The Evolution of Grameen Bank

We were asked to watch a video before coming to the class. Initially I hesitated because the video run time was around an hour. Inquisitiveness made me click the play button, but later it came to my realization that I would have missed an important learning if I hadn't watched this. I would like to share my understandings from the video.

Microfinance is a form of financial services for entrepreneurs and small businesses lacking access to banking and related services. The two main mechanisms for the delivery of financial services to such clients are: (1) relationship-based banking for individual entrepreneurs and small businesses; and (2) group-based models, where several entrepreneurs come together to apply for loans and other services as a group.

The modern use of the expression "micro-financing" has roots in the 1970s when organizations, such as Grameen Bank of Bangladesh with the micro-finance pioneer Muhammud Yunus, were starting and shaping the modern industry of micro-financing.

In his speech he explained how he developed the micro-finance model in the poor villages of Bangladesh which eventually got replicated all over the world. He set up a system of Social business whose main purpose was not profit maximization but serving the most pressing problems of the society.He explained , how simple non collateral based loans can transform the lives of poor. He visualized " we have created a society that does not allow opportunities for those poor people to take care of themselves because we have denied them those opportunities"

In class, We had a discussion on how Traditional banks are different from grameen banks. Illustrated by tabular column below.

I am embedding the video we were asked see below. Watch it; it's worth your time. 

he other takeaway from this class for me was the idea of how the organizational culture actually shapes and is shaped by the goals and objectives of any organization. The culture at Grameen Bank is to find ways to eradicate poverty. The Managing Director of the bank is not asked, “Why are Profits down?”. Instead he is asked, “How many people have you taken out of poverty today. It is precisely this culture that has allowed the Grameen Bank to achieve so much.

Structure of Organization

This class was about the importance of organization structures and what exactly are the different types of organizational structures.

What exactly is the meaning of organization structure??

The organizational structure of an organization tells you the character of an organization and the values it believes in. Therefore, when you do business with an organization or getting into a new job in an organization, it is always a great idea to get to know and understand their organizational structure.

One more important question is “Why does companies spend so much of their money and time on re-jigging their organization structure?”

The answer is while the strategic decisions are taken by the top line management, it is the effectiveness of the organization structure which translates this strategy into successful implementation.

The below link highlights the importance of organization video and design

 

What are the three main types of organization structures?

Functional Structure

Functional structure is set up so that each portion of the organization is grouped according to its purpose. In this type of organization, for example, there may be a marketing department, a sales department and a production department. The functional structure works very well for small businesses in which each department can rely on the talent and knowledge of its workers and support itself. However, one of the drawbacks to a functional structure is that the coordination and communication between departments can be restricted by the organizational boundaries of having the various departments working separately.

Divisional Structure 

Divisional structure typically is used in larger companies that operate in a wide geographic area or that have separate smaller organizations within the umbrella group to cover different types of products or market areas. For example, the now-defunct Tecumseh Products Company was organized divisionally--with a small engine division, a compressor division, a parts division and divisions for each geographic area to handle specific needs.

The benefit of this structure is that needs can be met more rapidly and more specifically; however, communication is inhibited because employees in different divisions are not working together. Divisional structure is costly because of its size and scope. Small businesses can use a divisional structure on a smaller scale, having different offices in different parts of the city, for example, or assigning different sales teams to handle different geographic areas.

Matrix

The third main type of organizational structure, called the matrix structure, is a hybrid of divisional and functional structure. Typically used in large multinational companies, the matrix structure allows for the benefits of functional and divisional structures to exist in one organization. This can create power struggles because most areas of the company will have a dual management--a functional manager and a product or divisional manager working at the same level and covering some of the same managerial territory.

The Valley Crossing Exercise

There is a saying "Talent wins games, but teamwork and intelligence wins championships."

Teamwork is defined as efforts done by a group of people to achieve a common goal. In essence, each team member leaves his/her individual priorities aside for a larger cause and works together.

The valley crossing exercise was performed to provide an idea of the concept of teamwork. 

Let us analyze the following example

In this, three persons had to cross from left block to right block. Both the blocks were separated by a distance of more than one step of each person thus making it impossible for single person to achieve it individually.

To accomplish the task, we derived a workflow and split the task into 9 steps. Then all the steps were followed and demonstrated in class to achieve the goal.

The steps are as follows

Three wise men Crossing the valley  - Detailed task process

Persons	First Person	Second Person	Third person
Steps
1	Safe	Safe	Safe
2	Half Risky
3	Full Risky
4	Half Risky	Half Risky
5		Full Risky
6		Half Risky	Half Risky
7			Full Risky
8			Half Risky
9	Safe	Safe	Safe

 Safe  - Both the legs  of the person  have full  support

Half Risky – One leg in the air and the other leg has support

Full risky  -  Both the legs are  in the air without any support

Learning from the activity

Workload Distribution

Working in a team has an advantage of the workload getting distributed among all the team members. With work properly distributed, you can concentrate on a single activity till the time you gain expertise in it and you not feel stressed out due to work. 

Trust

 The organization cannot be successful if there is no element of trust in it. As in the case of valley problem, persons can take the risk to cross the valley only since they trust the other two. Similarly for the organization to be successful, managers and workers have to follow the Theory X which tells the people or managers have trust on the other people or employees.

Responsibility

Everybody in the organization is equally responsible, no matter if he/she is the higher manager, manager or the engineer/ worker. Because if suppose engineer will not be able to do his job properly then not only he will be in the risk but there is the chance that the manager and the higher manager will be also be in the risk. And finally the task will not be completed.

Communication

When working in a team, communication will need to be established. If a team can't communicate - it can't and won't work. In a team, there are lots of different individuals from different walks of life, being brought-up in different environments. The individuals of any team will have varying personalities, and so working in close proximity with these different characters will get you used to how to communicate with them. Working in this environment will help to round-off and develop communication.

Increased Speed of Work

With many people handling a single project and doing the assigned work properly, the overall work speed increases and your team can complete the project well within the given time frame.

The Three Monks ("WE>>"I")

For our next lecture we were asked to complete a small assignment before we come to class. But this assignment was different.  We were asked to watch a Short film called “Three Monks and No Water”. It is a Chinese animated feature film produced by the Shanghai Animation Film Studio in 1976, It is also referred to as “The Three Buddhist Priests”.

The film is based on the ancient Chinese proverb "One monk will shoulder two buckets of water, two monks will share the load, but add a third and no one will want to fetch water.”

The Brief Plot

A young monk lives a simple life in a temple on top of a hill. Every day he gets two buckets full of water from down the hill and carry them back to temple using a shoulder pole. This time around another monk joins him and they share the job of carrying water using bamboo stick after initial arguments over the position of bucket on the bamboo stick. The arrival of a third monk gave a sigh of relief to the other monks. They made the third monk carry water. He gets so exhausted in the task that he drinks all the water by himself. So he evades from the task. Eventually everyone starts expecting the other person to take on the chore. Consequently, no one fetches water though everybody is thirsty. One night, a rat accidentally knocks the candle holder, leading to a devastating fire in the temple. The three monks finally unite together and make a concerted effort to put out the fire. Since then they understand the old saying "unity is strength" and begin to live a peaceful life.

LEARNINGS FROM THE STORY

As soon as the second monk came to the temple, the 1^st monk ascertained a way to partner with him and divided the work among them. This shows that division of work is a positive trait and helps in increasing the throughput.  

 

We saw that when second monk joins and wants to share up the load, they end up pulling 1 bucket together. Here the load was shared but efficiency was reduced. It is important for a proficient manager to realise that though load sharing is important to maintain the harmony amongst the team members, utilisation of the available resources should be done in a way such that the overall efficiency increases.

With the entry of the 3rd monk all of them started to run away from their duties. This happened because there was no clear cut defined role for them. The same thing may happen in an organization which has many members but not well defined set of goals to keep them focused.

This story teaches a gentle, humorous lesson about responsibility. Three monks allow personal pride to interfere with the performance of daily tasks, each believing that the other two should be the ones to go downhill to fetch water. When a fire breaks out, however, they understand how silly they’ve been and work together to save the temple.

The story shows that when one person carries 2 buckets of water, the amount of work done by the person is more and hence the productivity decreases. When 2 person carries 1 bucket of water, the amount of work done is split into halves and the productivity increases.

Task	Output(No. of buckets)	Input(Unit Work Done)	Productivity (Output/Input)
1 Person - 2 Buckets	2	2	1
2 Persons - 1 Bucket	1	0.5	2

When the monastery is on fire they realise that it is better to think in terms of team goals rather than individualistic goals. The monk at the bottom fills the buckets, the middle monk works on pulley system and the third monk at the top douses the fire with water in the bucket. This shows difficult situation inspires ingenious solutions.