Metrics

What more can we learn?

April 9, 2012
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Stanford Social Innovation Review posted a great article about the importance of data in the non-profit world, and how one specific organization, Data Without Borders (DWB) is making a difference.

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DWB’s mission statement begins with the line, “Data Without Borders seeks to match non-profits in need of data analysis with freelance and pro bono data scientists who can work to help them with data collection, analysis, visualization, or decision support.”

A noble task indeed. Of the resources available to non-profits, data visualization and analysis is typically not at the top of their list. Non-profits are mainly concerned with looking for the next batch of funding, and working to drive impact true to their mission. Read more »

Microfinance Monday: Full steam ahead…for what?

March 26, 2012
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Amid a damning report from one of the industry’s heavyweights, financial activity in the microfinance world is picking up, clearing the way for more opportunity – but at what cost?

David Roodman, one of the world’s foremost thinkers on microfinance, presented his newest book in a column last week that might appear to strike a spear through the heart of microfinance champions everywhere.

On current evidence, the best estimate of the average impact of microcredit on poverty is zero. So microcredit as a whole appears neither to live up to the hype nor justify the harshest attacks against it as modern usury. Microcredit does not appear to be the financial equivalent of cigarettes.

Well that’s good to hear! At least we’re not addicted to cancerous activity. Yet, the heart of what Roodman is getting at is something secretly feared by microfinance champions for years. Does it live up to the hype? Is this truly impactful? Read more »

Microfinance at a Crossroads: Balancing Good Intentions with Critical Industry Structuring

September 29, 2011
By

In the quest to reduce and eventually eliminate poverty, there exists no silver bullet. Poverty is a complex problem that requires the cooperative assistance of people from the top to the bottom of the economic pyramid. Economic stimulus through access to capital for microenterprise or personal use is one instrument that has experienced widespread accolades as well as criticism as it has grown in size and popularity.

Microcredit, or microfinance, more broadly, has taken the bottom-up approach of providing access to capital to those who previously did not have the opportunity. As microfinance has grown, its overlay between driving “real” impact using semi-traditional economic methods has made it the darling of social enterprise. Early successes and rapid growth have even inspired some Microfinance Institutions (MFIs) to go public. As access to capital became more widespread, perfect-storm-like conditions began forming in conjunction with a global recession. Repayment failure rates have started to rise, and areas like Andhra Pradesh have been saddled with accusations of corruption and abusive lending practices. Read more »

Define Your Own Success

May 23, 2011
By

Here at Rising Pyramid, we have spent a lot of time discussing and advocating for the development and application of metrics.

Many of the metrics revolve around the concept of transparency and accurately reporting company status and progress. Including a standardized set of metrics will help to properly assess a company’s health and performance.

But what makes your specific organization a success or failure? Read more »

Celebrate our Failures

April 25, 2011
By

I read a line in a book recently that made me pause for a bit.

“Anything worth doing is worth failing at.”

I immediately began to think of organizations like Matchsavings.org and other social ventures that began with an idea and a dream, but for a laundry list of internal and external factors did not flourish. They believed so strongly in their idea and the impact it could have, and though it was not sustainable in the end, I don’t consider it a failure on many levels. Blazing the trail for others to follow and learn from is almost just as valuable as if they still existed today. Read more »

Communication Is Key to Collective Impact

February 28, 2011
By

I had the opportunity to do some community service this past week, in which our team was tasked with teaching a class of second graders about community and entrepreneurship.

We started off with an exercise where some of the kids “produced” an item practicing Unit Production, while other teams practiced using an Assembly Line. It was interesting to observe the various teams work, and a point that especially stood out was the levels of communication between the workers.

Those kids who worked in the Assembly Line teams were intensely interacting with each other; checking each others’ work; asking for and giving advice; working together. The Unit Production teams? Not a peep out of them. They didn’t perceive the need to interact with their teammates. As a result, some students didn’t properly hear the instructions and “produced” incorrect products, never once bothering to check with their teammates. Read more »

Global Poverty Rate Cut in Half? Not So Fast

January 31, 2011
By

Early last week, the Brookings Institute released a report complete with data supporting the progress of the successful fight against global poverty.  In short, the results are nothing less than impressive, and everyone involved in making these results a reality should be commended.  Good news about the fight against poverty is always welcomed especially considering the rash of negative PR we have seen with Andrha Pradesh.

While the results are indeed promising, I caution the trumpeting of this report of success beyond our goal definition.  Poverty is a real term and should not only be viewed as landing above or below a certain income threshold.  Daily income rates have become a strong and widely accepted measure of poverty, but its important to keep in mind that while data points help to ground our assumptions and estimates, the real issue of poverty still exists at an alarming rate.

An important caveat to keep in mind is that the data referenced for this study holds true through 2005.  The Great Recession that affected so much of the global economy as well as recent devastating natural disasters will have no doubt negatively contributed to these results.  This downward shift in the poverty population is a great sign in the right direction, yet one data point should not equate to a trend – yet.  Sustaining this trend and building upon it through infrastructure, health, and environmental improvements is where we have an opportunity to truly turn the corner.

So what should we think then?  The journey needs its milestones to be celebrated, but the objective is far from met.

Though we here at Rising Pyramid may have a tendency to be slightly biased, I would like to believe that Social Enterprise has played a role in and of itself in this promising statistic.  As stated in the Brookings report, “From 2003 onwards, developing economies have expanded by more than 6 percent in every year except 2009, during the height of the Great Recession.”  This economic growth will  continue to be the backbone upon which this growth is predicated and social entrepreneurs aim to assist in that area.

While the extent of the data can be debated, there is no doubt that the conclusions of the report indicate something positive.  Let us read this as a sign that we’re moving in the right direction, and continue to bring innovation and business to the BoP in the hope of hearing equally positive news the next time around.

- Chris

Looking at Collective Impact: Does Social Business Solve Poverty?

February 4, 2010
By

Most social businesses share the ultimate goal of  solving global poverty by fixing various underlying development issues.   Each organization is a piece of the puzzle, but how do we know whether social businesses are having any success as a whole?  In his book “Small Change: Why business won’t save the world”, Michael Edwards argues that business is not the answer (as described on Social Edge here).  Though I believe that Edwards is wrong (Full disclosure: I haven’t read the book yet, but am eager to report back once I do), how can we demonstrate that social business is the answer to the problems of the world’s poorest?

Read more »

Are we judging organizations like Kiva the right way?

February 2, 2010
By


A recent article by Adam Kemmis Betty, a Kiva fellow in Boliva, tries to provide some supportive reasoning for the existence of Kiva, and more generally, the concept of micro-finance. He starts off the article with a “disheartening” stat (citing a Consultative Group to Assist the Poor (CGAP) report) that

…institutional and individual investors, including pension funds, commercial banks and online lending platforms such as Kiva, only amounted to 7% of total funding for the microfinance industry in 2008.

While acknowledging that this data is inclusive up through December 2007, I aim to ask a broader question: Should that be the metric used to justify the point of Kiva and other microfinance organizations? What are we trying to rank microfinance organizations on? Are we even trying to rank them? Read more »

"It's All a Game"

September 28, 2009
By

BOP markets break our traditional ways of thinking and acting. This might be their biggest allure and challenge alike. Unless we are willing to discard our biases, this opportunity will remain invisible and “unattractive”

- C.K. Prahalad
“The Fortune at the Bottom of the Pyramid”

I often find myself in the middle of one of the inspiring anecdotes that are found in Prahalad’s book (and every other Social Enterprise book) thinking “wait, this can’t be right.” How is it possible, for example, that we have a business model that provides products or services with (in some cases) higher quality, more intimate specifications, and a lower price, all the while working in a hostile environment? [Hostile environments, according to Prahalad, are markets with a "low quality of the infrastructure, such as electricity (e.g., wide fluctuations in voltage, blackouts, and brownouts) and water (e.g., particulate, bacterial, and viral pollution)."] Why haven’t we thought of such solutions already?

It’s the approach. It’s the approach that traditional business models use to analyze problems and develop solutions. It’s the approach that is used to assess companies and their value. Its even the approach that the casual person has when learning about companies.

The constraints imposed on finding a solution at the bottom of the pyramid are typically more restricting than those of a developed market. Traditionally, when facing a constraint with no clear solution nearby, the result is more often then not to pass a higher cost on to the customer. Yet this is rarely, if ever, a viable solution to problems at the bottom of the pyramid. This is when you really see the creative innovation that develops from problem solvers. The rules of the game are tossed out and you start with a clean slate. You can’t bring the same parameters into developing a better quality, lower priced, and sometimes more robust system. This zero-base approach has implications through to the metrics used to evaluate companies. The metrics that are currently used to assess companies don’t provide the same insight into social enterprise companies. Does it involve number of people helped? What, then, does “helped” really mean? How do you quantify it? Can you? This issue doesn’t yet have an agreed-upon solution, and is a hot topic within the social enterprise community.

One of the ways in which I’ve been taught to approach business and the associated emotional attachment that we sometimes get with our work is to view it as a game. Work hard, compete hard and try to win, but at the end of the day, it’s just a game and you can’t let it ruin your life if you have a bad day. I think the interesting area to focus on from this simile is that there exists an underlying “point” to the game. Words like profit, revenue, and stock price might come to mind when thinking of what the “point” or “objective” of a traditional business is. This is where social enterprise begins to break the mold. Profits and stock prices aren’t purely (if at all) the focus here. New metrics need to be able to assess how well organizations are carrying out their mission to serve the bottom of the pyramid.

These are just a couple of ways in which we see traditional business problem solving methods and evaluation metrics questioned. One of the most important takeaways I see to this ongoing discussion is that we must challenge our current mindset not to eliminate solutions simply because there are too many constraints. Continue to be innovative; don’t be afraid to create something new; throw away the framework that we use to assess a solution for one that is more robust and accurate. By accepting this open approach and allowing long-standing assumptions to be tested, it provides a vast number of opportunities in markets that are normally avoided simply because they don’t fit a model.

- Chris

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