Tipping: A Viral Infection We Want to Catch

Alex Counts is president, CEO and founder of Grameen Foundation, and author of several books, including Small Loans, Big Dreams: How Nobel Prize Winner Muhammad Yunus and Microfinance are Changing the World. At Grameen Foundation, we often talk of the concept of “tipping,” which was popularized by the book The Tipping Point by Malcolm Gladwell.  I define the concept as taking something, such as an idea or a product, to the point where it starts to spread virally, exponentially and without much additional effort.  For an organization like Grameen Foundation that works with limited resources to make significant impact on a global problem such as poverty, it is a very important concept.  Through tipping, our early seeding and nurturing of innovations can lead to their widespread adoption by poor people, the organizations that serve them, and even by businesses and governments. One example is our Growth Guarantees program, which pioneered loan guarantees to forge mutually beneficial business relationships between local commercial banks and microfinance institutions (MFIs) working to alleviate poverty.  In the program, we not only directly consummated transactions (bringing nearly $200 million to MFIs, who were then able to help more than 1 million new poor borrowers), but more importantly, proved the concept and prompted many other banks to follow suit (even without guarantees from Grameen Foundation).  Likewise, our efforts to replicate the highly successful village phone program of Grameen Telecom, initially in Uganda, set in motion dozens of “village phone” initiatives, most of which we had no direct role in starting or managing.

The PPI is a simple, short, country-specific survey that poverty-focused organizations can use to better understand the people they're trying to help, as well as the effectiveness of their work. This is a screenshot of the PPI for the Philippines.

 

I thought a lot about Grameen Foundation’s role in “tipping” last week when I flew to Jordan to attend the annual meeting of the Social Performance Task Force (SPTF), a group in which Grameen Foundation has been deeply involved for years.  More than 300 people attended.  The SPTF sets standards and shares best practices for those practicing ethical, poverty-fighting microfinance.  Partly as an acknowledgment of Grameen Foundation’s central role in the task force, I was asked to give the closing remarks at a historic “CEO Roundtable” where the heads of leading MFIs came together to discuss implementation of the just-completed “universal standards for social performance management.”  The standards have the potential to reshape how MFIs around the world work in fighting poverty, mainly by comprehensively adopting what have emerged as effective practices through the task force’s dialogue and research over many years.

There was much talk during the conference’s sessions and hallways about Grameen Foundation’s technology initiatives, which have the potential to increase the efficiency of MFIs and their poor clients.  Also discussed was the Seal of Excellence for Poverty Outreach and Transformation – based on a paper that Grameen Foundation had published in the Stanford Social Innovation Review in 2008 – as it is developing a set of complementary standards focused on poverty-reduction outcomes.  Now, a growing coalition of microfinance policymakers, philanthropists, investors and advocates are coming together to turn the Seal into a reliable mechanism to help distinguish good MFIs from great ones, at least in the area of poverty-reduction outcomes. For me, however, Grameen Foundation’s success in tipping – and believe me, we have not always succeeded – was driven home most memorably in a small, optional workshop that I attended during a lunch break.  As many friends of Grameen Foundation are aware, we champion microfinance’s leading social performance management tool, called the Progress out of Poverty Index^®, or PPI^®.  Based on a prototype developed by Grameen Bank, the PPI is a simple, country-specific and easy-to-use survey that enables MFIs – and, in fact, any organization seeking to reduce poverty – to measure and improve their effectiveness by getting timely and reliable data.  Though we worked with such partners as the Consultative Group to Assist the Poor (CGAP) and the Ford Foundation to get the PPI going, it is widely acknowledged that we are the driving force behind it today. The workshop’s two presenters explained how they were using the PPI to measure the progress of village savings associations, an exciting variation of traditional microfinance that is practiced extensively in Africa, India, Nepal and elsewhere.  I had no idea that this growing movement was using the PPI so widely.  The presenters were able to explain, as well as our Grameen Foundation staff experts, how the PPI worked and why it was important!  In addition, a consultant to the United Nation’s International Labor Organization (ILO) who was sitting next to me mentioned that the ILO was using the PPI to correlate family poverty levels with the incidence of child labor.  Talk about progress!  And two days earlier, Steve Wright, who heads social performance work at Grameen Foundation, had been invited to present “PPI+” – our latest and upcoming social performance product offerings – to the leaders of eight global microfinance networks.  (He did a great job.) So, it looks as if the PPI is finally going viral.  Why is this important?  To me, it boils down to this: In poverty reduction work, we have a big problem – more than 1 billion people in extreme poverty and 2 billion more in "moderate" poverty – and finite resources.  We must rapidly and objectively assess what works, and apply what we learn to make sure we get the biggest bang for the poverty-reduction buck.  We have always tried to hold Grameen Foundation to that standard – now, this concept is finally spreading like wildfire.  And who benefits most?  The world’s poor.