The 2010 AI Summit for IFMR Trust.

1. Appreciative Inquiry at IFMR Trust Dave Wallack

2. “Appreciative inquiry gets much better results than seeking out and solving problems. We concentrate enormous resources on correcting problems... [but] when used continually over a long time, this approach leads to a negative culture, a descent into a paralyzing sense of hopelessness. Don’t get me wrong. I’m not advocating mindless happy talk. Appreciative inquiry is a complex science designed to make things better. We can’t ignore problems- we just need to approach them from the other side.” - Thomas H. White, President, Telephone Operations, GTE Wireless

3. AI is an approach to organization change that has been used successfully in small and large change projects with hundreds of organizations worldwide. It is based on the simple idea that organizations move in the direction of what they ask questions about. For example, when groups study human problems and conflicts, they often find that both the number and severity of these problems grow. In the same way, when groups study high human ideals and achievements, such as peak experiences, best practices, and noble accomplishments, these phenomena, too, tend to flourish. AI distinguishes itself from other change methodologies by deliberately asking generative questions to ignite constructive dialogue and inspired action within organizations.

4. AI is a decision. It is a theory and philosophy that applies to any choice we make about seeing and understanding our world. It is a conscious choice to socially construct reality in generative, creative, imaginative and, of course, appreciative ways that leads us into a world of possibilities for our most desired future. Changes in the world necessitate changes in language, and changes in language affect what we are able to grasp about the world and how we grasp it. By searching for new ways to speak about new situations and experiences, language develops. Language has the power to move us toward our preferred future.

5. As a method of organization change, AI differs from traditional problem-solving approaches. The basic assumption about problem-solving is that people and organizations are machines that are fundamentally “broken” and need to be fixed. The process usually involves: 1. Identifying the key problems 2. Analyzing the root causes of failure 3. Searching for possible solutions 4. Developing an action plan In contrast, the underlying assumption of AI is that people and organizations are highly generative living systems. They are always evolving, growing, and moving toward the future. AI focuses the whole organization on identifying its “positive core” – its greatest assets, capacities, capabilities, resources, and strengths – to create new possibilities for change, action and innovation.

6. The five core principles of AI

7. Principle 1: Constructionist Knowledge about an organization and the destiny of that organization are interwoven. To be effective leaders in any situation, we must be skilled in the art of understanding, reading, and analyzing organizations as living human constructions. What we believe to be true about an organization will affect the way we act and the way that we approach change in that system. The first task of any organizational change process is discovery – learning and making sense of what is believed about the system The way we know is fateful

8. Principle 2: Simultaneity Inquiry and change are not separate, but are simultaneous. Inquiry is intervention. The seeds of change – the things people think and talk about, discover and learn, and that inform dialogue and inspire images of the future – are implicit in the very first questions we ask The questions set the stage for what we discover, and what we discover creates the stories that lead to conversations about how the organization will construct its future

9. Principle 3: Anticipatory The most important resources we have for generating constructive organization change or improvement are our collective imagination and our discourse about the future. The image of the future guides the current behavior of any person or organization. Much like a movie projecting on a screen, human systems are forever projecting a horizon of expectation that brings the future powerfully into the present. Organizations exist because people who govern and maintain them share a discourse about what the organization is, how it will function, and what it is likely to become

10. Principle 4: Poetic Humanorganizations are open books. An organization’s story is continually being co-authored by the people within the organization as well as by those outside who interact with it The organization’s past, present, and future are endless sources of learning, inspiration, or interpretation, just as a good poem is open to endless interpretations. We can study any topic related to human experience in any human system. We can inquire into the nature of alienation or the nature of joy. We can study moments of creativity and innovation or moments of debilitating stress. We have a choice.

11. Principle 5: Positive Momentum for change requires large amounts of positive affect and social bonding – things like hope, inspiration, and sheer joy in creating with one another. Human beings and organizations move in the direction of what they inquire about. Inquiry into “empowerment” or “being the best organization in the field will have a different long-term sustainable impact for positive action than will a study into “low morale” or into “process breakdowns” done with the idea that these conditions can be cured. Learning how to succeed is a different practice than learning now not to fail.

12. The five processes of AI

13. Step 1: Defining the topic of inquiry The topic of inquiry is defined in a manner that aspires to create something that the whole system really wants instead of around the solving a problem that the system is perceived to have.

14. Step 2: discovering the positive core The purpose of this phase is to search for, highlight, and illuminate the factors that give life to the system. The system harvests the raw data by having people in the system exchange success stories about that actually happened. Small groups identify themes in these stories that they believe are root causes of the system’s peak performance, these root causes are reported to the whole system. Data analysis on the root causes reported by each group is done by the whole system and the whole system interprets the results.

15. Step 3: reaching a shared vision Given a better understanding of the root causes of the system’s current peak performances, each person in the system is asked to imagine what would be possible if those root causes of peak performance become the norm in the system. People then go back into small groups to share their dreams. To inspire people to dream they are asked to use an artistic medium to visualize their optimal vision of the future. This art is shared with the whole system and feedback is received. The small groups then put their dreams back into words which are shared with and refined by the whole system. The end of this step is a shared vision of the future that has been created by and is grounded in the reality of the system.

16. Step 4: designing initiatives to reach the shared vision Once there is a shared vision for where the system wants to go, then system focuses on redesigning its social architecture – norms, values, structures, strategies, systems, ways of doing things – in a way that can bring the system’s dreams to life. Small groups identify possible design elements worthy of focus. These are reported to the whole system. Any member of the system is then free to pitch themselves to the whole system as the leader of a design team to focus on that element. Teams then meet and some merge into larger teams. These design teams then create visions for the future state of their design element that are provocative enough to garner the support of the whole system.

17. Step 5: planning the implementation of those initiatives The design teams then lay out a tactical plan for achieving the vision that they have each set out. Each member of the system reviews the other tactical plans and offers their support and resources under their control to speed the execution of each tactical plan. With the whole system in the room any decision is possible. Plans are made for how to follow up on the plans.

18. Our AI Summit

19. Step 1: Defining the topic of inquiry The purpose of the IFMR Trust AI Summit was to unify our efforts and thus accelerate our progress towards our mission of ensuring the growth of a community of originators that is so vast and of such high quality that there is complete access to finance for every individual and every enterprise.

20. Our objectives Our objective was to discover and build on the strengths of our past and to create an IFMR Trust-wide shared vision for how we will ensure complete access to finance for every individual and every enterprise by creating shared sub-visions for: 1. Transformative Wealth Management 2. Agile Operations 3. Abundant Access to Capital 4. Breakthrough Advocacy

21. Transformative Wealth Management This topic includes the diagnosis of the household’s financial well-being; the tools we use to come to that understanding; the dialogue with the household to understand its investment, its consumption, and its dreams; the tools we use to create that dialogue; the product development and customer data analysis; the directly related training of the wealth managers and other employees; campaigns to create awareness with the community; efforts to better understand the villages we operate in, each household and its members; and efforts to support enterprises and entrepreneurs.

22. Agile Operations This topic includes all efforts to create a standardized set of KGFS systems and processes that are strong enough to withstand massive scale and are also flexible and robust enough for others to replicate in varied contexts. It includes all processes, strategies and efforts from cash management to audit that enable us to keep costs low while ensuring operational quality and being nimble and flexible. This topic also includes the technology, training, and other efforts required to deliver, manage, audit, and continually improve that which seems impossible to others.

23. Abundant Access to Capital This topic includes everything that relates to the securitization of loan portfolios from KGFS and other originators including investor relations, due diligence, monitoring, and the legal and logistical work required to execute the scale in quantity and size of transactions required to ensure the mission is achieved. This topic also includes the provision of mezzanine capital to prepare originators for capital markets.

24. Breakthrough Advocacy This topic includes the breadth of our efforts to advocate for an inclusive and stable financial system. This topic includes all of our engagement with regulators to create a friendly policy environment, the media to harness the power of public support, students to create a groundswell of support, academia to create a body of knowledge the world can tap into about how to create access to finance.

25. Step 2 : Discovering the positive core We recruited and trained a core team of 30 people within the system to harvest success stories before the AI Summit these stories are available on a private blog to which you have been subscribed. We used these stories to design the structure of the AI Summit. A few of them were even used in the internal marketing campaign for the event …

29. Stories At the beginning of the AI Summit we had people in the system pair off to capture each other’s success stories and visions of the future.

30. Then each pair joined three other pairs to pool their stories and find common themes

31. Then the themes were shared with the whole system

32. Once all of the themes were shared with the whole system, then each person got to vote (with Avery dots on a scattergram) for the 5 themes they felt were most responsible for IFMR Trust’s successes. The Positive Core of IFMR Trust

33. 1. We are clear on our mission 2. We are intrinsically motivated 3. We are innovators 4. We are open and egalitarian 5. We are experts in our work 6. We are resilient and we persevere

34. Step 3: reaching a shared vision Now that we had a clear sense of the root causes of our peak performance we were ready to think about what we could accomplish if these root causes became the norm – if we really leveraged them. One of our strengths was the clarity of our overarching mission, but we wanted to make sure people had a picture in their mind of what the world would be like if we made tangible progress towards that mission. Bindu put out a set of milestones for IFMR Trust in 2015 to help prime people’s dreams.

35. There are now more than 10,000 KGFS branches staffed by over 30,000 transformational wealth managers whose unquestionable impact has led the micro finance industry away from a product-centered focus to a customer-centered focus. Each KGFS branch is extremely well capitalized because IFMR Capital has securitized more than 10,000 crores of micro loans from the KGFS network alone. The entire KGFS network is a model of process excellence that has raised the bar on other originators – and they are responding. IFMR Mezzanine and IFMR Capital have dramatically expanded the pool of high quality originators outside of the KGFS network. IFMR Ventures’ work has led to lakhs of micro enterprises having steady access to markets and finance. Villages have been transformed. Regulators and policymakers have been convinced and have been acting to support IFMR Trust’s efforts, the media is excited, and the public sees the power of access to finance.

36. Once Bindu had thrown down the gauntlet to our system, then Dave did a visualization exercise with the whole system to get them to turn Bindu’s numbers into pictures in their minds.

37. We broke the system into 8 groups. Each group tried to put their vision for one of the four sub-visions into words. Then we shook them up by asking them to explain their vision to the rest of the system by putting on a puppet show – in an hour.

38. People rose to the challenge!

39. … and an hour later we enjoyed hilarious puppet shows that helped us to get clearer about the visions each of us had of what IFMR Trust will achieve.

40. Our team did not realize how prescient they were in talking about the central government and RBI.

41. And while everyone had a good time, they also came to a shared sense of what was possible if all of us worked as one.

42. Step 4: designing initiatives to reach the shared vision The next step was to determine what changes IFMR Trust needed to make in its social architecture to bridge the gap between where we are today and the vision we set for ourselves. We needed to change our system so that we could make the root causes of our current successes the norm in our system. Small groups focused on things that needed to change for us to reach out vision. We then pooled all of these potential changes. Every member of the system got a chance to review the full set of potential changes. Then we invited anyone in the system to get up in front of the whole system to take leadership of a change and to appeal for others in the system to help.

43. Design Teams We expected 15-20 people to rise to this challenge. We were surprised when 43 people queued up. Each spoke passionately about a possible change. Over the course of an hour many smaller groups merged into 12 larger groups. Each group would design an initiative. 1/3 of the company got up to talk about something Coalesed into a smaller number of groups

44. Inspiring Induction "The induction into IFMR Trust is an inspiring experience that helps the inductee understand what we stand for and help their smooth transition into the team. A great environment in terms of surroundings and structure of programme is provided to get the best of every moment. The programme ensures that they get friends for life supporting each other in every walk of their professional life. At the end of the programme the participants feel valued and walk out with a sense of pride of having made the right choice of joining this movement called IFMR Trust."

45. A Fine Balance People are our greatest assets. Our profit sharing model brings about a sense of complete ownership and responsibility towards the organization while striking a balance between our mission and employee aspirations.

46. Sparks of Change We engage youth. We use our expertise and experience to create awareness about the deeply transformative power of access to finance. We provide a platform for them to participate in the process. SEE BELIEVE ACT

47. Beyond Human Capital Human Capital partners with management strategically and plays a defining role in business decisions. We attract high quality talent through our advocacy efforts and accelerate human capital through clearly defined roles & responsibilities. We have established a learning culture which fulfills individual and organizational aspirations. We have a robust and dynamic Performance Management System which is transparent and provides inputs for Training & Development and Career & Succession planning. We have a feedback mechanism which fosters achievement & support oriented culture. We retain our talent through best practices and Employees feel valued, recognized and appreciated.

48. Beyond Transactions The project is about building up a relationship with Credit Bureau and revisit and suggest a better data structure which will specifically be helpful for both rural population and service providers.

49. The Gardeners Gardeners will work towards building a model where the expertise of the respective entities within IFMR Trust will be leveraged to create a conducive environment where new and growing enterprises have complete access to finance.

50. The Voice We are the voice of financial inclusion.

51. Research in Action The goal of this project is to ensure that every intervention at the trust is based on a thorough understanding of markets and customer needs. We believe that continuous collaboration between the business units and research teams at the trust will bring rapid improvements in the quality of our work

52. Enterprise Transformers We have the expertise in the ecosystem of indigenous enterprises of India's villages through our continuous engagement with them. This expertise includes an understanding of their business models, their customers and regional nuances . We leverage this expertise to partner with organizations to ignite growth, expansion, and replication.

53. IFMR Way Respect for all individuals, merit for deserving ideas and translation into action, fearless exchange of thoughts, a sense of ownership and responsibility that goes beyond the apparent, informed, involved and participative decision making. Holding on to the highest standards of ethics. We stand on the shoulders of giants and soon others will stand on our shoulders.

54. BATS (Business & Technology Success) In our organization our employees have instant access to information in one centralized place which seamlessly integrates and disseminates the knowledge & analysis of all IFMR groups, alumni and the global community. The platform and the system it supports are secure, robust, agile, scalable and very easy to use.

55. ROBUST GOVERNANCE We believe that Corporate Governance is vital to the growth of the organization. Our strong governance practices lay the foundation for growth, ensure quality and enable stability. Mission: IFMR Trust follows best practices and sets standards for highest level of good governance. We ensure high ethical standards and transparency and our guided by our board members who are enriched with experience and expertise. We have been certified for adopting best corporate governance practices by national and international agencies. Our stakeholders look forward to being associated with us as it enhances and enriches their wholesome experiences. Our Governance practices lay the foundation for growth, ensure quality and enable stability. Vision: To be a trendsetter in Corporate Governance by adopting high ethical standards value systems and transparency.

56. Stage 5: planning the implementation of the initiatives

57. Each team presented their tactical plan. Other teams had to approve that it was aggressive enough. Because we had management and the entire system in the room at one time there was the ability to offer up resources and make decisions to speed execution.

58. We closed the three day event with people sharing their excitement about getting to be a part of creating the future of IFMR Trust and their deeper appreciation of each other.

59. Thank you