Wharton MBA students write business plan for Kenyan honey farm

Jonathan Nipper, Anuj Kulkarn, Alexis Cox, and Julia Wynyard, Wharton MBA students from the class of 2012, traveled to  Kenya to help write a business and forest conservation plan for a honey business.  They assisted REFUGE, an indigenous-led, community-based organization, which is working to restore the Mau forest in Kenya.  One of the only sources of income for the community is charcoal production, which 85 percent of Kenyans rely on as a fuel source.  REFUGE is using the honey business to provide alternative sources of income and to provide a revenue stream to be used to plant trees and to reinvest into the community schools. The trip was part of the Wharton International Volunteer Program, and co-sponsored by IGEL. You can read their diary from the trip here.

Highlights from the business plan:

• The team conducted primary market research with purchasing and gift shop managers in both Nairobi and the Maasai Mara National Reserve.
• The team evaluated the market and found that the high-end honey market in Kenya consists mostly of tourists and business travelers, as well as Nairobi-dwellers who seek organic foods. The export market is also a possibility in the future, and the team identified Mau Honey’s main competitors to establish how Mau Honey might differentiate to capture market share.
• The team also identified the social impacts of the business; detailing projected trees saved and planted using a portion of the profits from the honey.

We at IGEL are certainly happy we could help send these students to Kenya to use their business skills to assist REFUGE’s efforts to provide alternative community income, invest in community education and assist in forest conservation.  Thank you to the students who did such a great job, and REFUGE for the excellent work it does!

Examining the State of Water Projects in Developing Countries

The University of Pennsylvania and Philadelphia Global Water Initiative, with help from IGEL, is undertaking a survey of organizations who work in water supply and treatment in developing nations.  The goal is to figure out how to best measure success in these projects.  If you are a member of an NGO, government entity or company that works to provide water, please take a look!  We’ll be releasing a paper in the fall with our findings. Click here to be taken to the survey.

 

Reduce (then reuse and recycle)

by Caroline D’Angelo
July 20, 2011

“Reduce” – One of the three “Rs” of sustainability, the concept of Reduce is one that is challenging to consumption-based societies.  After all, to build off Oliver Sanche, the late Apple data center sustainability guru, the most efficient and sustainable data center, office, etc. that you can have is the one you don’t have to build.  So won’t reducing consumption reduce our economy? The short answer is No. In fact, a look around the business-scape today shows that there is business opportunity in “Reduce”; from better marketing and relationships with consumers and employees, to new product lines.

Some companies have taken the lead on “Reduce” in a variety of ways, from reducing the use of virgin materials, to investing in energy-efficiency, to creating company recycling programs. Responding to consumer and company desires to reduce the use of paper, Xerox invented a reusable paper that erases itself, creating a product line for temporary paper needs.  Patagonia, the outdoor equipment and clothing company, used internal demand to drive carbon footprint analysis on all of their products and shifted to all organic cotton in the 1990s. Now they create fleece out of recycled soda bottles, reducing the demand for virgin petroleum products.  Coca-cola has been working to reduce its water use and has  redesigned its packaging across the company to reduce materials use. Bank of America recently devoted $55 million to help finance energy-efficient retrofits.

Indeed, perhaps the underutilized “R” is now set to become more mainstream as companies recognize that there are serious benefits to Reduce, both environmental, social and financial.  Making processes and products more efficient reaps financial returns from lower materials costs, lower shipping costs, and lower waste disposal fees.  Cloud computing, better manufacturing and redesigned products are ways that companies are benefiting their triple-bottom lines.  Companies are also using natural systems, rather than working against them.  Companies like Yahoo and Microsoft are recreating data centers to harness natural cooling, like winds off of lakes and cool outside air.

Reducing all virgin resource use is critical, but water may be the utmost.  At our March 22 conference on Valuing Water, representatives from companies, government, NGOs and academia convened to discuss challenges and opportunities.  The water situation is dire – demand is outstripping supply throughout much of the world, and will only get worse.  With water, reductions are crucial, for the sake of ecosystems, biodiversity and people.  Yet even here, reductions provide business opportunities.  Will Sarni of Deloitte Consulting highlighted Intel’s aggressive reduction of water use for manufacturing.  Jeff Fulgham of GE talked about GE’s new innovations and partnerships around the world in water reuse, which decreases demand on stressed ecosystems.  Finding opportunities in scarcity is an excellent way to encourage innovation and problem-solving.

Of course, while business opportunities are great, a mainstay point of the three “Rs”  is ethical behavior.  It may be that some investments in sustainability do not recoup costs on a simple cost-benefit analysis, due to subsidies, poor policy, or a high adoption cost.  Sustainability efforts are hard to quantify in many cases, though efforts by the Global Reporting Initiative, SAP and others are certainly making it easier and better.  Some ethical behavior may not never be adequately quantifiable; certainly at the very least, not everyone will agree on what constitutes ethical behavior. Perhaps risk is therefore an inherent part of ethics, but with smart design and proper outreach, risk can be mitigated and pay off to a triple-bottom line. In the 70s, for example, Patagonia pulled a product for rock-climbing off the shelves when the founder saw first-hand how much damage it was doing to rock faces and took a risky turn to an alternative product unknown to the consumer market; it became the standard.

“Reduce” may sound like a risk to economic growth, but it can be a boon to

bottom lines. “Reduce” is an important component of living more sustainably; it encompasses smarter design, more efficient processes, and working with natural mechanisms, rather than against them.  How does your company interact with “reduce”?

(If you’re interested in seeing what a fully shifted economy could look like, see Paul Hawken’s brilliant books “Natural Capital: Creating the Next Industrial Revolution” and “The Ecology of Commerce: A Declaration of Sustainability“)

**the views of the author are her own and should not be construed as the views of Wharton or the University of Pennsylvania**

Wharton MBA Students Help a Kenyan Organic Honey Business

Below, read the diary of the students in Kenya.  The students wrote a business plan, financial model and also set up a foundation to allow the business to pursue its desire to reforest the area. We will post a summary of the business plan they wrote next week.

5/16/2011

Greetings from Africa!

We reached Nairobi yesterday and things have been great. Yesterday was spent in socializing and getting our body clocks on to the Kenyan time zone. We met with Dr. Mukuria from Refuge and his wife who showed us around. We also visited a local Giraffe Park and saw the African Giraffes in their natural habitat.

Today we had our first meeting at the Refuge Headquarters. It has been a very steep learning curve and we are extremely excited to be here.

5/18/2011

We left Nairobi and arrived in Narok, a small town along the Great Rift Valley just outside of the Mau Forest. We visited an elder of the Ogiek Tribe, who, along with Dr. Mukuria, is the visionary behind the idea of selling the honey his community collects. The business plan we construct will support honey sales to provide the Ogiek with an alternative source of income. The community lives in extreme poverty. The elder lives in the slums of Narok with his wife and six children and they live on $6/day in a corrugated aluminum shack. He welcomed us into his home and that is where we conducted our first business meeting.

 5/19/2011

We drove three hours along a wide, washed-out dirt road to get to the Mau Forest. We passed through the farmlands of East Mau, which are primarily the source of the deforestation in the area. We then met with members of the Ogiek who live at the edge of the forest.They took us on a hike into the forest to collect honey. The Mau is a natural pharmacy. Our Ogiek guides pointed out roots that act like Neosporin, tree bark that cures colds and nuts that they mix with honey to treat stomach issues. We watched as an Ogiek elder rubbed sticks of wood together to lite brush on fire he used to smoke the bees out of their hive. He then stuck his entire arm into the hive to collect the honeycombs. We tasted the raw honeycomb that will later be filtered into Mau Forest “Highland” Honey.

5/20/2011

Our Ogiek guides invited us into their homestead where we planted three seedlings in their tree nursery. We were invited to sit inside a mud hut where we asked our guides and the elder of the homestead many questions about their culture, community and concerns about deforestation in the Mau Forest.

The Ogiek culture is interesting and ancient.  They are a peaceful people who believe anger is a disease. The community consists of only 10,000 people, many of whom live in cities now instead of the forest. Many have been relocated but they still rely heavily on honey and subsistence farming. They are very open to ideas of how to preserve their culture, which cannot be separated from the preservation of the Mau.

5/21 – 5/22

After visiting the Mau Forest, our team traveled to the nearby Maasai Mara National Reserve to explore a potential market for the honey product. The Massai Mara is by far the largest tourist attraction in Kenya with approximately 290,000 visitors per year. Hotels in the Reserve are thus a significant potential market for REFUGE’s locally produced honey. In addition, the Mau and Reserve ecosystems are closely intertwined. The primary source of water for Reserve wildlife is the Mara River that originates in the Mau Forest. Any disruption of the ecosystem within the Mau Forest would directly impact that of the Reserve.

We arranged meetings with several hotel managers to gain insight into the Reserve’s tourism market. From these conversations, we were able to map out the hotels’ sourcing strategies (most products are shipped in from Nairobi) and customer bases for similar honey products. Additionally, as we researched more about the culture of the Maasai people, we learned the Maasai once sourced Ogiek honey to produce honey wines used in traditional Maasai ceremonies. Our trip to the Reserve truly shed light on how intertwined the Mau Forest is with this area of Kenya.

5/23

The team arrived in Nairobi on sunday night and geared for the second phase of the project. With the first week completed, the team now has a good understanding of the people, processes and environmental aspects of the project. In the coming week, the team will put their nose to the grindstone to start developing the full business plan. This will include meeting a number of hotel purchasing managers and conducting financial and strategic analyses for the business. Our goal for the remainder of our time in Kenya is to construct an in-depth, actionable business plan that the Ogieks can use build themselves a sustainable future.

5/24

While a sales experiment in the short span of time was not possible, the team was able to visit the potential collaborators in Nairobi and obtain valuable selling data points from them. The Wharton brand opened many doors and got our team into meetings with several top hotels in Nairobi. We were able to have a candid chat with a renowned head chef who was also a Penn Alum. From this we learned a number of insights about the restaurant market in Nairobi, where REFUGE could potentially supply specialty honey for tea and desserts.

5/25 – 5/26

Back in Nairobi, we worked as efficiently as possible to complete the time-challenged task of writing the business plan. The team members paired-off to continue gathering information from Nairobi hotel purchasing and gift shop managers, and to rigorously work at the hotel on the final plan. As the plan unfolded, it became evident that there was a solid business case for the market potential for REFUGE’s honey in hotel gift shops and restaurants. It was impressive to see the significance of the growing trend towards locally sourced and environmentally friendly products. One hotel, even had a “green team” with full-time resources allocated to oversee and improve the hotel’s environmental impact. We were cognizant to emphasize the number of lives that could be positively impacted by the potential sales of Mau Forest Honey.

5/27

It was with a great satisfaction that we were able to hand over an in depth business plan, complete with a 5-year financial model. In addition, we were also able to provide a foundation for supporting the social impact vision of reforestation. We are confident that given the projections of honey sales over 3 years, Refuge will help plant over 16,000 indigenous trees in the Mau and help increase the average income of the Ogieks by up to 65%!

Whats happening in the Mau today?
Here is the latest update on Honey sales; exactly one month after.
June 27

http://twitter.com/#!/zanaafrica

More about Refuge and Zanaa Africa

http://www.zanaa.org/transformations/enterprise-for-conservation/

Mukuria’s Blog

http://mau-mandala.wildlifedirect.org/

WIVP website

http://www.wivp.org/

Can Venture Capital Really Influence Environmental Sustainability?

Panel at Wharton Global Alumni Forum

Can venture capital really lead to sustainable businesses, energy and products? Or is venture capital an outdated and inefficient means of funding sustainable enterprises?

We posed this question and more to a panel hosted by IGEL and Bank of America at the Wharton Global Alumni Forum in San Francisco.(1)

Venture capital is the only way to sustainability. – Ashmeet Sidana, Panelist, Foundation Capital

The panel’s consensus was a resounding yes – venture capital can lead to environmental sustainability.  Panelist Ashmeet Sidana of Foundation Capital went on to argue that venture capital is the only way to reach sustainable goals. Panelists highlighted their cleantech investments, including new methods of algae biofuels manufacturing, solar power, geothermal energy and smart grids.  Last quarter saw the most investments in cleantech ever, said Andrew Chung of Lightspeed. Robert MacDonald of Craton Equity Partners showed the optimism of the markets by remarking that investments in cleantech is nearly $200 billion worldwide.

Remarkably, these investments are largely consumer-driven with large corporations like GE, Chevron and Intel buying in. Consumer and corporate buy-in is crucial,  given the lack of policy-leadership in the U.S. on clean energy.  In fact, investors’ frustrations are only mounting from uncertainty in the political climate.

The panelists also discussed necessary steps for scaling up cleantech investments. Capital efficiency is crucial, said Cynthia Ringo of DBL Investors.  Also necessary is further advances in technology for renewable energy storage.

What are your thoughts?  Leave us a comment in the Comments section or connect with us on Facebook or Twitter.

The panelists were:

Ashmeet Sidana, General Partner, Foundation Capital

Mr. Sidana has investments in cloud computing, network efficiency and consolidation, and wireless monitoring.  He also is involved in solar power for India; he led the Foundation’s investment in and currently serves on the board of AzurePower, a solar power company in India. Foundation Capital also invests in such green and clean-tech such as smart grid technology, paper-less sharing systems, food and water sanitation systems, environmentally-friendly advanced materials manufacturing, energy conversion and efficiency technology, and thermal management.

Cynthia Ringo, Managing Partner, DBL Investors

Ms. Ringo is a board observer for LiveScribe, a new computer-version of pen and paper, as well as a board member for Solexant and Soladigm, two solar companies with new PV technologies. Prior to DBL, she was the CEO of CopperCom, a next-generation telecom equipment company. DBL also invests in electric cars and smart grid technology.

Andrew Chung, Principal, Lightspeed

Mr. Chung is a Principal at Lightspeed and has helped lead the firm’s entry into new areas of investment that include cleantech, education, genomics, and healthcare IT. Lightspeed’s investments include next-generation biofuels. Andrew chairs the Cleantech Advisory Board for The Indus Entrepreneurs (TIE), serves on the Advisory Board for Stanford Energy Crossroads, and is an advisor to the Clean Tech Open.

Jon Krahulik, Managing Director and Global Head of Clean Technology Investment Banking, Bank of America Merrill Lynch

Mr. Krahulik is responsible for growing the firms’’ coverage of companies across the clean tech sector globally. Mr. Krahulik joined Bank of America Merrill Lynch from Deutsche Bank Securities, where he served for four years, most recently leading clean tech investment banking.  Earlier in his career, Krahulik spent seven years in the global technology group at Lehman Brothers, most recently as a senior vice president.

Robert MacDonald, Managing Partner,  Craton Equity Partners

Mr. MacDonald developed Catalyst Energy Corporation into one of the largest IPPs in the country. Bob currently serves on the boards of EnLink Geoenergy Services, GigaCrete, Inc., Petra Solar, and RYPOS.

(1) Bank of America and IGEL have teamed up to create a speaker series on topics in business and environment.
Click here for SmartPlanet’s coverage of the panel.