Finding a Good Fit

In her book The Blue Sweater, author Jacqueline Novogratz says the customer is always right, even those at the bottom of the pyramid.

When she was a teenager, Jacqueline Novogratz took a blue sweater to Goodwill—only to see it again years later on a boy in Rwanda, where she was working to help start a microfinance organization.

It makes for a perfect title, being both a good story, and also a striking metaphor about how markets are connected in today’s world. And it is just the beginning of the compelling stories—and poignant insights—that Novogratz makes as she recounts her journey to end poverty, mostly through work in Africa.

In a recent Interview with Profit Online, Novogratz said that while she came to the developing world to rescue it, she eventually realized that “nobody wants other people to come and save them.”

Through her own work history—which includes microfinance as well as work as a banker for Chase Manhattan, a fellowship with the Rockefeller Foundation, and more—she began to envision a new way of ending poverty. That’s why she started the Acumen Fund, making loans and equity investments in entrepreneurs trying to sell affordable services to low-income people, such as bed nets or irrigation for sustenance farmers.

Novogratz talks to Profit about the future of leadership, why it’s important to build solutions from the customer’s perspective, and how to find opportunity in the current economic market.

Profit Online: You have worked with many different kinds of leaders throughout the world and now run your own global non-profit. What makes a good leader?

Novogratz: I would reiterate what one of my mentor’s, Common Cause founder John Gardner would say: Real leaders move from a strong moral compass. They have a real sense of who they are as well as what they are trying to accomplish in the world, while they’re also really open to listening. Leaders should really have the ability to listen. That’s an underrated and incredibly needed quality in all of us, but particularly in our leaders. John had this idea that it’s more imported to be interested than interesting.

Probably more than any other quality, real leaders have extraordinary determination. And they should have a comfort with being audacious, but also move from a place of humility. Today, we also need leaders comfortable with nuance and holding contradictions in their hands.

Profit Online: You work with a lot of young leaders through the Acumen Fund’s fellows program. Are they different from the previous generation?

Novogratz: For one, we’ve gotten applications this year from more than 60 countries—they’re not just from America and Europe. Also, in the 1960s and 70s, you saw a whole generation with incredible idealism, but they didn’t necessarily have the pragmatism that the generation has today. At Acumen Fund, we want to see our team and our fellows develop financial skills and other operational skills, which are so important to making systems work for low-income people. They also need what we call “moral imagination,” which means you have to put yourself in other people’s shoes and build solutions from that perspective.

Profit Online: Technology investments are a big part of your current work but you say in the book that technology itself is not the answer. What role should technology play in solving problems?

Novogratz: At Acumen, we made some mistakes at the beginning because we were excited by a cool technology, when in fact most human beings do not make decisions based on the cool technology, they make decisions based on the services that are provided. We must understand how that technology fits into the overall context of low-income people’s lives, and what it will take to encourage them to experiment and adapt, and then ultimately adopt that technology. So we have become much more interested in the business model, and how technology fits within it.

Profit Online: In your book, you write about how the best-laid plans often go awry when you hit the ground. What should executives keep in mind when putting plans into action?

Novogratz: Too often top-down plans that assume we have the answers can end up that way. When we’re looking at the emerging market and the bottom of the pyramid, in particular, there’s a real role for incremental-ism. There’s a real role for looking at the poor as customers, understanding their preferences like you would any other market, then building solutions from that perspective.

Let the work teach you, and be very comfortable with not only identifying mistakes and failures, but in learning from them. Then you can scale over time, often with partners, including non-profits and government.

Profit Online: Is the current economic situation making people rethink the way they do business? If so, how can they use your book to help reshape their vision?

Novogratz: The current economic situation is an enormous opportunity for the world on two levels. To your point, people all over the world are beginning to reevaluate their values, what success is, what the bottom line is, and are increasingly interested in integrating sustainability into their definition of success and the bottom line.

Also, when systems are broken, there is an opportunity to reinvent, to innovate, and to imagine. This is the moment for us to ask what will it take for us to extend the financial systems and markets to reach every person on the planet.