In praise of failure?
Let’s keep building the systems and standards we need to ensure the success of inclusive finance as a social business model. But isn’t it also time to start talking about failure?
Vexed by a well-documented crisis of confidence and clarity in recent decades, sector leaders have poured considerable effort into defining what it means to be a microfinance institution that successfully and demonstrably delivers both client value and financial value (at the same time). So too have we built a supporting framework of industry standards, internal quality control and external transparency. In short: the architecture of successful (balanced) microfinance is huge, well-documented, and gaining traction as standard microfinance business practice.
However, a blind spot remains in both theory and practice — and it is a troubling one. As an industry, we instinctively (and understandably) recoil from openly discussing those instances when we don’t live up to our mission statements. Dogged by headlines decrying the latest IPO, wary of future market overheat, haunted by the ghosts of microfinance suicides — we meticulously plan for success, and scrupulously avoid talking about failure when it happens. Perhaps we’re allergic to talking about it because we know the stakes are high; when we mess up, bad things happen to real people. So how can we embrace the uncomfortable truth that unexamined failure leads to more of the same?
We would do well, in this respect, to learn from other industries. Matthew Syed, in his recent Black Box Thinking, brings home the point: generally speaking, Americans are more apprehensive of flying than going into hospital. However, if the American healthcare industry was in the aviation business, 235 of their jumbo jets would fall out of the sky every year, killing every soul on board. Medical mistakes are the third biggest killer in the United States — and when they occur, the collectively-felt impulse (on the part of the establishment) is to sweep them under the nearest very large rug. Mistakes within the airline industry, on the other hand, are rare — but when they do happen, they are automatically subject to intense scrutiny to glean insights for future performance enhancements, starting with the data captured in those famous black boxes. Even voluntary self-reporting of mistakes is a routine part of the deeply-ingrained culture of learning and improvement. (Parenthetically: we’d also do well to learn from the experience of others in the social enterprise sphere, who elevate learning from failure to a fine and frank art form. Need I say more?)
So how can we start a conversation about failure? Let’s start by building our own black box to identify total failures, partial failures, and even failures masquerading as successes. For instance, we might know when clients repay, but do we understand how they repay, and whether they need to make unreasonable sacrifices in order to stay afloat? Do we spot when their businesses aren’t growing as they’d hoped? The client complaints box in the lobby might sit empty week after week — but are we absolutely certain that this is a good thing? And how often do we explore the dark clouds on the data horizon through deeper research (e.g. talking to clients with perfect repayment and stagnating business turnover).
And what systems should surround our conversation? For instance, what does your annual staff review system say about your priorities? Is it an annual tick-box exercise, or a frank conversation about the not-so-great moments? Do you have annual “autopsy sessions” at the annual retreat, and a whistle-blowing policy for staff? And what about the client interface? I met with one inclusive finance provider in Africa that helped its loan officers identify which clients needed extra attention and support during the month, using data on savings patterns and meeting attendance to signal when clients slipped into the “vulnerable” category. Giving staff this mandate can help identify and mitigate individual client failure — and feed your black box with yummy data on what’s not working, and why.
Most importantly, we need to get comfortable with the concept of failure on a fundamental, cultural level. Staff will invariably keep silent about what’s not working, if they feel their job is on the line, or if deference to the hierarchy (common in many countries) short-circuits common-sense thinking and critical feedback. Frontline staff are often the first to spot friction in the system; to tap into these real-time insights is a potential gold-mine of information. As AMK’s CEO (Kea Borann) notes: “If each of our 1,500 staff have just one good idea per year — even if we only use 10 per cent of them, we can really improve our work.” As with most cultural issues, it falls to management to set the tone for this conversation, and even model what “successful failing” looks like. As Solymar Torres (no stranger to the HR space), will tell you: “it’s not for nothing that this is called the ‘era of the learning organisation’… and there is no better place to start creating that ideology than at the strategic level, as an ethos that is encouraged from top management on down.”
As you’d expect, the questions outnumber the answers at this moment in time. But let’s begin to find those answers by talking to each other about what’s not working. About where we failed to live up to our good intentions. I’ll start. I make mistakes. I make them all the time. Both failures of action, and of omission. But as Henry Ford reminds us all, and as I in turn remind my son, the only real mistake is the one from which we learn nothing.