Phil Smith is the former CEO and chairman of Prize Energy Corp and Tide West Oil Company, and he is now a private investor and speaker under the banner Practicing Significance. Eric Thurman is president of Protos Fund, former CEO of Geneva Global Inc., and he has supervised grant-making in more than half of the countries worldwide. He has had extensive experience directing microcredit programs. The foreword for the book was written by Muhammad Yunus, 2006 Nobel Peace Prize winner in economics for his work in micro-credit.
A Billion Bootstraps has an unusual style for a co-authored text, as the authors took turns writing chapters. But the result is better than expected. The editors and the authors made this a seamless text with a clear effort to connect the chapters.
The authors have created a primer on microcredit, very small loans given to the poorest of the poor to start small businesses. They explain what it is, how it works, why it works, and provide stories of success. The high payback rates for this type of loan are truly remarkable.
In the authors’ words, this is, “an impartial overview of micro-credit so you can quickly grasp how it works and discover the many ways to get involved,” p. xi. It is not impartial. While it is written for the business person, with lots of data, it is clearly written from the heart, to make the case for micro-credit as the means to end poverty.
The authors are enthusiastic about why microcredit works in very poor countries where direct aid has failed. Aid builds a dependent society, while micro-credit forms the foundation for a society lifting itself. Aid offers a donation that is gone when it is delivered, a short-term patch. Micro-credit is paid back, making it possible for a starting donation to be used over and over again. This appeals to their business focus as a responsible way to invest in others. There is a great chapter titled “Micro-credit Plus,” which identifies the kinds of business services that can and should go with a loan to make it more likely to succeed.
The book has some shortcomings, however, and I will mention three. First, the book focuses on how an individual or group can make money from the loan, but nothing is said about the value of the products or services to the community. In parts of the world where no products are available, business is important for more than the money that can be made. Second, nothing is said about the challenge of turning a small loan into a thriving business. Yes, the entrepreneur can make a bit of money from the loan after paying it back, and this is very important. But the criticism of microenterprise development is that it doesn’t develop sustainable businesses, and the authors do not address this issue. Third, micro-credit programs do wonderful things for entrepreneurs, but what about the poor person who just wants a job? I believe it is difficult to assume that micro-credit by itself will end poverty. These other issues must be addressed.
As a primer on micro-credit, A Billion Bootstraps is an excellent contribution to the literature, and I can highly recommend it. It should be read with a bit of caution, however. Micro-credit is a great piece of the solution to poverty, but not the answer by itself.
Reviewed by Al Erisman
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Paul Collier is professor of economics and director of the Center for the Study of African Economies at Oxford University. He is the former director of development research at the World Bank. He is also the author of many books including Breaking the Conflict Trap.
In The Bottom Billion, Collier shines a spotlight on poverty by looking carefully at the data. According to his research, about one billion people (out of the world population of six billion) from 58 countries represent a different kind of poverty. During the high-growth economic decade of the 1990s, many very poor countries made at least some progress, while these 58 countries did not. For a variety of reasons, these countries are not a part of the global economy, and continue to get poorer. In fact, these countries and their people may be hurt by the global economy. He wanted to understand why.
Looking at the data, he found four relevant characteristics of countries that continued to get poorer, though all of them are not present for all countries in the group. These include countries trapped in conflict, those that are landlocked and surrounded by bad neighbors, those with corrupt governments, and those with natural resources. The first three may seem intuitive, but the fourth one is not. In the first five chapters of the book he builds the case for these.
He then builds his argument for what can be done. “Change is going to have to come from within the societies of the bottom billion, but our own policies could make these efforts more likely to succeed and hence more likely to be undertaken,” he argues (p. 12).
These policies start with changing the way aid is handled, because though it is part of the solution, our emotional approach to aid may also be detrimental. He moves to military intervention (clearly his most controversial idea), dealing with law, and finally with trade policies as things that outside countries can do to make a difference..
Collier has more than academic interest in this part of the world. As a student of the 1960s in England, he headed for Africa after graduation, and he has done academic research and research for the World Bank there for much of his professional life. His emotional connection to the subject sometimes trumps his academic pursuit. For example, he does not name the 58 countries in the group because, “this is not company countries are keen to be in, and because stigmatizing a country tends to create a self-fulfilling prophecy …,” p. 7. He refers to the group as Africa +, since while many countries from the “list” are in Africa [including the Central African Republic, see pp. 16–17 in this issue of Ethix], many are not including North Korea, Haiti, and Bolivia.
The author determined to write this book in a popular style, so there are few references and not much precise data. This is not a quick read. Collier uses carefully crafted sentences to lay out his case. But this is an important book, challenging us to consider the part of the world that is not benefiting (and may be hurt) by the global economy.
Reviewed by Al Erisman
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Ron Carucci is founding partner of Passages Consulting LLC, an associate professor at Fordum University Graduate School, and professor and chief operating officer at Mars Hill Graduate School in Seattle, Washington. He is the co-author of two other books.
Some have been worried about the coming leadership vacuum. With the retirement of baby boomers, will there be strong younger people ready to take on roles of leadership in the corporations, educational institutions, and nonprofits of our world? To get to the answer, Carucci had in-depth interviews with more than 60 senior executives, did an essay survey of 1,100 present and emerging leaders, and scanned the business and sociological literature. His conclusion? Yes, there are plenty of strong emerging leaders. But they don’t want to lead as they have been led. Rather, they want to develop a leadership based on authentic relationships. This will produce a transformation of the great institutions, changing the face of all of them.
Carucci identified six areas that will characterize this transformation, and he has organized his book into these six major chapters. They include moving from
1. hierarchy to collaboration,
2. surface relationships to greater depth of relationships,
3. manipulative deception to authentic problem solving,
4. monotony to innovation, 5. arrogance to generosity,
6. and patronizing to real gratitude.
The book is filled with stories from the interviews and surveys. Warning to leaders: Some of the illustrations are very painful and you may see yourself there. I did! Leadership Divided offers a hopeful look at how leadership styles can transform not only the way leadership is done, but also the very fabric of the organizations. And it doesn’t have to wait for the next generation of leaders, as it provides helpful new insights for leadership today.
A minor quibble is the cover, which might imply the leadership divide is east vs. west. It is not. I highly recommend the book.
Reviewed by Al Erisman