For the last four years we have been studying entrepreneurs in low income, low technology rural ecosystems in India to understand what describes them and drives them. We’re wondering how they compare to aspiring entrepreneurs at the other end of the spectrum. If you are an aspiring entrepreneur or even are an entrepreneur already, please do help us by filling out the survey below. The survey is completely anonymous and while aggregate results will be shared, even anonymous individual profiles will be maintained completely confidential.
Aspiring Entrepreneur Survey
One of the very first steps of successful entrepreneurship, in any context, micro or macro, is to envision new possibility. Possibility of something that has not yet been created; something that adds a new dimension or element to the status quo; and every so often, something fundamentally different that topples an old paradigm and ushers in a whole new era of capability.
This requires a trick of the human mind to span multiple timescales at once. To stand in the present, reach into the past to access one’s accumulated knowledge and experience, and churn this into something that looks beyond to the future. This is perhaps one of the most remarkable feats that distinguish human beings from other species. To imagine a new context and future is certainly not sufficient to guarantee its realization, but without it the … Read More »
The art and science of building a collectively intelligent team
Several years ago we had hired an HR consulting firm to help us assess our senior managers. Through a series of competency mapping exercises they were going to tell us who could be tasked with greater responsibility, who would have to go and what skill gaps we might fill by training. They had devised a set of exercises among which was a group problem solving task. In the group task they each assigned themselves one participant to observe, and made notes on the person’s participation and contributions. I sat in as an observer in one of the group exercises, not tracking any one person in particular.
Among the group was a manager whose assessment so far had been on the brink. Communication skills were below average, logical and quantitative … Read More »
Microfinance is about small loans to those with low income in the informal economy. These three factors pose three unique challenges. The small loan size means a different kind of economics and business model from mainstream banking with distinct processes and cost-efficiencies, since the income per loan is particularly low. That the borrowers have low income means the risks are large; small shocks in the family or larger system can have devastating impact on a borrower’s means to repay. And finally, lending to the informal economy presents a different set of challenges in that there is no documentation to verify assets, occupation, income or anything about the person.
The microfinance industry is still grappling with these challenges, learning many of the lessons the hard way. With lending rates now limited to 26 percent under the new regulation, gone are the days … Read More »
Between 2005 and 2010 the microfinance industry saw a spectacular growth trajectory of almost 80 per cent a year, taking it to almost Rs. 25,000 Crore and making it one of the fastest growing industries in India. In October 200, a crisis led by an ordinance in Andhra Pradesh, where much of the lending was concentrated, limited collection methods and resulted in a dramatic drop in repayments. Now, one year later, media reports indicate that the industry has shrunk by 40 per cent. Microfinance is now in dire need of reinvention to emerge as a stable and responsible industry with a strong value proposition for the financial inclusion agenda.
Read the full article in The Hindu Survey of Indian Industry 2012
In the 1980s and early 90s lending to the poor was considered a losing proposition in the banking sector. In the mid 1990s, the problem that microfinanciers stepped in to solve, was to find a way to make credit available to the poor on large scale in a viable way. This meant finding effective ways of delivering credit to people with no collateral to offer and mechanisms to ensure repayment. On these counts the industry has had some fair success and some failures.
Read the complete article in the Indian Management Journal
In 1989 as a 17 year old college student I had a childish view of what it took to get by in the world. Foolishly, I thought that $150 (7,500 Rs.) was sufficient to spend a month in Greece (it was my own hard earned money and seemed a lot to me at the time). $150, I found out, is not a lot of money. It worked out to about $5 a day. In purchasing power parity terms it was somewhere below $2 a day in an India. What followed was hardly a sightseeing tour but an exercise in subsistence living. For $1 there were hostels that would let you roll out your sleeping bag on their roof. If it rained they would accommodate you in the corridors by the bathrooms. In Athens I could not afford the entrance fee … Read More »
A couple weeks ago my newly married maid came asking me for a loan to pay the rental deposit on her flat. I knew she had saved up much more than the amount she needed so I asked her what she had done with the money. She told me she had bought gold jewellery with it.
With all of it? I asked her. Why did you do that when you knew full well you had this expense coming up?
I had to she said, without gold they won’t let you get married.
Who is ‘they’? I inquired.
Everyone, she told me. All my relatives in my village
At the time I told her she was foolish. Now I’m not so sure.
Back in the old days money used to be linked to something of physical utility – typically gold. For every note issued, the government … Read More »
****This survey is now closed******
We have some interesting results that will be officially announced in a ten days or so and not on the 15th as previously promised.
Think you know what rural India is really like? We are doing a short quiz to understand your perception of rural India and to get some information about your ecosystem that we will use as comparison. The survey will take you about 2 minutes and we will post the results next week along with what the real numbers look like.
Take the quiz!*
Please do take 2 minutes to participate!
*For folks outside of India – ‘Petrol Bunk’ is India speak for ‘Gas Station’.
There is this strange sense of duality that India seems to bring upon you. On one hand there is this feeling of being on the cusp of something extraordinary. The giddy experience of watching something once so far removed from the developed world morph so rapidly and palpably into a modern society. The sense of possibility, the sense that something big is about to happen is now regular dinner party conversation.
The journey of one generation to the next has been so fast that parents often have little context for the lives of their children. Particularly for the lives of the children who have been abroad and returned speaking, dressing and acting differently. This new India is English speaking, moves easily from one city to another, sometimes one country to another. It is hyperconnected and watches all the same TV shows … Read More »
When tackling any sort of problem, it matters immensely how you frame it. The construct and language you use to describe the problem will inevitably direct and guide how you formulate solutions. Let’s take a look at the economic topography of the world – there are places where a great deal of innovative products and services are created that many have access to and other places where much less is created and fewer people have access to the little there is. The medium of exchange for these goods and services being money, the issue of this global inequity among human beings has been constructed in the context of money. It has been framed as an issue of ‘poverty’, the lack of money and therefore the ability to acquire. With this framework lack of money becomes the central issue and we … Read More »
Back in 1996 when I was in business school we used to sit around and make fun of our organizational behaviour classes. Soft stuff. Not hard core like finance. Now I know better. Finance is the easy stuff. Organizational behaviour on the other hand is complex and can profoundly change socital outcomes.
So what is organizational behaviour about? If you really think about it, it’s about how human beings come together to share their knowledge and abilities to create, build and get things done. And why should we do this? Because when it is done well, the outcome can be far greater than the sum of the parts.
Paradigms of progress are exemplified by large scale organization. In the United States and most European countries, for instance, somewhere between 5 and 10% of working adults are entrepreneurs. In India it is almost … Read More »
Over the last ten years, with the publishing of CK Prahalad’s book The Fortune at the Bottom of the Pyramid and with inclusion gaining ground as a national buzz word, companies have been looking in larger numbers at rural markets for all sorts of products. Yet for every success in rural India, the marketplace is littered with many, many failures. What has been the problem?
From my vantage point inside a company that operates predominantly in villages, I have a first-hand view. Not a week goes by when we are not introduced to a company with a product opportunity that they would like us to help them market in rural areas. It is an innovative product they tell us, specifically designed to solve a problem, meet an urgent need. And it is affordable. Shouldn’t that be enough? People from the villages … Read More »
According to the microfinance calendar, the last ten years were the decade of the cow. We celebrated the cow as the path out of poverty. At Madura we even benchmarked the loan amount to the cost of a cow. What good is a loan if it’s not even enough to buy a cow? And so over the last decade the microfinance industry has supported the purchase of millions of cows across the country. Millions of scrawny cows with poor yield it turns out; a hallmark of the inefficiency of microenterprise. I for one am glad to be past the decade of the cow and am excited and hopeful that this decade we will do away with celebrating cows – and pigs and goats and chickens and antiquated sewing machines and cottage industries – and celebrate instead the human being and … Read More »
I am now writing a weekly column for YourStory (www.yourstory.in), also called Physics of Poverty that will post every Monday. Some things taken from what I have already written here but also some new stuff. I will start posting the column here as well. Here is the first post that appeared last week.
What is the question?
Physics of Poverty series by Dr. Tara Thiagarajan, chairperson, Madura Microfinance Ltd.
Alright, I’ll come right out and say it. Microfinance has done very little to alleviate poverty. Practically speaking, even after five loan cycles, virtually all of our borrowers are still poor—poor enough to be eligible for yet another microfinance loan.
The premise of microfinance has been that giving poor people a loan is all they need in order to get out of poverty. This presumes that simply giving someone money will first turn them into … Read More »