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 »
Less than 50 million people are employed in the formal economy. That’s less than 5 percent of India’s population. What this means is that most of the country operates in the informal economy and most are by definition ‘poor’.
When we speak of the formal economy, which accounts for almost all of our GDP, we often throw around terms like value creation, entrepreneurship and job creation and the like. But when it comes to the majority of India’s populace, we flip the paradigm to ‘income generation’ and ‘livelihood creation’ and use this interchangeably with micro-entrepreneurship, which it is not.
It may seem logical, that after all, poverty is the lack of income and most of India has little of that. So, it is best to rush out to generate some income to feed yourself. Except that it’s not.
The wealth of a … Read More »
It is important for organisations to continue to be valuable and saleable. To do so, companies need to tap into their network of partners and train together to stay ahead of the market.
When most of us think about the value of organisations, we are thinking about our revenues, customer base, products and distribution, maybe even our processes and access to capital. While these are good indicators of our accumulated value so far, they are not nearly as good indicators of their continuing value tomorrow. In today’s fast changing world where there are more unknowns than knowns, nothing is stable, and strategies often have to be quickly reconfigured to discard dead ends and take advantage of new opportunities. What determines whether an organization is poised to take advantage of the future? How does an organization ensure that it is fit for … 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 »
A college degree does not necessarily guarantee good skill sets useful in a work environment. To change that, companies and educational institutions need to work together to develop a curriculum to ensure a more productive workforce. Going one step further, industry professionals need to double up as faculty members – all possible in today’s digital world.
In a country with over a billion people and the largest young workforce in the world, you might think it should be easy for companies to find and recruit young people but it’s not. It’s quite the opposite. About a year or so ago, I was interviewing candidates for junior branch manager positions.
What does a finance company do? I asked them, what do you think is its main source of revenue?
Opening of accounts, said one. He was a high scoring commerce graduate.
Maintaining the systems and … Read More »
In a country like India, where over half the population scratches out a living in a manner that could be called ‘self-employed’, access to loans was going to be the magic bullet that was going to catapult them to greater economic gain. Microfinance for microentrepreneurs. Never mind that in the end most who borrowed never spent the money on a real business. What about those who did?
In any other realm of entrepreneurship, investors and lenders do extensive due diligence on past financial records and make laboured assessments of business plans and management teams. In the case of the microentrepreneur, every transaction is in cash, accounts are rarely recorded and there is hardly any reliable evidence available of their past success or data with which to assess their future potential. Furthermore, most ‘microenterprises’ are not profitable when you factor in … Read More »
Every company worries in some way about how to make people more productive. To do this, most companies normally focus on two things: training – building knowledge and skills, and technology. No doubt this does yield returns. However, there is something else, perhaps even more powerful, that is largely ignored.
Productivity is how much you produce or create within a given period of time. Therefore, it has an implicit rate component to it. This means how productive we are depends on how fast and how effectively we act. Our knowledge and skills certainly play into how effectively we act and technology can speed it all up. The other hidden component, however, is how fast and effectively information travels through an organisation every day. Information about who else is doing what, information on resources in the company and the larger ecosystem, information … 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
The numbers that describe India’s economy are mindboggling. Just one-tenth of the population participates in the formal economy. Of these, only about 35 million pay taxes. That’s less than 3%.
No wonder then that our economy produced a GDP of only $1.42 trillion at last count, about the same as that of the city of Tokyo which has a population of 35 million. There are simply too few producing value and wealth in India and so there is not enough to go around.
The financial inclusion agenda so far has been largely focused on redistribution of wealth while what is required is inclusion in the creation of wealth. Financial inclusion so far has meant debt distribution and nofrills bank accounts.
Microfinance has been one major channel of debt distribution to the poor. While the original assumption was that these loans were for investment … Read More »
Recent work has shown that large amplitude negative periods in the local field potential (nLFPs) are able to spread in saltatory manner across large distances in the cortex without distortion in their temporal structure forming ‘coherence potentials’. Here we analysed subdural electrocorticographic (ECoG) signals recorded at 59 sites in the sensorimotor cortex in the left hemisphere of a human subject performing a simple visuomotor task (fist clenching and foot dorsiflexion) to understand how coherence potentials arising in the recordings relate to sensorimotor behavior. In all behaviors we found a particular coherence potential (i.e. a cascade of a particular nLFP wave pattern) arose consistently across all trials with temporal specificity. During contrateral fist clenching, but not the foot dorsiflexion or ipsilateral fist clenching, the coherence potential most frequently originated in the hand representation area in the somatosensory cortex during the anticipation … Read More »
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
What we need are Masters in Enterprise Building (MEBs)
Ask MBA (Masters in Business Administration) students what they want to do after they graduate and the answer is usually a variant of ‘Get a good job’. A good job, they will explain to you, is a job with a good salary, good personal growth opportunities, good work environment and good facilities. Large multi-national corporations will top that list. At the recent IIM-A Confluence, Satish Pradhan, executive vice-president, Tata Group likened business school placements to the Pushkar Mela. wherecandidates, like camels, are dressed up, paraded and sold to the highest bidder. . A student countered that they were ‘trained’ to find jobs.
What’s wrong with that, you might ask. For a country, where less than 10 per cent is employed in the formal economy and where the college capacity extends to less than … Read More »
There is a certain romanticism that we all carry about rural living. For many of us it represents the simple life, a place where you go when you need to slow down and not do much. And it is precisely that. The world’s relentless march forward occurs in the cities. Almost three quarters of the world’s productive output, its GDP, comes from its cities. There are simple reasons for this. When we cluster closer together into large agglomerations it brings us close to resources and information. City living is more expensive because we are willing to pay more for the choice and opportunity that this results in. For the entrepreneur, it allows you to access the resources you need quickly and efficiently from legal to administrative to people and gives you rapid access to a larger market. For the job … Read More »
Many CEOs and HR folk will tell you that happy people make for more productive employees. In fact there are even studies that demonstrate that when you are happy you are more productive. Therefore, the reasoning goes, it is important for companies to make employees happy so that they will be productive. Some even go so far as to say employees first, customers second. An article in the recent issue of Outlook on happiness made me wonder if they haven’t got it all backwards.
The article reported on a survey of happiness among some 2000 people across India. In it they asked people questions about whether they were happy, what made them happy, and who they thought were the happiest people. What made people happiest was optimism about the future, followed by feeling fit and work success. Also, a sense of … Read More »