repost from http://asiasociety.org/policy-politics/asia-21/changemakers-wanted-philippines-21-class-2010

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2010 is a year for change. As the country elects local and national officials who will lead our government, Asia Society-Philippines honors dynamic individuals who are at the forefront of change in their respective fields, through the Philippines 21 Young Leaders Initiative. A flagship program of Asia Society-Philippines, the Philippines 21 Young Leaders Initiative aims to develop a nationwide, multi-sectoral network of changemakers to meet, educate and inspire each other; collaborate and share ideas on public service and other meaningful initiatives, and build relationships of trust and understanding.

Nominees must be between 25-40 years old, of Filipino citizenship, and have substantial leadership experience in their chosen field, including but not limited to the following: academe, business, civil society, media, arts and culture, military, and government. Prospective Philippines 21 Fellows must also demonstrate a commitment to devote time and effort to achieve the goals and projects set by their Class.

Upon selection as Philippines 21 Fellows, the Class of 2010 will convene at a two-day forum where they will engage in roundtable discussions on issues concerning the Philippines and the Asia Pacific region, in preparation for their participation in the international program, with the ultimate goal of developing projects to address these issues. The annual Forum is held in the last week of August.

Philippines 21 Fellows serve as the country’s official delegation to the Asia 21 Young Leaders Summit, organized annually by Asia Society’s New York headquarters. This year’s Summit, scheduled for November in Jakarta, will bring together some 200 of the most dynamic next generation leaders from Asia and the United States.

The 2010 Fellows join an illustrious roster of Fellows such as the eminent DNA scientist Cora de Ungria, award-winning travel blogger Ivan Henares, social innovator Mark Ruiz, IT and gaming entrepreneur Enrique Gonzalez, and CNN Hero of the Year Efren Peñaflorida, Jr.

Nomination forms may be requested from the Philippines 21 Secretariat via email at philippines21@gmail.com or patriciav@asiasociety.org.ph. Deadline for nominations is on May 31, 2010. For sponsorship opportunities and other inquiries, please call Patricia Vega at (632)7524374. Shortlisted candidates will be notified by mid-June.

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Last December 2009, I attended INSEAD’s Social Entrepreneurship Programme in Singapore.

As part of ISEP’s ongoing efforts to create a vibrant community as well as advance the field, they are organizing their 4th Conference, aptly entitled ‘Social Entrepreneurship for Social Change’ in Istanbul, Turkey this coming June 4.

Hans Wahl, Senior Associate Director has extended an invitation to join – as well as participate on the Leadership Roundtable (which will be held adjacently to the conference) -  and as such I will be excitedly attending

You might want to join too! Check out the official conference website for more details.

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“SOCIAL ENTREPRENEURSHIP FOR SOCIAL CHANGE” Conference

Today, social issues are being tackled through socially innovative approaches instead of traditional philanthropic methods.

Social entrepreneurship entails a comprehensive approach, which is both innovative and realistic, dealing with the core of social issues and trying to change conditions that create them; contrary to temporary solutions provided by philanthropic endeavors.

INSEAD Social Enterpreneurship Program (ISEP) is organizing an international social entrepreneurship conference and alumni meeting every year since its establishment in 2006. The 2010 Social Entrepreneurship Conference that will take place in Istanbul is ISEP’s 4th conference.

These international conferences are organized by ISEP and local partners. This year’s organization is a partnership between ISEP, three ISEP Alumni from Turkey, and Sabancı University (the details of organizing institutions and committee members are under the heading of “About Us” in the web).

The Social Entrepreneurship Conference includes interactive panel discussions and keynote speeches on major opportunities and challenges faced by social entrepreneurs around the world.

Inspiring speakers with compelling stories will definitely impress the attendees!

As the organizing committee, we believe that this conference is a great instrument to publicize the importance of Social Entrepreneurship in Turkey, discover new ways to tackle social problems and bring innovative models into light.

Thus, we INVITE you to join this remarkable event in the 4th of June 2010 that is the first international conference on “Social Entrepreneurship” in Turkey.

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The Videos from the 1st TEDx Manila are now online!

Posting my video from my talk on the Social Business Revolution Congratulations to TED fellow Rom Feria and team!

Unfortunately I had problems with the microphone so audio’s not ideal;

Sharing my presentation via slideshare as well below. I’ll find time to make a slidecast to make it more comprehensible :

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While this is most certainly an award for my fiance’ (!) , it’s also a glowing testament of the work that Rags2Riches is doing. In fact, as Reese is the first to always mention – this award truly belongs to Rags2Riches, our Communities, our Nanays, our Partners, our Designers, our C0-Advocates, and of course – our country, the Philippines

With the award, Reese and Rags2Riches will be putting up RISE – the Rags2Riches Innovation and Social Enterprise Center (although other auxiliary names are being explored for it :p) which will be the livelab that will further scale our work in Eco-Ethical Style.

More details of this endeavor in the months to come – but suffice to say that 2010 continues to be an exciting year for this Social Business Enterprise.

Congratulations, Reese!!! We’re all very proud of you

ROLEX ANNOUNCES FIRST WINNERS OF YOUNG LAUREATE AWARDS

Five Pioneers Poised to Change the World

Geneva, 15 April 2010 – Five visionaries aged under 30 from Ethiopia, India, Nigeria, the Philippines and the United States have been selected as the Young Laureates in the inaugural Rolex Awards for Enterprise: Young Laureates Programme, Rolex announced today at a press conference in Geneva.

Chosen from a pool of nearly 200 candidates worldwide by an international jury of experts, these outstanding social entrepreneurs impressed the judging panel with their passion and conviction to overcome challenges in the areas of science and health, applied technology, exploration, the environment and cultural preservation.

The Rolex Young Laureates are:

Jacob COLKER, 26, United States – is changing the way people get involved in community service. His internet-based programme allows volunteers to use their smartphones to donate spare

minutes to charitable and scientific organizations.

Reese FERNANDEZ, 25, Philippines – is committed to alleviating poverty by training people to become social entrepreneurs. Her Rags2Riches enterprise has already empowered hundreds of women to earn a living by turning scrap materials into elegant fashion accessories.

Nnaemeka IKEGWUONU, 27, Nigeria – intends to boost the living standards of millions of Nigerian farmers through his interactive, mobile radio network. Hundreds of thousands of rural listeners are already receiving and exchanging information on sustainable farming practices and health issues.

Piyush TEWARI, 29, India – has set up a foundation to train a network of police officers and volunteers to respond quickly to road accidents and administer rapid medical care. By providing immediate assistance to victims, he hopes to stem the thousands of fatalities that occur on Indian roads each year.

Bruktawit TIGABU, 28, Ethiopia – is building on the success of a television programme on health that she and her husband are producing for preschool children and their parents.

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“Rolex is delighted to support these exceptional young men and women who represent the best of their generation,” said Rebecca Irvin, director of philanthropy at Rolex. “In tackling the problems that face humanity, they do not think in traditional ways or stick to old ideas. Their innovative projects have begun to have a profound effect on their own communities, and potentially could improve the lives of millions of people.”

An expansion of the long-standing Rolex Awards for Enterprise, the Young Laureates Programme honours men and women between the ages of 18 and 30 with inventive ideas. Each Young

Laureate will receive US$50,000 over the course of two years. During the first year, funding of

$25,000 each will give the recipients time to focus on their pioneering projects, while the second instalment will help them move forward in implementing them. The Rolex Awards international network of innovators, comprised mainly of former Laureates, is available for guidance and to help the winners take the projects to another stage.

“In this sound-bite world of ours, Rolex is giving a message to these motivated young people to take time to think things through and do their projects right,” said American ecologist Margaret

D. Lowman, one of the 10 jury members who chose the winners. “The younger generation really gets it when it comes to the planet and how the machinery of the earth works. We only need to empower them to act and Rolex is doing this by providing the gift of time.”

Another jury member, Singaporean explorer Khoo Swee Chiow, agreed: “Rolex is giving the Young Laureates time to mature. I think preparation is important. That is why, I guess, it took me

ten years before I finally climbed Everest.”

On 11 November 2010, Rolex will mark the accomplishments of the Young Laureates at an event at the recently launched Rolex Learning Center, a hub for educational exchange, at a highly respected Swiss university, the Ecole Polytechnique Fédérale de Lausanne (EPFL). Experts from

related fields, including some former Laureates, will join the celebration.

For further information, visit: young.rolexawards.com, or contact:

Mary O’ Mahony
Head of the Rolex Awards Young Laureates Programme
The Rolex Awards for Enterprise, P.O. Box 1311, 1211 Geneva 26 Switzerland
Tel. +41 22 302 2179, Fax +41 22 302 2585

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PinoyME Foundation – the Pinoy MicroEnterprise initiative founded by former President Corazon Aquino – just held a stakeholder’s conference on the theme ‘MAINSTREAMING MICRO’.

The invitation from Dan Songco, President and CEO of PinoyME, read :

“While microfinance and microenterprise development continues to evolve, the microentrepreneurship sector is faced with growing opportunities and pressing issues that must be addressed in order to fulfill microentrepreneurship’s promise in helping the poor move out of poverty.

The Philippine Microentrepreneurship Stakeholders Conference aims to assess the current situation and discuss a proposed policy agenda derived from an extensive survey of literature and roundtable discussions of policy experts and institutions. The conference aims to gather a broad constituency behind this proposed agenda in the hope of promoting collaboration among the different stakeholders in the sector and put microentrepreneurship in the mainstream of Philippine social and economic concerns.”

This theme of transitioning microentrepreneurs from micro to SME is at the core of the work we do in Hapinoy, and as such I decided to attend. The conference was well-represented with more than 100+ attendees from stakeholders in academe, donor/funding agencies, development organizations, corporate foundations, microfinance institutions, social enterprises, commercial banks, and government institutions. There were even quite a few familiar faces whom I last saw in the Eradicating Poverty Conference held last November in Cebu.

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Program Schedule of the Mainstreaming Micro Conference

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The crux of the conference was a proposed Policy Agenda on the state of the microfinancing industry – as well as policy implications on it scaling across the country. It was authored by core members of the PinoyME research consortium, which is strengthening its knowledge base and research on the sector.

The Policy Framework has four major components : Progress (increasing market opportunities for microentrepreneurs), Impact (increasing MFIs’ impact on reducing poverty), Access (increasing access of poor people to financial services), and Outreach (increasing outreach of microfinance to rural, hard to reach areas).

These (4) major areas were processed in groups through consultative workshops and dialogue.

I myself joined Workshop #4 on Progress, wherein we tackled the question “How can we enable microfinance clients to graduate into small enterprises?”. The group was moderated by Mr. Jerry Pacturan, Executive Director of PDAP (Philippine Development Assistance Program) with discussants Lanny Nanagas, Chit Juan, Jerry Clavecillas, and Vic Roaring.

There were some common threads that lined our group’s discussion.

One thread was the reality that not all microentrepreneurs want to transition into small entrepreneurs. This is something we’ve certainly experienced in Hapinoy and as such, we have (2) levels — 1. Hapinoy Community Stores that act as the depot/distributor/leader to 2. the smaller Hapinoy Stores. Typically, our CS owners are those that have more drive, ambition, and vision both for themselves and their businesses. They also provide role modeling and a provide leverage in multiplying our impact.

Another thread was the model of development itself — should we be focusing on providing microfinancing/microentrepreneurship, or is it better to put energy behind SME’s and job creation? I personally think that it should be a balance of both. Job creation would be the relatively easier path; but it is microenterprise development that could provide fertile ground for those diamonds in the rough that will eventually become small-to-medium-sized businesses. Also, microfinancing provides the larger outreach that SME’s might not be able to scale towards.

Another discussion thread was the role of Microfinancing Institutions vis-a-vis Business Development Services. Should MFI’s be doing both? Or should they be entirely separate institutions? Our experience with our MFI partner CARD is that they are able to straddle both, although we at MicroVentures are also fulfilling additional BDS services for them.

The last thread – and the main point that i was really driving at – is creating an environment that cultivates and supports microenterprises. On this point, my main belief is that we need infrastructure and institutions that are microenterprise-friendly, as the current environment is decidedly not so. We need better policies for taxation on microenterprises as they integrate into the formal economy; We also need physical infrastructure – whether it be access to roads, energy, and market linkages. While access to financing has been cracked by the MFI’s, it is this whole other slew of needs that also have to be addressed if we do indeed hope to mainstream the micro.

Unfortunately, I wasn’t able to finish the conference but I’m most certain that the conference went well. More details on PinoyME’s website.

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Traditional thinking suggests that you should start with a great business idea.

I cannot disagree with that; It is after all something I myself would advocate.

But indulge me as I broaden the perspective.

Before embarking on the problem, the need, the industry analysis, the opportunity, the big kick-ass business concept – ask yourself a simple, fundamental question – “Are You Yourself An Idea?”

By this, I mean :
- Stripped of everything, what do you stand for at your very core?
- When people hear your name, do concepts beyond you resonate?
- Are you married to a dream that you will live for until your very last breath?

To be fair, most entrepreneurs start their own businesses, make a ton of money, and in fact become very successful without even tangentially answering these questions. But that branch of entrepreneurship is what I would call ‘Entrepreneurship-Lite’. I’m really a bigger fan of the flipside, of ‘hardcore entrepreneurship’ – the kind wherein entrepreneurs truly pursue a Quixotic vision, ideas they cannot help but humbly submit to.

This dichotomy I believe is what separates the men from the boys, the innovators from the wannabe’s.

When you think of Muhammad Yunus, the idea of Making Poverty History relentlessly surfaces. After founding Grameen which eventually birthed the global microfinancing movement, he is now moving into the next phase with social business enterprise, of institutions and mechanisms that can create a world without poverty. Yunus has been incisively consistent along this path, and it is crystal clear that this idea is what is truly at his very core.

For the first half of his life, Bill Gates stood for a computer in every desk and every home, and this idea eventually made him the richest man on the planet. Now in Act 2 of his life, the idea that all lives have equal value is what consumes him, quite possibly for the rest of his life.

Closer to home, my InoventDesign tag-team partner Brian Quebengco is married to Championing Filipino Ideas – and believe me when I say that you’ll rarely find a more hardcore Filipino entrepreneur than him. From founding Inovent, to conceptualizing the Ilumina, and now with Inovent Academy and spurring the movement of Inovention, his vision is coming more and more into reality.

I could go on and on with more examples, but I really want to throw this back at you.

Are You An Idea? and if so, What Idea Are You?

Because it is the one question when truly, honestly answered – will make everything else easier.

And if you want to throw the question back at me, then I’d quickly answer :  Harnessing Innovation for A Better World.

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In Rags2Riches, we have a term which reflects one of our core philosophies : “The Back End is the Front End”.

You see, ‘The Back End’ is the aspect that customers normally don’t see; They only see the fancy advertising, the glitzy images, the seductive storefront, the alluring posters, the massive billboards.

The customer’s interface with the enterprise, if you really think about it, is really only with marketing and sales. After all, nobody really cares about the Back Office – the people in HR, Accounting, and Legal.

Moreover, the true Back End – Production – is more often than not nameless workers in a nondescript factory. You don’t really give a damn where the product you bought was made and who made them – as a customer, your role in the universe is simply to buy.

But it’s on this point wherein Rags2Riches shares a different paradigm.

Because we do want you to care.

We want you to care who made the products you buy. We want you to give a damn about the artisans who painstakingly crafted the product you so wholeheartedly bought.

slide taken from the Rags2Riches Manifesto

And that’s why our Back End – the Payatas Community – is delicately woven into our Front End. The Nanays are at the spotlight of Rags2Riches – in our events, in our communication, in our collaterals. We proudly wear our advocacy on our sleeves.

But we also deal with this Back End-Front End integration very delicately, especially because its subject to misinterpretation and – shudder to think – exploitation.

We’re cognizant that the community is NOT a marketing tool. That’s a trap that’s just way too easy to fall into. In fact, sometimes it’s downright preadtory and lessens the dignity of the marginalized.

The reason the Rags2Riches Nanays are at the forefront is not a marketing tactic; Its actually our vehicle of spreading the advocacy – that our social business enterprise isn’t in the business of selling bags, it’s in the business of empowerment. On a deeper level, the reason they are at the forefront is because it gives them pride in the work that they do. The R2R Nanays aren’t laborers or workers; They’re artisans.

In fact, they’re artisans AND entrepreneurs. Because when you buy an RIIR Designer Bag, you’re not donating to beneficiaries; you’re purchasing from an empowered community of business owners.

This coming March 24 we are again launching another chapter of Rags2Riches – aesthETHICS : the RIIR Aranaz Spring/Summer Collection Launch, wherein the empowered community artisans have again collaborated with designer Amina Aranaz-Alunan, and proudly share their work. The text of our invitation says it all :

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We Celebrate Beauty.

The hands that make them.

The advocate that supports them.

And the life that continues because of them.

Join us for One Beautiful Night.

—

One beautiful night, indeed! Message me directly ruizmark@gmail.com if you want to go

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Sandwiched amidst lighter conversation was a topic that landed on the dinner table :

What country’s model of development can the Philippines emulate?

Now, I’m an entrepreneur, not an economist; But I guess my opinionated self can’t help but throw in my own two cents on this personally-fascinating topic.

The angle that really fascinates me, though, goes beyond the “Should the Philippines follow the US, India, Japan, or South Korea model of economic progress?” discussion. Now while I think that topic is a critically important conversation, I think I’ll save my thoughts on that for another blog. (My quick answer: an intersection of India and South Korea.)

For me, the angle I want to explore begins with clarifying the dichotomy between Developed vs. Developing Countries.

A quick search on slideshare gives us a quick resource :

Now, this is far from a technical, scientific explanation of the difference in definitions; But it does give us a flavor of the general bias.

If anything, it reinforces that Development is something that every country must aspire for. It gets populations out of poverty and improves a nation’s way of life.

But while I generally agree that Developed Countries have shown ‘The Way’ for those still ‘Developing’, I for one don’t accept that we have to take their ‘Roadmaps for Development’ lock, stock, and barrel.

Why?

For the simple reason that the end result – their version of development – is not something embraceable in its entirety.

Yes, Developed Countries have the highest GDPs per capita, while Developing Countries have most of its people living under $2 a day.

Yes, Developed Countries have infrastructure. Technology. Military might. And products that Developing Countries want.

But they sure as heck have also tons of baggage that I wouldn’t touch with a country-wide pole : Environmental degradation. Unhappy populaces. Mountains of debt driven by unbridled consumerism.

Corny as it sounds … development … doesn’t always equal … happiness.

Let me be clear : this Developing-Developed dichotomy isn’t a West vs East debate. Even Developed Asian economies experience the same issues. If either China or India mirror US development with its patterns of consumption and addiction to oil, climate change will accelerate at disaster-movie-proportions.

So, for me, the heart of the matter is rethinking a new model of development – one that goes beyond what we have normally laid it out to be.

My book of the moment is The Economics of Happiness : Building Genuine Wealth by Mark Anielski, and it has greatly influenced the thinking I have on the subject.

The book urges its readers to go beyond traditional measures of economic development – e.g. our fixation on GDP – and expand the scope to other measures that would result in Genuine Wealth. Anielski’s philosophy is that Genuine Wealth is based on five capital assets: human (duh, people), social (strength of relationships with each other), natural (gifts from nature e.g. forests, natural gas, mineral resources), built (what we’ve made e.g. equipment, factories, tools), and financial (money!) – and this becomes the foundation for an economic model of well-being and prosperity. Of Happiness.

I know this is mostly touchy-feely, but I think we have to start becoming more comfortable with this new reality. After all, the world that’s emerging is the fuzziest that it’s ever been. The intangibles are seamlessly meshing with the tangibles in entirely new, surprising ways.

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So, going back to the Philippines, and what we can – and should – aspire for from development?

We have to grab the issues of poverty and corruption by the horns, bare minimum. Let’s not even talk about happiness economics if people don’t even get to eat three times a day, brought about by the absolute excess of those in power. The first issue requires traditional economic development that brings financial security to people; The second requires a radical new inculturation and cleansing of government.

But beyond solving the poverty-corruption conundrum, we also have to wrap our heads around the fact that The Filipino Dream shouldn’t just be financial security and purely materialistic pursuits.  Developed economies have shown that this kind of mentality can lead to unbridled consumption, a breakdown in values, and environmental degradation. So as we explore the hard economics, we also have to grapple with the socio-cultural approach. We need to change our thinking, what we measure, and how we go about things.

To end, one of the few silver linings of being a laggard is that you see what has befallen those ahead of you – both the good and the bad. The Philippines can emulate most of what is good from those that have Developed. But we have the singular, prime opportunity to avoid the Bad. Let’s not waste this opportunity.

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Well, the truth of the matter is that lately, I’ve begun to become more comfortable explaining Hapinoy’s Business Model in this way. Most especially now that we’re in a stage wherein we can more tangibly share the next phase of our evolution.

You see, a lot of people look at Hapinoy and mistakenly think that the whole plan is simply to organize, aggregate, and makeover a chain of sari-sari stores.

That’s actually an intuitive observation, as aggregating thousands of sari-sari stores is indeed a significant chunk of the Hapinoy program.

But from the very beginning, we never really saw the Hapinoy Stores to remain as ordinary sari-sari stores. Since a major thrust of Hapinoy is to grow the business of our micro-entrepreneur storeowners – captured in our Path to Prosperity Program – then we have to go beyond traditional business thinking in order to realize new revenue streams. And in a situation wherein commodity goods provide only commodity margins, then innovation and evolution will play a key part in our Hapinoy Stores’ growth.

And so, while one whole path of growth for the Hapinoy community is growth through backward-integration and creating an “inclusive supply chain” for community-based producers (a whole separate blog entry in itself) …

… another big area of growth is really the evolution of Hapinoy Stores into what we call Hapinoy+ (Hapinoy-Plus):

Simply put, Hapinoy+ Stores are those stores that go beyond the traditional sari-sari store model – beyond the basic assortment of commodity products.

A few quick examples :

- Due to our partnership with Smart, we’ve converted Hapinoy Stores into a cellphone-loading platform. In fact, our top stores have been computerized and wired – paving the way for Hapinoy Internet Cafe’s. After thinking through on how to maximize the very same PC’s, we partnered with Intel and have an ongoing experiment on a simple photo-printing solution called HapiPrints.

- With Ateneo School of Government’s iBop-Asia project, we’re actively researching the Hapinoy Healthcare Hub, our exploration into medicine distribution and marketing.

- Just recently, we met with a large beauty-care company’s CEO, and will now explore a new category pillar of products for the BoP,  thus reimagining the Sari-Sari Store are as a center for beauty care.

And the list goes on and on : agriculture, simple technologies for the BoP, food and nutrition, et cetera. The possibilities are almost limitless.

And as these limitless possibilities emerge, this is where the iPhone metaphor begins to rear its head.

Because Hapinoy’s strategy and Business Model is NOT retailing. The truth is that – much like the iPhone – our business model is to be a platform.

To the non-geeks, let me explain that most of the functionalities of the iPhone are unleashed through the applications installed on it. It’s what has allowed the iPhone to go beyond being just a normal phone. Literally, it has simultaneously become a GPS device, a gaming machine, an ebook/comicbook reader, a location-sensitive information tool, a PDA/organizer, and so on and so forth and so on and so forth (all the way up to 100,000+ apps)

But here’s the beauty of the platform business model :

Apple manufactured the iPhone and got it into the hands of millions of people; And yet equally as important, Apple also developed the distribution mechanism to bring the Apps to the iPhone – the much-venerated iTunes Store.

But if you dig down to it, all the applications that you can buy and install on the iPhone – all of these were developed by independent third party software developers. Which then points to the fact that Apple didn’t have to invest in huge resources and manpower in order to develop all those applications from scratch; It just had to open itself up as a platform, and then relied on an ecosystem of these companies who then developed apps for their device.

The beauty is that it’s a win-win-win situation. iPhone users get more functionality, App developers gain sales from selling their Apps, and Apple derives revenue from every transaction.

And so, applying the same thinking to Hapinoy – in order for the Hapinoy Store to unleash the true potential of the network, then the ecosytem must be opened up as a platform to independent entrepreneurs who want to develop “applications” for sari-sari stores. And these apps can take so many various forms — whether it be new products for the BoP, new services even (such as the Hapinoy+ examples mentioned above), most especially new livelihood opportunities for the BoP.

And it will also be win-win-win : you’ll make money, the Hapinoy Store will realize higher revenues, and MicroVentures also benefits from the transaction.

So if you’re an entrepreneur out there who wants to start a social business enterprise, we enjoin you to start with Hapinoy. You won’t have to start from scratch in trying to make an impact; We’ve already got a large network, an ecosystem, a platform, upon which you can build your big idea. Email me : mark@hapinoy.com

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Last weekend, Reese Fernandez – President of Rags2Riches, Inc and my other/better half – conducted a transition workshop with the Rags2Riches Cooperative’s Board of Directors. The main content of the workshop was – and stay with me here – finance and managerial accounting.

To appreciate the concept on why it’s a transition, one has to understand first our philosophy and business model.

I’ve often said that the easiest thing Rags2Riches could have done – in order to impact the community – was to have set-up a Rags2Riches factory and hire the Payatas Nanays as laborers. The Nanays would have ended up with a production area, they would clock-in time in/time out from 9-to-5, get decent wages, and live a slightly more financially secure life.

It would have made things absolutely simpler than our complex arrangement right now — the Nanays as part-owners/shareholders of Rags2Riches Inc., and also fully owning – independently – Rags2Riches cooperative. In fact, it would also make things simpler on the business and production side — if the Nanays were hired employees, then we could demand specific work-hours, impose targets, and let all hell break loose if production wasn’t up to speed – quite unlike the current experience wherein production and time commitments are continuing negotiations.

But mere employment, strictly speaking, wasn’t – and isn’t – the goal of Rags2Riches.

It’s about a psychological/cultural upheaval; A directed transition from dependence, patronage, and entitlement – into independence, participatory equality, and empowerment.

And this is something that will only happen if there’s a conscious movement to the community having, owning, and running their own business. And this will only take form once the community becomes their own Rags2Riches cooperative. It’s a necessary, albeit potentially difficult, step.

This is a much harder route to take, but one that we feel is more sustainable and long-term; After all, this is what differentiates us as a social business enterprise as opposed to a traditional business.

Through time and experiences of success, the community – through running their own business – will discover self-confidence and a can-do attitude. And that paradigm shift leads to a luxury a lot of people take for granted — the belief that you can indeed control your own destiny.

When this happens – this psychological shift towards empowerment – the community’s culture fundamentally changes. And this, we believe, is the true goal and challenge. It’s not just about putting more money in marginalized communities’ pockets (although indeed, providing livelihood is an undeniably important factor), it’s really about working with the community so that they can eventually stand on their own two feet.

And so, this leads us to Rags2Riches Inc’s business model.

Other schools of thought position the social entrepreneur’s philosophy as making oneself obsolete. Find a social problem, come up with an innovative solution, disappear, and move on to the next problem. While I can imagine how this would be true for certain cases – climate change, human trafficking, spousal abuse, prostitution, to name a few – our particular context in Rags2Riches (and indeed, Hapinoy) points us towards a difference perspective. Given that we’re in livelihood, we see an ongoing business relationship with the community, even – and actually, most especially – after they have been set-up into their own cooperative.

This is the business model we’re looking at :

What we’ve essentially done is look at the entire value chain, and ask ourselves fundamental questions : Which portions of the chain would the community of Nanays be best at, that we at R2R inc wouldn’t be able to touch with a ten-inch pole? And what could R2R inc be potentially best at that could deliver value to the R2R cooperative?

Which leaves us with this equation : R2R Cooperative would focus on production, while R2R inc would focus on product design & development and marketing & sales, thus creating a configuration that would allow for a continuing business relationship. A business partnership between equals.

How do we ensure it is indeed a partnership of equals?

Well, here’s a peculiar fact – the R2R cooperative is not exclusively tied to R2R inc – meaning that the cooperative could choose to “fire” R2R inc and do business with another organization, if they choose to do so.

With this arrangement, we can then truly say that the cooperative can determine its own destiny.

Some people who’ve seen this model have asked us if we were crazy. After all, why expend so much energy and effort into organizing the community into their own cooperative, and then not lock them in to your system?

It doesn’t seem to make any sense to a lot, yes. But for us, it does.

After all, the goal of community empowerment is at the core of what we’re doing, and this is the route, the decision, that increases our chances at achieving that. But furthermore, there’s also business rationality here. Given that the R2R cooperative can choose to work with any organization it wants, this then forces R2R inc to continuously strive to give the coop the the best deal (in fact, the Nanays negotiating with us for the best deal is a welcome and good thing — it spells equality!); it also forces us to make sure that we are indeed the best business partner, keeps us on our toes, and creates a healthy tension and pressure for us to innovate.

And so this is what brings us back to the workshop that Reese and team conducted.

The whole exercise was working with the Nanays in crafting the financials of their cooperative. There was most definitely a managerial view — as they saw first-hand the relationships between wages, product-costing, and overheads – and how all this affected the selling prices of what they produced. And since this is a partnership of openness, R2R coop also saw how their decisions affected the financials of R2R inc.

Summa total, the cooperative took an important step to managing their business from a financial perspective — from simple things such as what ongoing expenses should they rationalize, to more sensitive topics such as how much they want to pay the members and in what schemes. It wasn’t a light conversation, but it was definitely something that had to be done.

And personally, I can’t help but say that it was indeed quite fulfilling to have seen this whole thing unfold.

While the Rags2Riches model is definitely a work-in-progress, it seems more and more that we’re along the right path.

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