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# Section 13: Innovation

_Innovation is the process of solving large-scale organizational problems or developing new technologies and processes to more effectively pursue goals. What can we learn from past examples of innovation? What types of organizational policies and processes inhibit innovation? What are characteristics and leadership practices in organizations that have been innovative?_

Bornstein, D. (2007). How to change the world: Social entrepreneurs and the power of new ideas. Oxford University Press. CH3 – Fabio Rosa: Rural Electrification. Author: Gobbo, Andre Francis; Editor: Rodriguez Ranf, Daniela

# The Light in My Head Went On#

Fabio Rosa was a recent graduate in agronomic engineering in Brazil and wanted to help bring electricity to rural areas of the country. One day he received a phone call from a university classmate who invited him to Palmares, which was a rural, depressed area inside of a wealthier state. The town could be described as “...reminiscent of the Mississippi Delta”, and had zero infrastructure to work with. Rosa found out that the father of his friend who invited him there was the mayor of the municipality. After a few conversations, Rosa was hired as the secretary of agriculture.

After starting the job, Rosa quickly found that there was a disconnect between what the politicians wanted (to build roads) and what the farmers wanted (for their kids to escape poverty and to maintain ownership of their farms). About 90% of the land was used solely for producing rice. In order to produce rice, the farmers needed water, which was controlled by wealthy landowners who set a high price for access to the irrigation channels and dams. Rosa had an idea to create artesian wells in order to increase access to water; however, he needed electricity in order to make this happen. Unlike the U.S., Brazil had no government works program that brough electricity out to rural farms. As a result, about 70% of people in Palmares had no electricity.

During his research, Rosa stumbled upon an interview with Ennio Amaral, who was a professor at the Federal Technical School in a nearby rural municipality. In this interview Amaral mentioned how he brought electricity to his rural area. Instead of a conventional power distribution system involving 3 wires that provided more electricity than farmers needed and was subsequently too expensive, he had put together a high-tension “monophase” current system that was more suitable for modest energy consumption. This monophase system had 1 wire, carried the current through a transformer to the house, and grounded the system in nearby soil. His plan also substituted cheaper materials than the conventional system (e.g. wood for cement, steel instead of copper, etc).

Upon further research, Rosa found that there was enough water of appropriate quality that he could implement his idea of building wells. However, the system Amaral developed and Rosa wanted to implement was technically considered illegal because the state electrical companies determined what technical standards were considered “appropriate.” If the system didn't comply with the Norm determined by the companies, then the power wouldn't get turned on. Because of this, Rosa went to the town's mayor, who eventually opened the political doors necessary for Rosa to experiment.

Rosa had to convince the farmers that his means of bringing electricity would actually work and be implemented, unlike promises that were made before Rosa arrived. Fortunately Rosa was able to collaborate with the farmers by using their materials and his ideas to create a type of well that didn't need the conventional type of power distribution. By creating this workaround, Rosa had solved the most serious problems with providing low-cost irrigation to farmers.

However, there was still an issue with “red” rice. Red rice is basically a weed that grows when land is continually cultivated. Because of this, farmers in Palmares only cultivated ¼ of their land at a time. Rosa had the idea of flooding the fields before planting the rise, which would prevent the red rice from growing due to a lack of oxygen. Farmers could then pregerminate the proper rice seeds and then transplant them underwater, allowing for only the proper type of rice to grow. This strategy had previously been unvailable to the farmers due to the high cost of water. However, thanks to low-cost irrigation system Rosa had created, each farmer could multiply the productivity of their land by a factor of 4. Rosa had created a new equation allowing this to happen:

Inexpensive electricity + shallow artesian wells + monophase pumps = cheap irrigation
Cheap irrigation + water seedling = more efficient land use, increased income, and a future for rural communities

In Brazil, people in rural areas were leaving in order to find work in the cities. As a result, people were forced to live in shantytowns, unemployment was driven up, and crime rates were increasing. Rosa's equation struck at the root of this problem by giving people in rural communities to access to create their own sustainable wages.

Rosa took this idea to the federal agency that was involved with long-term national development funding, who pounced at the idea. However, there was a substantial obstacle due to political opposition from the state electric company, Companhia Estadual de Energia Eléctrica (CEEE), and from cement and aluminum cartels. As such, Rosa had to muster up political support for his cause for the ensuing battle.

During this time, Rosa had found a means to cheapen the costs of implementing his strategy. He contracted with 2 state companies in order to build 5 kilowatt-amp transformers that were necessary for his system. The farmers supplied tree from their properties for electric poles, which Rosa had managed to configure such that he could use fewer than what was required by the government. Rosa even found a way to extended the life cycle of the poles by dunking them in a chemical solution called creosote.

As this was going on, CEEE withdrew Rosa's permission to engage in his project. Because Rosa's model was threatening that of CEEE's, CEEE held a meeting where they tried to cut a deal. CEEE would provide electricity to Palmeras through the proper grid if Rosa's idea was completely abandoned. However, Rosa countered by saying that his solution could be implemented throughout the entire country, whereas the preexisting electric grid couldn't. Fortunately the national development bank got involved and managed to get the state electric company to stand down.

As a direct result of Rosa's work, 400 families were provided with electricity at a cost of $400 per family, which is significantly cheaper than the government's cost of $7000 per family. Those farmers that switched to the water seedling approach saw their incomes jump from $50-$80 per month to $200-$300 per month. Almost a third of the houses (130 of 400) were people who returned to the rural town from the city because of the project.

Due to the popularity and success of the project, CEEE got involved again because they didn't want a major challenge to their distribution norm. They claimed that the results from Rosa's system were inconclusive and couldn't be recreated anywhere else. It took another year before the CEEE caved and turned Rosa's system into a norm, called the 025 Norm. This meant that Rosa's system was no longer breaking any laws.

Shortly after these successes, the mayor of Palmares was forced out due to term limits, and the new mayor completely halted Rosa's project. Fortunately Rosa's work had taken root in various parts of the municipality, and had positively affected the lives of many. However, Rosa was now out of a job.

Fortunately, the national development bank but Rosa in a different municipality. From there Rosa continued to promote rural electrification, and was leased land to experiment with rice planting techniques. He eventually started another project to bring electricity to 25,000 low-income rural dwellers. Through this project he discovered that the technique of delivering electricity he developed in Palmares could be applied widely to other forms of farming. Rosa and a colleague at the national development bank partnered with the best electrical engineering university program in the country to establish a resource center that utilized the newly established 025 Norm as the central standard. This had ended any and all conflict that the could only work in one place. A credit line was even established with this as the Norm, however economic issues eventually forced the credit line to get slashed.

Due to these political constraints that Rosa kept encountering, he gave up on working with the government and decided to establish a private company. Through this company he started to spread photovoltaic solar cells around the country. However in order to offset such high costs of implementation he had to package the solar cells with something else. He eventually discovered that if he sold solar energy as a package with electric fences he could bring down the prices of fences by about 85%. This meant farmers could receive electricity, increase farm production, and improve land management all at once. Over the course of 5 years he established 700 solar electric and fencing systems in 16 different Brazilian states.

As this was happening, different states had continued to consult with Rosa about the 025 Norm in order to pursue rural electrification. One state launched a $34 million plan to bring electricity to 160,000 people, while another state launched a $240 million project to bring electricity to 800,000 people. However both of these projects eventually fell short of their goals due to a lack of motivation and follow through.

In the mid-1990s a political movement started by farmers who could no longer subsist on their land began to gain traction. As a result of this, the government sought a short-term solution by placing these people on certain tracts of land, but without any electricity. The lands they were put on were grass lands, which were best for grazing instead of farming. This resulted in farming practices that cause environmental degradation and the perpetuation of poverty. A quarter of people who received land had abandoned it in 2 years, while some regions saw almost half of their land get deserted. Rosa saw this problem, and sought to find a solution.

Rosa found it in a book by Andre Voisin published in 1957, who developed the idea of rational or managed grazing. This technique was designed to avoid overgrazing, and was implemented successfully in parts of France, New Zealand, Canad, and the U.S. It was originally introduced to Brazil in the 1970s, however it was met with disappointing results and was ultimately scrapped.

Rosa found that the system only worked if there were several small paddocks created a low cost. He eventually found that small paddocks could be created with the use of electric fencing and appropriate technology. By adjusting the original formula from the 1970s to account for things like fences being drained of their currents by tall plants and other region-specific issues, he was able to develop a system that maintained an effective current throughout the fence. This led Rosa to creating another equation:

Solar energy + polywire + fiberglass posts = inexpensive fencing
Inexpensive fencing + Voisin managed grazing = higher yields, sustainable land use, and a future for even more rural communities

As a result, he saw that most farmers' yields doubled or tripled. Unlike his previous innovations, this time he didn't have to worry about government involvement because the system was being propagated through market demand.

Eventually Rosa stepped down from his business in order to build up a nonprofit that he had started a few years prior to spreading solar cells and electric fences. He sought to use this nonprofit to apply the models he developed in his private business to those poorer areas where the for-profit model didn't quite fit. He started by focusing his efforts in southern half of Rio Grande do Sul, where 250,000 people lacked electricity, and then targeted 13,000 poor families.

Rosa conducted a market study and found that more than half of families were spending $13 each month on diesel fuel, kerosene, and batteries. He correctly thought that people could instead spend this money on monthly payments for a renewable energy supply, equipment, and service. Farmers could rent systems or slowly pay them off at a rate close to $13. Poorer people could also afford this, but they needed more help. So in order to reach the entire market, Rosa designed 2 projects: one nonprofit, and one for-profit.

The nonprofit was called the Quiron Project, which was a venture designed to boost the incomes of 7,000 poor families through a combination of solar energy, organic animal production, managed grazing, and other means of resource conservation. The for-profit was called the Sun Shines for All project, which sought to provide solar energy to 6,100 families that had no electricity but could afford rates of solar panels through renting. His company would break even between 42 and 48 months, and provide 20-30% return for investors in addition to social and environmental benefits.

As a result of all of this work, Rosa was recognized as one of the first 40 people to be honored by the Schwab Foundation for Social Entrepreneurship. He also won a $50,000 award from the Tech Museum of Innovation associated with the San Jose Tech Museum for applying technology to benefit humanity. He was one of 5 winners that were chose from 400 nominees hailing from 50 countries. The good news kept coming, as the Solar Development Group, a company based in Washington, DC, agreed to invest in The Sun Shines for All project in 2002. He also received funding fro the Quiron Project from a wide variety of other wealth funders. Thanks to Rosa's tireless work, he helped bring about a fundamental change that institutions can establish reliable, long-term credit relationships with poor people across the world.

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