Parallels in Microfinance and Corporate America

By Alex Duong, KF9, Vietnam

A recent interview with John Hagel of my employer Deloitte sparked the idea for this blog entry (article here).  According to Hagel, the US market is maturing to the point where solely focusing on product and process innovation have decreasing marginal returns.  A good example is Microsoft Office or the iPod.  At first, new products came out every 4-5 years.  Now it seems the product line must be refreshed every 2-3 years.  So what could serving the poor have in common with profit oriented businesses?  It turns out there are plenty of parallels.

A few staff members of my MFI, TYM Fund

For developed markets, Hagel advocates creating work environments that allow for greater communication and interaction.  The innovation will take care of itself if everyone feels involved and can collaborate in the process.  Developing countries, on the other hand, are right on the heels of mature markets.  While mature markets work to achieve the next latest and greatest, developing countries are looking to gain economies of scale.  Both, however, are earmarking expansion.  It is my personal belief that there is no sense in charging ahead if others aren’t there beside you to enjoy the achievements.  This is why passing on lessons learned is critical.  Players like Kiva provide valuable assets including Kiva fellows and capital to assist developing countries.

Discussing expansion plans over lunch

Similar to US companies hoping for annual growth, Kiva partners look to become self-sustainable. Self-sustainability implies funding for everyday operations no longer come from grants or subsidies.  Here in Vietnam, Kiva’s partner TYM Fund is dedicated and bright.  Employee turnover is almost nonexistent and the size of their operations have doubled in the last two years.  However, it is unlikely to reach full self-sustainability without appropriate forecasting tools, analytical frameworks, continuous employee training, and planning for overall capacity building.  Many US companies have these foundational pieces in place.  Due to lack of exposure to the aforementioned concepts, developing country organizations have room to grow.  Yet this also implies those willing to assist can have immediate positive effects.  Kiva fellows, for example, range from a tech CEO to a new college graduate but everyone finds a way to contribute.  This is what I find most amazing about the fellowship.

Training TYM's newest batch of loan officers

Personally, it is rewarding to apply thought processes and methodologies I used in consulting to assisting poverty alleviation.  The smiles that appear and mental lightbulbs that turn on when making the organization’s job easier or more efficient is priceless.  And I have to admit providing this incremental amount of knowledge and value is addicting.  If anyone reading this has ever wanted to lend a helping hand, it is easier than you think and the gratitude is more rewarding than you can imagine.

As one can see, despite global coporations’ focus on income and microfinance institutions’ focus on self-sustainability, the means to achieving both are similar.  Planning ahead, market research, product development, recruitment, and client base are all things organizations focus on whether in a developing country or not.  What I have seen are unlimited possibilities for assisting Kiva’s microfinance partners.  Rest assured that the partners are taking measurable steps to improve and expand their reach.  Kiva lenders are the stakeholders and can continue contributing to the cause through interest free loans.  As a Kiva fellow, I just get the added bonus of sharing my thoughts and viewpoints from ground zero.

Interested in becoming a Kiva fellow?  Click here.

Join the Vietnam lending team here.

Alex Duong is the first Kiva Fellow (KF9) working with TYM Fund in Hanoi, Vietnam. Click the links for info on TYM Fund & his personal blog.


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