First Energy is a small start-up with big plans to transform the way the world cooks. The company was nominated by the World Economic Forum for its first annual list of Technology Pioneers. The nomination stated that First Energy’s “revolutionary” cooking stoves were “helping save the environment while making life more affordable in rural villages” in India and elsewhere.
|First Energy's Cooking Stove and Fuel Pellets|
The CEO, Mahesh Yagnaraman, says “Over 3.6 billion people cook their meals on primitive stoves fueled by crop waste, wooden sticks, and dried animal dung. Smoke from these indoor stoves makes millions ill, and kills 1.9 million people, mostly women and children, every year. First Energy aims to solve this problem. We are at the cutting edge of a social transformation that starts in the kitchen. Our innovative cooking stove is clean, efficient, and inexpensive.”
I just finished writing a case study with my co-author Chandra, on First Energy. We got terrific cooperation from the top management of the company, despite how busy they are. It helped that a quarter century ago I went to school with Mahesh.
The case describes the challenges of taking a technology to market. Despite its obvious benefits, the company’s alternative fuel faces several challenges. First, in the residential cooking market, the aspirational fuel is Liquified Petroleum Gas (LPG), not bio-mass pellets of the kind First Energy has developed. Selling these requires changing customer attitudes to bio-mass fuel. Secondly, LPG is subsidized for residential cooking by the government so households can buy it at half its market price. First Energy, which aims to bridge the gap between primitive stoves and LPG finds itself squeezed out of the market because LPG is so heavily subsidized.
The company believes government subsidies will eventually be cut, just as gasoline subsidies have been eliminated. But when is anybody’s guess. Until then the company must find a way to stay in business and continue developing its technology and growing its business. For now, it has set its sights on the commercial market, where LPG is not subsidized. It is developing new stoves, new fuel packaging, new channels of distribution, new marketing programs, and a new sales force to address the needs of the commercial segment.
The case places the reader in the position of keeping a strategic eye on the long term goals of revolutionizing cooking, helping save the environment and thousands of lives around the world, while developing marketing programs to address the current commercial segment and eventually, the much larger household segment.
You can find the case study here. If you have ideas or solutions for First Energy, feel free to leave comments below or drop me an e-mail.
Picture, courtesy First Energy