Wall Street Woes- and what to do about it

I don't know about you but I am getting very tired of hearing about Wall Street woes; about executives who must sell their jets and how, somehow, that translates to average folks getting laid off. Its just fear tactics. The issue is Wall Street has only one metric - financial performance. So Wall Street is always overly emotional - down in the dumps or unnecessarily bullish, which leads to hyper-movements of capital. It is an overly constrained system. Wall Street has boxed itself into a single-bottom-line system and doesn't know how to get out. So folks, - if the system isn't working change the system - think out of the box.

Its time the financial wizards admitted they have no clue what to do and start learning from us research types. Wall Street has one metric - the bottom line - and the entire house of cards is built on that. In new product development, at a minimum we evaluate around three metrics - faster, better, cheaper - its the mantra that modulates expectations -maybe you hit one maybe you hit all three - at least there is room for experimentation and different vectors to push. If wall street followed an R&D model it would look for and formalize other metrics besides financial performance. That would allow social entrepreneurs to go mainstream instead of being boutique; get on Wall street and seek capital. allow diversification of capital instead of all based on profit. I don't know what the right answer is but here are some ideas:
- following the micro-finance model - rate a company on how many people are served (not just amount)
- Tax credits (like R&D credits) for companies that serve the BOP - after all they serve those whom the government serves
- IPO for social businesses except - instead of financial returns give voting rights on how to run the company
- New job creation - e.g green job creation gets points
When I first started at HP, we used to say - focus on the value you create not the stock price. If you create value stock price will follow - Value for us was high quality products and a satisfied employee base and a welcoming community wherever we operated. Yes - its time to get back to basics - its takes more than money to be a good capitalist.
I am glad the auto-industry is not getting a bailout; but I am not glad the Wall Street isn't thinking about more change itself.

Microfinance for Beggars?

Yesterday at SCU's event "Transformative Changes Through Science and Technology: The Role for Social Benefit Entrepreneurs" honoring the 2008 Tech Laureates I heard something new. It has made me change my mind. (In the interest of full disclosure, I hereby state that not much changes my mind these days).
Here is the story: I am just back in the US after six weeks in India. A common sight in India is women and children at stop lights- begging. There used to be a time when I would give some change but I have stopped doing it now; doesn't giving them money encourage them? Not much has changed over the years except now they often carry tissue boxes, balloons, magazines, hats, toys etc. to sell. Where did they get the money to buy the stuff? Some tiny children offer entertainment in the from of headstands or juggling or something. "The goods must be stolen; they are just an excuse for begging - whatever" I think. I look away. I can do nothing about this. I feel rotten for a while till I get over it.
Yesterday, I heard Mohammed Yunus talk about Grameen's new program in Dhaka, Bangladesh - "loans to beggars". He thought - why not do something for the beggar? and that's how the program started. They find a beggar and ask one question - at what time in your life did you become a beggar? And then they gave him/her an idea - continue begging, but why not carry some small article to sell- give their "customer" a choice - so as to speak - buy or give charity. If the beggar agreed, they gave an interest free loan with no time set for repayment. Whenever they are read to repay, they can come back to repay. That he said was key. Enablement- a person who tries cannot fail. In fact, they said - take your time to repay. To keep their own costs low, Grameen provides no other service, just trusting the person to come back. Loan amount is $15 flat. So far there is $100K in the program and 11,000 people are not begging anymore. Most others are only part-time beggars and some are successful entrepreneurs.
So next time I am stopped at a light in New Delhi - I will roll down my car window. I may not be in a position to start a loan program but I can buy a box of tissues. Who knows? It might make a difference. Why had I never thought about this before? Why did I assume the goods were stolen? The kids wanted to trick me?
Why? Becuse I still have a lot to learn.

Social Capital is Good Economics: Invest in Technology for the Next Billion

This Sunday, reading the Times of India article - What MFIs can teach Wall Street by Swaminathan Aiyer (of Swaminomics fame) made my day! He writes "Big financial institutions of all sorts are in dire straits across the globe. But one category remains unaffected — micro-finance. Even as the global financial system freezes and giants like Lehman Brothers collapse, microfinance institutions (MFIs) are expanding unfazed. Famous financiers face defaults big enough to wipe them out, but MFIs report virtually zero default. This is extraordinary. Big financiers lend against collateral, a back-up if their borrower defaults. But MFIs lend with no collateral at all. Big financiers lend to the most creditworthy corporations. MFIs lend to poor women whom nobody in history considered creditworthy before. Yet, the secured loans to big corporations are bombing, while unsecured loans to poor women are being repaid in full."
And may I add that stimulating the BOP markets besides being a safe bet is also profitable - a double bottom line - social as well as economic good.
I want to build on this article to make two points not made by Mr Aiyar:
1. Portfolio diversification - In my view social capital is a good way of diversifying your investment portfolio and I think there IS a silver lining to this meltdown - I hope investors will go back to thinking about value creation in more than pure dollar terms.
2. Capital Gap - Currently there is a gap in the range covered by MFIs (loans must be under Rs 35,000 or so) and traditional business lending (loan must be above Rs 10 lakhs or so). Entrepreneurs that start technology based social businesses need loans in this range and they have nowhere to go. This is actually the sweet spot for social capital - it is a new area - call it "investing in technology for the next billion". There is great economic potential in this space- like the VCs who invested in technology startups in silicon Valley. It is the same story -except since the new market it is not in the traditional VC backyard, they are not jumping in. Somebody else needs to step in and I am hoping it will be the future leaders - Social Capitalists.
One can see that some new gen leaders who are now big boys (e.g. Google Foudation) are stepping into this space but it is not enough - traditional thinking needs to change too.
From my perspective, the meltdown is a wake up call for change and I hope Mr Aiyar's article is just the start of this new thinking.

TATA Nano, Singur and Social Entrepreneurship

TATA having to pull out of Singur actually has a plus side to it.
It so happens that when TATA fist announced the Nano car (Rs. 1 lakh), I was in India and I authored my most popular (to date) blog page called TATA Nano- Is It Social Entrepreneurship? And now I am in India again when TATA is announcing its pullout from West Bengal (Singur). TATA will relocate its Nano factory to another state in India.
The media is abuzz and Gurcharan Das (an author I admire immensely) has written an article in Times of India called "When Everyone Lost". My view is different. I think this is a battle lost that will win a war. From an economics perspective, yes - everyone lost. But if you think of Nano as a social enterprise, much social value has been created.

The Singur pullout proves my point - that social entrepreneurship - defined as social as well as economic impact - is really difficult. The big win here is that this factory relocation, has engendered an open conversation: who has the best interests of the people at heart? There is data available (increase in number of savings accounts, people trained for new jobs ..) that in one year the Nano plant has already had positive economic impact on life in Singur. As other states line up to offer the best deal to TATA, hopefully the destitute landowners of Singur (ultimately they must benefit) will start thinking for themselves rather than listening to vested political interests and that is a social change that cannot be undone.
So, I hope that TATA will still get the Nano out on schedule and this relocation, while admittedly an economic bump in the road, will prove to be of immeasurable social value in educating India about creating social impact through business methods - the "double bottom line". Next time the people in Singur get a deal like the Nano, they will think twice before agitating. In fact, Ratan Tata was most impressive (I saw this on TV) when he calmly mentioned that West Bengal will be considered for the second Nano plant. West Bengal's short term economic loss is immediate benefit for some other state (evidenced by the offers).
Now that is thinking long term, thinking social entrepreneurship.

A linkage between "Ekalavya-ism" of Indian mythology and the modern concept of open courseware

Back in 2001 MIT took an unprecedented step when it announced its intention to make most of its courses and course materials freely available on the Internet over the next few years. Today MIT has advanced significantly towards this goal, with the school’s Open CoursewareWeb site now providing access to syllabi, lecture notes, assignments, exams, problems and solution sets, tools and tutorials, and a growing library of video lectures for most of MIT’s courses. Subsequently, the Open Courseware Consortium was formed as a collaboration of more than 200 higher educational institutions and associated organizations from around the world for creating a broad and deep body of open educational content using a shared model. Many of the world's leading academic institutions now contribute to the open courseware movement in their own unique ways. For example, Rice University runs a very vibrant site called Connexions as "a place to view and share educational material made of small knowledge chunks called modules that can be organized as courses, books, reports".

So what is the linkage between the modern concept of open courseware with the story of Ekalavya, an interesting character from Indian mythology? Let me give you a brief overview of Ekalavya for those who might not have heard of him. For further reading, please click here.

Ekalavya, as narrated in the great epic Mahabharatha, was a young prince from a lowly forest tribe who wanted to learn archery from the great Guru Dronacharya who taught Arjuna and his brother princes. However, Drona refused to take on Ekalavya as his student because of the latter's humble origins. Some commentaries say that Guru Drona recognized a master archer and didn't want anyone to come in the way of his favourite pupil Arjuna.

Disappointed but undeterred, Ekalavya went back into the forest, where he created a sculpture in the likeness of Guru Drona and started a rigorous schedule of self-study in archery in front of the sculpture. As a result of his tenacity and single-minded focus, he achieved a level of skill in archery that was far superior to that of Arjuna, the favourite pupil of Guru Drona.

Of course, the story has a cruel ending which the interested reader can pursue separately. But the point of interest for me is that "Ekalavya-ism" is a philosophical way of looking at learning as a self-learning process in which the meditative mind can function and learn even without the physical presence of a Guru or teacher. Ekalavya's role model was Guru Dronacharya whose sculptural likeness provided the physical and spiritual connection between the student and the teacher. Today, modern technology provides us better tools to emulate that connection.

Often, when educators discuss the important role of the teacher and the relevance of face-to-face interaction between teachers and students, the general consensus is that without teacher-student interaction students may not learn to their potential. My contention is that we need to apply the concept of "Ekalavya-ism" here. Modern technology allows us the luxury of access to information and knowledge through initiatives such as open courseware. Technology enables the student to view video images of lectures and create a mental image of the lecturer. It is then up to the student herself to create the remote spiritual connection with her guru or other role model.

While there is no denying the importance of role models, role models are not necessarily available as close physical entities. Role models exist in the virtual, conceptual and spiritual domain. We just need to make the appropriate connection.

So, those aspiring young students who might never have the opportunity of going through the hallowed portals of MIT or Stanford or whatever else is their ideal place of study, should not despair. They can still benefit from the open courseware movement as long as they emulate Ekalavya within themselves. In any case, higher learning is always about self-learning.

The spirit of the Open Courseware movement is the same as that of the mythological Ekalavya.

Shashank

HASTAC Digital Media Competition- Seeking India Applicants

With my background in imaging and interest in new education methodologies, I have a keen interest in how Digital Media can transform learning. I attended the last Stanford event hosted by MacArthur on this topic. So I was really happy when I got the following note from Mandy:

Dear Neerja, I recently discovered your Digital Provide: From Good To Gold blog. I'm writing to announce that the HASTAC/MacArthur 2008 Digital Media and Learning Competition is now open (http://www.dmlcompetition.net/). This year we are piloting international eligibility for our Innovation in Participatory Learning Award and INDIA is one of the countries from which we will accept stand alone applications. We all know that there is excellent social networking being done in South Asia and very worthy digital learning projects, yet we have seen relatively little traffic to our site from that region of the world. We need your help. I know that an award such as this could change the life of someone and help make their dream a reality. Best,Mandy

I think this is a great program and would encourage you to apply-Details:
DIGITAL MEDIA AND LEARNING COMPETITION 2008 --Inviting Applications from India Now-- $2 Million Competition Focus: Participatory. Full information at: http://www.dmlcompetition.net/
Application Deadline: October 15, 2008
The second HASTAC/MacArthur Digital Media and Learning Competition is now open! The focus is participatory learning. Awards will be made in two categories:Innovation in Participatory Learning Awards support large-scale digital learning projects Applications from South Asia are now being accepted in the "Innovations in Participatory Learning" category as part of a pilot international program. ... Young Innovator Awards are targeted at 18-25 year olds $5,000-$30,000Full information at: http://www.dmlcompetition.net/
Participatory learning is defined broadly: using new digital media for sharing ideas or planning, designing, implementing, or just discussing ideas and goals together. (You can find out about last year’s winners at http://hub.dmlcompetition.net/

Stanford Offers Entrepreneurship Podcasts - Free!

The Stanford Technology Ventures Program has just updated and renamed what used to be called Educators Corner, a free podcast and video website for the entrepreneurship community. We are trying to get the word out about the new name and features – Entrepreneurship Corner (ECorner). We have a creative commons license, so it’s very easy for people to insert the content into their own sites and use almost at will. Obviously you may also use the material in your sites. We’ve had over 2 million podcast downloads alone, so the site is clearly providing something useful! Details below:

Stanford Offers Free Entrepreneurship Podcasts and Video Clips

The Stanford Technology Ventures Program (STVP) in the School of Engineering at Stanford University invites you to visit its Entrepreneurship Corner (ECorner) web site. The site includes over 1,200 free, high-quality podcasts and video clips of entrepreneurial thought leaders from Silicon Valley and beyond. Recorded during guest lectures at Stanford University, the speakers offer important insights on all aspects of entrepreneurship. The content is great for classroom instruction, research, and general enrichment. Formerly called Educators Corner, the site has added many new, innovative features and has just launched under its new name. See the Creative Commons license under Terms of Use for guidelines. http://ecorner.stanford.edu.

Sustainability through Business Model Innovation in Education

Marvin Hall, from Kingston, Jamaica, Founder, Halls of Learning, Stanford Digital Vision Fellow, 2006-2007 has a passion for igniting the creativity in children, especially at-risk inner-city youth. His project at Stanford was Stimul-I about engaging kids through hands-on Robotics. After leaving Stanford, Marvin has continued his work in Jamaica and recently he writes about a program he has created "Lego Your Minds Jrs". He has created a model, I think, educators should seriously consider. Marvin writes:

"Being back in Jamaica the past year, I had to focus on rebuilding finances after the fellowship at Stanford but still explored the possibilities of how to expand our Lego programmes here. To that end, we were not able to get funding to take the team to the World Robotics Olympiad and I was forced to rethink my strategy....or better yet, come up with a business strategy for going forward. In March, I started a 3-month programme in the mornings at my son's school using the Motorized Simple Machines Set. The boys and girls responded very well to the activities and were excited to come to school earlier for those mornings. At the end of the term, the programme was mentioned at the school's closing ceremony and the class surprised me with an award for working with them.

In July, Halls of Learning launched "Lego Yuh Mind Jrs", a summer camp for children aged 4-11 years old. While most of our marketing was done through personal emails and spread virally, Jamaica's leading newspaper, The Gleaner, sponsored us with a series of print advertisements. We rented a large classroom and hosted the camp there. In one section of the room, we had the 4-5 year olds working with the Early Simple Machines Set III and in the other section, we had the older kids working with the Motorized Mechanisms Set. Over the 4 weeks of the camp, we had 114 participants. The cost to each participant was about US$100.

In August, I packed the summer camp materials into my car and we took it on tour to 5 at-risk communities. With that, the Lego Yuh Mind Jrs experience was delivered to another 65 children at no cost, as a part of our outreach. It made me realize that there is also a great opportunity to act as a service provider to the corporate and church foundations who have funded community centres in these neighbourhoods. They have the spaces, but there is a shortage of programmes.

There is good momentum to launch a "Lego Yuh Mind Jrs Club" that would be offered as an after-school activity. This will be our next move in the short term.

One of my biggest challenges is to find new activities for the Mechanisms and Early Simple Machines Sets and hence attract repeat customers from the summer camp who feel like they have built all the models already. I will also be ordering the Pneumatics Add-on set. I would eventually like to have my own headquarters to launch these programmes, but renting space will keep my overheads low in the short term.

Lego Yuh Mind Jrs was profitable, portable, mobile, and is scalable.
[Note: "Lego Yuh Mind Jrs" is derived from Jamaican dialect. "Lego" means 'let go' and "Yuh" means 'your'. So Lego Yuh Mind can mean 'let go your mind', 'free your mind' and to many of the children 'build your mind'. Our first robotics workshop in 2004 was called "Lego Yuh Mind", used Mindstorms with Robolab and was for older students. So Lego Yuh Mind Jrs distinguishes this brand for a younger audience and as the stage before robotics programming. The connection with LEGO goes without saying :) ]

Lego Yuh Mind Jrs inspired at least 100 happy parents and made another 100 curious. It is a great opportunity to build on and I can see our sustainability on the horizon."

Congratulations Marvin - great work.

How Can Decision Making Be Improved?

I recently published the second edition of my book "The Practice and Philosophy of Decision Making". Some of what I say in my book is based on a Negotiating Skills class I took from Prof. Max Bazerman when I was at Kellogg. So as I worked on the second edition, I was curious what he was up to and I found his HBR paper about decision making skills. In my book I talk about creating a personal framework to understand emotional biases - some a result of stone age "fight or flight" instincts that are inappropriate in today's society. The paper also talks about "how to reduce biased decision-making." From the summary page - key concepts include:
-People put great trust in their intuition. The past 50 years of decision-making research challenges that trust.
-A key task for psychologists is to identify how and in what decision-making situations people should try to move from intuitive, emotional thinking to more deliberative, logical thinking.
-The more that researchers understand the potentially harmful effects of some biased decision-making, the more important it is to have empirically tested strategies for reaching better decisions.

Leadership Skill for Social Entrepreneurs

The leadership definition I like is from Charlie Pellerin, former Dir Astrophysics at NASA: “Leadership is influencing people to do willingly, and do well, that which has to be done.”
Doesn't that sound like what social entrepreneurs have to do?

On August 2, I had the opportunity to moderate a professional development workshop hosted by IWE and sponsored by Fujitsu called "Cultivating Influence: How to Influence and Deliver Results". The tech-savvy panel covered a range of expertise - large corporation (Nina Bhatti - HP, Peggy Zagelow - IBM), triple-bottom-line startup Meemli (Usha Sekar) and entrepreneurship, intrapreneurship and MicroPlace (Ashwini Narayanan). The panel was followed by a interactive skills building experience session led by Improv artist Susan Snyder of BATS. Some highlights:

There is no right way, nor is there only one way to influence others. Everything is a factor when influencing people. And we are, all of us, influenced by organizations, actions, people, places, events and situations at all times. Sometimes we are affected more or less by these things, but we are continually being influenced by what happens around us. So what about the specifics in the workplace?
Your job requires you to influence people just about all of the time. It may take the form of gaining support, inspiring others, persuading other people to become your champions, engaging someone's imagination, creating relationships. Whatever form it takes, being an excellent influencer makes your job easier.

* think win-win - articulate the benefit for organisation, individual, group
* self-empowerment: be self-aware; take responsibility for managing the perception people have of you - e.g. stop acting "fresh-off-the-boat"; build your "new" sphere of influence
* manage your career; manage your boss - build trust but don't be a threat to him/her
* lead by involving others in problem solving by posing the problems and asking "how"
* Make coworkers feel positive, can do empowered (e.g. through use of positive attributes as nicknames)
* make it "their" idea
* Make an abstract concept personal
* Power of education -to make a change in a belief system provide education/information
* Reposition points of view - e.g. microfinance is not a "handout" but a "hand up"
* Compliance - make others to "feel good" like a superhero especially if doing something difficult/different for them
* Create websites/images to convey "higher purpose" to get alignment
* Negotiate the detail only after "shared goal" has been established first
* think positive and use positive language - ex. organisational understanding - vs. "politics"
* Do uncover the problems but always from a "what could be a solution" attitude without blame

An interesting point about people, who use their influencing skills well, is that other people like being around them. There's a kind of exciting buzz, or sense that things happen when they're around.

Check out Peggy's blog on the subject for a personal account of the workshop.