Rags2Riches – Reese Fernandez Creates Value from Creativity 226.0

Not all entrepreneurs are innovators as categorized by the Ewing Marion Kauffman Foundation.

In putting together a new way for nascent entrepreneurs to work together and create value from creativity and to sustain the work over time, Reese Fernandez of RIIR is definitely in the practice of innovative entrepreneurship.

I believe her pioneering effort – in fact, her meta-work in designing a sustainable way to produce and capture value from creativity by training entrepreneurs – will add total factor productivity to the whole country and not just result into transfer payments that will make her wealthy. That is why I chose to feature her in SYNTHESiST as an innovator and entrepreneur worthy of emulation.

International Recognition. Note that I am late in a long line of those who have recognized her efforts. In April, 2010, Rolex identified Reese as one of only five young enterprise laureates in the world. I copied the Rolex citation in full below with a link to the Rolex website.

Other international awards from BID, Starbucks and Body Shop are listed in the Rags2Riches website. Note: Please click image above for RIIR website.

Rags2Riches or RIIR. RIIR is in the business of training entrepreneurs out of ordinary housewives. The company just happens to engage in this social enterprise in the niche of designer bags.

And RIIR is run as a business albeit a social enterprise that takes its triple bottom lines of profit, equity and sustainability very seriously.

A unique part of RIIR’s history as a social enterprise is that it was organized always to be a going concern business; quite unlike the typical social enterprise in the Philippines.

In a history of the growth of social enterprise in the Philippines, Lisa Dacanay of the Institute of Social Enterprise in Asia (and formerly of AIM), noted that they first developed in the mid-1990s when grants to NGOs dried up and for profit efforts were initiated to sustain cause-oriented goals.

The present Board of Directors of RIIR (listed at website linked above) that also include other RIIR co-founders reflect this business direction with a fine mix of marketing, finance, and operations professionals.

As mentioned above, RIIR was organized with the social goal of training [women] entrepreneurs [mainly in Payatas] with profit and equity and sustainability bottom lines as well.

As such, RIIR must attain acceptance by the market to be able to charge a premium price and extract a high value added for sharing by the stakeholders and to fund growth.

A SYNTHESiST framework for understanding RIIR. Interestingly, RIIR can be approached and its business model analyzed using the SYNTHESiST innovation framework given in the numbered post category titles in the homepage:

Innovation sources. The underlying secular trends that supply the opportunity for RIIR as social enterprise are changes in demographics and lifestyle and concerns for environment and sustainability. These represent the new Zeitgeist for our world.

Value creation. Reese, as an innovative social entrepreneur, found new ways of working together with others to take advantage of available opportunities.

Under her leadership, RIIR became the locus for getting usually desparate groups to come together – hardworking but needy Nanays (mothers in Filipino), name designers, management professionals, investors – when otherwise their paths would never have crossed.

Value capture. For a creative ‘product’ like RIIR, the ultimate value capture mechanism is its brand.

Here the creativity shines through based on the brand elements wrapped around high quality products – not dowdy or dirty – but well-finished that is able to command a premium price compared to other products in its category. The brand elements are:

• Eco-ethical based on recycling of otherwise waste material and the provision of livelihood to otherwise the idle poor;
• Co-branding with name brand fashion designers like Rajo Laurel, Arañaz,(and Cebuano Kenneth Cobonpue (updated later); and
• Reese Fernandez, herself, as name brand for social enterprise and representative of responsible consumption.

Managing the evolution and convergence of these elements to support a premium price for the carrier products is a delicate balance but necessary to give equal share to the stakeholders (including the true blue financial investors) and the three bottom lines.

What comes to mind, in RIIR’s work to support a high value and differentiated product in a competitive field like fashion are Body Shop, Starbucks and Rolex, who are excellent brand managers themselves for what could well be commodity products like cosmetics, coffee and watches.

Incidentally, all three brand leaders have recognized three-year old RIIR and 25-year old Reese with awards and grants for outstanding product development and brand management. These recognition are listed in the RIIR website.

Value is also captured by replacing the middle man though the bigger and more sustainable value created and captured is from designing and marketing a successful branded product – designer bags.

Prototyping and nurturing. A key issue that is not visible to buyers of the brand are the nurturing and prototyping that accompanies RIIR’s success at product and brand development.

The efforts are done internally and start with design thinking that involves constant customer feedback.

Per Reese, this will involve selecting the right name designers and partners stores in the coming to support the evolution of RIIR as brand.

Likewise, Brand Reese must continue to evolve herself in terms of contests to win and grants to obtain.

Incidentally, her coming marriage to 31-year old Mark Ruiz, a noted social entrepreneur himself who is the subject of the next SYNTHESiST post on Hapinoy, will support this brand-building as well (though I am sure this vicarious brand-building effect is not part of the marriage calculus as the love birds seem like inseparable, Platonic soul mates, too.)

The key nurturing activities are the continuous training and orientation activities on the production cooperative to set a high standard of manufacturing and outgoing quality consistent with the premium price position of RIIR.

I visited the Aranaz store at Power Plant and I believe the finished product on sale present good value to a buyer.

Commercialization and diffusion. Finally, communication, promotion and general to build the product and brand are necessary activities for RIIR. From what I have seen, the team is very strong in this area.

What is paramount is to keep the three brand elements moving forward in a tight menage; elements of execution will follow.

The new Zeitgeist supports the brand position. The possibilities for growth in creative replication are many.

To support the hypergrowth phase, the steep growth gradient up the S-curve that follows the successful start-up, RIIR must institutionalize learning from experience – by continuously codifying learnings into processes and manuals for easy access and to avoid repeating past mistakes – as is the usual route for successful, innovative companies.

This way innovation becomes embedded in the venture DNA and create a positive feedback loop.

Rolex Laurete. Below is the Rolex write-up for Reese as one of five global laureates of Enterprise. She is toting an RIIR designer bag. Please click on the image for a link to the Rolex Laureates website.

__________________

Updated March 20, 2011: If you are interested to receive similar posts as this, please click ‘Like’ on Facebook SYNTHESiST page as below.

Please click this image to move to Facebook.

As in Facebook, the Page allows more interaction among friends. You can also post status topics for discussion as you wish.

Finally, clicking on ‘Like’ will also send you notification of each new post.