Retrospective on Energy as a Service

Matthew Carney - Ross School of Business & School for Environment and Sustainability

Namaste! With my internship now over, it’s a perfect chance to reflect on my summer and how my first year at Michigan led to this opportunity. Like many students, I came to Michigan without a firm idea of where exactly I wanted to go professionally. I knew I wanted to do something in the realm of sustainability, but I struggled to decide which problem I wanted to focus on. Renewable energy? Clean water? Waste? Poverty? Forest degradation? These were all significant areas to focus on, but I still felt like I hadn’t quite scratched my itch.

Thankfully, my vision became clearer as the year wore on and I began to reconsider energy not as a product to be sold - but a service to be provided. Working with institutions like the William Davidson Institute helped me understand that we shouldn’t limit ourselves to thinking that the benefits of renewable energy are realized when the lights turn on. Particularly in emerging markets, new sources of renewable energy can have a significant positive impact beyond reducing carbon emissions.

Subsistence farmers in rural Nepal provide a stark reminder of this fact. These farmers spend hours each day farming their land by hand, and struggle to produce enough crops to feed themselves - much less sell for profit. Additionally, tasks such as irrigating land and grinding crops into flour are extremely manual labor-intensive and incur significant opportunity costs due to how time-consuming they are.

Access to solar-powered mechanization can help these farmers in numerous ways. First, improved agricultural productivity means that farmers can produce more crops with less effort, ensuring they not only have enough food for themselves but also have crops they can sell to earn income. Secondly, reducing the number of manual labor hours needed to tend the farm leaves individuals, particularly women and children, free to pursue other income-generating opportunities. From an environmental perspective, the adoption of modular solar power can also meet these farmers’ needs while reducing the incentive for capital-intensive, environmentally unfriendly electrification infrastructure projects.

Overall, I was very lucky to spend my summer working with a company that helped me see the positive trickle down effects energy access can have in emerging markets. I’m grateful for the experience WDI provided because I know this experience will provide a new lens for how I approach the upcoming year at Ross and my career interests.

10 Tips for Making Great Business Decisions

Chris Owen - Ross School of Business and School for Sustainability and Environment

Making great business decisions can be difficult. Incomplete information, confounding variables, conflicting interests, and tight timelines—these are just a few of the challenges that entrepreneurs face as decision-makers. Fortunately, sound decision-making is a skill that can, in part, be taught. Below is an abbreviated list of strategies—a decision-making toolkit—based on the research of both Nobel Prize winner Richard Thaler and Joe Arvai of the Erb Institute that we at Poornatha are teaching our entrepreneurs in the Journey ‘n Joy Entrepreneurship Ecosystem.

1. Begin with vision and values. Your decisions should align with and support both your overarching vision and your core values. What are the purpose and goals of your business? Does this decision support that purpose and goals? What are your business’ values? How does this decision affect both shareholders and stakeholders in your business ecosystem?
2. Identify important information. You will always have either too much information or not enough. Your responsibility is to identify important information while ignoring that which is irrelevant. This is both an art and a science. Lean on your own experience as well as the guidance of mentors. Lastly, stay focused on your end goal as you research your options and their respective outcomes.
3. Learn from the past. History is a great teacher. Often, a simple look backward can help you take a step forward. Ask yourself: Have I or someone I know faced similar circumstances before? What was the decision that was made and what was the outcome? How is my situation similar or different?
4. Be aware of brain tricks. Our brains are inherently lazy. In order to process large amounts of information quickly, we use mental heuristics—that is, mental shortcuts—to make decisions. We take into greater consideration experiences that have happened more recently (recency effect) or more often (frequency effect). We tend not to stray far from past decisions (anchoring effect) and depend largely on our feelings (affect heuristic). Are any of these brain tricks influencing you decision in a disproportionate way? How and why?
5. Acknowledge choice architecture. The options with which we are presented often dictate the decisions we make. Our environment shapes us. So ask yourself: “What are the options with which I am being presented? Can I restructure this problem or my environment to provide myself different options?”
6. Avoid decision fatigue. Making a multitude of daily decisions makes us mentally tired. This is called “decision fatigue” and it weakens our creativity, analytical ability, and self-control. Therefore, never make important decisions after you have already made several other decisions or when you feel fatigued.
7. Quantify it to clarify it. Numbers matter - a lot. They often make clear on paper that which may be fuzzy in our minds. Identify important data points, quantify them, and highlight trends. When possibly, equalize your choices by measuring them and comparing their outcomes quantitatively.
8. Taste-test your top choice. Apply the concept of a “prototype” or MVP (minimum viable product) to your decision-making process. Is there a way you can test the various outcomes of this decision at a negligible cost? The goal of this strategy is to gain as much feedback as you can before having to fully commit.
9. Hedge your bet with a diversified decision portfolio. Ask Yourself: “Do I have to go all-in with this decision or are there ways I can maximize my probability of success by distributing risk over several selected options?” This is the equivalent of a diversified portfolio of investments—a “decision risk portfolio.” Don’t risk everything on one choice if you don’t need to, especially when you have several great options available to you.
10. Trust your gut. Most business owners begin by trusting their gut. While this is valid to a degree, why not also inform your decision with the aforementioned decision-making tools? Your personal experience and collective wisdom are important, but it shouldn’t be the only factor that determines your final decision. Therefore, trust an “informed gut instinct.”

BONUS: Document your decision outcomes. Many business owners make a decision then neglect to reflect on the process which produced the outcome. Begin documenting your decision-making process. Over time, you will accumulate a library of decision-making maps which can inform future choices.

References and Recommended Resources:

Triple-Bottom-Line Decision-Making, Joe Arvai, Professor at the University of Michigan

Nudge, Richard Thaler, University of Chicago

Ruth Chang, Hard Choices, TEDx

A Day in the Life

Chris Owen - Ross School of Business and School for Environment and Sustainability

No morning alarm needed here in Madurai. Prayers are projected from a nearby temple via loudspeaker at four-thirty every morning. A street sweeper with bells on his broom acts as my 5am snooze button. And of course, the cacophony of beeps and bells, horns and honks by motos, bikes, and buses begins at six—a definitive dream crusher. Night owls have no hope here.

After a morning meeting or two via BlueJeans on side projects that are progressing stateside, I depart for the gym where I’m welcomed by Justin Bieber. “Let Me Love You” and “Despacito” are my fitness instructor’s favorite songs. He's had them on repeat for the past month and I secretly approve. After emerging from the sweatbox, breakfast is up one floor at “Temple City Family Restaurant.” Idly, dosa, vada, chutney, and Pongal complete the palate—South Indian food that’s both flavorful and fun to eat with your hands. I’m free entertainment for the wait staff who enjoy watching my unorthodox “shovel ‘n thrust technique.” I also have the dubious distinction of being the first person they've ever seen who's attempted to eat a soup with his fingers.

Off to work at 9am. I carpool with my neighbor, The Marvelous Mr. Selva. Despite the short distance, the commute always proves adventurous or, more accurately, treacherous. If a cat has 9 lives, everyone here has 900. My office is a glass palace—the home residence of the Chairman, a guru and gifted visionary. From nine to six I work on my core project and one of the Chairman’s top priorities—creating a coaching program for entrepreneurs in emerging economies. At 5:55 pm, as the sun slowly dips, the security guard kindly slips into my office to turn on my lights. At 6 pm, I kindly turn them off, pack my things, and depart for home.

I choose to walk home in order to stretch my legs and because nothing beats the thrill of a nightly near-death experience. Might is right on the roads in Madurai where pedestrians rank just above bugs on the commuter hierarchy scale. For dinner, I stuff as many mangoes in my face as humanly possible while squishing mosquitos so I don’t have to sleep with them. A little reading before bed, then repeat Monday through Saturday. Sundays are for letter writing (my favorite 19th century hobby), church (in Tamil), Bollywood flicks (“3 Idiots” is a must-see modern classic), and daydreaming of Culver’s Beef Butterburgers (something I must never admit aloud).

Parting Shot: The best part of my internship is the balance between autonomy and support from my project partner.

Pictures Below: 1. The glass palace. 2. South Indian breakfast. 3. My mustache (which I promptly shaved off despite it being the predominant style in India)

About the Author: Chris Owen is a rising second-year dual-degree student with the Ross School of Business and the School for Environment and Sustainability at the University of Michigan. He is passionate about social entrepreneurship, sustainability, and people strategy. He joins the 2018 WDI Global Impact Fellows program after serving for three years in Ecuador with the U.S. Peace Corps, first as a business consultant in the natural resource conservation program and then as a Regional Volunteer Leader.

Defining Entrepreneurship in Nepal

Matthew Carney - Ross School of Business and School for Environment and Sustainability

One of the most eye-opening aspects of working with entrepreneurs in emerging markets like Nepal is the degree to which the very concept of entrepreneurship differs from what is taken for granted in the United States. In America, most startups follow a familiar game plan; identify a robust market, disrupt existing firms by offering new services, scale up efficiently to maximize market share, and ultimately try to go public or get purchased by a larger competitor. Having spent six weeks working with energy entrepreneurs in Nepal, it is already clear how foreign this concept of “entrepreneurship” can be. In particular, this manifests in three distinct ways.

First, the basic infrastructure that undergirds our domestic economy is often taken for granted. For example, the CEO of a new software or direct-to-consumer apparel company will know they can count on ubiquitous internet access and expansive highway system to deliver those products. Local entrepreneurs in emerging markets have no such privileges.  When considering potential targets for decentralized solar power systems in Nepal, the realities of limited infrastructure not only hinder the entrepreneur but also the customer.

Secondly, entrepreneurs in emerging markets tend to rely on partnering with nominal competitors much more than those in the US. While most startups in America focus singularly on expanding and protecting their market share at the expense of their competitors, resource limitations in developing countries necessitate collaboration. Given how many people simply don’t have access to the market, working together connect with potential customers is worth the effort even when each company’s individual market share is diminished.  

Both of these factors are evident in the different approaches taken to scaling. American startups are often judged by their ability to add customers and increase revenue while keeping their marginal costs low. For example, it won’t cost twice as much to run a social media app with one million users as one with half a million. For energy entrepreneurs in emerging markets, however, each project must be profitable on its own and costs largely correspond to earning potential. Given the limits this imposes on startups’ potential profitability, it can make it much more difficult for entrepreneurs to attract outside investment - limiting their prospects from the outset.

The stark difference in constraints and opportunities between American and Nepali startups provides a learning opportunity for entrepreneurs of all stripes. It is an important reminder that the skills that makes an entrepreneur successful in one context may not be applicable in another.

The Importance of Entrepreneurship in India

Chris Owen - Ross School of Business and School for Environment and Sustainability

People are pouring into cities.

In India alone, urban centers are expected to grow by 250 million during the next 20 years--nearly equivalent to the entire population of the United States. Rural Indian residents are moving into cities for work, for the lure of modern conveniences, or simply to be closer to fellow migrant family members. Indian farmers, in particular, have been forced into urban areas by water wars, below-market value pricing for their crops, and debilitating debt. Considering that India will also have the largest millennial workforce in the world by 2027, we must ask: Where will all of these people work?

Government funds are already being stretched thin by increasing demands on transportation infrastructure, waste management systems, and an expanding energy grid. National or international aid organizations may provide relief for society’s most destitute, but that still leaves a large middle class searching for economic stability.

This is precisely the purpose of Poornatha--my counterpart organization based here in Madurai, India. The mission of Poornatha is “to foster socio-economic vibrancy and entrepreneurial resilience, thereby contributing to nation-building.” In collaboration with the Michigan Academy for the Development of Entrepreneurs (MADE) and the William Davidson Institute (WDI) at the University of Michigan, Poornatha is designing an affordable, world-class coaching curriculum for entrepreneurs in emerging economies. The goal of this program is to equip and empower entrepreneurs as confident, evidence-based decision-makers who build enduringly successful businesses that strengthen their local communities.

Madurai is an ideal test site for this program. Located in the southern state of Tamil Nadu, Madurai is a gritty trading center with an aspiring manufacturing sector, reminiscent of an American Rust Belt metropolis. It’s home to rubber factories, sand mines, raw material distributors, a robust textile industry, and an engaged entrepreneurship network. Poonatha provides first, second, and third generation entrepreneurs in Madurai with training in cash flow analysis, marketing and brand management, leadership development and, most importantly, data-driven decision-making. Our hope is that this program helps cultivate a business ecosystem that ensures stable, sustainable economic growth for the region.

Overall, by investing in strong local economies, India can address its dual-challenges of rapid urbanization and rising unemployment. Indeed, for this reason, entrepreneurship in India--and the work of Poornatha--is becoming increasingly important.

About the Author: Chris Owen is a rising second-year dual-degree student with the Ross School of Business and the School for Environment and Sustainability at the University of Michigan. He is passionate about social entrepreneurship, sustainability, and people strategy. He joins the 2018 WDI Global Impact Fellows program after serving for three years in Ecuador with the U.S. Peace Corps, first as a business consultant in the natural resource conservation program and then as a Regional Volunteer Leader.

References:
1. https://www.mckinsey.com/featured-insights/urbanization/indias-urbanization-a-closer-look
2. https://www.financialexpress.com/economy/indias-millennial-generation-bigger-than-china-to-boost-nations-workforce-to-worlds-largest-by-2027/836248/
3. http://www.thehindu.com/news/national/growth-in-urbanisation/article23925543.ece