Strangulation Of The Status Quo - Lessons from the 19th Century

In light of the recent unrest in Turkey, Brasil and the ongoing effects of the Arab Spring, I thought this was worth reposting...

If you haven’t seen the [new] Les Misérables movie you should. It powerfully portrays many of today’s issues: poverty, inequality and inequity, the struggle of self-organized groups versus command-and-control and liberty to name a few. Most profoundly, it speaks to the overwhelming and dangerous hold of the status quo on our minds and souls.

The battle between the new and the status quo is epitomized in the relationship between Javert, a policeman ingrained the life of Law and Order, and Valjean, a reformed ex-con who through grace and freedom has become a just and caring businessman in the community. Javert, unable to receive Valjean’s grace and freedom, actually kills himself instead of accepting a world where compassion and understanding counterbalance the rule of Law, a world most of us prefer.

So what does this have to do with business? A lot. On first blush, the lesson is the stranglehold of the status quo binding us to the present, and past, so we are unable to see the benefits of anything different. The present may not even be great, but we know it and how to deal with it.

Change is scary, threatening. We will have to learn new things and maybe we won’t be able to. Then what? It also means risk, risk means failure and failure is punished. None of these options are good.

So what do we, our people, our organizations do? We shut down. We show up, do our jobs, follow policies and procedures and check our hearts, souls and even minds at ‘the door’. We know what that does to growth, profitability and purpose!

On a deeper level, it highlights the death throws of a binary world so many of us cling to: yes and no, either or, good and evil, America vs. the USSR.

The new world is grey. It requires integrating disparate ideas, accepting paradoxes, looking for the And Both instead of Either Or, combining things in new ways. . . which leads to freedom, to innovation and growth and solutions to real customer needs and wicked problems.

It leads to loosening some of the harsh, unjust shackles of the Law through Compassion. Let’s face it, it’s much easier to live in a black and white world where we know the rules, we know what’s expected, the probability of failure is much lower.

That binary world doesn’t exist anymore and actually, never did. It was an illusion that lasted a century. Increasingly, we define our jobs, blur lines of responsibility, integrate once discrete disciplines (e.g., design and engineering), and experiment and iterate instead of perfect. While a grey world may be scary to some, it unleashes innovation and new ways to realize profits that can create meaningful outcomes.

Javert’s Suicide Soliloquy shows the glaring self-destruction inherent in status quo’s black and white world – a world so stark that Javert views freedom as another chain (“hold dominion”) and chooses death:

What sort of devil is he [Valjean] to have me caught in a trap and choose to let me go free…

Vengeance was his and he gave me back my life!

Damned if I’ll live in the debt of a thief! Damned if I’ll yield at the end of a chase…

How can I now allow this man to hold dominion over me…

He gave me my life. He gave me my freedom…

And must I now being to doubt, who never doubted all these years?

The world I have known is lost in shadow

So what does this mean to us? Hopefully, none of us will hold so desperately to the status quo that’d we’d rather literally die than adapt. Make sure your organization's culture doesn't either.

This originally appeared in Tanveer Naseer's Blog

Innovating The Brick-and-Mortar Injustice Infrastructure

This week's post is by Andy Posner, Co-Founder & Executive Director of Capital Good Fund (CGF), a non-profit microfinance organization targeting the root causes of poverty through innovative micro-loans and personal financial coaching.  In a world filled with Pay-Day lenders that ruin lives, CGF is starting to making a difference by innovating the basic business model.  Maybe you can help! 
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Go into any low-income neighborhood in America and you are almost certain to come face-to-face with a cabal of bright neon signs and welcoming storefronts proclaiming fast cash, no credit required.  This is the brick-and-mortar infrastructure of a $100 billion/year industry—check cashers, pawn shops, payday lenders, refund anticipation lenders, rent-to-own stores and other sub-prime lenders—that profits handsomely off the backs of the poor.  As the Co-Founder & Executive Director of Capital Good Fund (CGF), a non-profit based in Providence, RI that uses financial services to tackle poverty, I am all-to-aware of the damage these companies do to the fabric of communities and the families that reside therein.  Take, for instance, payday lenders: a study by the Insight Center for Community Economic Development found that in 2011 “the burden of repaying [payday loans] resulted in $774 million in lost consumer spending and 14,000 job losses.[1]

Traditional economic theory dictates that market forces should spawn more affordable alternatives, but they haven’t.  America’s poor are forced to choose between the 260% payday loan and mainstream financial products and services from which they are often excluded due to poor credit.  Few for-profit alternatives exist because small, risky loans aren’t highly profitable if they aren’t accompanied by high interest rates, and few non-profit alternatives have scaled because of the limits of philanthropic dollars. 

Recognizing that this paradigm is untenable, at CGF we are using business model and other innovation to scale a solution that is affordable and financially viable for us as an organization. From the outset we knew that our solution had to compete with existing options in terms of ease-of-use, customer service and turnaround time; we also knew that our model had to be about more than just making loans and collecting loan payments—we needed a way to obviate the need for expense financial products to begin with. 

In order to meet these requirements, it became clear that having a physical presence in the communities we serve would be critical, but expensive.  To solve that, we are partnering with a local non-profit, within whose office we will house a loan officer.  After running the numbers, we have a realistic target: the program will be self-sufficient if we can close 240 loans per loan officer per year while maintaining a repayment rate of 93% (and charging 36% APR).  Of course, we have to acknowledge two things: first, that people don’t wake up in the morning and say “Boy, I wonder if there’s a non-profit alternative to the local payday lender,” and second, that the established players have a lot of marketing clout.  With that in mind, we are running an aggressive advertising campaign, from billboard ads and bus shelters to flyers, community presentations and door-to-door visits.  In concert with that, we are working to ensure that it takes no more than two days to go from loan application to loan closing—slightly longer than with the predatory firms, but still within reason. Finally, we require that every borrower also avail him or herself of at least one session of individualized Financial Coaching, focusing on budgeting, managing debt and opening a bank account so that they have the tools the need to achieve financial success.  Already, our average clients saves $1,100 / year thanks to our program, and we have disbursed over 340 loans to low-income families.

Taken together, these program components—a community storefront, an affordable, customer friendly product and an aggressive marketing campaigned married to Financial Coaching—have the potential to, at scale, put the predatory financial services industry out of business.  Of course, lending and Coaching alone aren’t enough to cover all the costs of running each of these ‘micro-branches,’ so we need to explore alternative streams of revenue.  Grant funding, to be sure, is an option, but an unreliable one at that.  We don’t yet have all the answers, but we are considering a few possibilities.  For instance, suppose we were to partner with a forward-thinking, ethical grocery store chain and turn our micro-branches into micro grocery stores.  This would address several issues: healthy, affordable food is notoriously hard to come by in low-income neighborhoods; the more products and services sold at our branch, the more we come to be seen as a community hub; and we can earn a percentage of sales, thereby increasing our earned income.

What I want to emphasize is the importance of thinking out-of-the box, for on the one hand, the for-profit mentality says it isn’t worth doing if the profits won’t be large, and on the other, the non-profit mind doesn’t want to do it without grant funding.  By thinking hard about our customer’s needs, understanding our competition, and thinking creatively about how to solve an endemic problem that takes a drain on our country on both the macro and micro-economic scale, we are building something that can truly make a difference.  It’s time for us to finally put poverty out of business for good.


[1] http://www.huffingtonpost.com/2013/05/05/payday-loans-cost-economy_n_3211597.html

Dancing Your Way Through A Revolution

Again I'm privileged to host the insights of an 21yr-old - Emily Goldman (Brown '14) gives us life-time learnings on discernment, judgement, critical thinking and getting the facts for yourself.  She has been studying Arabic and the impact of local rap movements on the revolution in Alexandria, Egypt for the past year - just your average American Female Jew in Egypt!  Read and re-read this - it has profound implications on how we view the rest of the world, and our place in it - especially in light of the recent NSA revelations.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 

I have always been a little weird. When I was younger, I used to obsess over one topic and learn everything about it—anything from Lucille Ball to the Brain Trust— and then get bored and move on. My mom called these cycles “phases.” One of the longest “phases” was my revolution phase at the beginning of high school. I had just learned about Che Guevara and the Latin American revolutions in history class, and was immediately enthralled. I read everything from biographies of Che to theoretical texts about Latin America’s liberation movements. I was captivated by this idea of a “revolution”ion in Development Studies"t STude to dig deeper as i  about revs in a general sense. I expected you to be like " and decided to feed my curiosity as I began my academic career at Brown University. I am a Development Studies concentrator who began with a focus on Latin America, then Social Entrepreneurship, and now Egyptian Hip Hop. Looking back, I think I might have been revolution hopping. During my first three years of college, I reveled in the way that phrases like “postrevolutionary state” and “direct foreign investment” rolled off my tongue. Armed with a hefty political science vocabulary and my slightly obsessive self-study, I felt that I truly understood what it means for a state to have a revolution. Wrong.

Inspirational graffiti in the city of Luxor about resisting tear gas and trying to build the country anewWhen I moved to Egypt in January, there were some things that I noticed: traffic is insane and has no rules, there are no taxes in daily life, the electricity sometimes goes out, there are checkpoints on the roads in Cairo run by civilians, the police often decide to go off duty (especially when they are threatened with actually performing any duties), and Fridays are protest days. After about a week, I got used to all of these things. One thing that I absolutely could not get used to, though, was the media.

I had been living in Alexandria, Egypt for about one month when I was watching TV this one Friday afternoon. When I turned on the TV, the correspondent was announcing widespread violence in Alexandria and a march down the street next to the seaside. My host family was traveling at the time, and my host mom called me: “How is Alexandria?” she asked, panicked. I peered out my window, looking onto the road where all of the violence was supposed to be, and saw absolutely nothing besides some stray cats playing in the garbage can below my window. Convinced I must be wrong, I called a friend in a different part of the city. “Are there violent demonstrations today?” I asked him.

“No,” he told me, “There was a peaceful march near the train station this morning, but that is seriously all that’s happened in Alexandria today.”

That night, my mom called me from the US. “Are you ok?” she asked, “I heard there’s been a lot of brutality towards women in demonstrations and that there were a lot of demonstrations today.”

I reassured her and, upon talking to a friend who works for a women’s rights group in Cairo, found out thatEmily dancing outside a temple the brutality article was published in the New York Times. According to my friend, the real story was not protestors harassing women but instead policemen harassing female protestors. While all of this conflicting information is confusing and annoying, it still leaves one essential question to be answered: who should I believe? Should I believe the news that tells me that people are attacking each other outside my house even when I can look out my window and see a totally different reality? Should I believe the New York Times correspondent when my friend who was actually at the event tells me that the correspondent got the story wrong? I choose to believe what I see with my own eyes and ears. But what about people like my family who can’t get this information first hand? What about the ENTIRE AMERICAN PUBLIC that, thanks to the media, thinks Egypt is a lawless and—to borrow a word from my Development Studies classes—“postrevolutionary state?”

“The media won the revolution” is a refrain echoed throughout Egyptian society these days. As anger at President Morsi and the Muslim Brotherhood boils, I am discovering that it is an amazing time to be a researcher of Hip Hop, an art form that has given the finger to the media time and time again. My research in Ticket from Emily's first Egyptian rap concertEgypt focuses on Egyptian rap and its role in politics during and after the revolution. Both the rappers that I work with and the music that they make refuse to fall into the media categories of “smart/dumb,” “religious/not religious,” “revolutionary/not revolutionary,” etc. The Egyptian rappers refuse to deal in these binaries. These rappers are incredible, multidimensional people who refuse to let the revolution, society, or anyone else silence them.

This morning I met with one of the earliest Egyptian rappers, a guy in his thirties who I will refer to as S. I hopped on the back of his motorbike and we took off through the Alexandria rush hour traffic as he shouted over his shoulder to me about everything that got worse in Alexandria after the revolution.

“What do you think of the traffic?” he bellowed over wind as we weaved dangerously between stopped cars along the seaside road.

“Um, well….” I stuttered, trying to formulate a response that was not offensive but also truthful.

“HA,” he responded, “Not like America, huh? Honestly, Egypt was not like this even three years ago.”

Over the course of the next three hours, our conversation meandered seamlessly from the politics of Egyptian rap to the influence of the Muslim Brotherhood on artistic expression to the intricacies of the Egyptian stock market interest rate fluctuations. S, like many other rappers and Hip Hop artists I have gotten to know here in Egypt, is brilliant. He speaks four languages fluently, is getting his Master’s degree in Development Economics, writes and produces his own music, and cannot find a job. He does not rap because he has nothing better to do or because he thinks it makes him look cool, but rather because he has something to say.

“The Egyptian people have a problem with being afraid of expressing themselves, “ he told me as we strolled along the sea, “Maybe it is left over from Mubarak or something, but we rappers, we don’t think about these things. We just say what we think.”

That is exactly why I choose to work in Hip Hop both here in Egypt and in the United States. In the US, I work with Hip Hop 4, an organization that I co-founded in my sophomore year with another Brown student named Pierre Arreola. Hip Hop 4 uses Hip Hop as a tool to provide character building in after school activities for underprivileged youth. The idea came from our observation that kids in underprivileged neighborhoods have infinitely fewer opportunities to express themselves artistically or otherwise. I would say that the same goes for Egyptian youth who suffer because of high levels of education, low levels of employment, an increasingly oppressive Muslim Brotherhood influence, and a crashing economy. So, in a way, Egyptian rappers are doing the same work as Hip Hop 4. They are modeling frank and public self-expression by refusing to let the political, societal, and media obstacles get in the way.

On our way back home from our seaside conversation, the police stopped S and me. The policeman was tryingView from a friend of Emily's countryside home to give a taxi driver in front of us a ticket for blocking the road. The policeman took down the taxi driver’s license plate number at which point the minibus driver next to us hopped out of his van and told the policeman, “You can write whatever you want, but he is a taxi driver. This car does not belong to him. If you want him to move, you have to MAKE him move.” He then leaned down into the cab and screamed in the taxi driver’s face until he moved his cab out of the way.

That is Egypt right now. If you want to get something done, do it yourself, make it happen. As harsh as that might sound, it actually makes me feel safe in my daily life because there is an incredible sense of unity, of Egyptians helping Egyptians to make it through this hard and confusing time. I have met unparalleled kindness and selflessness here every day. I have been embraced as an American, a Jew, a female, and every other part of my identity that I was afraid of revealing based on stereotypes I had heard about Egyptians before I came. When I walk outside every day, I don’t see a country plagued by senseless violence like the media wants me to, but rather a country still yearning for change. I am not afraid to be here and I refuse to let the news sources bully me into fearing a country and culture I have come to know and love. However, I would like to ask one thing of my fellow Americans: Do not assume that what you hear about Egypt from the media is true. Please use your judgment and think critically about what you hear about this country and the Middle East in the upcoming years. Most importantly, let’s take a cue from the Egyptian rap community and remember that people are not one-dimensional characters, but instead complicated beings with the natural urge for self-expression. Egyptians may be demonstrating against President Morsi each week, but they are also finding ways to prop each other up and protect each other from the difficulties in this postrevolutionary period.