40K – a sustainable approach to delivering impact

Business Model

The 40K group is an Australian social enterprise that operates two separate entities, PLUS and Globe.[1]

40K PLUS

PLUS runs after school english literacy programs in rural India. The challenge they are trying to overcome is: how do you provide high quality education in a setting that has few qualified teachers, no internet and intermittent electricity?

Unlike many other education providers in the region who provide free services, PLUS charges the parents of their students $4/month despite the fact that these people are some of the world’s poorest. This decision was made for 2 main reasons. First, at this price an average utilisation of 75%[2] revenue covers operating costs and so allows the program to scale sustainably. Second, asking parents to pay drives innovation and performance as parents only pays this if they believe they are getting value.

40K Globe

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Video sourced from Youtube (https://www.youtube.com/watch?v=AFlL3MoZ0EY)

Globe runs month long internship programs in India, but with a difference. Rather than working in a comfy office, Globers stay in rural communities working in small teams to build social enterprises that improve the lives of the locals. For $2200[3] AUD these Globers receive

• The opportunity to work on a meaningful project that will have a direct impact on the lives of those in the local villages. Examples of social enterprise businesses that were created are shown below.
• A structured induction teaching innovation concepts including Lean Startup and Design Thinking.
• Accommodation in India, local transport around Bangalore and the local villages, and meals.
• Strong friendships with like-minded individuals interested in making a difference in the world in a meaningful way.

Today customers largely consist of university students who have the flexibility to dedicate a month for the program. Marketing channels are focused around on-campus lecture presentations, university careers and internship fairs, and social media (Facebook and Instagram). The business has been growing strongly doubling sales for the last 3 years and will gross over $1m this year.

Examples of products developed during Globe whose production now employs local Indian women.[4]

 

Operating Model

There are many parts of 40K operating model that I could take about however I will limit the discussion to the overall model and PLUS rather than going through the mechanics of how they deliver the Globe program in India.

The most interesting part about 40K’s operating model is the way in which the two entities operate as a whole. Essentially Globe is the profit engine that funds the impact work that PLUS performs. This end product was more out of necessity than design.

To be effective 40K PLUS needed quite a bit of start-up capital to invest in R&D. Unfortunately traditional charitable donors are rarely prepared to pay for non-frontline services and so securing philanthropic funding was difficult. Globe was conceived as a way to generate sustainable funds to invest in PLUS’s innovation.

40K PLUS

40K PLUS is organised into 3 main divisions 1) an operations field team who implement the program, 2) An R&D team who design and develop the program, and 3) Corporate HQ.

A number of management decisions and innovations have allowed 40K to successfully operate in these difficult rural environments and have provided a competitive advantage.

• PLUS is delivered through ‘pods’, generally garages or other small spaces that have been converted to classrooms. Classes involve 10-20 students at a time who rotate through a series of exercises using both textbooks and tablets under the supervision of a facilitator.
• To combat the challenge of not having any teachers qualified to teach English in these rural villages, PLUS deploys tablets loaded with appropriate English Language Learner content. Rather than being a source of knowledge, a facilitator’s role is to motivate students and keep them on track. Extensive training is provided to help them improve their practices.
• To combat the challenge of no internet connectivity 40K developed a proprietary technology they call Sneaker-Sync which allows data to flow between pods and HQ. This allows new content to be pushed to classroom tablets as well as the collection of classroom usage and performance data.

Meeting the objective of PLUS involves lots of investment in research and development in 4 key areas[5]

1. Content – Sourcing or building the best content
2. Technology – utilising technology to deliver high quality instruction
3. Teaching/Tutoring – training facilitators to lead and motivate students
4. Delivery – improving the quality and consistency of learning experience

Locating R&D in India, where labour is a fraction of the cost compared to Australia, allows PLUS to undertake significantly more work than they otherwise would be able to.

 

[1] Most facts and figures presented in this post come from 40K internal documents, obtained during employment, that cannot be shared.

[2] From discussions with CEO, Clary Castrission.

[3] Current price, soon to be raised to $2600. https://www.40kglobe.com.au/program/ , accessed December 8 2015.

[4] 40K Globe marketplace. http://marketplace.40kglobe.com.au/?page_id=54 , accessed December 8 2015.

[5] 2015 PLUS internal strategy document.