All about the Hub experience: The best practices to build regional hubs

Desh Deshpande, Sanjay Kadaveru, and Nagaraja Prakasam spoke about how developing regional hubs can promote social innovation, at the AFI Forum 2015.

“A problem is the absence of an idea. Not absence of a solution.”

This is rather what drives the Sandbox for Innovation (the Hubli Sandbox) – it was created with an aim to provide a nurturing environment that can foster social innovation and entrepreneurship and fill the gap of this ‘absence of an idea’.

The Hubli Sandbox is the earliest of its kind run by the Deshpande Foundation. This Sandbox has incubated several successful enterprises, the most recognized being the Akshaya Patra, the midday meal scheme that feeds millions of school-children every day.

The programs at the Hubli Sandbox run by the Deshpande Foundation include Navodyami (to help micro-entrepreneurs in Karnataka expand their business), Entrepreneurs in Residence (EIR) program (that incubates aspiring entrepreneurs), and Leaders Accelerating Development (LEAD) Programme among others. The Hubli sandbox covers five districts in Karnataka — Belgaum, Dharwad, Gadag, Haveri, and Uttar Kannada that is home to about 10 million people.

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Today, the Sandbox model is being replicated in other regions– including the Kakatiya Sandbox in Nizamabad, Telangana (named after the progressive Kakatiya Dynasty that ruled Telangana), that will be funded by Raju Reddy and Phanindra Sama, and the Varanasi Sandbox by Dilip Modi.

There are also Sandboxes in wealthier countries like USA and Canada (Entrepreneurship for All Program in Massachusetts and Pond-Deshpande Center in New Brunswick). While the concept of social enterprise may be well understood in many parts of the world, that you can create economic value while solving problems is not easily understood in economies like US or Canada- where what’s common is purely not profit or purely for profit models.

Since Sandboxes aim at incubating enterprises that look at a local problem, in some ways similarities between the various sandboxes emerge. Karina LeBlanc, Executive Director of the Pond-Deshpande Center says, “Of course, the youth (anywhere) need jobs, but they’re also looking for impact and social contribution from their careers.”

These Sandboxes are not in the big cities, and their style of working is very different from a regular incubator who’ll expect return on their investments. As one entrepreneur at the Hubli Sandbox put it, he was ‘still standing’ as the Sandbox gave him access to expertise, while the location (Hubli) kept his costs low and the Sandbox ecosystem didn’t push him to show profits before he was ready.

At one of the panel discussions at the recently held AFI conference, panelists discussed AFI’s initiative to build a nation-wide network of 20 regional hubs of social innovation by the year 2020 and their own experience of building hubs.

The panelists included Gururaj “Desh” Deshpande, (a successful entrepreneur who founded the Deshpande Foundation along with his wife Jaishree Deshpande); Nagaraja “Naga” Prakasam, (Angel Investor and founder of a sandbox ecosystem in Madurai) and Sanjay Kadaveru, President of AFI (Action for India).

Gururaj 'Desh' Deshpande and Sanjay Kadaveru speaking at the AFI Annual Forum 2015

Gururaj ‘Desh’ Deshpande and Sanjay Kadaveru speaking at the AFI Annual Forum 2015

Context and Inspiration for Desh starting the Hubli Sandbox

Leaving India with $8 in his pocket in the ‘70s, Deshpande is now a successful entrepreneur and one of the richest men in the world. He and his wife Jaishree graduated from IIT Madras, moved to the US in the early ‘70s and have been looking for ways to give back to society.

Deshpande’s roots are in Hubli and that was another reason for them to set up the Deshpande Foundation there in 1996. Indeed, when they started out, they thought they would focus on technological innovations, but later they realized they should focus on social innovation. They realized that the core competence for social innovation starts with a deep understanding of the problem itself.

The Hubli Sandbox was set up in 2006, a place where social entrepreneurs can come with their ideas and experiment. Over the last eight years, the foundation and Sandbox together have funded 135 ideas since inception and seen 10 achieve significant scale.

Deshpande says, “The new idea that you bring to solve the problem is secondary to the solution- it need not be patentable, first time in the world, hugely competitive, etc. I’d say the first fundamental principle of social innovation is coming up with a relevant solution that’s co-created by the people you’re looking to help, not thrusting a solution upon them that you think is good. So,  good intention or compassion is not enough.”

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That is what the social innovation sandbox in Hubli is all about, they want to create an environment where innovative approaches to addressing social challenges is encouraged, instead of sitting back, complaining and being indifferent.

“The biggest lesson”, says Deshpande, “is not to lead with ideas. Almost every tech entrepreneur thinks about  problems with a pure technology focus, he thinks he can solve the problem with a great app he can create – that doesn’t really work. The secret to the Hubli Sandbox (which has been operational for the last 8 years) is to actually make the people there into innovators and leaders making solutions. Then you can add technology, finances, funding etc- but ultimately, they’re the owners of the solution”

The secret to building an ecosystem

Deshpande said he’s seen in the Hubli Sandbox, that when someone becomes passionate about a problem they can’t stop thinking about it and somehow they reach a solution, so in a sense, every problem becomes an opportunity. The secret to building an ecosystem is not about starting with big infrastructure, but about having these ‘problem solvers’.

This is very well understood in the high end market- IT, bioscience etc, but not always the social sector. This is a basic principle they use in all their sandboxes, in India, US and Canada, (even though the context of the sandboxes are different) – make them problem solvers, get them excited and the problems are solved (at least to some extent).

Going about systematizing and institutionalizing problem solving

Speaking about their LEAD program, Deshpande says, “At the Foundation, we have a program called LEAD, for college kids, they pick problems in society and they try and solve it over the course of a year. They have T-shirt that says, “Problems start with ‘they’, solutions start with ‘I’”, that really frames what they are there to do. Of course , not everyone is successful in coming up with a solution. They are also trained, especially in work ethic and communication skills. They are on a tight schedule- they’re up from 5 AM to  11 PM, 7 days a week, no holidays. Of course the first month is not easy, but later you ask them if they’d like a day off, and they’ll refuse!”

According to Deshpande, it’s very important to make them feel empowered, like equals, and related a story about one of his LEAD entrepreneurs, whom he casually introduced to Ratan Tata. The 20 something boy pulled up a chair and said, “So Mr Tata, what do you do in Bombay.”

“This goes back to everything the Deshpande Foundation does,” Deshpande said, “Making them feel part of the system, for example, at Development Dialogues, you’ll see an equal number of $2/day persons and of $200/day persons.”

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Naga’s Madurai Sandbox story

When ‘Naga’ Prakasam was in the US, he was part of an association that raised funds for development activity in India and that’s what gave him exposure to the problems of India. When he got back to India, his work focused more on the entrepreneurial ecosystem, but by early 2012, he knew he wanted to work in this area full time, but on marrying the efficiency, accountability and scalability of a corporate with social impact potential.

He eventually went on to work with the IAN (Indian Angel Network) where he spearheaded impact thinking, with what eventually became IAIN (Indian Angel Impact Network). Merging all these experiences, his work looks to nurture innovate and invest in SEs (Social Enterprises) or ideas. He has worked with several entrepreneurs and investors in Madurai, looking to solve local problems through entrepreneurship.

Spreading the work of these hubs through AFI

Sanjay Kadaveru speaking at the AFI Annual Forum 2015

Sanjay Kadaveru speaking at the AFI Annual Forum 2015

Sanjay Kadaveru, President of the AFI spoke about how he was excited about the sandbox model as it was not just a great idea, but a model demonstrated on the ground. His efforts at AFI are basically to evangelise this model and identify people like Desh to launch these hubs in different parts of the country.

Providing what an entrepreneur needs

Deshpande: “What helps an entrepreneur is an ecosystem that helps you experiment, so if you fail, you want to fail small and have an ecosystem that nurtures that experimenting, and that’s what we do at the Sandbox. What you need in place is possibilities for experimentation, HR, distribution channel, access to capital”

Prakasam spoke about how he sees it from 3 angles (1) It’s necessary to bring market alignment to grassroot innovations, (2) It’s important to reach the last mile and work with the population (see how Gramalaya works with the last mile on sanitation) and (3) Co-creation- perhaps the problem can’t be solved only by the local population- but definitely not by totally excluding them either.

Accelerating the scale of these hubs

Deshpande: “India is in a pretty unique position that we have good technology, competent professionals, and big problems staring us in the face every day we have the freedom to do anything in India (which you can’t in China). All this means that even if a small percentage of the population working on something, it has a massive impact.”

Dispelling notions that ‘replicating hubs’ across India will be a ‘cut and paste’ solution, Kadaveru says, “When we say we want to replicate hubs- it doesn’t mean we can lift a solution from a place and transplant it somewhere else and expect it to work, it has to be contextualized to local needs . The flavour of the hub also depends on the hub champions. Like the Varanasi hub championed by Dilip Modi (of Spice Telecom) is going to be very focused on telecom.”

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Speaking about the need for a local connection of the hub champion, Prakasam says, “It also helps if the hub champion is from the region – like Madurai for me or Hubli for Desh – the champion has to have the local understanding and know the local language.”

Dilip Modi (the Varanasi hub champion) chose Varanasi as he has roots there, it offers a lot of potential for impact and to collaborate with universities like the Banaras Hindu University. The Hubli Sandbox provides a proof of concept of what has worked and though different, the Varanasi Sandbox is going to be ‘seeded’ with some Hubli Sandbox incubatees (like Agastya non-profit educational trust which teaches science to rural children) and programs (like LEAD) to showcase how the sandbox works.

Balancing profit with social impact in the hubs

Deshpande: “We need to blur the difference between these activities- what drives an entrepreneur and a someone focused on social impact. What they have in common is to do something that will make a difference, creating a value. In some cases, people can pay you for the value you’re creating, and in some cases, no.  – whether their model is for profit or not for profit.”

Advice to entrepreneurs

On choosing mentors, Deshpande says it’s important to pick a useful mentor; not just someone who’s rich or influential or has a big name or someone who you expect will give you funding or business orders, in fact, he suggests that entrepreneurs know in advance what to expect from mentors. He often tells his entrepreneurs, “Entrepreneurs have to learn how to fire their mentors.” Entrepreneurship is no cakewalk, “it’s not easy, it’s a lonely journey, it’s risky. But at the end of the day, they need to feel empowered and privileged that they are going through that risk.”

On choosing mentors, Kadaveru says it’s important to choose from a large pool of mentors and have clear expectations about what they will do.

Prakasam says to realize the difference between a mentor and someone who can give you expert advice: “Figure out if you need mentorship or expert advice. With expert advice, you have a precise problem and you get a precise solution, mentoring is different- you may not get an answer, but a mentor will guide you to arrive at an answer. At the end of the day, the entrepreneur must realize that he has to make the final call on the decision and he is responsible. Mentoring is just a sounding board. If you keep that distinction clearly, you won’t be disappointed.”


This is part of a content partnership between The Alternative and Action for India (AFI), publishing key insights from the AFI Forum 2015 held in Bangalore on 31st January and 1st February.


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