Post #3: “Skin in the Game”
Read about our last mentorship call here!
Alexie, Madhavi, and Peter began their December call with an update on the new incentive structures for Sales Managers and Pollinators. The Sales Managers hit their targets and appear to be normalizing the new incentive structure. Surprisingly, all Pollinators — including the highest performing — elected to become employees rather than freelancers, a decision Alexie attributes to lack of capital to purchase products up front. Was it a ‘failure’ that Pollinate staff spent many hours developing and discussing a freelancer option, only to have no current Pollinators elect freelancer status? How will Pollinate use its growing knowledge about business-format franchising in different geographic and cultural contexts to structure its staff incentives as the organization grows?
Experimentation & Learning
Alexie and Madhavi confirmed through this experience that frontline Pollinators are less likely to want to assume entrepreneurial risk. Alexie explained that, in major Indian cities such as where Pollinate currently operates, salespeople want employment because they want stability, even if it means potentially lower wages. Their cost of living is quite high in the city and they don’t have other jobs they can go to from time to time. This differs from the rural areas of India, where the agricultural sector provides alternatives for seasonal work.
Alexie mused that rural environments could be more conducive to a business-format franchising model. Expansion to rural and peri-urban areas is part of Pollinate’s strategic plan, as noted at the UNH Social Sector Franchising Innovations Roundtable. Because villages are more homogenous, there would be less danger of ‘mission drift’ away from serving families with very low levels of income. In diverse urban environments, Alexie expressed concerned that the Sales Manager, as franchisor and business owner, could pivot away from Pollinate’s mission in order to try to get easier revenues. She noted, “You’re walking between families who have millions of dollars to a slum family who has none — and we want them to focus on the slum family. In a village, it’s different because you’re limited geographically and you’re presumably serving everyone in the neighborhood.”
Peter agreed, observing, “That’s what you’re experimenting with: How do I create a model that incents the performance I’m looking for? There’s nothing wrong with having different models, even under the same brand.”
New Strategic Partnership
In addition to in-house experimentation, Pollinate is pursuing a strategic partnership with a Nepali distributor, with a goal of learning how the business-format franchising model can be applied effectively in last-mile technology distribution. The Nepali organization was cofounded by a woman who invested ‘skin in the game’; she took out her own loans to get working capital for the business and imports all of the products before selling them on to the organization’s microentrepreneurs. Her approach is akin to how Peter has described the dedication and spirit of franchisees who invest in an effective franchising system. In fact, Alexie has been impressed by the marked difference in the Nepali cofounder’s approach:
“She does think differently about the operation there. It’s hers and she has a lot of ambition around it. She needs support but she’s… vested. She’s there for the long term; she will be the one who grows it.”
The new partnership will bring increased efficiency and effectiveness that comes from consolidating technology and fundraising activities. Beyond these tangible benefits, however, the partnership is also an opportunity for Pollinate to test out the different incentive structure and see how the Nepali organization responds, as compared to Pollinate’s Indian Team — as Alexie puts it, “to see whether we’re getting better performance and better responsiveness because [the cofounder] does have that skin in the game.”
UNH Student Research Fellow Yusi Turell will be visiting Pollinate in India from January 3–14, 2018 and speaking with sales team members in three cities (Bangalore, Lucknow, and Kanpur). We look forward to learning more about what motivates Pollinate’s staff in different roles and different markets. Stay tuned!
