The SELCO Way

Harish Hande established the SELCO Foundation (SF) in 2010 to provide solar energy aimed at improving the lives of households at the base of the income pyramid. Hande was not alone; other governmental and NGO organization had launched efforts to provide decentralized renewable energy (DRE). Unfortunately, many of these other attempts had run into problems. According to various reports, solar mini grids and other solar devices across rural India and Africa had been abandoned or fallen into disuse.1 Hande believed that these efforts suffered from taking a “product-centered” approach, focusing on placing as many DRE solutions as possible without integrating the devices into the lives of the people they hoped to serve. In contrast, SF had developed a methodology that put users at the center of an intervention and marshalled an ecosystem to support each intervention.

Hande had gained his insights into making solar useful through more than a decade of work in DRE. In 1995, before solar came into vogue, Hande had established SELCO India, a for-profit company that supplied and installed solar panels, batteries, and lighting systems. The company focused on the needs of end-users, designing ways that everyone from street vendors to midwives could utilize solar lighting for their lives and livelihoods. It took about six years for the company to break even and build a stable capital stack. By 2005, the company had reached about half a million people by electrifying more than 80,000 households, micro-enterprises, and community facilities, making it one of the largest solar panel providers in the world.

With SELCO India established around the company’s headquarters in Bengaluru, Hande’s vision of what could be done in sustainable development expanded.  He had become frustrated with the efforts that NGOs and governments had made in the DRE space. Hande contended that the poor themselves could provide direction as to how DRE could be best utilized in their daily affairs. But because people at the base of the income pyramid could not speak English and put together a PowerPoint presentation, their insights and innovations were generally ignored. So, Hande started the SELCO Foundation to promote DRE interventions that considered the needs and ingenuity of the rural poor. Hande eventually left SELCO India to focus his efforts on SF, which works independently of SELCO India on most its interventions.

While the DRE solutions SF devised were important, Hande believed that the Foundation’s primary contribution was the design thinking that the Foundation brought to creating interventions. The SF team acted as system designers – looking to understand user problems and innovate solutions that went beyond customary business models. Hande argued that conventional development efforts could be too siloed – with interventions that drew from a narrow range of possible alternatives. SF looked to gain a fundamental understanding of a user’s problem and then consider the entire ecosystem required to operate and sustain a particular enterprise. It was this approach that Hande hoped to impart in the people and organizations working in development. Eventually, Hande hoped that SF would work itself out of business as the more holistic approach it favored became the norm.

The User and their Ecosystem

The SF approach began with understanding the needs of its end-user rather than coming in as experts in a particular technology. Hande noted, “We need to think why a person demands electricity. When it comes to power, it is always talked about from a supply side — how many MWs [megawatts] of solar has been put up — and never from the demand side.”

User-centered product development, a fundamental tenet to design thinking, taps into age-old wisdom about consumer preferences. Decades ago, Harvard Business School marketing professor Theodore Levitt observed “sell the hole, not the drill,” arguing “people don’t want to buy a quarter-inch drill; they want a quarter-inch hole.”2Though this wisdom is often forgotten by product designers, Hande believed that examining DRE from the user’s perspective would yield better, more appropriate designs.

It was at Hande’s first venture, SELCO India, that he discovered how important it was to tailor the design of the product to the requirements of the user. For example, the SELCO India team examined how night street vendors used light. They realized that the vendors didn’t have the capital to buy batteries to power the solar lights that the company hoped to sell them. However, they could rent a battery for a night with the cash flow from their sales, if the price was less than the kerosene they would use for their lamps. So SELCO recruited a team of solar entrepreneurs who bought batteries and lights, powered them during the day from solar panels, delivered the lights to the street vendors for the night, and used the rental fees to pay-off the loans on the batteries and generate a profitable livelihood. In a situation that might have led others to conclude that solar energy could not provide a solution, SELCO India found a way not only to help the street vendors with a cleaner source of light, but also to create a new layer of successful entrepreneurs.

SF’s approach to user-centered design encompassed more than the physical design of the product. To make an intervention work, SF designers believed that they had to not just adjust the technology but also consider a user’s entire ecosystem, potentially transforming business models, supply chains, and financing.3 For example, solar panels and the devices they were meant to power required regular maintenance. Many times, even a minor interruption would spell the end of a particular DRE intervention. So, designers needed to figure out who would maintain the systems over time. Other aspects of a user’s social world needed to be marshalled as well. Who would train the microenterprise owners to use new devices and equipment? Who would finance the purchase or rental of the equipment?  If the new devices increased efficiency, to whom could the microenterprise sell their increased production?

SF believed answering questions such as these was as important to the success of an intervention as the physical design of the product. SF codified their philosophy into ‘five pillars’ that would anchor their design work:

• Innovation - People looking to employ solar solutions required devices tailored to their needs and the capacity of DRE.  Encouraging innovation took many forms, from incubating new technologies by talented inventors to benchmarking and certifying existing products.
• Finance - The available capital and cash flows of poor households made buying new devices difficult with conventional financing schemes. SF sought to match the financing for a device to a microenterprise’s cash flows, working with financial institutions to create context-specific and customized financial products.
• Skill and Capacity Building – The ability for a community to both operate unfamiliar devices and incorporate new routines was limited. SF sought to build educational opportunities and enhance the human capital in the areas it served, creating curricula, and encouraging exchanges among grassroots innovators.
• Backward and Forward Linkages – New devices increased production and therefore needed robust linkages to raw materials and increased markets. SF worked with local organizations to design programs that would extend the reach of the microenterprises served by the devices it promoted.
• Policy – To scale innovations, SF needed attention from government and social sector funders to help facilitate replication. The hope was that key policymakers would adopt approaches that would be conducive to the user-centric ecosystem approach.