Sadna Samaranayake

How would Muhammad Yunus Redesign Microcredit? How Can We Better Design Models for Social Change?

This week, I had the rare opportunity to ask Dr. Muhammad Yunus, Nobel Peace Prize Winner and founder of the Grameen Bank, what he would do differently if he could rewind the clock 30 years and “re-design” microcredit. Given the past year of controversies in microcredit, (covered here) and the forum where we met – Change Model, a workshop on innovating development approaches – it seemed appropriate to ask the father of microcredit how the sector could have been engineered differently, with hindsight. His resolute response: “I would not let the profit-makers be part of the movement. We didn’t screen right from the very beginning. We let them grow with it and they became very aggressive.”

It’s a sentiment echoed in his opinion piece in the NY Times earlier this year, where he writes, “The community needs to reaffirm the original definition of microcredit, abandon commercialization and turn back to serving the poor.” He went on to share that he believed clearer distinction from the get-go about the social goals of microcredit – and more explicit articulation of microcredit as an avenue for poverty alleviation, as opposed to commercial gain – might have precluded some of the more commercial (and ultimately controversial) players from self-identifying with the movement.

When I asked Dr. Yunus whether he thought microfinance would have scaled as widely as it did without commercial interests, he said: “I believe so – we would have found other ways to solve this problem.” He elaborated that other structures better suited to a purer pursuit of social returns would have evolved, carrying concept, execution and momentum forward. “We have to sort it out- we have to figure out who is genuinely doing this work and make it very clear to everybody,” Yunus added.

Despite the benefit of hindsight we will never know if a clearer, or different, articulation of the social mandate of microcredit would have produced a different set of players, with similar wide-scale impact and adoption of microcredit and microfinance.

Action Framing/Designing for Success

While definitive answers elude us, it’s a fascinating question to consider … Could a design reframe of microcredit – a definitional shift earlier on in its evolution – have produced a much different reality in the field today? My exchange with Yunus merely touches on the complexities at the intersection of design and development – the subject of a two-day conference hosted by New York University’s Interactive Telecommunications Program (ITP) and Grameen Creative Lab. A gathering of social entrepreneurs, practitioners, economists, technologists, design specialists and students convened to explore definitional aspirations of change and new models for development. Groups of participants collaborated to develop concrete social business models, based on Yunus’s Seven Principles of Social Business. The resulting concepts were ultimately critiqued by Yunus himself.

The event kicked off with the premise that today’s large scale development problems cannot be addressed through siloed approaches. Change Model organizer and ITP Professor Despina Papadopoulos whose work focuses on creating shared frameworks and strategies for collaboration, thinks convening an interdisciplinary group of people passionate about social enterprise is a good place to start. The workshop addressed how practitioners can better design and frame their efforts to produce successful outcomes. Bill Moggridge, co- founder of IDEO and director of the Cooper-Hewitt Museum shared design principles for social change including; participatory design with client communities, use of hybrid models, utilizing existing and under-leveraged resources in the community, and capacity building as a key driver of success. Grameen Bank’s early attention to a combination of these principles and strategies, now largely accepted as vital to the success of BoP enterprises and approaches, speaks to how far ahead of the curve they were at the outset.

Action Informed with Technology and Data

Catalyzed by the Internet, and catapulted by a follow-on revolution in mobile technology and infrastructure, today’s new data and technology realities offer opportunities unimaginable when Yunus made his first microloan. Yunus himself marvels at the possibilities offered through technology and encouraged conference participants to consider technological innovation in social enterprise design. We heard from several cutting edge initiatives at the forefront of these exciting possibilities. Among them, UN Global Pulse, an innovation initiative in the Executive Office of the UN Secretary-General, attempting to track and harness the “new world of data to gain a real-time understanding of changes in human well-being.”

“By the time we have hard evidence of a crisis, the harm has been done,” Global Pulse Director Robert Kirkpatrick explained.

Global Pulse attempts to make sense of what he refers to as “digital smoke signals” to forecast and gain real time information on global crises. Among its innovative projects is an initiative called HunchWorks, intended to be a social media platform where individuals can post their hypotheses – or hunches – complete with photos, insights, and analysis. As envisioned, HunchWorks would harness the best of innovations in social media to effectively “crowd-source” evidence and perspectives – allowing trends that might help avert or forecast global crises to be noticed before empirical data is available. These types of innovations in technology and information foretell of tremendous potential for innovating new models for change.

I left the workshop with more questions than answers, a sign of thoughtful framing, design and planning on the part of the organizers. NYU ITP and Grameen Creative Labs did a wonderful job stimulating thought, perspectives and questions around innovating models for social change. Check here for updates on the workshop. We invite you to comment here to keep the dialogue moving forward. Here are a few burning questions to get you started:

On Microcredit:

Could all manner of mission clarity and vigilance on the part of the microcredit movement have kept commercial interests (or at least those at the center of recent controversies) at bay? Would we be discussing microcredit, were it not for its commercialization? Could a new category of ventures, more given to social returns have resulted under different circumstances?

On Innovation for Social Change:

Is a tradeoff between social and financial value creation (where social goals take second place) a foregone conclusion for BoP initiatives that reach scale? Similarly, is straying from original “design” a foregone conclusion, by virtue of the fact that we now recognize a need for diverse perspectives and collaborative approaches? We accept that it is critical to align incentives among an ecosystem of players – but who out there has gotten this balance right? If scale in this sector is synonymous with inviting market forces – both positive and negative – can negative externalities be out-designed? Are all implementation failures ultimately design failures? And how do we design for change when the change we seek is a moving target? Please let us know what you think.

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