What-Works-Scojo-India-Fdn

NICO CLEMMINCK

SACHIN KADAKIA

June 2007

What Works Case Study

WORLD

RESOURCES

INSTITUTE

WHAT WORKS:SCOJO INDIA FOUNDATION

Restoring eyesight in rural India

through the direct selling of reading glassesHorace W. GoldsmithFoundation

Support for this Development Through Enterprise

What Works∗ case study provided by:

HORACE W. GOLDSMITH FOUNDATION

∗ The Development Through Enterprise What Works case study series is available for downloading at:

http://www.nextbillion.net/resources/casestudies

What Works: Scojo India Foundation

Restoring eyesight in rural India

through the direct selling of reading glasses

By:

Nico Clemminck and Sachin Kadakia

Scojo promoters: Graham Macmillan & Neil Blumenthal ▪ WRI promoter: Julia Tran

The authors would like to thank the management team of Scojo Foundation for their enthusiasm and support in developing this case study, as well as Molly Christiansen and Ted London of the William Davidson Institute for sharing their unpublished Michigan

Business School teaching case study as a main reference in the preparation of this report.

Table of Contents What Works: Scojo India Foundation

i

Table of Contents

Executive summary 1

1.1 Introduction..................................................................................................................................... 1

1.2 Business model................................................................................................................................ 2

1.3 Impact............................................................................................................................................... 4

1.4 What works........................................................................................................................................ 4

Market overview 7

2.1 Geographic distribution................................................................................................................. 7

2.2 Size and demographics .................................................................................................................. 7

2.3 Economic situation ......................................................................................................................... 8

Business model 10

3.1 Founding history........................................................................................................................... 10

3.2 Mission and strategy .................................................................................................................... 12

3.3 Ownership and governance structure ....................................................................................... 12

3.4 Products and services................................................................................................................... 14

3.4.1 Introduction .................................................................................................................. 15

3.4.2 Distribution channels................................................................................................... 16

3.4.3 Pricing and marketing ................................................................................................. 20

Partnership networks 22

4.1 Formulating partnerships............................................................................................................ 22

4.2 Current partners in India............................................................................................................. 24

4.3 Success of partnership strategy................................................................................................... 26

Table of Contents

ii

Challenges 28

5.1 Introduction................................................................................................................................... 28

5.2 Partnerships................................................................................................................................... 30

5.3 Recruiting entrepreneurs ............................................................................................................. 31

5.4 Motivating entrepreneurs............................................................................................................ 32

5.5 Market saturation.......................................................................................................................... 33

5.6 Competition................................................................................................................................... 33

5.6.1 Optical retailers............................................................................................................. 33

5.6.2 Street vendors ............................................................................................................... 34

5.6.3 Existing Indian manufacturers ................................................................................... 34

5.6.4 Charities......................................................................................................................... 35

5.6.5 New entrants................................................................................................................. 35

What works: key lessons learned 36

6.1 Focusing on sustainability and profitability ............................................................................. 36

6.2 Aggressive growth strategy ........................................................................................................ 37

6.3 Building barriers to entry............................................................................................................. 37

6.4 Replicating the model .................................................................................................................. 38

6.5 Delivering social impact .............................................................................................................. 39

6.6 Conclusion ..................................................................................................................................... 39

Board of Directors and Advisors 40

Projected income statement 42

Projected balance sheet 43

List of Figures 44

Executive summary What Works: Scojo India Foundation

1

Chapter 1

Executive summary

In this case study, we examine Scojo Foundation (“Scojo”)1 and identify the key drivers that make its

social enterprise program successful in India. To evaluate Scojo’s strategy, we analyzed the business

model, market environment, successes and challenges, potential replicability and scalability of the

program. Our conclusion, as detailed in the final chapter, is that a unique combination of carefully

designed organizational and operational strategies is driving Scojo’s widely recognized success.

1.1 Introduction

Presbyopia, or blurry up‐close vision, is a condition that currently affects 700 million people worldwide.

Those suffering from presbyopia in the world’s poorest countries are faced with decreased job

productivity, diminished quality of life and financial instability. The problem can be solved immediately

with reading glasses, which are readily available in developed countries at pharmacies and corner shops.

However, poor populations in developing countries rarely have this option.

Scojo has developed an innovative, market‐based solution to address this crucial public health issue.

Scojo trains micro‐franchisees, or ʺVision Entrepreneurs,ʺ to run profitable businesses conducting vision

screenings within their communities, selling affordable reading glasses and referring those requiring

advanced eye care to reputable clinics. This business model is built on the belief that the “base of the

1 Refers to the Foundation, both internationally and India, unless otherwise specified.

Business model What Works: Scojo India Foundation

2

[economic] pyramid”2 is better served when involving some payment, so that products are more highly

valued, costs are covered and programs are financially self‐sustaining.

Since 2002, Scojo has launched operations in India, Bangladesh, Mexico, Guatemala, El Salvador and

Ghana. In the spring of 2007, Scojo Foundation signed an exclusive licensing agreement with Population

Services International (PSI) to make reading glasses available to PSI’s 30 sub‐Saharan country programs

through urban pharmacy stores. The first countries to start this program

will be Zambia, Tanzania and Ethiopia.

Scojo India Foundation, headquartered in Hyderabad, is the largest and

fastest growing operation today due primarily to strategic investments,

strong networks and rapid replication of the business model by local staff.

Scojo began operations in India by training and supporting Vision

Entrepreneurs in a proprietary distribution network. However, recent and

future growth is being driven by franchise partners, which have integrated

the Scojo model into their existing rural networks. These partnerships have

greatly reduced expansion costs and have added both profit and social

value to the program.

1.2 Business model

Since the launch of the India program in January 2005, Scojo has sold

more than 50,000 pairs of glasses, and is targeting cumulative sales of

one million pairs by 2010 and ten million by 2016. To date, the India

program has trained 457 Vision Entrepreneurs through its proprietary

network and twenty franchise partners. Scojo currently employs 16

people: seven managers, seven district coordinators and two

2 “Base of the pyramid,” or BOP, is a concept developed by Drs. C.K. Prahalad, Stuart Hart, and Allen Hammond to refer to the 4 billion people whose incomes place them in the lowest level of the world’s income distribution. Implicit in the term’s usage is that engaging with these 4 billion people as consumers and producers and through the right business models could yield significant financial and social returns. For more information, refer to publications listed at: http://www.nextbillion.net/resources/.

Scojo’s mission is to improve the economic condition of

families in the developing world by broadening the availability of

reading glasses and other health products and services through Scojo entrepreneurs

and other market-based distribution solutions.


3

administrative staff.

The dual objectives articulated in Scojo’s mission form the basis of its business model. As a primary

objective, the micro‐franchise strategy enables low‐income entrepreneurs to generate income by selling

glasses in their communities. Secondarily, Scojo aims to broaden the availability of eye care products by

distributing them in the most efficient and sustainable manner.

To implement its mission, Scojo trains local community members to become Vision Entrepreneurs and

provides them with a supply of reading glasses, related accessories, and materials to run their business.

In addition to building its own distribution network, Scojo works with strategic partners that recruit and

support Vision Entrepreneurs through their social and business networks. As such, Scojo helps to

develop rural infrastructure while achieving its dual mission.

The business model is designed to be financially self‐sustainable, by generating profits at every step of

the value chain. In India, each pair of glasses, which Scojo imports for about $1, is supplied to micro‐

franchisees for about $2 and sold to customers at a retail price of about $3 or roughly 10% of the average

customer’s monthly income. This financial structure is a core driver of Scojo’s success. The $1 gross profit

to Scojo will cover its overhead expenses once it achieves its volume targets in 2010. The $1 gross profit to

Vision Entrepreneurs offers a higher margin than most other retail products and substantially adds to

their household income.

This model has several key benefits compared to a traditional charity model. By making customers pay

for eyeglasses, customers ascribe greater value to them and are more likely to wear them. This market‐

based model also incentivizes the producer and distributors to improve product design and quality

continuously to meet customer preferences. In addition, Scojo’s model provides adequate financial

incentive for the distribution network to sustain the program, versus community health workers

constantly hindered by limited resources. Most importantly, this model is the only means to raise

sufficient capital to help solve this widespread problem.

Manufacturer

Entrepreneur Gross Profit:

$1/pair

Scojo FoundationGross Profit:

$1/pair ~$1 ~$2 ~$3

Customers receive high-quality, low-cost eyeglasses

Impact What Works: Scojo India Foundation

4

1.3 Impact

To measure its impact on livelihoods in India, Scojo identified a number

of operating and social indicators. The primary operating metric –

number of glasses sold – has grown rapidly, albeit unevenly, in the past

two years (Figure 1). Number of Vision Entrepreneurs employed,

average incremental monthly income from Scojo, and number of people receiving eyeglasses, measure

the primary social impact. The number of Vision Entrepreneurs has grown dramatically, due in large part

to more than 20 strategic partnerships, including multi‐national corporations, micro‐credit institutions,

health organizations and consumer products distributors (Figure 2).

On average, Vision Entrepreneurs allocate 20‐30 hours per month to the Scojo program and earn

approximately $15‐20 per month. As many participants had previously earned $1/day, the potential to

boost their income while also serving the community is an attractive prospect.

Number of glasses sold

2,0191,171 1,191

6,777

9,313

3,287

5,797

3,710

0

2,000

4,000

6,000

8,000

10,000

Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006

Number of Vision Entrepreneurs employed

30 24 4678 93 102 111 126

53

148179

260

331

0

100

200

300

400

500

Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006

Scojo VE's Partner VE's

Figure 1: Growth in number of glasses sold Figure 2: Growth in Vision Entreprenuers

1.4 What works

Scojo’s innovative business model has enabled the organization to scale its operations quickly and

efficiently. The implementation of this model has worked particularly well due to the following factors:

• Focusing on sustainability and profitability from the earliest stages. Scojo’s programs were

designed and are presently evaluated on a double bottom line: organizational profitability

Since inception, Scojo India has sold more than 50,000 pairs of glasses and employed more than 450 Vision Entrepreneurs.

What works What Works: Scojo India Foundation

5

and social impact. The value chain emphasizes this mission, creating sustainable profits at

each stage of the process. With this model, Scojo expects to achieve sufficient volume to be

profitable by 2010.

• Aggressive growth strategy. This business model requires efficiencies of scale in order to be

profitable, and Scojo has aggressively expanded its network of Vision Entrepreneurs. In

addition to its own distribution network, leveraging existing networks developed by other

organizations in concentrated geographic regions has provided Scojo a faster and

substantially less expensive expansion strategy.

• Building barriers to entry. With its first mover

advantage, Scojo has built barriers to entry for

potential competitors. No other organization (to

our knowledge) sells eyeglasses at the village

level, and the cost has historically been

prohibitive. Scojo has developed a strong brand

in the markets it serves, as a reliable, high‐

quality product and service provider, which is a

key decision factor for the rural poor. As Scojo

aggressively continues to expand its distribution and build its brand, it will be even more

difficult for new entrants to penetrate the rural market.

• Developing a replicable model. Scojo’s model has been replicated in six states in India,

through a broad range of remote villages with diverse cultures, economic conditions and

geographic considerations. A key driver for this rapid growth is the minimal impact of

region‐specific factors on its success. The problem of presbyopia affects every person over the

age of 35 to 40, irrespective of region, culture or economic conditions. Even literacy rates do

not appear to have a significant impact, because Scojo’s glasses are used for sewing, cooking,

farming and other necessary daily tasks.

• Delivering social impact. Scojo delivers social impact through economic empowerment of

entrepreneurs and their customers, many whom previously earned less than $1 per day.

What works What Works: Scojo India Foundation

6

These entrepreneurs substantially boost their income by selling a high‐margin product with a

large market demand. The Vision Entrepreneurs’ customers, people suffering from

presbyopia, receive a low‐cost solution in the convenience of their own villages. With newly‐

corrected up‐close vision, weavers, farmers, tailors, artisans and other professionals who

require the ability to see up close benefit greatly. Many customers are able to double their

productivity (output) and also double their working lives. Furthermore, customers no longer

require the assistance of younger family members to help with tasks that require close‐up

vision (e.g, threading needles, separating stones from rice) thereby freeing up younger family

members to work on other tasks.

Market overview What Works: Scojo India Foundation

7

Chapter 2

Market overview

Over the past five years, Scojo has launched operations in India, Bangladesh, Mexico, Guatemala, El

Salvador, Mexico, and Ghana. Scojo India Foundation is the largest and fastest growing operation today.

In this chapter, we will present an overview of the Indian market and discuss its specific challenges.

2.1 Geographic distribution

Scojo Foundation launched Scojo India Foundation in January 2005. From its headquarters in Hyderabad,

Scojo currently trains and supports Vision Entrepreneurs in five districts in Andhra Pradesh. In addition,

Scojo is active in five other states of India through strategic partnerships: Madhya Pradesh, Assam, Bihar,

Rajasthan and Uttar Pradesh. In these partnerships, Scojo provides the training, technical assistance and

eyeglasses, and partners recruit and support Vision Entrepreneurs directly. The nature of these

partnerships will be discussed in more detail in Chapter 4.

2.2 Size and demographics

Scojo estimates that approximately 250 million people in India currently do not have access to affordable

near‐vision eyeglasses and could benefit from readymade reading glasses. As shown in Figure 3, Scojo’s

potential customer base includes anyone over the age of 35 with symptoms of presbyopia. This base

incorporates certain individuals who also exhibit other refractive errors such as mild astigmatism,

myopia, or hyperopia, since readymade reading glasses will improve their ability to see up close. Note

Economic situation What Works: Scojo India Foundation

8

from Figure 3 that more than 75% of these potential customers are located in rural communities.

Furthermore, it is estimated that 80% of the Indian population, or approximately 825 million, live on less

than $2 per day.3

Market size India (Millions)

1,027.0

308.1246.5 246.5

184.9

61.6

0

200

400

600

800

1,000

1,200

Total population Population overage of 35

Population thatbenefits from

reading glasses

Total potentialcustomers

Rural customers Urbancustomers

Market size Andhra Pradesh (Millions)

75.7

22.718.2 18.2

13.6

4.6

0

10

20

30

40

50

60

70

80

Total population Population overage of 35

Population thatbenefits from

reading glasses

Total potentialcustomers

Rural customers Urbancustomers

Figure 3: Potential customer base in India and Andhra Pradesh

2.3 Economic situation

Unfortunately, the rural population has limited access to professional eye care. Scojo estimates that there

is an average of one eye care professional per 30,200 people in India. The

majority of these professionals are in urban areas, which only constitute 25%

of the target market for reading glasses. Furthermore, consulting urban

professionals is too expensive for the Indian rural population, with the total

cost for such a visit varying “between Rs. 250 and 500 (US$6–11)”4 according

to Scojo’s estimates.

Primary research conducted by Scojo in 2002 indicates two main reasons for the lack of availability of

ready‐made reading glasses:

• Undeveloped industry. Less than 5% of the existing eyeglass manufacturing business is

focused on readymade reading glasses. Manufacturers lack the technology and expertise to

3 Population Reference Bureau. “2006 World Population Data Sheet.” http://www.prb.org/pdf06/06WorldDataSheet.pdf.

4 Christiansen, Molly and Ted London, “Scojo Foundation: A Vision for Growth at the Base of the Pyramid” (unpublished teaching case study, University of Michigan, 2007), 6.

Around one quarter of the Indian population would benefit from reading glasses in terms of improved quality of life and increased productivity.

Economic situation What Works: Scojo India Foundation

9

produce high quality frames that compete effectively on a price and quality basis with

Chinese imports. Therefore, retailers focus on more expensive, custom‐made eyeglasses.

• Profitability. The price of the least expensive reading spectacles at optician shops averages

$8, and although low‐quality, plastic‐frame options are available for as low as $3, opticians

do not earn enough profit on the latter to stock them.5

Consequently, many people do not know that there is a simple and affordable solution to presbyopia,

and therefore do not look for opportunities to buy reading glasses even if they are available. Scojo India

Foundation, therefore, stimulates demand in this market by generating awareness of blurry up‐close

vision and the need for reading glasses.

5 Arunesh Singh, interview by Nico Clemminck and Sachin Kadakia, Hyderabad, India, January 2007.


10

Chapter 3

Business model

In this chapter, we provide an overview of Scojo as an organization and analyze the unique

characteristics of its business model. Primarily, the model employs a distinctive distribution system

through the promotion of local entrepreneurship supported internally or by strategic partners. In

addition, the model emphasizes long‐term self‐sustainability through its marketing and pricing strategy.

3.1 Founding history

Dr. Jordan Kassalow and Scott Berrie drew on their experiences in medicine and business, respectively, to

create Scojo Foundation in 2001. Both founders believed in making affordable reading glasses available to

low‐income populations through market‐based delivery models. Kassalow and Berrie established Scojo

Foundation in conjunction with the company Scojo Vision LLC, a for‐profit designer and manufacturer of

high‐end reading glasses which caters to customers in high‐income countries. Scojo Vision donates 5%6

of all its profits to Scojo Foundation.

Scojo Foundation piloted its direct selling model in India, in 2001, and has since expanded operations into

El Salvador, Guatemala, Bangladesh, Mexico, Ghana,7 and most recently in 2007, Sub‐Saharan Africa.8

6 Scojo Foundation. “Mission and Vision,” http://www.scojofoundation.org/2_1_mission.html.

7 Graham Macmillan, interview by Nico Clemminck and Sachin Kadakia, New York, NY, October 2006.

Founding history What Works: Scojo India Foundation

11

Scojo distributes glasses through differing subsidiary and partnership arrangements adapted to local

market conditions. Only in India and El Salvador does Scojo operate wholly‐owned subsidiaries.

United States Legal Entity: Scojo Foundation, Inc.

US non-profit - 501(c)(3) public charity Key Staff:

Graham Macmillan, Director Neil Blumenthal, Director of Programs

Guatemala Program Type: Franchise partner

Year Started: 2004 Legal Entity: Community Enterprise Solutions (US

non-profit 501(c)(3) public charity) Funding: Scojo Foundation makes grants to CES to

manage program and purchase inventory

El Salvador Program Type: Subsidiary;

Year Started: 2002 Legal Entity: Scojo El Salvador, S.A.

(Salvadoran For-profit Sociedad Anónima) Key Staff: Heidy Serpas, Country Manager

George “Bucky” Glickley, Consultant

Bangladesh Program Type: Franchise partner

Year Started: 2006 Legal Entity: BRAC (Bangladeshi non-profit) Funding: Scojo Foundation makes grants to BRAC to


India Program Type: Subsidiary that also supports franchise

partners; Year Started: 2005 Legal Entity: Scojo India Foundation

(Indian Non-profit Section 25 Company) Key Staff: Arunesh Singh, Country Director Raman Nageswara, Operations & Programs

Mexico Program Type: Franchise partner

Year Started: 2006 Legal Entity: One Roof (US for-profit with for-profit

subsidiary in Mexico) Funding: One Roof paid Scojo Foundation to conduct

a feasibility study and pilot

GhanaProgram Type: Franchise partner

Year Started: 2007Legal Entity: Freedom from Hunger (US non-

profit 501(c)(3) public charity)Funding: Freedom from Hunger paid Scojo

Foundation to conduct a feasibility study and pilot

United States Legal Entity: Scojo Foundation, Inc.

US non-profit - 501(c)(3) public charity Key Staff:

Graham Macmillan, Director Neil Blumenthal, Director of Programs

Guatemala Program Type: Franchise partner

Year Started: 2004 Legal Entity: Community Enterprise Solutions (US

non-profit 501(c)(3) public charity) Funding: Scojo Foundation makes grants to CES to


El Salvador Program Type: Subsidiary;

Year Started: 2002 Legal Entity: Scojo El Salvador, S.A.

(Salvadoran For-profit Sociedad Anónima) Key Staff: Heidy Serpas, Country Manager

George “Bucky” Glickley, Consultant

Bangladesh Program Type: Franchise partner

Year Started: 2006 Legal Entity: BRAC (Bangladeshi non-profit) Funding: Scojo Foundation makes grants to BRAC to


India Program Type: Subsidiary that also supports franchise

partners; Year Started: 2005 Legal Entity: Scojo India Foundation

(Indian Non-profit Section 25 Company) Key Staff: Arunesh Singh, Country Director Raman Nageswara, Operations & Programs

Mexico Program Type: Franchise partner

Year Started: 2006 Legal Entity: One Roof (US for-profit with for-profit

subsidiary in Mexico) Funding: One Roof paid Scojo Foundation to conduct

a feasibility study and pilot









Figure 4: Overview of Scojo operations in different geographies9

8 Scojo Foundation. “Scojo Foundation and PSI Collaborate to Launch Pan‐Africa Reading Glasses Initiative.” http://www.scojofoundation.org/5_p_psi.html.

9 Christiansen and London, “Scojo Foundation,” 15.

Mission and strategy What Works: Scojo India Foundation

12

Scojo Foundation’s partnership arrangements with existing distribution networks allow greater reach into

low‐income communities using a minimum of resources. Scojo partners with a wide variety of

organizations, including BRAC, a microfinance institution, Drishtee, a for‐profit Internet provider to rural

India, and Peace Corps, a US government sponsored volunteer program.10

Scojo Foundation has received numerous honors and awards, including the “World Bank’s Development

Marketplace Award in 2003, Yale/Goldman Sachs Foundation Partnership on Nonprofit Venture Award

in 2003, New York University’s Stewart Satter Social Entrepreneur of the Year Award in 2006, Fast

Company magazine’s Social Capitalist Award in 2005 and 2007,”11 and Brigham Young University’s

Social Innovator of the Year in 2006.

3.2 Mission and strategy

Scojo’s mission states that it “improves the economic condition of

families in the developing world by broadening the availability of

reading glasses and other health products and services and achieving

this through Scojo entrepreneurs and other market‐based distribution

solutions.” The dual goal articulated in this mission, broadening

availability of health care products on the one hand and enabling entrepreneurship on the other, is being

carefully balanced by the organization. Currently, Scojo is focusing on enabling entrepreneurship in order

to build scale and prove the model sufficiently. As such, Scojo is putting its emphasis on building the

organization aggressively by training Vision Entrepreneurs and formulating strategic partnerships.

3.3 Ownership and governance structure

Scojo is a 501(c)3, non‐profit organization governed by a Board of Directors, which includes Dr. Jordan

Kassalow (Chairman and Co‐Founder), Scott Berrie (President and Co‐Founder), David Bornstein, Anne

Marie Burgoyne, Charles DeGunzberg, Paul Lambert, and Ken Schwartz.

10 Scojo Foundation. “Partners.” http://www.scojofoundation.org/2_3_partners.html.


The dual goals articulated in this mission, broadening availability of health care products and enabling entrepreneurship, are being carefully balanced by the organization.

Ownership and governance structure What Works: Scojo India Foundation

13

Scojo Board of Directors and senior management are supported by a Board of Advisors with expertise in

many of the areas of Scojo Foundation’s work. Please see Appendix A for a complete list of Directors and

Advisors. Figure 5 provides an overview of Scojo Foundation’s organizational structure.

GhanaPartner: Freedom

From Hunger

Chairman

Dr. Jordan Kassalow

Director

Graham Macmillan

Bangladesh Partner: BRAC

El Salvador CountryManager : Heidy Serpas

Guatemala Partner: CES

Board of AdvisorsBoard of Directors

Operations & Programs Manager

Rama n Nageswara

Key Accounts Manager (Franchise

Partner and Wholesale Channel)

Salu Cherian

Training Manager

Franchise PartnerChannel

Krishna Kakani

Vision Entrepreneurs

Admin/Stock AssistantDavid Tadikonda

Finance/Accounting

Praveen Kumar

India Country Director : Arunesh Singh

VE Channel Manager

Maruti Ram

District Coordinators (6)

Mexico Partner : One

Roof

VE Identification and

Training Managers (2)

Director of Programs

Neil Blument hal

Chairman

Dr. Jordan Kassalow

Director

Graham Macmillan






Rama n Nageswara


Raman Nageswara



Salu Cherian



Salu Cherian

Training Manager


Krishna Kakani

Training Manager


Krishna Kakani




Finance/Accounting

Praveen Kumar

Finance/Accounting

Praveen Kumar


VE Channel Manager

Maruti Ram

VE Channel Manager

Maruti Ram



Roof




Neil Blument hal


From Hunger


From Hunger

Chairman

Dr. Jordan Kassalow

Director

Graham Macmillan






Rama n Nageswara



Salu Cherian

Training Manager


Krishna Kakani



Finance/Accounting

Praveen Kumar


VE Channel Manager

Maruti Ram



Roof




Neil Blument hal

Chairman

Dr. Jordan Kassalow

Director

Graham Macmillan






Rama n Nageswara


Raman Nageswara



Salu Cherian



Salu Cherian

Training Manager


Krishna Kakani

Training Manager


Krishna Kakani




Finance/Accounting

Praveen Kumar

Finance/Accounting

Praveen Kumar


VE Channel Manager

Maruti Ram

VE Channel Manager

Maruti Ram



Roof




Neil Blument hal

Chairman

Dr. Jordan Kassalow

Director

Graham Macmillan






Rama n Nageswara


Rama n Nageswara



Salu Cherian



Salu Cherian

Training Manager


Krishna Kakani

Training Manager


Krishna Kakani




Finance/Accounting

Praveen Kumar

Finance/Accounting

Praveen Kumar


VE Channel Manager

Maruti Ram

VE Channel Manager

Maruti Ram



Roof




Neil Blument hal

Chairman

Dr. Jordan Kassalow

Director

Graham Macmillan






Rama n Nageswara


Raman Nageswara



Salu Cherian



Salu Cherian

Training Manager


Krishna Kakani

Training Manager


Krishna Kakani




Finance/Accounting

Praveen Kumar

Finance/Accounting

Praveen Kumar


VE Channel Manager

Maruti Ram

VE Channel Manager

Maruti Ram



Roof




Neil Blument hal

Figure 5: Scojo Foundation organization chart12

Scojo employs 16 people in India: Arunesh Singh as Country Director, six Managers, two administrative

staff and seven District Coordinators. Mr. Singh brings to Scojo extensive experience in social enterprise

12 Scojo Foundation, business plan submitted to Acumen Fund (2006), quoted in Christiansen and London , “Scojo Foundation,” 17.

Products and services What Works: Scojo India Foundation

14

management as a former Program Director with Appropriate Technology India,13 an organization that

promotes environmentally sustainable work alternatives to subsistence agriculture.14

Scojo New York is involved in nearly all aspects of Scojo India Foundation’s activities. These include

recruiting an experienced Indian management team; identifying and securing funding and investors;

providing technical assistance in sales, marketing, and product design; partnership‐building with Indian

NGOs and government; ongoing monitoring and evaluation of operations through quarterly visits,

weekly conference calls and monthly progress reports submitted by Scojo India Foundation’s

management; annual site visits to India by Scojo directors; and strict financial monitoring via internal and

external controls and audits.

3.4 Products and services

Scojo trains rural community members to become

Vision Entrepreneurs, capable of providing vision

screenings and identifying common eye conditions.

The vision screening enables Vision Entrepreneurs to

refer all customers with eye conditions other than

presbyopia to reputable partner eye clinics to receive

comprehensive eye care. For customers with

presbyopia, Vision Entrepreneurs are able to assess

the correct magnification required and provide ready‐

made reading glasses on the spot.

Scojo provides the Vision Entrepreneurs with a kit including multiple styles, colors, and powers of

reading glasses, screening equipment and marketing materials to help launch their business. After the

launch, Scojo replenishes supplies of reading glasses and provides additional support as required.

13 Scojo Foundation. “Founders and Staff.” http://www.scojofoundation.org/2_2_founders.html.

14 Appropriate Technology India. “Home.” http://www.atindia.org/.


15

Behind this seemingly simple model, however, is an innovative way of dealing with distribution channels

and a refined strategy in setting prices and marketing the product.

3.4.1 Introduction

Scojo seeks to improve livelihoods in the developing world by broadening the availability of over‐the‐

counter eye health products and services through market‐based distribution solutions. Scojo utilizes a

micro‐franchise model to enable low‐income entrepreneurs, both male and female, to realize significant

income by selling glasses in their communities. Scojo has grown its number of Vision Entrepreneurs

steadily over the last two years (Figure 6).

Number of Scojo VE's

3024

46

78

93102

111

126

0

20

40

60

80

100

120

140

Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006

Figure 6: Historical growth of Scojo Vision Entrepreneurs

In addition, Scojo has increasingly been broadening access to affordable reading glasses by working with

strategic partners that recruit and support Vision Entrepreneurs in their networks. As such, Scojo

leverages access to its partners’ distribution networks in order to meet its dual mission. This partnership

channel has significantly increased in importance since the end of 2005 and has currently outgrown

Scojo’s own distribution channel (Figure 7).


16

Number of Partner VE's

0 0 0

53

148

179

260

331

0

50

100

150

200

250

300

350

Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006

Figure 7: Historical growth of Partner Vision Entrepreneurs

Scojo currently employs the following strategies to ensure program success:

• Identify local entrepreneurs or partners (including eye hospitals/clinics, consumer products

distributors, micro‐credit institutions and other NGOs) who have demonstrated success.

• With partners, systematically select entrepreneurs who will be able to sell glasses in their

community and advocate for improved eye health. Also, establish a referral hospital for

people with other vision disorders.

• Provide entrepreneurs and partners training and marketing support with co‐branded

business packs including backpacks, display boxes, screening materials, certificate, lab coats,

posters, and advertising campaigns, to kick‐start their businesses.

• Assist entrepreneurs and partners during business operations by offering continuous

training, procurement of affordable reading glasses, and ancillary eye care products.

• Implement integrated supply‐chain management to ensure timely and cost‐effective delivery

of reading glasses and other associated products.

3.4.2 Distribution channels

Scojo distributes reading glasses through three channels: Scojo Vision Entrepreneurs, Franchise Partners,

and Wholesale (Figure 8).


17

Figure 8: Overview of the three main distribution channels15

In the last two years, the franchise partnership channel has significantly increased in importance (Figure

9). As will be discussed later, we expect it to continue to grow in importance.


2,0191,171 1,191 1,450 1,802 1,471 1,649 1,467

4,725

7,470

1,127

3,890

2,243

602

41

689

258

0

2,000

4,000

6,000

8,000

10,000

Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006

Scojo VE's Franchise Partners Wholesale

Figure 9: Number of glasses sold in different distribution channels

Scojo Vision Entrepreneur Channel

The Scojo Vision Entrepreneur (“SVE”) channel is the oldest channel and exists in five districts of Andhra

Pradesh. In this channel, Scojo staff identifies, recruits, trains, and supports its own network of Vision

Entrepreneurs. In essence, each entrepreneur is a Scojo micro‐franchisee.

15Christiansen and London , “Scojo Foundation,” 21.


18

When selecting SVEs, it is important to Scojo that the entrepreneur has 1) an adequate education level to

allow him to run a business; 2) a good reputation and connections within the community to provide him

with a solid customer base; and 3) a need for higher income to motivate entrepreneurialism. 16

Scojo provides each SVE with a business‐in‐a‐bag for a non‐refundable and below‐cost deposit of Rs. 500

(USD $11.11). This business‐in‐a‐bag (Figure 10) contains all the materials and information necessary to

start a successful business selling reading glasses.

Figure 10: Example of a Scojo business‐in‐a‐bag17

In addition to the business‐in‐a‐bag, a dedicated Scojo trainer provides all SVEs with business and optical

education to ensure that SVEs will be able to: identify potential customers; conduct screenings for

presbyopia; prescribe reading glasses; and manage their business and inventory. SVEs also learn to

recognize conditions that require medical treatment, such as cataracts, and refer the afflicted individual to

a clinic.18



18 Arunesh Singh and Neil Blumenthal, “Scojo Vision Entrepreneur Training Program,” a Microsoft PowerPoint presentation transmitted via email, May 14, 2007.


19

A Scojo District Coordinator, who is responsible for distributing

inventory, collecting data, managing implementation, and providing

moral support, supports each SVE. In general, a District Coordinator

supports 20‐25 SVEs in a given sales territory. While the cost per

beneficiary is highest with this channel due to staff and training costs,

the cost is justified because this channel acts as a test market for the rest

of the country. Scojo is able to control all of the activities in this channel,

learns lessons rapidly and proposes innovations to improve effectiveness.

Each District Coordinator aggregates sales information and supply requirements for their respective

region and sends the information to Scojo, often electronically through the SalesForce web‐based software

application. Scojo maintains a central warehouse at its Hyderabad headquarters for processing and

shipping orders to each District Coordinator. The District Coordinator receives the shipment (via

standard commercial shipping companies or local couriers) and distributes the supplies to their VEs

during their regular visits. In most cases, Scojo can re‐stock a VE through this distribution system within

1.5 days.

Franchise Partner Channel

Scojo Foundation’s primary growth strategy is based on cultivating partnerships with organizations that

have ready‐built distribution channels into rural areas. Such partnerships have proven highly beneficial

for both Scojo and its partners: Scojo is able to minimize the costs of expanding its business, not having to

expend resources toward managing individual entrepreneurs; and partners are able to offer their

members an additional income earning opportunity with potentially high profit margins. Scojo provides

initial training to entrepreneurs, while partners provide day‐to‐day support and inventory management.

Replenishment of supplies is managed similarly to the Scojo VE channel: supplies are shipped from

Hyderabad to an appointed District Coordinator‐equivalent staff member who ensures each VE receives

the stock. Scojo charges partner organizations varying upfront amounts for each business‐in‐a‐bag,

In the proprietary Scojo Vision Entrepreneur Channel, Scojo staff identifies, recruits, trains, and supports its own network of Vision Entrepreneurs. In essence, each entrepreneur is a Scojo franchise.


20

depending on the number of glasses in the starter kit. Partners then determine whether and how much to

charge its members for the kits. 19

In 2006, Scojo realized great success with its initial partners by delivering more than 20,000 pairs of

glasses in nine months. The reason for this rapid growth can be attributed to the partners’ large existing

networks of community‐based providers such as community health workers, consumer products

distributors, and micro‐credit borrowers. These community‐based providers represent the “last‐mile

solution” that is the most difficult aspect of rural distribution. In addition, each network is supported by

infrastructure that is able to manage the operations of the Scojo model. From a revenue perspective,

Scojo’s revenue is diversified because partners pay for the Scojo “franchise,” which includes the

inventory, use of brand, marketing materials, eye charts, and data collection forms. In the next chapter,

we will discuss this franchise partner channel in more detail as a major growth driver for Scojo India

Foundation.

Wholesale Channel

The “wholesale” channel represents Scojo’s effort to develop the market for reading glasses in India

through commercial retailers. Scojo intends to wholesale affordable, quality reading glasses to existing

pharmacy retailers, so that they are widely available. Scojo is well‐aware, however, of the need to ensure

that its wholesaling business is in line with its mission to serve the rural poor.20

3.4.3 Pricing and marketing

Scojo determined its pricing structure based on sales data from current operations, a market study

conducted by Marketing and Research Team (MART), and the Scojo pilot program conducted in 2001.

Scojo offers four models of reading glasses through its retail channel, and relatively more stylish models

are more expensive. Glasses retail from Rs. 95 to Rs. 165 ($2.11 to $3.67) and earn the VE an average of


20 Christiansen and London, “Scojo Foundation, 12.


21

Rs. 50 ($1.11) per pair.21 Demonstrating the fact that style is an important consideration for consumers of

any income level, the least expensive model accounts for only 3% of sales.

Prices to end customers through the wholesale channel are generally higher than through the SVE and

Franchise Partner channels, as those who have access to existing retailers are usually higher income

earners. Two models are available to wholesale buyers, one of which retails for Rs. 105 and the other for

Rs. 199. The average margin for the wholesaler is Rs. 94 ($2.09) per pair of glasses.22

In its VE channel, Scojo relies on two marketing techniques for selling its glasses: eye camps and door‐to‐

door sales. VEs organize eye camps in coordination with the local village head, who provides VEs with

access to a room centrally located in the village. The Scojo VE, with the help of the District Coordinator,

uses this room as a screening and selling location for half a day, and people from the village can walk in

for a complimentary vision screening and buy glasses if needed. Often, the VE would engage the local

town drummer to advertise these eye camps a couple days in advance.23

Scojo’s door‐to‐door sales strategy relies on a referral scheme by which the Scojo VE would screen a local

at his or her home and ask for referrals who might suffer from up‐close vision problems. The referral

scheme helps to establish trust between the VE and potential customers, especially when the VE begins

by screening a village leader, or when the entrepreneur has earned credibility as a physical examiner by

making a sale to a relative of the referral.24

Vision Entrepreneurs have observed that the door‐to‐door strategy is more profitable compared to the

eye camps, as the likelihood of a sale is higher.

21 “Scojo 2006 model 01.04.06 2006,” Microsoft Excel file from Scojo Headquarters, New York, NY, October 2006.

22 Christiansen and London, “Scojo Foundation, 12.

23 Scojo Vision Entrepreneurs, anecdote from village visit by Nico Clemminck and Sachin Kadakia, Hyderabad, India, January 2007.

24 Ibid.

Partnership networks What Works: Scojo India Foundation

22

Chapter 4

Partnership networks

Scojo’s partnership objective is to leverage existing networks and infrastructure to create sustainable,

scalable programs that bring eyeglasses to the largest number of people. Partnerships enable Scojo to

share the cost and resource commitment for recruiting, training and supporting entrepreneurs. This

strategy also diversifies the organization’s operations and income sources, while increasing its reach.

Partnerships are a critical component to the efficient deployment of Scojo’s business model and expected

to be the largest driver of its future growth. As such, it is important for Scojo to demonstrate a clear

financial and social value proposition to each partner.

4.1 Formulating partnerships

Scojo partners with organizations that demonstrate a commitment to their mission, support rural

networks in villages, are well respected in their communities and have the potential to make a

meaningful impact on behalf of Scojo.

Partnerships begin with a carefully designed pilot phase to

provide proof of concept for the partner before a full program

rollout. To date, most partnership pilots have been converted

successfully to full programs. Scojo and the partner jointly review

the pilot results and make necessary adjustments to training, support or startup kits. Based on estimated

overhead costs, each partner individually decides how to structure profit sharing agreements with their

Scojo partners demonstrate a commitment to their mission,

support rural networks in villages, and are well respected

in their communities.

Formulating partnerships What Works: Scojo India Foundation

23

respective entrepreneurs. Finally, prior to launch, each organization agrees to their roles and

commitments, ensuring smooth cooperation with Scojo. However, Scojo has little recourse if partners do

not honor their commitments.

In each partnership, Scojo commits to:

• Assess the feasibility of the program within the partner’s network.

• Provide the project template, including protocols for training, loans, selection of

entrepreneurs, data collection and reporting, marketing, inventory management and

management of the project.

• Assist in start‐up and implementation of the project, including training.

• Identify and secure a reliable source of high quality, low‐cost reading glasses.

• Provide ongoing technical assistance to project staff.

In return, the partner is expected to:

• Identify local staff to oversee and coordinate the project.

• Identify local low‐income entrepreneurs to participate in the project.

• Pay the upfront cost of the micro‐franchise kits (e.g., business‐in‐a‐bag or kiosk displays).

• Provide local oversight of the project.

• Incorporate the project into the organization’s ongoing activities.

• Provide weekly data reports to Scojo on sales.

• Provide monthly narratives and financial progress reports to Scojo.

• Absorb ongoing project costs as the project increases in size.

Current partners in India What Works: Scojo India Foundation

24

4.2 Current partners in India

Scojo currently works with over 20 operational partners in India, including multi‐national corporations,

micro‐credit institutions, health organizations and consumer products distributors. Utilizing these

networks, Scojo has been able to expand to five additional states in India.

Consequently, Scojo currently operates in five districts in Andhra Pradesh: East Godavari (13),

Mahbubnagar (25), Nalgonda (26), West Godavari (26), and Prakasam (3). The other states in India

covered through partnerships include Madhya Pradesh, Assam, Bihar, Rajasthan and Uttar Pradesh

(Figure 11).

Figure 11: Scojo presence in India and Andhra Pradesh

Six of Scojo’s key partnerships are described below:

• Drishtee is a rapidly growing, rural franchise network that provides computer training and

Internet kiosks to villages. Drishtee currently reaches over fifteen million people through

more than 1,000 Kiosks in nine states. Drishtee recruits, trains and supports local village

entrepreneurs, and encourages them to offer additional products and services from the kiosks

to diversify and increase their income. Through its partnership with Scojo, 36 Drishtee

entrepreneurs have received training and currently sell eyeglasses to villagers from their

Current partners in India What Works: Scojo India Foundation

25

kiosks, and over 300 entrepreneurs are expected to join the program by the end of 2007.

Depending on the type of eyeglasses sold, these entrepreneurs pay Drishtee approximately

Rs. 12 per pair of Scojo glasses for program support. The entrepreneur keeps the balance

(~Rs. 43) as profit, representing one of the highest margin products in their portfolio (at 26%).

Drishtee’s portfolio approach is designed to profitably support entrepreneurs, and this

revenue sharing model with entrepreneurs for Scojo products is a strong fit.

• Vedanta Resources is one of the largest metals and mining groups in India, and is committed

to managing its business in a socially responsible manner. As part of its corporate social

responsibility (CSR) initiatives, Vedanta has developed a network of Community Health

Workers (“CHW”) to provide basic services in villages where miners live. In partnership with

Scojo, Vedanta has provided training and support to more than 60 CHWs to do vision

screenings and sell eyeglasses in villages. Vedanta’s CSR program fully funds the overhead

costs of the program, so Vedanta entrepreneurs keep 100% of the profits they generate.

• The Byrraju Foundation seeks to build progressive self‐reliant rural communities by

providing services in the areas of healthcare, environment, sanitation, primary education,

adult literacy and skills development. The Foundation currently works in 152 villages in five

districts of Andhra Pradesh, impacting more than 800,000 people. Scojo helped Byrraju

expand its product portfolio and currently has 140 CHWs selling Scojo eyeglasses.

• Hindustan Lever’s Project Shakti promotes income generation for rural underprivileged

women by providing small‐scale enterprise opportunities. Today, Project Shakti has nearly

30,000 women entrepreneurs selling Hindustan Lever products such as soaps and shampoos.

Scojo has partnered with Hindustan Lever to train the women entrepreneurs to do vision

screenings and integrate eyeglasses into their enterprise product offering.

• L.V. Prasad Eye Institute (LVPEI) is the largest eye care provider in Andhra Pradesh and one

of the preeminent eye care facilities in the world, providing equitable and efficient services to

underserved populations. LVPEI’s growing statewide network of Vision Guardians will be

trained by LVPEI in basic eye health and will sell Scojo eyeglasses or refer patients into

LVPEI’s statewide system of local eye care clinics and hospitals. As a key part of the state’s

Success of partnership strategy What Works: Scojo India Foundation

26

Vision 2020 Initiative, the program will quickly grow to serve all 70 million citizens of

Andhra Pradesh. LVPEI and Scojo have been partners since 2001 when the reading glass

distribution model using rural micro‐

entrepreneurs was first implemented. Dr.

Rao, the Director of LVPEI, has had a

professional relationship with Scojo’s

Chairman for many years and serves on the

Advisory Board of Scojo Foundation.

• BASIX is a micro‐credit organization

promoting sustainable livelihoods through

the provision of financial services and technical assistance to the rural poor. BASIX currently

works with over 190,000 households in 44 districts and 8 states. In partnership with Scojo,

BASIX plans to extend its service offering to include Scojo vision training and entrepreneur

support.

4.3 Success of partnership strategy

Partnerships have come to represent the most important channel for Scojo. Scalable, efficient growth

depends on Scojo’s ability to leverage the network and infrastructure of other organizations. In order to

continue to be successful, Scojo must offer a lucrative value proposition to each partner.

The key strengths in Scojo’s partnership strategy today include:

• With no other organization offering low‐cost, high quality reading glasses in villages, Scojo is

strategically positioned as a first mover and the sole distributor.

• Partners find the 30‐35% profit margin on Scojo products a very attractive prospect to offer

entrepreneurs in their networks. This unusually high margin enables the partner to charge

entrepreneurs a small fee to cover their operating expenses, while leaving the entrepreneur

with a meaningful income (e.g., Drishtee).

Success of partnership strategy What Works: Scojo India Foundation

27

• In areas where distribution is often challenging, Scojo offers a reliable supply of reading

glasses to district‐level coordinators

• Scojo has demonstrated its flexibility and accommodated varying partner requirements, such

as modifying training programs, adjusting micro‐franchise kit contents and startup costs,

negotiating minimum revenue agreements, and providing occasional operating support.

However, Scojo faces several strategic challenges, as addressed in Section 5.4. These challenges need to be

addressed in order for Scojo to continue to grow with existing and new partners.

Challenges What Works: Scojo India Foundation

28

Chapter 5

Challenges

Like many young organizations, Scojo faces many challenges to continue its growth and success.

However, the organization has proactively developed strategies to mitigate these risks and continues to

seek ways to minimize any potential threats to the success of their model.

5.1 Introduction

Scojo India Foundation’s revenue sources are from reading glasses sales, grants and loans. With

operations in India having started in January 2005, Scojo anticipates beginning to make a profit in 2010

assuming key volume growth targets as detailed in Appendix B and Appendix C. However, recent

performance suggests that these targets may be too aggressive. The key challenges, as described in this

chapter, in our opinion present important hurdles to achieving breakeven by 2010.

In order to achieve its 2010 targets, Scojo will have to increase its sales of glasses very aggressively.

Indeed, as detailed below its current forecasts project a doubling of number of glasses sold in each

channel year‐on‐year. To achieve growth in the VE channel, there will need to be an increase in sales

turnover per entrepreneur. With a cost of Rs. 25,000 ($556) per month for each District Coordinator

(including travel), each of a Coordinator’s 20‐25 Vision Entrepreneurs must sell 30 pairs of eyeglasses

each month for Scojo to break even. This target represents a substantial increase from the current average

of 15‐20 pairs. To achieve this, Scojo may need new incentive systems, improved sales practices or

reduced support levels.

Introduction What Works: Scojo India Foundation

29


21,816 48,300 82,080135,240

246,400

34,20083,250

151,875

232,875

328,500

11,400

25,800

51,600

88,200

135,600

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

2005 2006E 2007E 2008E 2009E 2010E

Scojo VE's Partnerships Wholesale

Figure 12: Projections of glasses sold in different distribution channels

At the same time, the number of Vision Entrepreneurs will have to increase significantly. We will discuss

later in this chapter how this growth might be hampered by several challenges. In addition, new

partnerships will be critical to support the growth in the partnership channel. As will be discussed in the

next section, there are several threats to the potential of this aggressive growth.

Cash flow from operations (USD)

-150,714

-96,492

106,925

-5,840-16,978

-200,000

-150,000

-100,000

-50,000

0

50,000

100,000

150,000

2006 2007 2008 2009 2010

Figure 13: Forecasted cash flow from operations

Partnerships What Works: Scojo India Foundation

30

5.2 Partnerships

Scojo’s rapid growth has been facilitated by an aggressive and successful partnership strategy, but four

key elements need to be incorporated into Scojo’s strategy to continue this trajectory:

• Convince partners to pay for and commit resources to operating and supporting Scojo

programs within their networks by:

o Justifying the incremental expenses to strictly breakeven‐oriented organizations, such as

micro‐credit institutions, and

o Creating a mission‐oriented case for charity and non‐profit organizations assuming the

cost out of their own funds;

• Ensure proper motivation and product emphasis by the partner’s entrepreneur, particularly

when Scojo is part of a larger suite of products (e.g., Drishtee);

• Develop a financially and organizationally sustainable level of involvement by Scojo staff in

ensuring adequate support of entrepreneurs by program partners; and

• Motivate partners to honor their commitments and continue sourcing eyeglasses from Scojo

rather than an alternate source.

To support the aggressive growth targets Scojo has set, it will have to overcome some important

challenges.

• Scojo will have to carefully manage the current diversity in its partner portfolio. CSR

organizations are strategically different from microfinance partners and require a different

value proposition. Either Scojo has to tailor its proposition to each specific partner or focus its

strategy in a more structured value proposition.

• While microfinance organization such as Basix or SKS Microfinance represent significant

potential as partners, Scojo will have to think through the reservations these partners might

have in getting too heavily involved in suggesting or managing the business their clients run.

These partners might limit themselves to purely financing activities, avoiding any

involvement beyond that.

Recruiting entrepreneurs What Works: Scojo India Foundation

31

• To enhance the value proposition for its partners, Scojo will have to increase its efforts to

build a strong brand name. As their brand awareness is currently limited, the strength of

current partner relationships and the potential for future relationships is vulnerable to

stronger brands launching similar programs. For example, Titan Industries (a popular Tata

Group‐backed manufacturer of watches and jewelry) recently announced the launch of Titan

Eye+, to provide prescription eyeglasses to the mid‐priced market25. While this does not

directly compete in Scojo’s target market, Titan’s brand name may be leveraged in the future

to penetrate Scojo’s market. Similar to current customers paying a premium for Scojo’s

fancier models, future customers may pay an additional premium for the Titan brand name.

• Keeping partners motivated and interested in boosting Scojo related sales requires dedicated

staff to cultivate partnerships. Currently, continuous management of partnerships is limited

as there is no dedicated staff. This results in partners loosing interest in the program, leading

to decreasing sales.

5.3 Recruiting entrepreneurs

Most Scojo entrepreneurs are required to pay a deposit for startup kits to begin the program. SVEs pay

Rs. 500 ($11) for their kits and receive eyeglasses on consignment. With a profit margin of Rs. 55 ($1.22)

per pair of glasses, they need to sell nine pairs before they breakeven. However, other entrepreneurs pay

significantly more, depending on the partner agreement. For example, Drishtee entrepreneurs pay Rs.

2100 ($47) for their kits. With a profit margin of approximately Rs. 40 ($0.89) per pair (after the Drishtee

fees), they need to sell over 52 pairs of glasses before they breakeven. Due to capital constraints among

the target population, many potential entrepreneurs cannot participate in Scojo’s program.

Scojo has tested several solutions to overcome this hurdle. Some partners pay outright or provide loans to

mitigate this problem. Others have negotiated smaller kits, reducing the size and financial burden on

their entrepreneurs. However, the most successful approach has been simply to demonstrate the

profitability of being a VE. Scojo found that if convinced, many entrepreneurs are able to raise the

25 Tata Group. “Press Release: Titan Industries launches Titan Eye+.” http://www.tata.com/titan/releases/20070331_titan_eye.htm.

Motivating entrepreneurs What Works: Scojo India Foundation

32

necessary funds. With successful VEs making an average of Rs. 1000 ($22) per month, the return on

investment is very attractive and the upfront capital requirement relatively small.

5.4 Motivating entrepreneurs

Many entrepreneurs start the Scojo program with strong results, but some

have gradually declined in their performance. It is the responsibility of

district‐level coordinators to follow‐up with entrepreneurs to offer support

and motivation, but there is significant variability in their effectiveness.

For example, one district coordinator we met had previously sold

insurance products, and encouraged the entrepreneurs in his region to push insurance sales ahead of

other products in their portfolios. As a result, the average sales of Scojo products per entrepreneur were

relatively lower in this region.

The key reasons for this declined performance are 1) the fact that entrepreneurs do not like going door‐to‐

door and prefer to sit in a shop to sell; and 2) a decreasing excitement as entrepreneurs exhaust their

immediate circle of close friends/family with the incremental sales harder to make (longer sales cycles,

more effort to establish credibility, etc.).

Vedanta is able to leverage the district coordinator role to much success and could serve as a model for

other partners. The Vedanta district coordinator maintained very close relationships with local village

heads, and as a result, recruited the most talented villagers to be Scojo entrepreneurs. Further, the

coordinator aggressively boosted the Scojo brand name, with the help of influential people in the villages,

to ensure the credibility and success of his entrepreneurs. He maintained regular contact with Vision

Entrepreneurs, and was able to proactively resolve any conflicts or issues that arose.

Another solution to improving motivation may be a sliding commission scale. Scojo can offer a higher

commission rate for sales above 20 pairs per month to incentivize Vision Entrepreneurs to increase their

commitment to the program and accelerate Scojo’s path to breakeven volume.

Many entrepreneurs start the Scojo program with strong results, but some have gradually declined in their performance.

Market saturation What Works: Scojo India Foundation

33

5.5 Market saturation

As an entrepreneur aggressively targets the immediate sales opportunities in nearby villages, there is a

fear of market saturation and diminished incremental sales potential. Entrepreneurs generally operate in

a defined region, consisting of more than 20,000 people. In Andhra Pradesh, a District Coordinator

estimated that the ratio of VEs to the population of surrounding villages is approximately 1 to 50,000. As

discussed in the market sizing, 20% of the population could benefit from reading glasses. This implies a

potential sales level of 10,000 eyeglasses per average VE, which they could not exhaust for many years.

Furthermore, as higher powers are required every 2‐3 years, the entrepreneur will receive repeat sales

from existing customers. Lastly, as a population ages, new customers are guaranteed to come, as

presbyopia is a condition affecting everyone over 35‐40 years of age.

5.6 Competition

5.6.1 Optical retailers

Optical retailers currently command greater respect than Scojo entrepreneurs do. Villagers still feel their

primary resource for vision problems are these retailers, and may not trust Scojo entrepreneurs.

However, villagers often have to travel several hours to reach the nearest retailer. The travel costs and

time required away from their jobs to make this trip are often too high. Furthermore, villagers are faced

with onerous costs for basic screenings and eyeglasses. With 34.7% of Indians earning less than $1.00 per

day,26 Scojo Vision Entrepreneurs indicate that a cost of $3‐10 for an eye exam and up to $11 for

eyeglasses are prohibitive for the average village population.27 In addition, optical retailers are not

inclined to push for this market due to the smaller profit margins on readymade glasses when compared

to over 100% margins they receive for prescription glasses.

Scojo entrepreneurs have more difficulty gaining credibility when they are already known for another

profession, such as tailor or computer trainer. However, the screening method and immediate, easy to

26 World Bank Development Data Group. “World Development Indicators 2006.” http://go.worldbank.org/RVW6YTLQH0.

27 Scojo Vision Entrepreneurs, anecdote from village visit by Nico Clemminck and Sachin Kadakia, Hyderabad, India, January 2007.

Competition What Works: Scojo India Foundation

34

prove benefits provided by reading glasses enables entrepreneurs to gain credibility over time. These

factors, combined with the convenience and substantial cost and time savings, need to be emphasized to

overcome the competitive threat of optical retailers.

5.6.2 Street vendors

Street vendors in urban areas are increasingly found selling reading glasses at prices below Scojo’s. For

example, we witnessed a street vendor in Hyderabad selling reading glasses for Rs. 125 ($2.78), compared

to Scojo’s selling price of Rs. 165 ($3.67) rupees in villages.28 These street vendors have not yet penetrated

the villages, due to the greater travel

expense and lower profit potential in more

remote areas. However, the increasing

prevalence of these vendors presents a

significant threat to Scojo.

To address this issue effectively, Scojo needs

to continue to build its brand, reputation

and the credibility of its entrepreneurs. The

Scojo training and support program is of

much greater quality and value, and these

benefits need to be emphasized. In addition, Scojo’s village model offers people the opportunity to

purchase reading glasses directly in their homes, which will command a premium as an alternative to

making the expensive and long trip into a major city. The reading glasses Scojo sells are of higher quality

and have longer durability than the typical reading glasses available in urban markets.

5.6.3 Existing Indian manufacturers

As existing Indian eyeglass manufacturers witness Scojo’s success in the villages, they may attempt to

enter the market and threaten Scojo’s long‐term position. However, the industry is highly fragmented

and there are no dominant firms with sufficient capital to build a network that could effectively compete

28 Field research by Nico Clemminck and Sachin Kadakia, Hyderabad, India, January 2007.

Competition What Works: Scojo India Foundation

35

with Scojo’s partnerships and first‐mover advantage. In addition, 85‐95% of existing manufacturers’

business is focused on the sunglasses or prescriptive glasses business.29 Therefore, Scojo’s focus on

readymade reading glasses should have a minimal disruption to their business.

5.6.4 Charities

Charities that distribute free reading glasses can undermine Scojo’s work by converting potential

customers into aid beneficiaries. Some potential customers will receive the free screening from Scojo but

not purchase eyeglasses because they want to wait for the next eye camp or health fair to receive a free

pair. However, Scojo is still able to operate in areas served by charities because customers often prefer to

pay low eyeglass fees for an immediate solution rather than wait an indeterminate time for the next

camp. In addition, Scojo offers brand‐new, high‐quality and fashionable reading glasses, which are rarely

found in charity programs. Finally, Scojo offers a permanent presence, as the entrepreneur is usually a

member of the village and can be available for future screenings or adjustments.

5.6.5 New entrants

Based on Scojo’s success, it is possible that new or existing organizations will adopt this model and enter

the market. A key challenge for Scojo is to ensure strong partnerships with every major organization that

has a network accessing villages. With partnerships at the core of a successful model, this will provide a

strong barrier to entry. In addition, Scojo needs to strengthen its brand name as a great partner, a high‐

quality service provider, and a high‐quality product offering. Entrepreneurs should be recognized as

Scojo entrepreneurs, and the Scojo name should be well recognized in villages. Finally, Scojo should

actively seek partnerships with eye care institutions, which represent the most likely new entrants in the

short term. These institutions should be convinced that they would benefit more by partnering with Scojo

instead of building the model on their own.


What Works: Scojo India Foundation

36

Chapter 6

What works: key lessons learned

Scojo’s innovative business model has enabled the organization to scale its operations quickly and

efficiently. As a result, Scojo has demonstrated the success of its replicable and sustainable strategy for

maximizing its impact. To better understand the key drivers of this success, we have outlined below

“what works” for Scojo.

6.1 Focusing on sustainability and profitability

From the earliest stages of the organization’s conception, a self‐sustaining business model was at the core

of Scojo’s strategy. Scojo’s programs were designed and are presently evaluated on a double bottom line:

social impact and organizational profitability. The result of each management decision, whether

partnerships, product launches or organizational change are evaluated under these strict criteria.

The organization has the culture of a small business, driven to be innovative and deliver measurable

results against both bottom lines. The business model incorporates many aspects of a typical retail

company: Scojo takes a fixed share of each sale, controls the retail price, develops the product strategy

and manages the supply chain. Ensuring a low cost, high volume product strategy is at the core of their

operations. Every employee understands that achieving breakeven is a requirement, not just a goal for

this organization. As a result, Scojo is continuously finding ways to increase efficiency, boost profits and

ensure a long‐term, sustainable enterprise. For example, Scojo India Foundation is implementing new

inventory management software to improve delivery times while reducing excess inventory. In addition,

Aggressive growth strategy What Works: Scojo India Foundation

37

Scojo optimized the delivery schedule from its manufacturer, so that it could use sea instead of air freight

and now saves 33% on shipping costs.

6.2 Aggressive growth strategy

This business model requires efficiencies of scale in order to be profitable, and Scojo has aggressively

expanded its network of vision entrepreneurs. Leveraging existing networks developed by other

organizations in concentrated geographic regions has provided Scojo a faster and substantially less

expensive expansion strategy. The value chain in Scojo’s business model provides sufficient financial

incentive and social impact potential to convince

partners to open their networks, leverage their

infrastructure and provide the resources to

manage these programs. Partners can take a share

of the large profit margins, and receive some of

the widespread recognition for the double social

impact provided by this innovative model. In

return, Scojo also keeps a dedicated staff person

responsible for monitoring all partnerships and

providing additional support when necessary.

Despite its rapid growth, Scojo has made sure that the necessary training and support structure is

provided to all vision entrepreneurs. In order to ensure quality standards, all vision entrepreneurs are

required to pass a test at the end of the multi‐day training program. To ensure continued motivation and

assistance in the field, district‐level coordinators are assigned to each group of 20‐25 Vision

Entrepreneurs. These factors provide organizational and quality controls around the rapid growth, and

keep the goal of long‐term success at the forefront of each decision.

6.3 Building barriers to entry

With its first mover advantage, Scojo has built large barriers to entry for potential competitors. Thus far,

the cost for retailers to penetrate the rural villages in India has been prohibitive. No other organization

Replicating the model What Works: Scojo India Foundation

38

sells eyeglasses to villages. In fact, very few organizations have developed the infrastructure to reach

villages with retail products, save large consumer products companies such as Coca‐Cola, Hindustan

Lever or agricultural products companies.

Scojo has taken advantage of its exclusive position in the villages by gathering market data on customer

preferences and building its brand name. We have observed that consumers, even in impoverished

villages, are willing to pay premiums for stylish and brand name goods. If a competitor can overcome

high infrastructure costs to enter this market, Scojo has taken the preemptive steps to ensure the

competitor will be at a major disadvantage on product style, cost and branding considerations.

Scojo is also working to ensure that entrepreneurs stay in its network.

Scojo offers these entrepreneurs higher profit margins than any other

retail product. Participating in the program can be part‐time, so the

entrepreneur does not have to quit his job or give up his primary

source of income. Further, because of the health‐based nature of the

product, Scojo entrepreneurs gain respect in their respective communities. Therefore, Scojo tries to ensure

that its entrepreneurs will remain motivated and less likely to consider switching into other programs by

future competitors.

6.4 Replicating the model

Scojo’s model has been replicated in six states in India, through a broad range of remote villages with

diverse cultures, economic conditions and geographic considerations. In addition, Scojo has launched the

model in El Salvador, Guatemala, Bangladesh, Ghana, Mexico, and will be launching throughout 30

countries in sub‐Saharan Africa through a partnership with PSI. A key driver for the rapid replication of

this program is the minimal impact of region‐specific factors on its success. The problem of presbyopia

affects every person over the age of 35‐40, irrespective of region, culture or economic conditions. Even

literacy rates do not appear to have a significant impact, because Scojo’s glasses are often used for sewing,

cooking, farming and other necessary daily tasks. As a result, the Scojo model is successful in almost any

region that is traditionally underserved by eyeglass retailers.

Scojo has taken advantage of its exclusive position in the villages by gathering market data on customer preferences and building its brand name.

Delivering social impact What Works: Scojo India Foundation

39

6.5 Delivering social impact

Social impact is delivered through economic empowerment of the entrepreneurs and the benefits to

customers who purchase eyeglasses. Entrepreneurs, many of whom previously earned $1/day, receive a

substantial boost to their income. Depending on how much time they allocate to the Scojo program,

entrepreneurs can double their income. On average, they generate approximately $20/month in

additional income. In addition to the improved livelihood through greater disposable income, the social

impacts include the creation of a new income generation opportunity for women, increased respect

within the community and improved business skills through Scojo training,

People suffering from presbyopia often cannot access a solution, due to the long distance to the nearest

eye doctor, lack of awareness, prohibitive costs, or simply fear. Scojo’s model brings free screenings and

low cost eyeglasses to their doorstep, eliminating many of these obstacles. As a result, many sufferers can

return to work, increase their productivity or read the newspaper again.

6.6 Conclusion

The combination of these factors has created a powerful business model and represents the key to “what

works” for Scojo. Several key challenges remain, particularly around maintaining the networks and

defending against potential entrants. However, the competitive barriers Scojo has created, through its

first‐mover advantage and growing scale, will protect the model in the future. Armed with a

management team that understands the importance of a sustainable, replicable business model, Scojo

appears to be well positioned for continued success.

Board of Directors and Advisors What Works: Scojo India Foundation

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Appendix A

Board of Directors and Advisors

Board of Directors

Dr. Jordan Kassalow Chairman and Co‐Founder, Scojo Foundation President and Co‐Founder, Scojo Vision LLC Partner, optometry practice of Farkas, Kassalow and Resnick Scott Berrie President and Co‐Founder, Scojo Foundation Chief Executive Officer and Co‐Founder, Scojo Vision LLC David Bornstein Author and lecturer in the field of Social Enterprise Anne Marie Burgoyne Director, Draper Richards Foundation Charles de Gunzburg Vice‐Chairman, First Spring Corporation Paul Lambert Partner, McLaughlin & Stern, LLP. Ken Schwartz Founder, Oliver Peoples

Board of Directors and Advisors What Works: Scojo India Foundation

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Board of Advisors Kim Alter Founder, Virtue Ventures Samantha Beinhacker Principal, New Capital Consulting L. Brooks Entwistle Chief Executive Officer, Goldman, Sachs India, LLC. Wayne Farmer Senior Director, KaBOOM! David Green Executive Director, Project Impact Kenneth MacWilliams, M.B.A. President, Woodrow Wilson Associates G. N. Rao, M.D. Former Director, L.V. Prasad Eye Institute Chairman, International Association for the Prevention of Blindness Seth Rosen Partner, Debevoise & Plimpton Jason Shaplen Senior Executive and Director, Next Steps Program, Project Renewal Rob Shepardson Founding Partner, Shepardson, Stern + Kaminsky Lloyd Timberlake Director of Sustainability, World Business Council on Sustainable Development

Projected income statement* What Works: Scojo India Foundation

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Appendix B

Projected income statement*

INR (1 USD = 45 INR)

Income Statement 2006 2007 2008 2009 2010 2011 2012

Revenue from VE channel 2,503,192 5,549,276 9,841,608 16,349,193 29,952,720 29,952,720 29,952,720Revenue from wholesale channel 1,418,730 3,210,810 6,421,620 10,976,490 16,875,420 16,875,420 16,875,420Revenue from partner channel 3,594,420 8,749,575 15,962,063 24,475,163 34,525,350 34,525,350 34,525,350

Total Revenue from Sales 7,516,342 17,509,661 32,225,291 51,800,846 81,353,490 81,353,490 81,353,490total number glasses sold 65,256 152,625 280,755 449,455 699,300 699,300 699,300

Total Income 7,516,342 17,509,661 32,225,291 51,800,846 81,353,490 81,353,490 81,353,490

COGs 3,941,553 9,220,035 16,959,840 27,146,664 42,223,877 42,223,877 42,223,877Operating costs from VE channel 2,126,312 3,221,144 4,789,486 7,257,128 10,869,197 10,869,197 10,869,197Operating costs from wholesale channel 384,200 497,722 1,037,907 2,060,740 3,264,798 3,264,798 3,264,798Operating costs from partner channel 563,600 1,122,833 1,874,208 3,146,351 4,581,982 4,581,982 4,581,982

Total Operating Costs 3,074,112 4,841,698 7,701,600 12,464,219 18,715,977 18,715,977 18,715,977Cost of state offices 0 0 0 1,478,460 1,522,813 1,568,498 1,615,553

Cost of VE regional managers 402,000 422,100 886,410 1,396,096 1,954,534 - - Cost of VE state managers - - - 625,118 656,373 689,192 723,652 Cost of Executive staff 2,340,000 2,457,000 3,439,800 4,514,738 5,688,569 5,972,998 6,271,648 Cost of Support staff 162,000 340,200 535,815 750,141 1,115,835 1,171,626 1,230,208

Total Hyderabad salaries 2,904,000 3,219,300 4,862,025 7,286,092 9,415,311 7,833,816 8,225,507 Total Hyderabad non-personnel costs 1,963,230 1,520,430 1,867,000 2,251,676 3,155,736 1,551,456 2,296,841 Total Costs 11,882,895 18,801,463 31,390,465 50,627,110 75,033,715 71,893,624 73,077,755

EBITDA (4,366,554) (1,291,802) 834,825 1,173,735 6,319,775 9,459,866 8,275,735 depreciation 15,033 35,019 64,451 103,602 162,707 162,707 162,707

EBIT (4,381,587) (1,326,821) 770,375 1,070,134 6,157,068 9,297,159 8,113,028 tax - - - - - - - interest expense 694,073 1,135,756 1,261,951 1,151,897 814,398 814,398 814,398

Net Income (5,075,659) (2,462,577) (491,576) (81,763) 5,342,670 8,482,760 7,298,630

* Scojo Foundation, business plan submitted to Acumen Fund, 2006.

Projected balance sheet* What Works: Scojo India Foundation

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Appendix C

Projected balance sheet*

INR (1 USD = 45 INR)

Balance Sheet 2006 2007 2008 2009 2010 2011 2012

Operating Cash 5,042,865 8,125,771 9,364,620 3,906,080 1,422,173 1,033,535 9,309,271 Accounts Receivable 1,235,563 2,878,300 3,972,981 4,257,604 6,686,588 6,686,588 6,686,588 Inventories 647,927 1,136,717 1,393,959 2,231,233 1,735,228 1,735,228 1,735,228 Other current assetsTotal Current Assets 6,926,355 12,140,788 14,731,560 10,394,916 9,843,989 9,455,351 17,731,087

PP&E 75,163 175,097 322,253 518,008 813,535 813,535 813,535 Accumulated Depreciation 15,033 35,019 64,451 103,602 162,707 162,707 162,707 Net PP&E 60,131 140,077 257,802 414,407 650,828 650,828 650,828

Goodwill/other intangible assetsTotal Assets 6,986,486 12,280,865 14,989,363 10,809,323 10,494,817 10,106,179 18,381,915

Accounts Payable 161,982 378,906 1,393,959 2,231,233 3,470,456 3,470,456 3,470,456 Accrued LiabilitiesOther current liabilitiesTotal Current Liabilities 161,982 378,906 1,393,959 2,231,233 3,470,456 3,470,456 3,470,456

Long-Term Debt 11,825,000 21,500,000 21,500,000 16,500,000 0 5,406,579 21,500,000Deferred Income TaxesTotal L-T Liabilities 11,825,000 21,500,000 21,500,000 16,500,000 - 5,406,579 21,500,000

Equity (5,000,496) (9,598,040) (7,904,597) (7,921,910) 7,024,362 1,229,145 (6,588,541) Total Liabilities and Equity 6,986,486 12,280,865 14,989,363 10,809,323 10,494,817 10,106,179 18,381,915

* Scojo Foundation, business plan submitted to Acumen Fund, 2006.

List of Figures What Works: Scojo India Foundation

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List of Figures

Figure 1: Growth in number of glasses sold ...........................................................................................................4

Figure 2: Growth in Vision Entreprenuers..............................................................................................................4

Figure 3: Potential customer base in India and Andhra Pradesh.........................................................................8

Figure 4: Overview of Scojo operations in different geographies......................................................................11

Figure 5: Scojo Foundation organization chart.....................................................................................................13

Figure 6: Historical growth of Scojo Vision Entrepreneurs ................................................................................15

Figure 7: Historical growth of Partner Vision Entrepreneurs ............................................................................16

Figure 8: Overview of the three main distribution channels ..............................................................................17

Figure 9: Number of glasses sold in different distribution channels.................................................................17

Figure 10: Example of a Scojo business‐in‐a‐bag ....................................................................................................18

Figure 11: Scojo presence in India and Andhra Pradesh.....................................................................................24

Figure 12: Projections of glasses sold in different distribution channels ..........................................................29

Figure 13: Forecasted cash flow from operations.................................................................................................29

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