Archive for October 28, 2012

Opportunity International Microfinance Summit

Camelback view from Montelucia, Scottsdale, AZ

I’ve been in Scottsdale, AZ for the last two days at a summit on microfinance with Opportunity International.  Although I was very involved in microcredit a number of years ago (see my blog for my time with the Reuters Digital Vision Program, the Grameen Foundation Technology Center and the Mifos project), and have been supporting organizations like Unitus  and Namaste-Direct, I haven’t been hearing the stories recently or having as much contact with direct practitioners.

I learned about Opportunity International back in August, and a new friend who is working there invited me to come to the Summit.  It’s been really enjoyable to re-connect with microfinance, hear more of the stories of how these small loans impact peoples’ lives, and chat with others who share that interest.

The program was a packed day plus a little on either side of it.  A few of the highlights:

Learning about Product Innovations

Many MFI’s (Microfinance Institutions) offer a limited range of products:  mostly just loans, varying in amount and duration, and whether they are granted to a group or individual, but loans are their bread, butter, meat and potatoes.  One of the key reasons is that the level of government regulation goes up significantly when you start taking deposits (they don’t want you going out of business and losing depositor funds).  Opportunity International has gone through the work to get the necessary licenses to take deposits (they have a combined gross loan portfolio of $515M, with $108M in depositor funds).  Opportunity International has also added insurance products (primarily life insurance, that pays out to cover outstanding loan balances if the borrower dies).

I got a chance to talk with Nathan Byrd, the key person behind their Educational Finance projects, and heard more about their plans there.  In addition to more traditional ideas, like making loans to schools for capital improvements, or loans to students to cover tuition, they’re pioneering a savings/insurance product that does a great job of meeting customer needs.  It’s a  savings account with some fringe benefits:  assuming you meet certain balance minimums (very modest by US standards, something like $50), you are automatically eligible for a linked insurance policy that, in the event of your death (except for suicide) while a child is still in school, pays 5x the balance for school fees to ensure your child(ren) can continue their education.

One of the other talks was by John Magney, the head of their agriculture finance group.  He gave some nice background about the (financial) ecosystem needed to support farmers, citing groups like market information systems, input providers (like seeds & fertilizer), output markets (to sell produce), finance, and external services (training and certification).  One of the interesting stats that he provided was that small scale farmers might pay up to half of their income for money when they needed it (“income smoothing”).  School fees are due in January, but crop sales don’t start until May, so farmers may end up going to a money lender or selling their crop futures at a cut-rate.

Impressive Women Leaders

Opportunity International hired a new CEO, Vicki Escarra, less than two months ago.  She has an impressive background in both the non-profit sector (most recently, CEO of Feeding America, doubling their number served, and raising their budget to nearly $100M) and in corporate America, (raising through the ranks of Delta from flight attendant to managing all operations to CMO).  She did a wonderful job talking about her personal commitment to the cause and talking up the achievements of the organization.

The keynote speaker was Carly Fiorina.  While she didn’t (and wouldn’t) get my vote for Senator, she did give a masterful talk about the importance of women leaders, and her personal challenges since leaving HP (death of a daughter, fight against cancer).

Mother-daughter co-authors Bonnie St. John and Darcy Deane spoke about their book How Great Women Lead.  Darcy, at 13 years old, was impressively poised, being interviewed before a group of more than 200 people.  I was even more impressed when I heard afterwards she’d gotten 3 hours of sleep the night before.

A Powerful Poverty Simulation

The OI crew had put together a series of personas of typical borrowers and the dilemmas they face.  Each table had about 6 of them, and we paired up to read the bio, the choice they faced, their options (that ranged from bad to horrendous) and choose which we would do.  We discussed them briefly around the table and then with the whole assembly, and moved on to phase 2, where we envisioned the case where all of the people were part of the same borrowing group, and one of the borrowers was unable to make her weekly repayment.  Given the joint liability for the loans, a default by any member implies all of the group members would be unable to get a future loan.  Realistically, the other members will cover the delinquent member’s payment, but apply some social pressure to make sure it doesn’t happen again (and maybe make some interventions to help guarantee that…)

For a sample, consider the 29-year-old making for $1.50/day selling sodas who had her savings stolen, and faced the choice of marrying her 12-year-old daughter off to a 50-year-old man for the dowry he offered, or ending the schooling of all 4 of her children when the next round of fees is due (and potentially not having enough to eat).

I’ve tended to operate at the “products and numbers” level of microcredit:  interest and repayment rates, technology solutions for managing mobile payments, and the like.  This simulation was a reminder that each of those loans does make a difference in a real person’s life, but even so, things can still be pretty dire.

Meeting Interesting People

The main reason to go to a conference is nearly always the people that you meet, and this one was no exception.  From a couple that owns a dairy farm in California’s Central Valley, to the retired president of an advertising agency, to the college senior interested in pursuing a career in microfinance or social entrepreneurship, it was a group that was concerned with other people and using their resources to make a difference in the lives of the poorest.

Thanks, Jennifer, for the invitation and encouragement to come!

Soulful Citizenship, a talk by Rev. Jim Burklo


Rev. Jim Burklo is a friend, blogger, and former minister at both Stanford and my church in Palo Alto.  He’s now the Associate Dean for Religious Life at USC.  He visited and gave a talk last weekend entitled “Soulful Citizenship”.

Since he’s included a lengthy excerpt in his blog and you can get the audio for the talk, I’ll just add a few of my reflections.

Jim did a really nice job balancing the talk between the personal, the religious, and the political.  He was great at handling questions, letting people feel as though they’d been heard, but not get too derailed with tangents.  He had some really nice, quotable lines in the talk, too, and he didn’t even include all of them in the excerpt.  One of my favorites was in his description of the “Drop-in” center that served the unhoused of Palo Alto.  He said that by accepting people where they were, and demonstrating the center had “no agenda but love,” it could become a trusted support partner when the person decided he or she wanted to change.

Another one was “If you don’t vote, you vote Republican.” (followed up with a light-weight analysis that Republicans do better when turnout is low.)  “Make politics depressing, make voting more difficult, make people believe it’s all hopeless, and Republicans will have a better chance of winning.”

The story of talking to a 34-year-old who asserted “I won’t get social security” also hit home.  I’ve said that myself.  (Although I suspect some form of social security will exist 30 years from now, I believe it will be means-tested and, I hope I’ll have enough assets that put me above the cut-off…) Jim’s thought-provoking point was that “If you say that.  It’s true.  They’ve already won.”  In other words, of course the program will fail if the people who bear the brunt of the costs don’t expect to benefit from it in the future.  They’ll have no incentive to stand up for it, and the program will fail.  Self-fulfilling prophecy.

Jim closed his talk with a plea for greater voter engagement, encouraging us to step into the void left by our political parties, and create a vision for the future, a motivating vision, and then “take it viral” discussing it with our friends, sharing it electronically.  I’m taking the first step here–at least dipping my toe in the water.  I’ve thought a bit about how I’d craft my vision, some of the elements with freedoms and protections for individuals, the systems of law, regulation, and taxation to provide those freedoms, the common investments that we want to make to support us all, and the way that we act on the international stage to provide an example without needing to have an arsenal that can only be maintained by spending more than the rest of the world combined.


Bill Drayton at Stanford Center for Philanthropy and Civil Society (October 3, 2012)

October 3, 2012, Stanford Center of Philanthropy and Civil Society

In a World Where “Everyone’s a Change Maker”

  • Bill Drayton, CEO & Founder of Ashoka, Harvard College, Yale Law.  McKinsey in NY 1970’s.  EPA.  MacArthur Fellow.
  • Greg Dees, Professor of Practice of Social Entrepreneurship at Duke Business School, High Impact Philanthropy

Opening Remarks from Bill Drayton (an approximate transcript)

The rate of change is escalating exponentially, as is the number of people causing change, and the combinations of people getting together to make change.  The old system is collapsing, with the death of old habits and institutions.  The death rate of large corporations is increasing (as measured by the half life of the companies in the Fortune 500).  Today, we need a different set of skills and societal organization.  To be successful, we are able (and must) deal with larger groups of people.  In yesterday’s world, efficiency and repetition were the organizing principles (a few people organize everyone else, with walls).  This stasis was a steady state.

But change is also a steady state, the one we’re in now.  Education as mastery of body of knowledge is no longer sufficient.  But large numbers of children are being given just that.  We need a different set of skills.  The half life of skills is getting shorter.  We need a sophisticated set of human social skills.  Following rules is not sufficient.  Empathy is required instead to be a good person.  To understand the impact of your actions, you need to observe everyone else, out into the future, in all different contexts.  Main cause of marginalization is failure of empathy (old paradigm of “don’t be a victim, respond with aggression” doesn’t work).  Many parents don’t realize importance of teaching empathy or know how to do it.

Teens need leadership.  Not telling them what to do.  Everyone needs to help make that change.  Every organization needs to be a fluid, open “team of teams,” serving a fluid, interconnected process of changes.  Each moment determine right combination of people to affect the change processes.  Many organizations aren’t able to make that leap and are dying.  Business school needs to ensure graduates are prepared.

Ashoka has 3,000 of best world’s social entrepreneurs.  They change the framework of thinking.  Everyone is a changemaker.  That’s the only way to have a world that’s fair and equal, with everyone able to contribute.  Much more powerful, with anyone in the world able to connect with anyone else, and start something.  Network effect is infinitely powerful and better than the world we have.  What better contribution can you have than helping people make a huge change?

Questions from Prof. Greg Dees and the audience

What’s the role of Social Entrepreneurs in “Everyone’s a changemaker”?

We need people who can see how to change the system and make that change happen.  See the new pattern, how to make it practical (simple and empowering people to be an advocate)

What is a Social Entrepreneur? 

The heart of it is a value system.  Social Entrepreneurs have given themselves “Permission to care”.  80% of Ashoka Fellows started something in their early teens.  With that early experience, you know you have the power to change the world.  For profit business isn’t sufficient:  It’s hard to make a business out of women’s rights.  Some entrepreneurs choose not to be subject to constraints of business model (short term focus on profitability).

Ashoka’s 5-part test for evaluating a Social Entrepreneur and the idea:

  1. Is it a new idea that can change the field?
  2. Is this person a creative problem solver?
  3. Does this person have entrepreneurial qualities?  They need to be committed—there for life, an 8-10 year commitment. They are building a movement.  There is probably an 80% overlap with business entrepreneurs.  Social entrepreneurs are good Listeners.  Traditional concepts of scaling are irrelevant here.  You need a Vision for a better way of the world being organized.
  4. Social impact of the idea.  Once idea is demonstrated, will others try it?  How many will be impacted?
  5. Ethical fiber—people are not convinced by the words you say, but “Do I trust this person?”  If they don’t trust you, they’re not going to change something fundamental in their life.  “Are you married to this idea?”

Ashoka works primarily as a community.  Collaborative entrepreneurship of 100’s of fellows working together.  Different from solo entrepreneurship.

System-wide change requires both Social Entrepreneurs and Changemakers.

People are getting rid of repetition as fast as we can (e.g., self-driving cars).  People are excited by change.  How much time do we waste and how many people do we kill by driving?  Trust people to make choices to change.

What are the Limits of empathy?

We have a hard time being empathetic to people who are unlike us or those who are far in the future, those who are “not innocents”.  He is describing a world that can’t be run by rules anymore.  All of us to be successful in life have to be empathetic.  We don’t have that now.  We are going through a transition period.  Most top-down institutions are dying.  When we can trust others to have this empathetic skills and act on them, we will be in a much safer and happier place.   [Blogger’s Note:  See Jerry Michalski’s TEDxCopenhagen talk “What if we trusted you?”]

If parents see their children need empathy to succeed, they will be motivated to provide that.  And they’ll apply it in their professional life as well.  You can’t run a fluid, open team of teams unless you trust everyone.

Ashoka and companies can help you with your children.  They’ll have to live in this world of change.  So parents will help their kids master empathy.  But they can’t teach it without mastering it themselves.  Companies control the messages we see day-in and day-out.  Capture the marketing budget of these companies.  If a company can help its clients help their children, it’s empowering them.  Makes them feel big, not small.   It’s the opposite of Fear; it’s the approach of John Kennedy, not Richard Nixon.

What can Stanford do?

Ashoka U.  was founded by 2 Stanford undergrads immediately after graduation.  Want every student, faculty, alumni to move into world of fluid open team of teams, as much as possible.

Bring the change to the Stanford alumni.

The Ed school should break out of the old model, instead, teach changemaking.  There should be better measures of empathetic performance.  To what extent can 3rd graders tell when someone is angry?  Ed school, dept. of psych, d-school all have a role to play.  Where is the GSB in charging “Are you transforming your company?”  P&G and IBM recognize the need to be open and global to research.

The “Process of change” tends to follow a script:  2-3 groups start pushing for a change, then islands of people start living in a different way.  The first article is published, then the first book; islands connect, confidence builds, people become aware of tipping zone, and follow through of actually getting change to happen. At the mid-point of awareness of tipping curve, it gets a lot easier, very few people who don’t want to hear about the change.  Prophets had to develop a new ethical model for 1-2% that were living in new way.  Gandhi understood that as people moved in this direction, the whole discourse must change.  Ask people respectfully to compare their behavior to what is ethically required. The result is people will change.  As long as it’s our choice (non-violence is key) people will do it.  Think we’re describing here the ultimate stage of that.  Everyone is liberated.  Until they see it, they’ll be uncomfortable.  How dysfunctional is what is currently going on?  We are still stuck with 1930’s rules (for finance, e.g.).  How can we get people to see where we are going and what we can do to get there?

What would Bill Drayton put on the research agenda for Stanford?

The legal system has not been transformed, we need a different legal structure.  We need institutions that not just “allow you” to take into account community and larger world (B-Corp.), it should be the institutional norm.  Right now that’s really difficult.  Common law developed 800 years ago, pretends not to be changing while constantly adjusting (new circumstances) subject to careful review with non-political process.  That may have worked in the past, but can we adjust to the current rate of change much less that of 15 years from now?

This process that’s been going on for 50,000 years is coming to culmination.  We have far more neurons, and capacity for managing complexity.

We need research on how to create, sustain, and evaluate social impact.  How can people in organization can be confident that their actions are having intended impact?  There is a longer time frame to determine whether you are having the impact or something else is causing it.

What is the role of innovation, and how can small organizations foster it?  Some organizations will atrophy because their culture and norms won’t let them change fast enough.  Outside entrepreneurs will be more nimble and able to bring about change.

We need greater understanding of what is required to be a social entrepreneur and the toolkit required.  How do we equip people so they can make those choices intelligently?

Ultimately, it’s about identifying and empowering social change leaders.