"With the amount of money, brains, and resources we have, there is no reason for the current level of poverty to persist," says Patel, linking a lack of inspiring human and cultural change to the call for action by President Clinton. "Finding the problem is as important as finding the solution."
As teams convened at the IXL space that will act as their accelerator for the summer, Patel encouraged them to tackle the right challenges and leverage the network and resources in the accelerator to establish early proof of concept. After the first training session focused on reverse engineering and critical entrepreneurial thinking, we sat down with him to understand how the teams will progress through the accelerator towards the creation of viable businesses.
Building a Business Case
"Most business school professors will tell you to find customers with money, and offer them something differentiated," Patel says, referring to the difficulties of serving fragmented and economically vulnerable markets. To build sustainable models, teams must understand how to tap hard-to-access markets, collaborate with "not the best people," and work around poor intermittent infrastructure. The team behind Origin, for example, will have to build "trust equity" with partners in India such as owners of local retailers known as "kiranas."
In building a business case, Patel warns that teams should not try to solve problems that government and corporations are supposed to tackle. Instead, he is looking for finalists to fine-tune and de-risk the ideas they already developed in the space, keep their imaginations as wide as possible, and continue to uphold the spirit of their original goals. In the process, they will have access to the Hult network in Boston to shortcut knowledge, and coaches to provide the right nudge, question, or challenge at critical junctures.
Cycles of Iterations
The real challenge for teams as they start is establishing proof of concept. To do this, they are encouraged to prototype first, then determine the feasibility of manufacturing, and later focus on finding the appropriate business model.
Building their initiatives in cycles of iterations will encourage learning and signal to investors that teams are committed to going through with their plans. Additionally, Patel points out, "Artifacts are more compelling than business plans and power points." He will be looking at what artifacts the finalists are working on in the accelerator as indicators of their progress over time and the challenges they face. Claiming that working through iterations is an intuitive approach to entrepreneurship, Patel says, "Business does not tell you to have iterations -- but successful architects, scientists, and chefs do."
The MBA: Asset or Impediment?
The next piece of the puzzle concerns the preparation that finalists have as MBA students. "MBAs provide structure to make sure that you ask the right questions to build successful businesses," according to Patel. The real challenge, he says, is for students to come out of their business schooling with an emergence of a passion around impactful ventures, and the patience and persistence to make them real. Reflecting on how finalists will commit to their work, he says, "Passion doesn't come first, but rather from doing something difficult and making something of it."
Although the MBA provides a powerful framework for analytical thinking, it can also hinder entrepreneurs' ability to stay the path. MBA social entrepreneurs are often pressured to find the best ROI, and are lured by higher paying corporate jobs during the infancy of their businesses.
About the USD 1 Million
The last factor influencing how the finalists collaborate and compete in the accelerator is the USD 1 million prize to be awarded at the Clinton Global Initiative meeting in September. Although the CGI will bring together like-minded people with money, ideas, and human capital to dispense, Hitendra Patel says that it should not be the sole focus of the teams' work.
The advantage of the CGI meeting is that it allows finalists to stand on a stage, publicly commit to what they want to do, and attract resources to go do it. As far as team dynamics are concerned, the potential to win funding adds sharpness in people's thinking and, "a little bit of competition, which is healthy." Patel hopes that teams pool help and mentor others in the accelerator, saying that "the more they mentor a teammate, the more they'll get out of it."
The availability of other teams in the accelerator also enables finalists to get quick and honest feedback as they ask everyone they see, "What do you think? What am I missing?"
Perfecting the Process
Until the prize in the fall, the teams have a long way to go as they perfect every aspect of their young social enterprises. The logical next first steps, according to the presentation given at the accelerator, are to identify opportunities to leverage consumer behavior and make value exchanges with partners who work at the bottom of the pyramid. For example, teams can exchange insights and know-how for access to distribution networks of multinationals such as McDonalds and Cargill. Beyond pursuing immediately identifiable opportunities with partners, teams may choose to run pilots on the ground to test their ideas and generate new ones.
Beyond targeting value creation and exchange, the teams will work on tightening their value propositions, identifying market segments, creating business models, and outlining plans for how they plan to scale using the funds they hope to receive. On the way, they will receive tailored instruction on understanding customers and consumers, reaching out to partners, designing pilots, and simulating the rollout of their plans. With these combined resources and plenty of opportunities to pitch to coaches and investors, it is Hitendra Patel's hope that all six initiatives launch come the close of the accelerator at the end of the summer.
For now, teams will move one step at a time, looking to reduce uncertainty around their business by experimenting to validate or disprove the key assumptions that will propel them forward or hold them behind.
This article was originally published at Grasp Magazine as part of a media collaboration between Grasp Magazine and Hult Prize covering the finalist teams efforts at the Hult Accelerator. Read more articles on the Hult Prize at Grasp Magazine.