I was in my second year of business school during the nadir of the financial crisis—the brief period during which Lehman failed, Merrill Lynch and Bear Stearns were purchased, and AIG tottered on the edge of destruction.  I just happened to be taking a class on financial markets and institutions that semester, so my classmates and I had the unique opportunity to dissect the mind-boggling events as they occurred.  Unfortunately for me, that was my first foray into this type of material, so I often found myself a bit lost.

Then one evening, during a dinner with one of my professors (who just happened to be thought leader in the area of base of the pyramid business development and sustainability), something clicked.  He was talking about how the financial crisis would force a change in “business as usual” for the average banker.  If the commentary of Greg Smith, the Goldman Sachs VP who very publicly told his employer to “take this job and shove it”, is at all indicative, this sea change is yet to be seen.  However, my professor’s words inspired a mini “aha” moment for me.  Why couldn’t I couch what was happening in the in financial markets class in terms of my focus on sustainable global enterprise, and create a framework for understanding both?

Long story short, that was what I resolved to do as part of an independent study.  I was rather proud of what I produced (given my struggle to master the financial markets material), but no one saw it except for my adviser and a few close friends.  But today, because my mind is on sustainability, I have decided to post what I wrote nearly four years ago.  So, here it is: my amateur thoughts on economics and sustainability.  A lot has happened in the world since I wrote this, and my understanding is probably less than sophisticated, but enjoy nonetheless!

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Posted by: Tayo Akinyemi | March 20, 2012

Bridging the Capital Gap in Impact Investing

It’s not unusual to hear two complaints with respect to impact investing: 1) there are too few investible deals; and 2) investors are reluctant to assume risk.  From what I can tell, potential solutions tend to focus on bringing investees up to speed through capacity-building.  Perhaps there is a need for more intermediaries—accelerators, for example—to serve that purpose.

However, I also wonder if it’s possible to work the other way ’round.  That is, to help impact investors evaluate potential companies, social enterprises, and nonprofits in ways that fit these organizations and how they operate.  Dr. Harish Hande of SELCO puts it this way:

[I’ve] yet to see a VC who puts money in companies started by non-English speaking entrepreneurs because of the ‘Excel sheet mindset’. “VCs are looking at entrepreneurs who know to make Excel financials and Powerpoint presentations. Thousands are left out of the ecosystem”.

Maybe the problem isn’t just the dearth of appropriate deals.  Maybe there’s also room to think more creatively about how to evaluate investment opportunities.  While this is might be happening already among impact investors—the Acumen Funds and Omidyars of the world, it’s hard to see from the outside looking in.  Even so, why not seek additional solutions?  For example, the Entrepreneurial Finance Lab has created psychometric tools designed to assess an entrepreneur’s potential to be successful, effectively reducing the cost of due diligence and the risk associated with early stage investments in emerging markets.

Of course, there are no easy answers.  There never are.  It seems to me that “crossing the chasm” would be an easier task if the bridge-building started on either side and met in the middle.

Posted by: Tayo Akinyemi | February 28, 2012

Success, Failure and the Lean Startup as a Metaphor for Life

I just finished listening to an interview with Dr. Heidi Grant Halvorson on GPS Your Career: A Woman’s Guide to Success, in which she discusses practical, evidence-based strategies for success.  What really caught my attention is her assertion that while it’s useful to visualize a desired future state, it’s equally, if not more important, to consider the challenges one is likely to encounter and implement a plan of action to address them.  She also suggested, and this is critical, that success isn’t a function of “who you are,” but “what you do.”

Perhaps not surprisingly, this reminded me of Adapt: Why Success Always Starts with Failure, a book I’d finished yesterday. (Adapt was written by Tim Harford, also known as the “undercover economist.”)  Through highly-engaging vignettes, Harford asserts that success is really a function of trial and error.  You have to try a lot of different things, do it in such a way that failure isn’t fatal, and use feedback to learn from your mistakes, i.e. what works and what doesn’t.  Harford refers to these principles as variation, survivability, and selection.  Pretty clever, eh?  Anyway, this chain of ideas makes me think that success in life (however you choose to define it) is really about two things: 1) trial and error; and 2) the method you use to engage in it.

That mini insight is what brought me back to The Lean Startup and why I like it so much.  Initially, I was enamored with the idea of applying  a thoughtful, disciplined process to an activity that seemed best-suited to gamblers and/or charismatic super-leaders.  The idea of creating order from chaos, especially given the cache (let’s call it the “badge of bad-assery”) that was associated with it, is compelling.  But now I realize that for me, it’s about recognizing that entrepreneurship is an activity, not a character trait.  It’s empowering to think that entrepreneurship can be “figured out,” albeit in a systematic way, by ordinary folks who are willing to jump in the deep end with the intention of learning to swim (quickly and well).

Does this mean that there aren’t discernible characteristics of successful people?  I think not.  But it does offer hope to those of us who are “figuring it out,” that our efforts do mean something.

Posted by: Tayo Akinyemi | February 3, 2012

What Works When You’re Measuring What Works

I’m always happy when I read a piece that “flips the top” in order to examine easy assumptions. Matthew Forti’s article “Ensuring that Scaling What Works Actually Works”, posted at the Stanford Social Innovation Review and on Bridgespan Group’s blog does exactly that. What really resonates with me is his emphasis on understanding the complexities underlying a model’s success.

Most evaluation studies devote little, if any, attention to underlying organizational factors (such as culture and leader characteristics) and contextual factors (such as regulatory climate and the presence of high-capacity partners) that play a role in the model’s success. In the absence of understanding the conditions under which a model worked, organizations or funders often require replicators to follow the original model with full fidelity, potentially precluding important adaptations and improvements that could increase the odds of success.

To his point, if you don’t fully understand why something worked the first time, you’re unlikely to reproduce the initial results.  Perhaps more importantly, as was noted by a commenter, there’s no “one size fits all” approach to measurement.  Nonetheless, two key principles remain fundamental: 1) know what you’re measuring and state it explicitly; and 2) ensure that your measurement approach is appropriate for the scenario you’re operating in.

Easier said than done.

Posted by: Tayo Akinyemi | January 27, 2012

The Danger of “One and Done” When Investing for Impact

Do you get the impression that investors only fund one “sector  representative” at a time?  I’m not an investor or a social entrepreneur, so I have no first hand knowledge of this.  But two unrelated conversations with—you guessed it—an investor and a social entrepreneur made me wonder. The social enterprise had developed a great product, but struggled to raise money, perhaps because there were already well-regarded (and well-funded) peers in its sector. In contrast, the funder expressed frustration at the lack of collaboration between nonprofits and social enterprises operating in the same space.  From her perspective, redundancy was an issue. While I understand both sides, the “one and done” approach, if it exists, may be problematic.

Really, it gets to the heart of what motivates impact investors.  Do they invest in the (perceived best) solution to a problem, or the best mechanism to discover the solution?  In the first scenario, the investor assumes that she has (or may have) a viable answer and devotes her efforts to supporting that answer.  In the second, the investor gets behind a superior problem-solving approach and a working hypothesis, subject to further testing and experimentation.  (You can probably tell that I’ve been reading The Lean Startup by Eric Ries.)

Why does this matter?  Because if investors bankroll “the best possible solution”, the focus may be making that particular solution work. From an investment management perspective, this could reduce tolerance for pivots.  From a portfolio management perspective, diversifying with other, presumably less promising  investments looks a bit foolish. However, if investors support “the best working hypothesis” + “the best discovery mechanism”, there is room for several players in the same sector.  In fact, what you have is multiple experiments running simultaneously that provide lots and lots of problem-solving information.  If the goal is in fact solving the problem, this approach makes intuitive sense.

Perhaps the state (and utility) of collaboration across the impact investing industry is something else to consider.  “One and done” may make sense in the context of a single institution, for a variety of reasons.  But it doesn’t across the investing spectrum.  The industry as a whole would be better off exploring multiple solutions at the same time.  However, this sort of approach would either require lots of luck or lots of coordination.  Both seem like wishful thinking at this point. In any case, if coordination is as absent among impact investors as it is among social entrepreneurs, it may be more, not less likely for similar projects to get funded.  Or not.  It does seem a bit nonsensical to think there is only one winner per category in the real world though.  Sigh… Perhaps I should refocus my energy on deciding what movie to rent from redbox.

Sigh…Just another entry under “Things that make you go Hmmm…..”

Posted by: Tayo Akinyemi | January 20, 2012

Chia Seeds for Fair Trade?

Baltimore Ravens running back Ray Rice consumes chia seeds for whole food energy.  So says the Wall Street Journal. Frankly, I clicked the link because I was curious. I’d purchased chia-laced kombucha from Whole Foods, but knew next to nothing about the seeds.  But it was this paragraph that caught my attention.

Skip Hammock and Dean Mosca, who work for Pharmachem, found out about the seeds at a conference in Baltimore in 2007 and began looking for places where they’re grown. They eventually agreed to purchase millions of pounds of the seeds from a cooperative of Bolivian farmers.

Now that, I like.  Shea, coffee, jatropha, and chia.  Let’s hope those farmers are profiting from the “super food” (Thanks, WSJ) craze.

Warby Parker is an eye wear company that sells prescription glasses for $95 each.  Impossible?  Hardly.  In a strategy designed to cut out the middle men—a handful of companies that control the design, manufacture, distribution, and insurance of prescription eye wear—they design, manufacture, and sell their eye wear online.   Check out Co-Founder Dave Gilboa breaking it down at Fast Company.  What’s more, Warby Parker has adopted the BOGO model (buy one, give one) pioneered by TOMS, which enables them to distribute a pair of glasses to someone in need for each pair sold.  Warby Parker donates glasses to VisionSpring, which trains “vision entrepreneurs” in developing countries to identify presbyopia, and fit its sufferers with low-cost reading glasses.  (You can watch Dave and another Co-Founder, Neil Blumenthal, explain the motivation behind the business model as part of the Smart Entrepreneur series.)

Here’s the thing.  From what I understand, Neil learned the ins and outs of the eye wear industry during the five years he spent at VisionSpring.  Neil talks about  that with Mitch Baranowski in BBMG’s The Green Room.  (Watch from 4:05 to 4:21.)  That’s when he discovered that glasses are sold at a steep mark-up because a small group of companies control the value chain.  For example, Luxottica Group basically corners the frame market by licensing 20 retail brands, manufacturing the glasses, and selling them at a 10-20x mark-up.  They own optical outlets— Lenscrafters and Pearle Vision, eye wear only retailers—Ray-Ban and Oliver People, and even the second-largest vision insurance provider in the country.

Is this an isolated incident?  Or are there other social enterprises/nonprofits that have discovered supply chain inefficiencies that can be exploited by disruptive start-ups?  If it’s the latter, then it weakens the questionable assumption that innovation mostly flows from the private sector to the “public” sector.  (Granted, VisionSpring is a social enterprise with an inclusive business model; the lines are clearly blurred.)  Perhaps this might cast a new light on the prescribed role of nonprofits.  Community service provider?  Check.  Honest broker?  Double-check.  Bastion of (social) business model innovation?  Hmm….

First off, I’ll admit that I saw the buzz about Gene Marks’ piece in Forbes, If I Were a Poor Black Kid in the Twitterverse before today.  I ignored it because I could tell from the title that it would be controversial and difficult.  And I wasn’t in the mood for controversial and difficult.  But the article found its way back into my feed, as these things often do.  My initial reaction was mostly disbelief…and surprise.  However, the real fun began when I started to read the comments.  Hundreds of impassioned, articulate people, many of them former poor kids (black, white and otherwise) tore into this man’s premise, assumptions, and conclusions with a vengeance I haven’t experienced in awhile.  Although I encourage you to read the comments yourself—they are well worth the effort—many of them centered on two simple ideas.  First, Mr. Marks is a middle-aged, middle-class white man.  In other words, he is not and never will be, a poor black kid.  This seems obvious.  Secondly, as a middle-aged, middle-class white man (and this is an implication of the first statement), Mr. Marks will never be able to completely understand what it is like to be a poor black kid.  This also seems fairly obvious.

The problem is that we, as human beings, hypothesize about what we would do in other people’s shoes all the time.  When it’s done well it’s called empathy.  When it’s not, it’s called hubris…at best.  Ta-Nahesi Coates at the Atlantic does a masterful job of describing the latter phenomenon in his response, A Muscular Empathy. Terrific read.  As Coates points out, there is a tendency to assume that we’d be and do better than the people to whom we’re trying to relate.  Why?  Well, in Mr. Marks’ case it seems as if he wrote from the perspective of a poor black kid while retaining his identity as a privileged white man.  I don’t know if this was intentional or not, but empathy doesn’t work that way.  You actually have to take off your loafers and put on the moccasins, which brings me to my point about development.

Many solutions to tough problems probably start with a hypothesis similar to the one Marks created.  Here’s one.  “If I were a rural farmer in Mali, I would invest in hybrid seeds to improve my annual yield.”   These statements are easy to make because we can imagine what we’d want if we were rural farmers.  Except we’re not.  Of course, there are lots of tools in development to avoid this type of thinking, and they’re improving all the time.  For example, Abhijit Banerjee and Esther Duflo’s work on randomized control trials, which I’ve blogged about before, goes a long way toward testing these sorts of hypotheses.  Design thinking, and other approaches that emphasize “human-centeredness”, co-creation, and community ownership also contribute mightily to this effort.  However, it’s all too simple to think “If I Were…” without actually doing the hard work—trading your set of experiences, expectations, assumptions, hopes, desires and needs for someone else’s.  So instead of pontificating about the hypothetical, get out there and experience the reality, as many of Marks’ readers suggest that he do.  If nothing else, you’re much less likely to piss people off.

*This piece was inspired by a friend and fellow Cornell alum with whom I recently reconnected.  Inspiration finds you at unexpected times in unexpected places.

At the risk of jumping onto the proverbial bandwagon, I feel compelled to comment on the unfortunate events surrounding the work of Greg Mortensen, his NGO, the Central Asia Institute (CAI), and his best-selling book Three Cups of Tea.  Two days ago I wrote about the power of personal story-telling and the need to believe the most “realistically optimistic” version of a narrative in order to affirm and empower ourselves.

Well, apparently this approach doesn’t necessarily translate at the institutional level.  As Heather Esper of NextBillion points out, “narratives are not enough” when the goal is to ensure accountability and transparency.  She rightly emphasizes the need to collect data as a way to demonstrate impact.  Perhaps more importantly, she highlights the growing realization that a framework for openly discussing failure is necessary, particularly as a way to learn and improve.

I don’t know what stories Mr. Mortenson told himself about his work, and don’t aim to guess.  However, for better or worse, the stories he told others are well-documented.  What’s pretty clear is that if you’re a public figure, your personal and public stories have to match up.  I suspect that this is much harder than it sounds.  The nature of (social) entrepreneurship requires that the problem-solver literally bend reality Matrix-style to match his or her version of the truth, i.e. how things should be in a better version of the world.  In order to do this, said entrepreneur better be a skilled story-teller.  Firstly, she has to believe with all the restless fibers of her being that what she wants to achieve is possible.  Secondly, she has to convince a whole crowd of skeptical others.  The challenge is maintaining a healthy balance between vision and reality.  That’s where data, an active board, and members of the community come in.

Nonetheless, I imagine that one’s self-esteem as a social entrepreneur can become intertwined with the (perceived) success of the venture.  In some cases, there is a great deal of external validation to be had in the life of a “social sector celebrity”.  From prestigious awards and fellowships to elevated social media status, the stock of the heroic founder can rise quite dramatically.  Unfortunately, sometimes this happens on the strength of the story rather than the work itself.  Of course, it’s the personal tales that captivate us the most.  That’s certainly the case with Mortensen.  And why shouldn’t they?  The compelling ones have surely inspired a generation of change-makers.  However, as participants in the narrative we need to be committed enough to stick with the plot, and  see what happens in the end  Indeed, this is why Desiree Adaway’s post on “founder’s fatigue” is so timely.  In her very appropriate words:

I am done with the founder that becomes the star, the hero, the savior.  …The founder whose reputation, brand, charisma and personality are so bound with the organization that they are one. I am tired of organizations, companies and products with big stories but no substance.  All narrative with no data just leaves me wanting,  disillusioned and hurt.

 An organization is never about one person, one story, one voice. The work is richer and deeper than that.  We like to simplify it for mass consumption and in doing that we have created a system which encourages and rewards easy answers to complex situations.

All of that said, I’m with Nicholas Kristof in his call to “reserve judgment” for the time being.  The truth about Mortensen’s apparent misdeeds—exaggerating the tale of his Taliban kidnapping, mismanaging CAI funds, claiming credit for schools he didn’t build or are currently unused— is probably fairly nuanced.  It probably lies somewhere between the absent-minded, well-intentioned “disorganization” that Kristof and Mortenson himself cite, and the outright fraud that former supporter Jon Krakauer attributes to him.  (See this exclusive interview conducted  by Alex Heard of OutsideOnline for Mortenson’s take on his management struggles.)  Perhaps that’s not surprising given the nature of the “truth”; it’s usually much more complex and much less subjective that we’d prefer.  Perhaps that’s why this impact assessment stuff is so darn thorny.

In any case, it’s not my aim to accuse Mortensen of anything further, or to speculate about what caused this situation to explode.  His story simply made me think about the nature of this type of work, and what roles we play for ourselves and others.  At minimum, I think it’s important to ask yourself, as often as you can, whose story you’re telling (or selling) and why.

Posted by: Tayo Akinyemi | April 19, 2011

Storytelling and the Link to Personal Impact

If you read a lot, there are times when you “hear” the same message from multiple sources.  That’s when it’s time to pay attention.  This happened to me with a seemingly innocuous topic–storytelling.  First, I watched Peter Guber’s take on the importance of storytelling in a corporate setting via the BigThink.  Then I read two stellar posts by Sasha Dichter about having enough confidence to keep pace with one’s personal and professional evolution and not deciding what you can’t do without giving yourself a chance.  Finally, I found (and shared) Tony Schwartz’s instructive blog on how to re-wire yourself for optimism.

My primary take-away from all of this is that we spend a lot of time telling ourselves things that simply aren’t true.   We talk about our limitations, weaknesses, and tendencies as if they were presented to us on stone tablets.  More often than not, we use personal labels, e.g.  introvert, extrovert, poet, numbers-jockey, etc. to excuse ourselves from situations that will push and challenge us.

Why is this a problem?  Because I’m pretty sure that many of you who do this are still pretty successful.  The problem is that we rob ourselves of opportunities to do so much more, without meaning to.  As Sasha puts it, “[if we] slam doors before we’ve ever tried to walk through them…then we have no one to blame but ourselves when our path forward isn’t what we’d hoped it would be.”

For those of us who are committed to living impactful lives, this is an unacceptable conclusion, point-blank, period.

So the next time you’re tempted to tell a negative story about your ability, don’t.   You’re doing yourself and the people you serve (who, incidentally, kinda need you to be at your best),  a disservice.  Plus, as one of Tony’s commenters rightly pointed out,  “When the truth is unknowable, believe the flattering outcome. You will turn to more useful actions as a result.”

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