biodiversity in the world’s 75 tropical forest-rich countries.  The 3 winners, in the Idea, Start up and Company categories will be endorsed by WWF Switzerland and receive global visibility and capacity building opportunities.

Maya Mountain Cacao is just one example of a for-profit business, which is, by design, creating a positive impact while generating commercial value. Now, as Whitmore and Stone focus on further growing their operations to scale their impact, Maya Mountain Cacao is well positioned to create lasting change for the communities of Belize, and the tropical forests in which they live and work.

And who knew it would all begin with that (sustainably) sweet treat – chocolate.

More than 90% of rural India is living on less than USD 4 per day. If we add number of urban poor to it, it would be safe to assume that the number of poor in India can easily cross 800 million. This population with an average daily expenditure of USD 2-3 has a potential market size of USD 900 billion. Even then, this segment is largely un-catered to and neglected by large corporations. The Indian government is also struggling to provide basic infrastructure for services such as – food, water, energy, health services & education to the low-income population.

The Opportunity

As the government and large corporations fail to adequately address to these needs, many young enterprises have taken on the challenge to bring innovative yet affordable products and services to cater to this segment. These enterprises, sometimes referred to as social enterprises, create a win-win situation by offering innovative solutions for the poor at an affordable price point while generating profits for shareholders.

For instance, B2R technologies, a rural BPO, is setting up clusters of rural BPO service delivery centers to provide business support services to global clients. Rural India has formerly only been seen as a supplier of labor to urban India, but B2R is changing that by providing rural educated, unemployed youth with the opportunity to earn a viable livelihood. This also contributes to reverse the forced migration to the cities as well as provide opportunities to those who cannot migrate. Their goal is to set up 70 centers employing more than 6000 youth over the next 5 years.

These enterprises have a strong affinity to create solutions which have a positive social as well as environmental impact. This impact brings long term sustainability to the society and the environment at large.

The Funding Gap

Entrance of social enterprises, has also attracted some level of attention from Angel Investors and Venture Capitalists (VCs) in the space. But “Social Investing” still being an evolving asset class, investors have followed a fairly risk averse approach – i.e. they are likely to invest in companies who have displayed proof of concept or proof of market.

This leads to a classic chicken-and-egg problem. Entrepreneurs need capital to build prototypes, acquire customers and reach a critical mass in the market. But, VCs will not invest in before the product and the business model is proven. The fact is financial support is most needed when the enterprise is prototyping its product or running a pilot for its service and is yet to generate revenues. Because of lack of financial backing at early stage, most of the highly innovative and game-changing ideas fail to prosper.

Early Stage Impact Investing

Early Stage Impact Investors are investors who have realized this problem of the Funding Gap and are willing to take a higher risks than VCs. Thus, these investors are willing to take on the market risk, technology risk and many-a-times business model risk.

It is with the support of such investors that social enterprises can actually move to the next level and begin to make an impact. In the recent years, early stage impact investors such as First Light Ventures, Aavishkaar,  Unitus Seed Fund, Ennovent Impact Investment Holding among others have emerged to back such enterprises.

Ennovent Impact Investment Holding, for instance, partners with early stage social enterprise by providing seed stage investment of upto USD 60,000 with a follow-on investment of USD 270,000.

Ennovent also recently launched the Impact Circle i.e. an exclusive group of individual & institutional investors looking to support high potential entrepreneurs creating a sustainable impact at the base of the economic pyramid in India. The Impact Circle members look to invest in seed to profitable sustainable enterprises looking to raise financing from USD 25,000 to USD 3 million in equity, debt or quasi-equity for 5-7 years.

These investors not only provide investment but also non-financial support that adds tremendous value to these enterprises such as developing strategic partnerships, scaling-up to new markets and regions, hiring talent etc.

Conclusion

The entry of these new early stage impact investors in the Indian market augurs well for the social entrepreneurship sector. Watch out for new innovative game-changing start-ups that redefine the way businesses perceive opportunities in rural India.

About the Author

ennovent accelerates innovations creating a sustainable impact on low income people. We work with a global network of entrepreneurs, investors and experts to discover, finance and scale up the best innovations. We envision sustainable living for people at the base of the economic pyramid.

The views expressed above are those of the author, and not necessarily representative of the views of the Mahindra Group.