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27 Jan

Don’t solve management problems, avoid them.

These days we think of impact first when building a business. We think that our contribution leads to changes in the grand scheme of things.

I feel that’s a short-sighted way to think of building a business.

Impact actually comes years later when you’ve stopped looking for it. It is a by-product of showing up. Day after day. For years.

But I’d rather tell you how a business did it instead of boring you with these platitudes.

Let’s dig-in.

A post-lunch banter session among women from then Bombay’s Lohana Niwas stirred seven of them into action. They took over a loss-making enterprise, and over a span of sixty years, turned it into a global business.If you didn’t guess already, I’m talking about Lijjat Papad.

We might feel sixty years is too long given the rate at which we see businesses grow these days, but consider how committed one must be to go from a seed investment of ₹80 to revenues of ₹1600 crore.

This is the story behind what facilitated this level of commitment.

In 1959, India was still finding its feet in the world as an adolescent independent nation, and women didn’t have much access to work or education. Jaswantiben Popat along with seven other women were deliberating on how they could productively use their afternoons despite being illiterate. Their ability to cook was a transferable skill, but they weren’t free enough to leave the house or take up cooking jobs away from home.

So, they had to come up with a solution where the seven women, from the comfort of their homes, could generate income for their families. This constraint helped them narrow the scope of the solution.

In essence, Lijjat Papad was born in large part because it was simple enough for women to adopt at the time.

What further strengthened the commitment was the mentorship from Chhaganlal Parekh, popularly known as Chhaganbapa. He lent the women a seed capital of ₹80 but advised them to never run the business using borrowed money. He suggested the accounts be settled daily, and that only a single quality of papad be produced.

Chhaganbapa was of the opinion that a business would function sustainably if it didn’t borrow money, and focussed on delivering a consistent quality of output.

Implementing both suggestions paved the way for what came next, and gave rise to a value system, which helped Lijjat grow as a business.

In its first year of operation, Lijjat Papad's sales were ₹6196 and 25 women joined within the first three months of the operation. They shut down the operations for four months during the monsoon, but in its second year of operation, invested in a cot and stove to continue the drying process of papads.

Sales in the first few years were led by organic word-of-mouth and publicity in newspapers. But women all over Bombay wanted to be a part of the collective because it offered economic freedom at a time of strict societal expectations. The unique functioning of Lijjat Papad drew in women as the business kept growing each year, each month, producing quality output daily.

But what was so special about it?

Well, everything. 300 women had joined by the third year of operation in 1961, and it was difficult to accommodate them all on the terrace workspace. The collective then decided that a group of women would knead the flour, and others could take the flour back home, roll papads and bring them back for weighing, quality checks, and packaging.

To iron out quality inefficiencies, they standardized the sourcing of raw materials.

Urad dal imported from Myanmar, asafoetida from Afghanistan, and black pepper from Kerala were now used.

Here's their production flow chart —

At the branch level, every branch receives raw materials from the head office. Based on the housing condition and hygiene, women get a chance to take the dough home and roll papads or work at the centre kneading the dough. Operations start at 5 am daily. The dough from yesterday is brought back as rolled papad and checked for quality at the branch, and the lady receives ‘vanai’ (a name given to the fee received) daily.

The accounts are settled daily, a practice they’ve followed since the beginning.

In fact, to maintain quality, a collective incentive structure is put in place. If a branch fails to abide by the expectations, a central committee reduces the daily wages by ₹1. When a branch does well, they’re rewarded with a bonus.

While each lady gets paid based on the quantity of papad rolled individually, the overall profit or loss of a branch is redistributed equally among the members.

Here's their payment structure —

The incentive works because the women are aware from the outset that if the output quality of even one member reduces, the branch suffers on the whole. It keeps the commercial aspects of business intact. There is a lot at stake if a centre is lax.

In an interview, Jyoti Naik, President, Shri Mahila Griha Udyog Lijjat Papad explains quality as —

"It is evident in the fact that even without modern machines, every consumer of Lijjat papad, wherever she is, gets the same consistent quality of papad. How? Because every ben rolls the papad to the same specification and every lot of papad goes through testing. If we find any ben becoming careless about quality, we do not tolerate it. We give her a warning, and then the option to take up any other work like packaging, testing, etc. Out of one kg of dough, we must get at least 800 gm (accounting for loss due to moisture, etc), otherwise, we cut pay. We get papads for testing from all centres every day and if we find any deviation from our quality, for example, if the salt is less or more, etc., we immediately intimate that particular centre to destroy the entire lot, even if amounts to a million rupees worth of production." (emphasis added)

Principles only cement themselves as principles when you pay a cost for them.

The consistency in output and values is also maintained in their expansion. When a new branch opens up, a neighbouring branch helps the new one set up with a two-day-long training period for every woman who signs up to be a Lijjat-Sister (a name given to women who work at Lijjat). The training practice is ingrained from when they first expanded to opening new branches forty years ago. Like it is with their operational functions, obsession with quality output and not borrowing money, it is the simplicity of their execution that stands out.

Even their recruitment process follows an old procedure. They recruit women through newspaper ads. Everyone joins as a roller, getting trained on sizing and quality standards, picking up the dough from a nearby centre, rolling and drying the papads at home, turning them in the next day and collecting their payment immediately. Buses ferry women to and from the centres. Much of the process involves doing things by hand.

We may think that introducing technology would make the business more efficient, but that would go against the philosophy of why the business started in the first place — to provide employment to unskilled women; women who aren't well-acquainted with tech.

While sticking to its core philosophy and designing all production systems around it there was also a need to incorporate some hierarchy. After all, coordinating operations across 17 states, 70+ centres and accommodating 42,000+ women did require adding some complexity to the organisational structure.  

But even those changes were anchored using the philosophy of ‘Sarvodaya.’

The philosophy refers to the idea of collective ownership in a business. At Lijjat, all women are considered equal partners in operating the business.

In fact, men are hired as salaried employees, unlike women.

The hierarchy is structured majorly for coordination purposes.

The office bearers of the managing committee and the sanchalikas (responsible for a branch) are chosen from among the member-sisters on the basis of consensus every three years. Each branch has a committee of eleven member sisters, again chosen by consensus.

The central office in Mumbai previously coordinated the activities of various branches. But, as the organisation grew, the authority was decentralised in terms of work and sharing of profits at the branch level. All the branches follow the same set of instructions and have similar accounting systems.

To coordinate various branches in a region or state, there are branch coordination committees and area meetings of the various branches in a state. The annual general meeting is attended by member sisters representing branches and divisions from all over India.

Jyoti Naik, explains this structure of decentralised control succinctly:

“In following this simple system, we don’t solve management problems, but avoid them.”

This bit stuck with me the most while researching the piece. I suddenly realized how much of an organization's energy gets zapped solving management problems, i.e., people problems.But most of all, what I took back after reading reports on their organizational structure and efficiency was —

  • The long-term effect of showing up daily
  • Preserving simple management systems that are suited to your people, and not designed according to traditional management textbooks
  • Writing a mission statement and list of values is one thing; getting the entire organization to adopt them is quite another. And this only happens when you're willing to pay a high price to uphold those values and principles.

Modern-day business operators are surrounded by a lot of noise. We tend to get influenced by every success story we read. Most of them are not quite contextual to our reality.

When I read about Lijjat and what it did for countless women across the country, I couldn't ignore the fact that the business was and continues to be so successful with its mission of empowering women only because it has created a solution around their reality.

The solution focused on reducing as much friction as possible to involve more women along the way.It made the idea of showing up daily easy to practice for women who wanted to earn a living. And it did so by preserving rudimentary systems that worked specifically for that business.

We read about compounding every so often these days but it is refreshing to see that one of the oldest businesses in India did it successfully and didn’t even tell.

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