80 Rs to 1600 Crore Empire? Lijjat Papad Story-
This is a story of 7 ordinary women who had no background in business, and no significant educational qualification with just 80 rupees in the capital they were able to build a business empire worth 1600 crores, which is spread across 69 branches and more than 42,000 employees. This home-grown brand that talking about is none other than Shri Mahila Griha Udyog Lijjat Papad. Now, what's more, fascinating about this company is not the growth of the company but the fact that the business philosophies of this home-grown company.
Somehow seems to have a very close resemblance to extraordinary companies like Starbucks and Apple also. The question is- What is so special about this papad company and how has it lasted for more than 62 years? And how did these 7 women manage to build a business empire out of just ₹80 in the capital? The answer to this question lies in the incredible history of the Lijjat Papad.
HOW LIJJAT PAPAD STARTED?
This is a story that dates back to the late 1950s India when India was a fairly underdeveloped country. And back then let alone education, even literacy was considered to be a luxury. And even in terms of literacy during those times woman's literacy was not even considered important because of which only 8% of women in India could read and write while 92% of women in India were illiterates. On top of that, women were not even allowed to go out and work and the earning capacity of the families was not enough to afford a decent standard of living. That is when in 1959, Mumbai. A group of 7 amazing women from very ordinary backgrounds came together to discuss a business idea that wouldn't need them to step out of the house, wouldn't need education, and yet could produce a competitive product in the market. Ladies and gentlemen, that is how the idea of Lijjat Papad was born with just ₹80 of capital that was given to them by a social worker.
They first started selling their papads at a local store and soon enough due to the superb quality and taste of the papad even other shops started buying their papads. And that's when they started scaling up. Now, when they started scaling they had the opportunity to hire women at a dirt cheap cost because there were one of the rarest avenues of income for women which allowed them to work from home.
BUSINESS ETHICS OF LIJJAT PAPAD-
Did You Know?
When these women had their first board meeting they established the fact that the primary goal of their business wouldn't be to make money but to empower women from the smallest households in the country and to provide them with the livelihood to nurture their family.
They also established the fact that money would only be used as fuel to scale their impact on the women of India and not be the sole purpose of their existence. So instead of hiring women they started to give out ownership to every woman who joined their business and called them Lijjat Sisters rather than employees.
This is what you call collective ownership, wherein every employee owns a small part of the company such that the profits and losses, both are shared by every single person in the organization. So regardless of your age, caste, or religion even if you were at the lowest hierarchy of the Lijjat Papad organisation, you'd still own a part of the business.
BUSINESS PILLARS OF LIJJAT PAPAD-
PARTNERED WITH EMPLOYEE-
The attribute of collective ownership is one of the foundational principles that make Starbucks an extraordinary company. Because you know what? Just like the sisters of Lijjat Papad own a small part of the company regardless of their position in the organization, every employee at Starbucks is considered a partner in the business rather than an employee. Everyone starts from the baristas who serve coffee to the customers all the way up to the senior management officers, each of them is offered stock options of the company. So this way, just like the Lijjat sisters every employee in Starbucks could be a small owner of the company. This move develops a deep sense of ownership which cultivates a culture of greatness wherein every employee is motivated to go out of the way and to contribute diligently towards the growth of the organisation. But the only difference between both these companies is that Starbucks ideated this with MBA masterminds and with a million-dollar capital backing. The 7 sisters of Lijjat did it way before Starbucks, in 1959 without even knowing what an MBA degree is. Such was the business acumen of these incredible women.
COST-EFFECTIVE SUPPLY CHAIN-
The second phase of Lijjat was building a robust supply chain that would be cost-effective, would ensure quality production, and would fit the lifestyle of the women who work for the company. So instead of having huge office spaces, they used the houses of the sisters as their small centers of papad making. And this is what their supply chain looked like The flour would first arrive from the mills at the respective central location wherein the dough is made. And after the dough is made the sisters will be brought by a bus facility provided by the company. Over here they would collect the dough and then go home, make papads dry them on the veranda, and then deliver the papads the next day.
Develop Standardized Process-
And lastly, after the delivery of the papads, they would collect their money and the dough for the next cycle. This would be followed by surprise visits by the supervisors to check the quality of oil they use, the hygiene check of the house, and most importantly the process of making papads. Now the sisters are also given aluminum papad makers to ensure that the papad is produced in a standardized manner. This happens at all branches. If one of these branches does very well the profits are distributed among the sisters.
And if not, the losses are borne by the branch members together. And after all of this comes the most challenging part of all and that is sticking to the vision and mission statement of the company.