18th
Doing Something Different: Continuum uses innovation to solve growing microfinance crisis
“We’re here to try to do something different,” said Continuum’s Ed Milano, kicking off a panel discussion at the company’s Boston-area offices last Thursday to address a growing crisis within the field of microfinance. Milano, Vice President of Program Development at Continuum, set the stage with an apt quote from the de facto “father” of microfinance, Muhammad Yunus: “My greatest challenge has been to change the mindset of people. We see things the way our minds have instructed our eyes to see…Poverty in the world is an artificial creation…Poverty is unnecessary.”
A proven tool for fighting poverty on a large scale, microfinance provides very small loans to people, mostly women, to start or expand small, self-sufficient businesses. In fact, 155 million of the world’s poorest people have received a microfinance loan—giving them the opportunity to transform their lives. But as these organizations face meteoric growth, managerial operations needed to effectively scale these institutions are suffering. Industry leaders claim that finding a solution to this “talent gap” is critical to the future of the field.
Continuum, in collaboration with a remarkable team, has just begun work on a project to solve this social challenge. The project’s goal is to create an innovative leadership development solution for middle managers, and, in essence, groom the next generation of leaders in these crucial organizations. The team includes Continuum Social Innovation Principal Anna Muoio; Peg Ross, director of the Human Capital Center at The Grameen Foundation; Lynn Pikholz, President of the microfinance development company ShoreCap Exchange; and Lyndon Rego, Director of Innovation at The Center for Creative Leadership, an international leadership education and research firm. “This is a burly problem,” says Muoio, “and we need the power of all these different disciplines and expertise—from microfinance to leadership development to organizational effectiveness and innovation—to solve it.”
Over the last decade, microfinance has experienced explosive growth, with local banks expanding anywhere from 50 to 100 percent year-over-year to serve the needs of their clients. “But because of this enormous growth,” says Pikholz, “resources are stretched, staff isn’t adequately trained, and there’s no methodology in place for managing, grooming, and attracting talent.” For example, one microfinance bank in India has hired close to 1,000 loan officers and branch managers this year alone. The branch mangers, for instance, are largely in their mid-twenties with little experience in managing hundreds of employees, significant loan portfolios, and “non-textbook” situations, such as a local government officials urging people to default on their loan repayments or the death of a loan officer in the field. To put things in context: A comparable job in a city at a traditional bank would require seven to eight years of experience. “Microfinance institutions can’t reach their mission without help,” says Rego.
During the discussion, the team opened up the conversation to guests, who included individuals from the microfinance and financial service sector as well as graduate students from Harvard, Tufts, and Boston College. They helped to imagine what the solution would look like. All agreed that a trail-blazing mentality is needed to get the job done.
Although the project is still in its infancy, Grameen’s Peg Ross has already felt that working with Continuum has been eye opening. “This company has introduced me to a whole new way of finding a solution,” says Ross. “And with the work that the team will do on this project, they will effectively train the next generation of leaders.”
Click here to read “No Footsteps to Follow: The talent gap in the development finance sector in India,” field notes from the team’s initial trip to India in the fall of 2009.
