Three Ways to Fight Poverty That Don't

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Jeffrey Ashe's latest book delves into how savings groups are the answer for impoverished regions to get back in control of their own finances and expenditures and therefore become truly independent.

But do we really need another poverty alleviation method? Don't the ones we have already work? Unfortunately, no, they don't. Below, Jeffrey highlights the three most popular methods currently in use, and why they are so ineffective:

1. Donations and Charities: In principle these are good things -- money with "no strings attached" that is given to those in need so that they can secure food and shelter and other necessities. The problem, however, is that donations only secure an environment of dependability where people are not self-sufficient but completely dependent on the support of others. Given how charities boom and bust these days, there is no guarantee that money will always flow to those needy hands, and the consequences can be dire.

2. Microfinance: Another idea that in principle was actually quite brilliant but in practice was not as effective. Micro lenders need to make a profit on their loans and when they are loaning such small amounts, the profit margins are even thinner unless they charge a heftier interest. (A 10% interest on a $5000 loan is appealing, but a 10% interest on a $50 loan is a lot less so.) So interest rates are higher and lenders can often be ruthless about collecting payment or penalizing people for delays, and all this does is put borrowers in debt to the tune of many times more than the amount they initially borrowed.

3. Business Enterprise/Entrepreneurial Ventures: Introducing entrepreneurial techniques to those in need is certainly one way to make them self-sufficient and in control of their own financial destiny but there are two problems with such programs: (a) Entrepreneurial ventures fail more often than they succeed -- even in the developed nations the failure rate for new enterprises is over 70% within the first two years, but in this case, you are dealing with a demographic who stand to lose a lot more if their startup fails; and (b) resources are limited as are potential revenue-generators in many rural areas, which means one person could generate a decent income producing handicrafts and beads for export, but given the lack of other options, now twenty or thirty people will also have to compete with one another to sell handicrafts to the same markets. This benefits no one.

With savings groups, the money is kept within the group, and all stakeholders have an equal share and equal responsibility and reason for maintaining the savings, so there is no competition and no outsider trying to collect. That is why savings groups triumph where others have failed.


Five Methods of Motivation That Don't Work

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Susan Fowler's latest book is all about how to do motivation right. The problem, as Susan points out, is that we've been going about motivation entirely the wrong way with the carrot-and-stick metaphor when in fact research has shown us that there are far more effective methodologies.

Susan describes below five "traditional" methods of motivation that are still widely used today -- and why they are deeply ineffective.

1    1. Verbal  Cheerleading. "You can do it! Keep up the effort! Give me just one more!" Recent research finds that coaches who verbally encourage people in training sessions are significantly less effective than quiet coaches. The verbal encouragement generates external pressure, diminishing people's sense of autonomy and internal fortitude. Whether coaching athletes or individuals in the workplace, your cheerleading may be undermining your good intentions.

2     2. Competitions. Setting up a competitive situation to “motivate” people begs the question—why are people competing?  People’s creativity, innovation, and long-term productivity suffer when they are competing to beat someone else, gain power and status, win an award, or receive an incentive compared to competing as a means to learn, gain experience, and obtain insight into development needs. Most competitions generate external pressure that ultimately defeats people and undermines long-term skill building and sustained high performance.

3    3. Imposing values. The most well-intentioned and values-based leaders often do this: Through their own sense of purpose and passion, they unwittingly impose their values on others. It doesn't matter how noble your values may be, if you impose them on people you run the risk of eroding people’s sense of autonomy and the opportunity for them to explore their own reasons for acting.

4    4. Incentivizing. Despite compelling research on the undermining effects of rewards and incentives to positively affect and sustain behavior, leaders and organizations still use this technique as a way of motivating people. Here's the problem: People are always motivated. The question is why. Giving people an incentive to motivate them is akin to feeding them junk food. The initial energy spike quickly falls and so does the quality of people’s motivation.

5    5. Praising. It may seem counter-intuitive, but when you praise people as a means of “motivating” them, it often has the same implications as an incentive or a reward—externalizing the reason people take action (to please you)! Focus on providing pure informational feedback, trusting people to evaluate their own performance. (Don’t confuse praising with sharing your gratitude. A heartfelt expression of thanks is always appropriate.)