An update on our shortcomings
Written by Koen The on 13 December 2021
As some of you know, we publish our shortcomings on our website. At one point in our company history, we decided that that would be more insightful for people than showing what we think we are good at. At that time we were not sure if that was a wise decision, but overall, sharing our shortcomings has been well received by our crowd.
Identifying your shortcomings is one thing, getting rid of them is a totally different ball game. We are committed to keep playing that game and we would like to share with you where we stand today.
So how did we do, tackling our identified shortcomings?
Shortcoming 1: We still don’t know what the net social impact is of our efforts
Until recently, we could only provide people the 'ex-ante' impact created with their money. We would ask investees what the impact would be for a project that they were uploading to our website. Now we ask them to provide certain metrics every quarter after they've received the funds. That way we get a much better sense of the impact that has been created.
And on that basis, we are going to publish our first Lendahand Annual Impact Report (Lendahand AIR?) early 2022.
Status: Not a shortcoming anymore.
Shortcoming 2: We find it hard to balance between creating impact and scaling up
We've come to notice that this boils down to 2 questions: can we increase volumes while still serving small SMEs and financial institutions? And what kind of parties do we allow on our platform to raise debt funding?
With respect to the 1st question, the good news is that the amount lent through our platform is increasing. That means more money is going to entrepreneurs in developing countries that can sustainably grow their businesses. However, in order to cope with these increased volumes we are kind of forced to partner with larger companies and financial institutions. And while that still allows for a lot of impact to be made, we feel we are not unlocking the full potential of the impact that we can create with Lendahand. The sweet spot is to grow volumes while having smaller companies financed.
One way to achieve this is to make use of emerging financial technology. We pitched this to US AID and they awarded us with a subsidy to make this happen. With their funds we've been able to set up the Data Team, which is going to allow us to do 'algorithmic lending': a fast way of lending in small tickets using machine learning. Although we have good hopes, this is all untested.
Then to the 2nd question. We are about to install an Impact Board. This group of people will decide early on in the investment process, whether a potential investee fits our portfolio in terms of impact. It's straightforward and in hindsight we should have done this much earlier.
Altogether it's fair to say that we need to keep this shortcoming on our list, but with a specific focus on the size of the companies and institutions that we are funding.
In order to not totally discount what we've done with regards to this shortcoming: we did what we said we would do, and that is to help set up a new impact-first crowd-lending platform (loans with 0% interest rate) together with several NGOs.
Status: Remains on the list, but in a different format.
Shortcoming 3: Stress levels are high
In our annual internal happiness surveys we kept scoring low on stress levels. We dug deeper (yup, more surveys and interviews) and found that the lowest common denominator was 'demands'. We were expecting too much from each other and at the same time we had a messy process of assigning tasks, stating expectations, and measuring progress.
We doubled down on goal-setting (in the objectives & key results framework) and defined clear Roles & Responsibilities (R&Rs). These R&Rs are dynamic and people can flag a responsibility for change. Someone may be of the opinion that a certain responsibility belongs to her, or the other way around, that one of her responsibilities should be with someone else. Once flagged, there is the commitment to consider the situation and decide what should be done. Minimizing gaps and overlap in R&Rs helps in reducing stress caused by demands.
We have also set up feedback teams that get together on a regular basis. You might think that these sessions lead to more stress, but they don't. As long as these sessions are constructive, they reduce uncertainties and wrong perceptions.
We still have a long way to go here and with more people joining the team we need to stay on top of this, but the basis has been put in place.
Status: Not a shortcoming anymore, as long as we monitor it closely.
Shortcoming 4: Suboptimal channeling of ideas, opinions, and energy
This is a complex problem. How do you create an environment where the best ideas win? Or how do you make sure ideas get heard in the first place, especially from people that feel uncomfortable speaking out? In the end there is probably no correlation between the quality of ideas and people's willingness to speak out.
Each 2 weeks we have an open mic. People can bring up any topic or question, or just do a personal announcement. The idea is to have an accessible platform where people can coin ideas or concerns. It's optional but luckily quite a few people dial in each time.
We have installed team leads. This is not an extra layer, but it's introducing extra nodes in a system, allowing for better two-way information flow.
Furthermore, everybody has at least one 1on1 with someone from the management team. In a 2-way discussion, people are stimulated to give their perspective on things they feel are relevant for them. There are also quite a lot of 1on1s between team members going on! It seems that at any given moment you see a Lendahand pair in cafe Heilige Boontjes on the ground floor of the building our office is in.
And that brings us to hybrid working. We have embraced that and people love that they can decide each week how their workweek is going to look like. We see that work is still kind of going on synchronously within teams, but asynchronously between teams. That on itself is OK, but we also see increased information asymmetry and subsequently a lower quality of communications. In the end it may lead to silos within the company and that we should obviously avoid. We organize more after hours events so that the whole team is able to meet regularly and that brings us to the next shortcoming.
Status: Not a shortcoming anymore.
Shortcoming 5: We don’t celebrate our successes enough
We have learned to celebrate important milestones (we celebrated reaching EUR 100 million on our platform in style, shooting arrows at each other on the beach of Renesse. Pictures available at request). And if a team has achieved something they are proud of, they bring delicious food or snacks to the office. We could celebrate individual successes better, but hey, our Dutch nature makes that difficult. To literally translate a Dutch saying: do normal and you are crazy enough. So yes - we could celebrate more. And luckily there is a lot to celebrate at Lendahand, so we are on a steep learning curve here.
Status: Hurray, not a shortcoming anymore.
This past year and a half, we managed to tackle 4,5 out of 5 of our shortcomings. While we addressed them and improved on them, others have emerged. Stay tuned for our new shortcomings to be published on the designated page soon. Making sure we can’t turn a blind eye to them.