Learning From Failure: How to Make a Successful Business and a Sustainable Industry
“Some people think I’m crazy.”
These were the words of Alexandre Wainberg as quoted by The Estado de Sao Paulo last Sunday (Article in Portuguese – Subscription required). In an excellent piece detailing the environmental damage and social issues surrounding the aquaculture sector in Brazil, the Estado focuses on Wainberg as a lone and oftentimes beleaguered advocate of sustainable practices. What was most fascinating in reading this was seeing the pure passion and entrepreneurial drive of someone willing to essentially defy an entire local industry; the question that kept popping into my head was: where is the government support?This is an issue that lays bare the challenges facing the BOP as producers as well as the unrecognized talent in this segment of the population. The article details how shrimp producers in Northeastern Brazil are in a situation where they have every incentive to ignore environmental regulations and flaunt formal business registration processes. Aquaculture farms burn and chop down forests to make space for their operations and fill water supplies with harmful chemicals made to grow shrimp faster with a higher survival rate. This has an especially harsh effect on local small scale fishers who must on one hand travel ever further away to make their livelihood and on the other find their communties’ water supplies increasingly polluted.
The environmental branch of the government, Ibama, has swept through the area issuing fines and sanctions, but this has led to controversy on two fronts. Many of the small enterprises in the shrimping business operate informally and go unnoticed by Ibama, while even in the cases where the government does distribute fines, it is criticized by NGOs like SOS Mangue for not being harsh enough.
Alexandre Wainberg has been in the middle of this battle for years. He recognizes the difficulty small enterprises face in adhering to environmental regulations tailored to large corporations in addition to the burden of becoming a legally registered business in the eyes of the government. As a solution, Wainberg made his company, Primar, into an organic producer and attempted to launch a cooperative organization aimed at assisting other producers to take the same steps. Despite valiant efforts, the organization failed due to the red-tape entrepreneurs have to endure in becoming certified, a process Wainberg admits is unnecessarily long and difficult.
So where is the government in all this? While enforcement is one side of social and environmental protection, there are few positive incentives or efforts to give technical assistance by Ibama for small businesses to adhere to their standards. Primar has since seen greater success, having recently signed contracts to supply retail giants Walmart and Carrefour. However, making the move to organic may not be possible for other producers with fewer resources, constituting a sort of regulatory BOP penalty. In essence, Wainberg showed his incredible ingenuity in learning from failure, and reorganizing his business to individually focus on cornering the organic aquaculture market. What remains to be seen is whether the government will learn from failure as well. There is plenty of talent and entrepreneurial ability among the BOP – both within the shrimp industry and among local fishermen, but the Primar story is a strong reminder that this ability cannot be unleashed without the help of a supportive public sector. In some cases, such as that of the fishermen, this negligence can have detrimental effects.As I mentioned at the beginning of this blog, many thought Alexandre Wainberg was crazy for thinking he could change an industry to become increasingly sustainable, formalized and profitable- the lesson for policymakers is to figure out what could have been done to make his dream a reality.