Step 1: Make sure the organization is ready to begin weaning itself off grants

When Ashwini Kumar first joined Ashoka Fellow S. Rajagopalan's organization, Technology Informatics Design Endeavor (TIDE), he immediately intuited that the organization could be stronger — both financially and organizationally — if it could break its ties to the grants that had historically been its financial backbone. "When I joined, we were highly dependent on foundations . . . so we very explicitly tried to reduce our dependence by providing our services through entrepreneurs," he said.

Ashwini's private sector background convinced him this was necessary, but TIDE's staff also knew this was the right time to make the change. After five years of smaller-scale work and demonstration projects of its energy-efficient technology, TIDE's internal management underwent a self-analysis during which it recognized that it had enough proven success and internal capacity to change its distribution strategy. It realized that it could only maximize its reach if it found replaced its reliance on grant money with revenues from clients.

Step 2: Earn the community's trust by continually consulting them, while charging for a valuable service

Before pushing its products to its clients, TIDE was careful to identify what the community wanted and adapt that technology to meet those needs instead of the other way around. Whenever TIDE does a community needs assessment, it approaches community leaders and helps them to identify and prioritize their own needs. TIDE transparently integrates the results of the assessment with the knowledge and priorities of other community organizations. In addition to this community focus, TIDE believes it is essential to maintain a service that is driven by the market that stresses feedback from customers in order to satisfy all parties' expectations. Because it is responding to the needs of a community, it can charge fees even for its demonstration units.

TIDE's energy efficient stove for silk reeling consumes 35 to 40 percent less biofuel, reducing both producers' costs and environmental impact

Step 3: Train the entrepreneurs and let them do the work for you

Some of TIDE's profits come directly from its clients, but the majority are passed through by its entrepreneurial middlemen. TIDE builds an entrepreneurial class of middlemen who are the local champions of its products and expand the market for its products. They are not your average traveling salesmen. Rather, they are entrepreneurs who, once trained, are committed to making a profit and creating social benefits by spreading TIDE's technology to its primary market: individuals and institutions who can reform their energy consumption habits by adopting TIDE's safe, ecologically friendly, and cost-effective technology.

TIDE spends an average of about six months carefully selecting its entrepreneurs. The criteria for selection include past experience in marketing/selling products in rural markets, having a relationship with local community institutions (such as cooperatives), and willingness to become "socially-conscious" entrepreneurs.

The offices of an entrepreneur who sells TIDE's energy efficient technologies

TIDE supervises the entrepreneurs during their first year of work, overseeing the quality of their work and providing them with credibility. It also offers seed funding to entrepreneurs that they can use to get training in production design and business skills (e.g., technological development and adaptation, needs assessment skills, and market development). Once financially stable, the entrepreneurs are obliged to repay this seed funding.

Because this gives communities a one-year guarantee, they accept the entrepreneurs' products and this ensures that the products will be trouble-free for at least one year. It also forces TIDE to be as reliable as the entrepreneurs. On the other hand, the entrepreneurs must shoulder the cost of any maintenance during the one-year "assurance period" while TIDE monitors whether customers are satisfied with the service they get from entrepreneurs. This accountability system ensures that the entrepreneurs deliver quality products to all clients at all times.

Step 4: Provide incentives for entrepreneurs that also strengthen the organization

The profit-making incentive that motivates the entrepreneurs ensures TIDE's success. First, the entrepreneurs know that they must maintain the credibility of their product in order to make sales. This is especially true because informal advertising — i.e., word of mouth — is their principal marketing tool for reaching remote and/or illiterate populations and brand strength is critical. Because the entrepreneurs value the need to uphold the reliable image of TIDE-branded technology, they work to preserve the integrity of TIDE's designs, buffering against corruption or the production of cheap knock-offs that would otherwise thwart the environmental and health benefits of their products.

Second, the independence and ability to earn profits that the entrepreneurs enjoy gives them more incentive to spread TIDE's technology than if it was sourced from a different organization or the government. Clients are also more likely to trust a local entrepreneur who must remain accountable to the community versus an institution that may have a hidden agenda. This increases trust in TIDE because it is not viewed as pedaling its own products.

Step 5: Trust your product and be willing to let go

TIDE learned early on that it was counterproductive to try to closely monitor entrepreneurs' work. While it was possible to oversee the quality of its devices, attempts to monitor the enterprise's management created hostility. As a result, TIDE has let the entrepreneurs have complete freedom over nearly all of their own operations, ranging from setting the product's price to choosing what markets to tap. Entrepreneurialism, after all, thrives on independent creativity.

TIDE still performs standard assessments and evaluations so that every process is regulated by an internal monitoring committee. But these are mechanisms to standardize lessons learned or to deal with unique cases; they are not intended to micro-manage the fieldwork. TIDE also connects the entrepreneurs monthly in co-learning meetings. This constant interaction allows TIDE to assess quality without demanding too much control. TIDE's approach appears to be working: according to 2003 data the failure rate of its projects was only 0.7 percent.

Construction of a TIDE bioreactor that treats effluent from coffee production. It purifies water and produces two byproducts: sludge that can be used as fertilizer and biogas that provides fuel for cooking and an engine that pulps the coffee fruit.

Step 6: Make sure that partners "fit" by matching interests and keeping expectations realistic

TIDE has partnered with a variety of research and development organizations over the years in order tap the innovation of Bangalore, its hometown and the "Silicon Valley" of India. This has taught it that not all partnerships are inherently beneficial. TIDE has revised its approach so that it partners only with organizations that have a similar size, philosophy, ethics, and commitments to aligned causes. It hmaintains relations with the less conducive partners, but manages its expectations by carefully matching specific needs and services instead of engaging in a more general alliance.

TIDE's partnership with individual entrepreneurs evolves dynamically, guided by a "give and take" approach rather than positioning TIDE as a distributor of largesse. During an entrepreneur's first year, the entrepreneur and TIDE acutely assess each other's strengths and commitment. Occasionally entrepreneurs are dropped because of their limited ability to "go commercial," and TIDE reinforces its message that it is unwaveringly focused on working only with the best. This approach appears to be working — none of TIDE's entrepreneurs have dropped out during the past three years.

Step 7: Engineer creative subsidies

Although TIDE's products produce a higher return over time, their initial cost is higher than conventional models. In response, TIDE's entrepreneurs design creative payment systems that make the products affordable for the clients. Instead of asking financial institutions to provide loans or discounting product prices, TIDE and its entrepreneurs have negotiated subsidized prices for raw materials from local businesses to lower the entrepreneurs' production costs. This approach ensures that the consumer purchases a quality product at market price while the entrepreneurs retains their profit margins (usually about 10 percent). Meanwhile, this process builds relationships that engage the broader community in TIDE's work.

TIDE and its entrepreneurs also develop flexible credit arrangements for customers. The cost of the funds during the credit period is built into product pricing. Working capital is managed by coordinating customer payback periods with vendor repayment periods.

What makes it possible to replicate this strategy:

This strategy applies entrepreneurialism to home-based industries and fortunately entrepreneurialism is inherent in many societies; it only needs to be properly stoked. It is even easier to stimulate the initiative and risk-taking behaviors that facilitate the solidification of an entrepreneurial class of vendors where small-scale producers are already innovating. Moreover, this model depends on the common commodity chain mode of production. It simply makes it more "compassionate" by providing financial and environmental benefits to all players. Even though India has a particularly fertile entrepreneurial culture, there is no reason why other countries cannot innovate and see the value of entrepreneurs at the helm of "triple bottom line" economic activity. In order to ignite entrepreneurialism where it is less abundant, other organizations should focus on stimulating the sector by providing high social and financial returns on innovative approaches.

(i) Mobilizing Citizen Support: Because TIDE relies on independent entrepreneurs to market its technologies, it focuses on finding and training these entrepreneurs and increasing their number. TIDE has a strong community orientation — it gets communities to help it identify these entrepreneurs. TIDE connects its entrepreneurs to community-based organizations, user-owned organizations (i.e., cooperatives), and citizen groups to help them organize meetings and workshops. TIDE also continually engages with its clients. For example, it carries out extensive, participatory community-based needs assessments and frequently revisits communities that purchase its products.

(ii) Generating Financial and Nonfinancial Resources: Although TIDE is a "non-profit" registered society, it has developed stable income-generating and cost recovery systems. When its entrepreneurs ventures are stable and profitable through sales to clients, they reinvest 5 percent of their profits in TIDE and reimburse TIDE for the cost of their initial training and for subsequent in-the-field customer support. All of TIDE's demonstration projects are fee-based. It earns income by installing devices that are based on emerging technologies. Once proven, these devices are transferred to entrepreneurs who market and sell them.

(v) Developing Information Spreading the Message: TIDE has developed a decentralized system to spread information about its improved technology through community-based organizations, citizen groups, and potential buyers to create demand for its products and generate interest in scattered markets. Its entrepreneurs also conduct campaigns, workshops, village-level meetings, and mobile exhibitions to create demand and increased awareness about the benefits of their products.

The beauty of a strategy that relies on entrepreneurs is that it reduces the organization's distribution, retail, and marketing costs while simultaneously expanding the products' reach. It also boosts the marketability of a product because TIDE staff can be confident that the prospect of personal financial gain will motivate entrepreneurs to keep selling TIDE's quality products. Meanwhile, TIDE does not need to anticipate changes in staff based on the success of their product; instead, the entrepreneurs absorb changes dictated by the flux of market demand. This freedom allows TIDE to remain focused on its competitive advantage: research and development. Thus, TIDE is able to extend its reach across all of the stages of the commodity chain without actually having to invest significantly at every stage of the process.

Having built intermediary networks of entrepreneurs who are better connected to local needs, TIDE has seen an exponential increase in its effectiveness. The entrepreneurs are willing to take risks to approach new audiences and creatively adapt to local needs, spreading TIDE's technology in unlikely markets such as makers of clay religious icons that require firing. The social impact can be felt by anyone who uses TIDE's products, which are generally 20 to 30 percent more effective than conventional products. Meanwhile, entrepreneurs have also seen their incomes increase by 35 to 50 percent.

During the next three years, TIDE expects that commissions earned from the entrepreneurs' net profits will cumulatively represent at least 10 percent of TIDE's annual cash requirements for research and development. TIDE is accruing this income in a corpus account, available to either its producers or to entrepreneurs for emergency funds. TIDE envisions raising further resources for research and development from entrepreneurs and other local sources during the construction stage of demonstration units at client locations.

Meanwhile, home industry producers have gained more control over their work, have minimized their health and safety risks, and are able to diversify their income stream by renting out technology they have purchased to other producers. In this sense, the entrepreneurial networks are simultaneously spreading entrepreneurialism at the local level, allowing new entrants into the market (such as women who previously were unable to use conventional technology, and masons who, when trained in the new design techniques, have found increased demand for their services).