Lijjat - Balancing social, scale, and standardization
Lijjat started close to home, on the terraces of Bombay. The firm still mentions the story of its inception proudly on their website - seven women meeting on the terrace of a small apartment in Bombay - starting with four batches of papad. The firm has grown quite a bit since that fateful day in 1959, now employing north of 40,000 women and generating north of 1500cr every year.
While is growth story is fascinating, what is even more interesting is how well it has balanced the issues of a social purpose, a standardized product, and scalable operations to build a successful business.
Standardization and scale: Users these days are habituated to factory produced standardized items that they can consume right out of the packet. For a company that caters to the export market as well, this challenge becomes even more serious. So how do you create a standardized product when you have 40K+ women making the papads in their homes? It’s a combination of some basic operating principles and some brilliant insight!
The firm ensures the products that go in are the best - even importing key ingredients wherever necessary. Hing (asafoetida) for example is imported in bulk from Afghanistan. The large order volumes gives them more attractive costing for the papads they make, allowing them to go for the best quality ingredients at affordable prices. These ingredients move to centers at various locations, where they are mixed in set proportions on a large scale to create huge balls of dough.
Parts of this dough created is then weighed and given to the women to take home, thereby ensuring that every woman takes home the same dough, made from the same ingredients, in the same proportion.
That is not all - because there is one more critical step remaining. Once the woman bring the batter home she rolls the papad on a board provided by the company that ensures the size remains consistent for all papads. These special boards are provided to all the women members by the firm.
Social: While there are very few successful firms that have social at the heart of what they do, the few that do manage it phenomenally well. Amul is one name that comes to mind providing support to millions of dairy farmers across India. Lijjat is another, providing not only economic support to thousands of women, but also providing them with a sense of purpose and greater self-esteem.
When National Geographic recently covered a few women who worked for Lijjat, their voices beamed as they described how they had managed to educate their children from the money they earned via Lijjat.
In addition to the steady income stream that the firm provides it also has a very egalitarian approach to distributing profits - which after accounting for the amount needed to be redeployed in the business, is distributed equally amongst all members. A unusual model no doubt, but one that has helped them build tremendous employee loyalty and goodwill over the years.
GSN Invest++: We are now entering the last week to subscribe to GSN Invest++, our flagship program where we analyze 70 market leading Indian firms across sectors. Limited seats left, join today.