how can they sustain this? and why do they?
Business case studies and news articles skip these questions. Luckily, I found at least two sources of information that I could tap into to try and answer these questions to my own satisfaction. We'll start with the 'how', and then the deeper, related question of 'why'.
How do they sustain it?
We turn to Prof. P. Kanagasabapathi's gem of a book "Indian Models of Economy, Business and Management (3rd Edition)", and see what he has to say about MDs. I must add this: I have come to learn, over the last few years that the Indian economy is like a complex number. It has a real part and an imaginary part. The latter is covered by CNBC, Bombay Stock analyses, and Ivy-league university economic theories faithfully imported and regurgitated in Indian colleges, and gobbled up by students and economists. If we want to understand how the real part works, read this book, and Dr. R. Vaidyanathan's equally brilliant 'India, Uninc'. Both are data-driven books, and offer us the reality based on deep insights into how the Indian society and mind actually function. They are available in paper and Kindle editions, and ridiculously under-priced.
Let us see what Prof. PKS has to say (emphasis in bold / square bracket is mine):
"...the dabbawala business in Mumbai is an innovative business designed and executed by a group of uneducated and undereducated people from the ordinary classes to suit the local conditions. The business plan is so designed to make it perfectly functional, while at the same time keeping it cost effective.
"....see how the supply chain management works. The dabba-wallas are semi-literate people, with rural backgrounds from Pune district. They belong to the warrior [clan] of Malua, which fought for [the great Indian king Shivaji] in the earlier days. In the 1890s, one Mahado, a migrant from their area started the supply of lunch boxes. Today under the banner of Nutan Mumbai Tiffin-box Suppliers Association, more than 4500 of them are involved in supplying nearly 2,00,000 boxes every working day. Braving Mumbai weather conditions and difficulties involved in multiple transfer points, these `ordinary' people make only one mistake for eight million deliveries "I.It is no wonder that the Forbes Global Magazine gave them a Six Sigma efficiency rating on par with multinational companies such as Motorola and General Electric. In fact, the efficiency of dabbawallas is much better than the Six Sigma levels fixed by the experts for world class performances. As a result they are now admired as the model for the global corporations...While mega corporations use the most modern technologies and employ highly qualified technical and management experts to reach higher levels, how could these ordinary people from village backgrounds with only their common sense and limited resources better the benchmarks fixed for the most efficient companies in the world? Is it not due to the effective teamwork and most efficient planning? Are these people not practising the most effective methods to serve their customers? In the case of modern corporate sector, they search for different methods to sell their products. In some cases, the products may not be essential to the customers. But still they try to look for different ways to attract customers and sell their products. In the case of dabbawallas they have devised a way to serve the customers who would like to eat home-made food, and in the process they have made it so well that they have become world-class service providers.
We start to get some answers above on the 'how'. Now we turn to find answers for how they're able to sustain this:
".. community relationships provide certain benefits and cost advantages in business. One is trust, which is very important for business. Communities generate high levels of trust due to their close-knit relationships. Second is the lower transaction costs compared to the rates determined by the markets. As a result, efficiency is increased and costs are reduced..."
Trust. It can dramatically reduce costs and boost efficiency. Every multinational company's employee brochure strongly emphasizes the importance of 'trust' and 'teamwork'. However, it is not easy build a high degree of cross-organizational trust in today's western workplace. why? Dr. Kanagasabapathi quotes Francis Fukuyama:
"The ability to associate depends, in turn, on the degree to which communities share norms and values and are able to subordinate individual interests to those of larger groups. Out of such shared values comes trust, and trust, as we will see, has a large and measurable economic value." Trust results in `social capital.'"
Trust can arise out of that bi-directional relationship called mutual respect. This blog I wrote a few years ago views mutual respect as a necessary and sufficient condition for building trust in a workplace. If one party dilutes its commitment, and merely tolerates rather than respect, this trust is broken. The modern workplace is contractual. Order is enforced, and chaos is contained by a variety of standard background checks, zero and non-zero tolerances, and legal penalties. One of India's most important thought leaders, S. Gurumurthy has pointed out that 'Capitalism requires employers, Communism banks on employees. Traditional Indian economies are entrepreneurial and require neither'. Rather, they rely on trust chains built upon mutual respect, which produce social capital. To learn more about social capital, Dr. P. Kanagasabapathi turns to Aiyer:
"From time immemorial, groups of people have created strong communities, based on commonly observed rules and mutual self-help. These social links discourage deviant behaviour through ostracism and other social penalties, create a climate of trust in which agreements are honoured and grievances redressed, and facilitate collective action against threats from outsiders and risks from natural disasters. This is social capital..."
Thus, the MDs have been able to sustain their dizzying levels of operational reliability and quality levels by achieving a high degree of trust within their organization and the mutual respect between self and customer.
Why do they?
The 'why' takes us even deeper. For this, I'm indebted to the head of the Indian embassy in Vancouver, Canada. Listen to his brief talk about the MDs in this You Tube video (watch from 9:33)
The Dabbawalas are doing their dharma, their cosmic duty. This idea of cosmic/sanctity implies an unmanifest motive to their duty. The effect that dharma has on the dabbawala output is real, measurable, and has made him go far beyond the so-called 6-sigma level of quality. As the consular head points out in his talk, when the Dabbawalas handle, deliver, and serve food, they also perform a sacred service, a seva. As mentioned in a previous blog here, an Indian business model seeks not unconstrained profit maximization, and nor is it non-profit, for neither are sustainable, but it shubh laabh, or auspicious profitability. There is a harmonious balance between the worldly and the unmanifest. The Indian idea of seva is different from the western conception of service. As Gurumurthy once pointed out (via the wonderful anecdote of Swami Vivekananda and the philanthropist Rockefeller), the Indian giver thanks the receiver, not the other way around. While the manifest, material benefit does indeed go to the receiver, the higher, unmanifest benefit from this good Karma accrues to the giver. Who, then is the giver, and who is the receiver? The entrepreneurial Dabbawala will continue to serve, innovate, and sustain operational excellence provided there is: demand for his service, trust at every point of interaction in the supply chain, and he chooses to do his dharma.