What’s the difference between capitalism and socialism? The difference is in their purpose. As already obvious in their names, capitalism’s purpose is to maximize profit for capitalists and socialism’s purpose is to maximize benefit for society. More specifically, a socialist system is designed to serve the interests and increase social benefits for the common people, the majority. While a fully-fledged socialist country doesn’t yet exist, socialist business organizations (aka Teal organizations) do. Contrary to common beliefs, profit and social benefit are not mutually exclusive but complementary. Here is one example illustrating how this is done.
Nand Kishore Chaudhary is the founder of Jaipur Rugs, one of India’s largest manufacturers of hand-knotted rugs. It started in 1978 with only two looms and nine weavers. At the time, the carpet industry was characterized by child labor, middlemen infringement, and weavers being treated as social outcasts. At the same time, the industry lacked innovation, efficient process, connectivity with market trend. Over the past 45 years, Jaipur Rugs has set itself as the role model of social transformation. It has evolved into a global company exporting to over 60 countries while providing sustainable living to 40,000 artisans in 600 remote villages across five states in India. Out of which 80% of them are women.
Even during his university years, Chaudhary had a different mindset about business. One day the professor asked: what is the purpose of business? Students one by one shared their perspectives: shareholder value creation, serving the customers, beating the competition and so on. However, Chaudhary’s answer was unique: “Business is next to love. It is the creator and preserver of a civilization.” His professor commented to the class: “This, ladies and gentlemen, is a successful business entrepreneur.” He was right.
From the beginning, Chaudhary wanted to build a different kind of company – one that is stakeholder centric, people empowering, profitable and sustainable. However, the journey was fraught with challenges. Initially, he took a 5000-rupee loan from his father, purchased 2 looms and hired 9 weavers. Soon, he found out that the male weavers were not reliable – either not able to concentrate or not even come to work. Gradually, he started to hire women. By 1986, he had created a sizeable network of weavers and started an export business with his brother, removing the middlemen.
By then, many of his weavers came from the “untouchable” class – the lowest of the caste system. In other words, he offered job opportunities to people who traditionally were only allowed to take the dirtiest and hardest labor-intensive jobs such as cleaning sewage system, butchering animals and handling dead bodies. For Chaudhary, people should be recognized and appreciated for the work they do, not for their caste, religion or social status. But the idea of working with the “untouchables” was unacceptable by his community. People didn’t want him to live among them.
Eventually, he and his young family left and moved to the rural area of another state where they had no car, no house and no relatives. He went there to teach remote tribes the weaving techniques and to further expand his artisan network. For 9 years, he crossed forests and flooded rivers to travel to remote villages in the hilly region. There, he established strong personal bond with the locals and was able to bring onboard a network of 5000 artisans. In 1999, after having a fallout with his brother, he decided to move back to his original state to restart the business. This time, in the capital city Jaipur, where he established Jaipur Rugs.
Today, with a network of 40.000 weavers from 600 remote villages, Jaipur Rugs has built a system that exist to serve marginalized communities, especially women, living in the underserved areas of rural India. It leverages innovation, cutting-edge technology, award-winning designs and business acumen to create a profit generating machine. In order for customers to better appreciate their purchased products, seeing the process, the effort, the family and the love put in creating each piece of rug, the company connects customers directly with the weavers, cutting the middlemen while establishing human connections between buyers and creators. Besides receiving a fair wage, the weavers are treated as part of an extended family. More importantly, women now have opportunities to earn money and gain more decision-making power within their families as well as improved status in their villages.
Besides job opportunities, there are plenty of growth opportunities for ambitious weavers. For example, the company tries to identify and develop grassroot leaders, responsible for maintaining rug qualities in their regions. After completing training programs, they would oversee over 100 weavers to ensure quality and a smooth production system. In terms of design, the company is highly innovative. Besides collaborating with well-known designers, it launched an initiative called Artisan Original to create single pieces using entirely weavers’ designs. These rugs allow weavers to highlight their original creativity and produce rugs showcasing their local cultures and telling their life stories.
One artisan Bimla Devi has done something truly spectacular. A remarried young widow with two children, she found her salvation through weaving. With 15 years of experience, she was one of the first to join the initiative and struck gold right away. Her first design, inspired by a popular local snack and the floor painting in her house, was a unique piece of art, transcends culture, boundaries of design and personal struggle. It won multiple design awards, including one in Germany, which gave her the chance to fly for the first time in her life and to collect her award on stage in Germany. From a weaver to artisan, to award-winning designer, Devi is now dedicated to empowering other women in her community and rural villages across India.
Another employee Harpool grew up in a poor village. The first time he saw Chaudhary visiting his village, he expected to be kidnapped. What else could a businessman want from his poor village? After he became a brand manager overseeing 2000 weavers, he thought he was the man, proud of his achievement from nothing. But Chaudhary helped him realize that his ego was hindering everything and he eventually overcame it. This is an illustration that more than creating financial opportunities, and developing professional skills, the company’s higher goal is to develop human beings.
Like a typical socialist organization, Jaipur Rugs was created for the people, by the people and to the people. Regarding the company’s business strategy, Chaudhary summarizes it this way: “Let goodness, fairness, and most importantly, love prevail in business; profits will inevitably follow.” Today, the company is striving to double weavers’ wages as its next goal. As of his dream for the future, Chaudhary hopes to convert his business into an ashram, so people who work for Jaipur Rugs are given a platform to find their purpose and meaning, whatever they do. In his mind, a life without purpose and meaning is a wasted life.
After all that he has done, Chaudhary remains humble: “I never say I have done any good to the weavers. It is the opposite: they have done good for me.” One thing he repeatedly tries to tell the world is this: Love whatever you do and love people.
Love, the magic formula of business success.
