The Four Lessons from Akula’s Path to “End Poverty through Profitability”

1) Talk and Listen to the Owners of the Problem
Understanding the cyclical and interrelated nature of poverty was just the first step
towards finding a good solution. What proved more important for Akula was understanding the
nature of the people who faced poverty. Living within the village, he understood an important
value that several people forget when they help the poor; he learnt that “Poor people themselves
are actually far more knowledgeable about their situations than outsiders, as they also have ideas
about how to improve things” (Akula.41). Having this attitude helped Akula create a business
model and build an organizational culture that was truly supported by the locals.
The impact of such an attitude on the culture of SKS Microfinance was incredible. The
loan officers developed a relationship of trust with the members and created a tradition of
consulting them before new-product developments. This strong bond was also leveraged to
conduct market research about product needs. The culture of learning from the problem-owners
was so deeply embedded that village women were the source of new products ideas, were data
providers for market research, and finally, were voters for its launch. Such a holistic involvement
of the members ensured that they trusted all SKS products.

2) Approach the Problem at its “Point of Greatest Astonishment”
Akula’s transformative approach to microfinance was not an idea that clicked overnight,
but one that was developed through years of learning. He experienced his first “point of greatest
astonishment” at the age of seven in India when he observed a woman pick up five to ten grains
of rice that were mistakenly dropped on the floor. The fact that someone cared about saving
those five grains of rice was astonishing to Akula who would have swept them off as dirt. He
realized the extent to which hunger existed when five grains of rice would make a difference.
This, along with the memory of watching poor boys consume leftovers of wedding guests’
dinner, drove Akula to his goal of reducing poverty.
However, he experienced the “point of greatest astonishment” that led him to believe that
change was necessary in the existing poverty-reduction and microfinance institutions while he
worked at an NGO, Deccan Development Society in India. When the question “Am I not poor
too?” was thrown at Akula by a rural woman whose village had no access to microfinance loans,
he realized that he needed to find a way to scale his resources to reach maximum coverage
(Akula.1). The existing non-profit microfinance and development organizations had no resources
to reach the poorest of the poor. He thus pioneered a for-profit model so he could scale up to
benefit more people.
By targeting the point of greatest astonishment each time, Akula found solutions that
were industry leaders in his field. During his two-week period at Grameen Bank, he noticed that
all the data was collected on paper and put in files that were lost amongst other documents. It
astonished him when it took a Grameen employee one entire day to sift through files to find a
document that Akula required. To ensure that SKS Microfinance did not have inefficient
management of data, Akula invested large amounts of money in developing software for data
collection and management. Knowing that there was limited funding available, he took a great
risk and had the foresight to invest into the software to ensure long-term benefits. It showed
extensive success, proved beneficial for data analysis and made the loan officers’ role more

3) Venture Beyond Social Constraints
As Akula said, using poverty and profit in the same sentence is often taboo for several
people. SKS was criticized for having high interest rates and making profit from the poor.
However, Akula believed that “The notion that it’s somehow unethical to enter into a profitable
business working with the poor is insulting to the poor” (Akula.153). He respected them as
working women and men who thrive “under a system that allows them to take their economic
lives into their own hands. Treating them as anything less is unjust” (Akula.153). His business
model helped SKS be sustainable and independent of regular donations. It helped scale enough
to reach millions of people. Most importantly, the members could easily afford this rate of
interest and make large profits because of four main reasons, as shown in Akula’s model (Exhibit
1). Thus, by venturing beyond the social dogma of not associating poverty with profit, Akula
created more social benefit. Big problem solvers must thus lose the fear of taking the
unconventional route, even if it is initially criticized.

4) Think Beyond the Obvious and Leverage Economies of Scale
Akula combined SKS’s large member base with several unusual business models to attain
success. First, SKS Microfinance used McDonald’s approach for training its loan officers, which
created a standardized practice throughout their branches. Secondly, its large network of
members and loan officers was used creatively to distribute developmental products. Akula
brought in insurance companies to provide life insurance for extremely low rates. He also
distributed inexpensive mobile phones. Thirdly, he developed several “free” initiatives, such as
disaster management and suspending loan collections during cyclones, providing deworming
tablets, and giving out free “asset baskets” of the member’s choice to the “ultra-poor” so they
could start their own small business. Lastly, “more than a million members have used their loans
to open and run small home-front grocery, or kirana stores, where they sell things like
toothpaste, soap, shampoo, and food items. The store owners make money from their new
businesses, and their fellow villagers benefit by having greater access to goods” (Akula.158).
SKS made deals with large companies like Metro Cash & Carry to create a “de facto national
chain, increasing the storeowners’ power and giving them access to cheaper bulk goods, directly
from the supplier” (Akula.159). Thus, combining SKS’s strengths with unusual business models
such as those of fast-food chains like McDonald’s, department stores like Metro Cash & Carry,
insurance companies like Bajaj Alianz and telecommunication companies like Airtel, was not the
obvious route for a microfinance institution. Leveraging economies of scale through SKS’s large
member base and creating innovative distribution solutions shows an applicable concept for
developmental projects by using existing supply chains or distribution channels that are scaled
and marketed largely.
In conclusion, A Fistful of Rice depicted how an unconventional business model was used
for microfinance to provide access to capital for small businesses in several villages in India and
to create a sustainable channel through which poverty could be addressed. I learnt that Akula’s
four approaches could be used by other social entrepreneurs. However, the scope of these lessons
might vary by industry and thus might not apply to solving all big problems. For example, they
are more applicable to developmental opportunities than technological problems. Technological
problem solvers often approach problems at “the point of least astonishment,” so the consumers
can easily comprehend its need and the product “makes sense” to consumers, instead of
confusing them. Although the lessons learnt from A Fistful of Rice, have limited scope, they may
apply individually to several other businesses in education, disease prevention, healthcare and
other developmental initiatives.

Exhibit 1:


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