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Inclusive growth means economic growth that creates employment opportunities and helps in reducing poverty. Businesses have traditionally contributed to inclusive growth primarily through philanthropy or corporate social responsibility. However, these initiatives have a modest societal impact when compared to the impact of core business operations on society. Businesses should address inclusiveness and sustainability in their business strategy and not just as an afterthought.
One such company that adopted a business model with inclusive growth in the form of women empowerment is Lijjat papad. Shri Mahila Griha Udyog Lijjat Papad, popularly known as Lijjat, is a women's cooperative involved in manufacturing of various fast moving consumer goods. Started in the year 1959 with a seed capital of Rs. 80, Lijjat has an annual turnover of around Rs.1600 crore. What started as a small group of seven women in 1959, is today more than 40,000 members in 62 branches across 17 Indian states.
In 1959, the seven women borrowed Rs. 80 from Chhaganlal Parekh, a member of the Servants of India Society and a social worker. They took over a loss-making papad company and bought the necessary ingredients and the very basic infrastructure required to manufacture papads. They then gathered on the terrace of their building and started with the production of 4 packets of papads. They started selling the papads to a known merchant. People loved their product. So to meet the demand, the company started employing more women. From the beginning, the women had decided that they would not approach anyone for donations or help, even if there were any losses. The organization's main objective has always been empowerment of women by providing them employment opportunities.
Lijjat doesn’t call the women working for them as employees, but rather as Lijjat sisters. Lijjat has a profit-sharing model and gives the Lijjat sisters some ownership in the company. Such strategies are also applied in larger corporations such as Apple and Starbucks to build morale and loyalty amongst its employees. Through employment, LIjjat not only gave opportunities to women but also dignity.
All of this is making Lijjat seem like an NGO but it was always business oriented. They have a sound foundation of accounts and finance. As they started expanding, they leveraged their economies of scale. Lijjat has a branch center which is the center of the business operation. Every morning a group of women goes to the Lijjat branch to knead dough, which is then collected by other women who go home and roll it into papads. When these women come in to collect the dough, they also give in the previous day's papads and receive their wages for it. By reducing the land requirement, Lijjat could easily reduce its cost by employing more women to make papads. In the branch, they have standardization which helps in keeping a consistent product. Lijjat has now diversified its product range and also exported their products. What’s interesting is that they refuse to use machines to expand, they just increase the number of Lijjat sisters.
This brings them back to their foundational reason for starting the company which is the empowerment of women. Lijjat shows us the power in a business to positively affect thousands of lives. Inclusive growth is one of the most pertinent goals of our society and business-led change is very effective. This brings in questions about the foundations of businesses and presents us an alternate view from how business is traditionally done.
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