The human drama of learning

I highly recommend David Roodman's recent reflections on the Kiva controversy he stirred up.  Particularly unusual are the insights he reports from actually visiting the Kiva offices and talking to some of the folks there.

Development is at root about innovation and change.  Innovation and change in turn have both a technology/policy dimension and a human/organizational dimension.  We often focus on the technology/policy issues without enough attention to the human side, which can play an equal if not greater role in the success of a new approach.   Our experience at GlobalGiving is that the ability of organizations to learn and respond is a key proxy for their effectiveness over time.

Roodman's description of how Kiva arrived where they did and what Kiva's management did about it after Roodman's initial post is an important story in itself.



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Transparency on Trial?

[Reposted from the Huffington Post, 10/22/09]

A number of commenters have asked me to weigh in on the lively debate that emerged from David Roodman's Microfinance Open Book Blog about transparency--not only on Kiva, but really about all attempts to make philanthropy more direct, starting with the pioneering efforts of Save the Children in 1940.

I've hesitated about weighing in--mostly because we have shared war stories, best practices, and worst moments with our friends at Kiva. We know that they are classy folks who know how to work constructively with feedback. And no one has written more openly than Matt Flannery has about the ups and downs of starting a new organization. So I have wondered what we could add to the debate.

Upon reflection, though, I do want to add a couple of things. It's partly because, as I reflect on this nascent space of direct philanthropy enabled by technology--including GlobalGiving, DonorsChoose, GiveIndia, and others--I think we have a collective responsibility to keep pushing the envelope on transparency and authenticity of the experience.

Let's face it: since the space is so new, we don't always know what works. So we keep trying things, based on what we think will work. Sometimes we get it right, and often we find we can improve.

Overall, we provide an enormous amount of information and transparency to our users about the organizations and projects on the site. We try to put the salient information on project home pages and provide links to more detailed information. At the beginning, we provided far too much information on the home pages. Users told us they couldn't see the forest for the trees - they felt overwhelmed and were paralyzed into inaction. Over time, we have gotten better in achieving a balance, and users tell us that they like our presentation much better now. Most of them feel we are giving them what they want.

But we can always do better.

For example, though the overwhelming majority of projects on the site are run by the equivalent of US 501(c)3 non profits, a few are run by self-help groups and community coops, which are sort of a hybrid type legal form. We even work with a handful of socially oriented for-profit companies that represent a new wave of entrepreneurs trying to leverage business principles to promote the common good. According to IRS guidelines, all of these different organizations are eligible to receive donations as long as they are carrying out a charitable purpose that is not possible under normal market conditions. Regardless of their structure, all are subject to our rigorous due diligence process. When these organizations list projects on GlobalGiving, we monitor their expenditures to make sure they are not making a profit from the donations.

We've received feedback that we should make this information more prominent on the project pages to make it clear to potential donors. That is a fair point, and we have in fact been considering making these categorizations visible, including a "for-benefit" category for these organizations that aren't equivalent to US 501(c)3s. My guess is that we will find that some donors are specifically attracted to this type of organization.

One of the positive things about the web is that we can get feedback - and respond to it - much faster than we could imagine back in the 20th century. Case in point: we recently piloted getting beneficiary feedback (via text message) in Kenya. We ended up with an incredibly rich dialogue between beneficiaries and donors that ultimately led to the beneficiaries moving on to work with another organization, and the original organization closing up shop.

We're constantly looking for more ways to get that feedback more quickly, and from more people. We even put in place what may be the first-ever philanthropic guarantee - the GlobalGiving Guarantee. This give donors a powerful way to tell us if they are unhappy in any way, and signals to them that we are serious about listening. And it gives us a chance to address the issue not only for that donor, but for all donors.

I admire how Matt and Premal have responded to the debate over at Kiva. Their response sets an admirable standard for speed and transparency. (And in that context, if you have any ideas about how we could get more feedback from more people faster, please let us know...!)

Owen Barder on "Beyond Planning"

This paper "Beyond Planning: Markets and Networks for Better Aid" by Owen Barder at CGD looks worth reading. Here is the summary:

The political economy of aid agencies is driven by incomplete information and multiple competing objectives and confounded by principal-agent and collective-action problems. Policies to improve aid rely too much on a planning paradigm that tries to ignore, rather than change, the political economy of aid. A considered combination of market mechanisms, networked collaboration, and collective regulation would be more likely to lead to significant improvements. A "collaborative market" for aid might include unbundling funding from aid management to create more explicit markets; better information gathered from the intended beneficiaries of aid; decentralized decision-making; a sharp increase in transparency and accountability of donor agencies; the publication of more information about results; pricing externalities; and new regulatory arrangements to make markets work. The aid system is in a political equilibrium, determined by deep characteristics of the aid relationship and the political economy of aid institutions. Reformers should seek to change that equilibrium rather than try to move away from it. The priority should be on reforms that put pressure on the aid system to evolve in the right direction rather than on grand designs.

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Darwin and Development

"Growth is innovation, and you can’t know in advance how to do the innovative thing, or else it wouldn’t be an innovation. Development is BOTTOM-UP outcome of lots of unpredictable individual successes and failures."

That is from Bill Easterly's most recent post at AidWatch. He goes on to say:

"The paradox of development economics is that Development does NOT require any one person (Expert, Leader, or Aid Official) to have a comprehensive understanding of how to achieve Development (sort of like how evolution managed to happen on its own before Darwin)."

This is a tough message for many aid workers and experts, but it is true. There is no evidence of intelligent design at work in economic growth, and we still don't understand exactly how it works. The best thing to do, as Bill notes, is to create a fertile environment for experimentation, and incentives for replication of the things that succeed.


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Crowdsourcing vs OpenSourcing

Here is a nice article by Dan Woods in Forbes about the popular concept of crowdsourcing.

In some ways he is constructing and attacking a strawman ("crowds create innovation"). But the article does clarify that the real value comes from OpenSourcing -i.e., allowing pretty much anyone to attack a problem or come up with a solution. As Dan says, it is usually a few virtuosos- obsessed individuals-- from within the crowd that do most of the work.

The key is to ensure that you don't predetermine who is eligible to address a problem, or which types of expertise are the relevant ones. Creative solutions and breakthroughs often come from outside the orthodoxy, not within it.

Crowdsourcing does have a role when you need to get feedback on a concept from potential users to see if it is is marketable, or to take the temperature of a specific population around an issue. But that is different from coming up with the breakthrough ideas.

So what closed systems, organizations, and companies have to fear is not crowdsourcing. It's OpenSourcing.


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The Success of Development

Countries in every region of the world, from the poorest to richest...have all seen improvements in average levels of health and education over the past century.

That is from a forthcoming book by Charles Kenny.  Based on Kenny's own summary, The Success of Development is a book that you will want to pre-order.  If the book delivers, it will help get us out of the rut we are currently in - namely the "there is no evidence that development aid works" rut.

According to Kenny, there is good news and bad news. The bad news is that the divergence in incomes between the rich and poor countries has grown sharply since 1960.  Worse, we really don't understand how to increase economic growth rates in any country. But there is also really good news.  First, contrary to Malthus and Paul Ehrlich's expectations, there is not widespread starvation in the poor countries.  Even better, there have been dramatic improvements in health, education, and even political rights in most poor countries. 

The key insight of this book is that income appears to be a poor proxy for quality of life.  Fortunately, as Kenny says, many of "the best things in life are cheap....The last century has seen a dramatic decline in the cost of living."  The technologies and practices that reduce infant mortality, improve overall health, and increase literacy are relatively cheap. 

So the challenge for the development field is to create and environment that stimulate innovation and the spread of ideas that drive changes that improve the basic quality of life in different countries.   Unlike economic growth, which we have not had much luck stimulating, we have had some success in helping generate and spread these types of ideas, so there is grounds, Kenny says, for "realistic optimism."

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Pioneers of Contagion

Recently I did a post called Could Prosperity be Contagious? Judging from a recent event I went to in Jamaica, the answer is yes.

An initiative called Pioneers for Prosperity was holding its finals competition for the Caribbean. Its goal is to celebrate some of the most dynamic entrepreneurs in the developing world and to help them become role models for their peers and the next generation.

I found the enthusiasm, skill, and grit of these finalists to be highly contagious, and I came back to Washington all charged up about my own work. The Pioneers for Prosperity group has made excellent videos of each finalist that will be showed on TV in their home countries. This type of initiative is very important to change mindsets about what is possible, which is key to making progress in any country.

You can read more here.

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Could prosperity be contagious?

“I wouldn’t call it a competition, I’d call it a collective,” Josh Potocki, the chef and owner of 158 Pickett St. Café in South Portland, said of the city’s food scene. “We are all trying to raise the level of food in Portland to insanely high.”

There has been much written about "social contagion" over the past few years. The latest NY Times Magazine has a long article describing the social dynamics of things such as smoking, drinking, and obesity.

I have been thinking a lot about whether the dynamics of contagion could be applied to economic development.

A powerful example of contagion that I have seen (or tasted, actually) is the restaurant scene in Portland, Maine. Even though Portland is a small city, it has evolved some of the best restaurants in the US. Mari and I recently ate at a restaurant called Bresca there, and the food was spectacular - on par with anything I have had in Washington, New York, San Francisco or London.

What is the key to this? No one knows exactly how it got started, but one or two really great chefs moved to town, and others followed. The dynamics are part competition and part collective. Each chef both emulates and tries to outdo the others, but each chef also knows that the success of the others bolsters the overall market. The NY Times article about Portland is here.

(Thanks to Eli and Scott Stefanski for the pointers to the restaurant and article!)

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Making solar simple (and and affordable)

The challenge for SunRun is to take the incredibly complicated business of solar and make it really simple to the consumer.

That is from a nice post about residential solar power by Marc Gunther. I highly recommend Marc's blog if you are interested in the intersection of environment and business. No one writes better about this than he does, and there are some very encouraging developments in the sector. The pace of innovation gives me some hope.

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Making complexity simple (and cheap, too)

It was refreshing to see this blog post by Ken McHugh, a software architect at Cognitive Edge. Ken describes upgrading the operating system on his computer. Based on past experience, he expected the worst.

Instead, he was delighted. Even though the new system was a significant upgrade, it was cheap, installed quickly, did not crash, and even took up less space on his hard disk. The title of his post, Why Did It Work?, which speaks volumes about our expectations, and also about the value of delighting ones' users.

Feature creep on things like cameras, remote controls, software, and web sites makes many products less rather than more useful to normal users. Trying to navigate all the dials, buttons, and menus is sometimes a nightmare, when all you want to do is take a picture or write a quick note. This is starting to produce a backlash, as described by Wired in a recent article titled The Good Enough Revolution: When Cheap and Simple is Just Fine.

Ken's experience shows that adding features and complexity can be made simple - and cheap, too - if the company behind it is focused on what users really care about.

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