As the International Monetary Fund moves to change its leadership, it should also change its business model, according to Matthew Clark, senior director of startup engagement for Microsoft’s strategic and emerging business team.
Pity the staff of the IMF. IMF President Dominique Strauss-Kahn’s alleged rape of a hotel maid is all over the news, overshadowing their work preparing for the G8 Summit. It seems the only time the IMF gets headlines in the US is for the indiscretions (or worse) of its presidents. No doubt the IMF is desperate to change the subject and then quietly change its president.
The Strauss-Kahn incident is a sad reminder the diminished position of Bretton Woods institutions and the malaise that plagues them. Staff are demoralized. Money is tight. Major shareholders –the governments of the US, UK, France, Germany, and Japan – are losing interest. NGOs, social enterprise, and venture philanthropists get all the attention and garner all the passion and imagination of development enthusiasts. When asked by young people whether they should pursue a career in development, I answer, “Yes. But not in development agencies.”
There are hundreds of explanations of the dysfunction of Bretton Woods institutions but it’s worth noting that there has been incredible improvement in the quality of life in developing countries since the Bretton Woods system came into being after World War II. The problem is few people think the IMF and World Bank deserve much credit for it.
In the over 60 years since their founding, the world has experienced incredible transformation and achievements. The fall of Communism. Genetically modified food. The rise of the Internet and mobile phone. Trips to the moon. The sequencing of the human genome. Private industry responded with repeated changes to business models. In technology, we’ve moved through the PC era to the client-server and now to the cloud. During every era, tech companies experimented with and adopted different business models.
In sharp contrast, throughout all this change and transformation, the Bretton Woods institutions have maintained just one – one – business model: collecting interest on loans (packaged with advice) given to governments. Sure, there have been variations at the edges: a (group) think tank here, a clever idea contest there, a Web gateway to nowhere. But the core business model has not changed.
As one might expect, other players entered the development arena to meet the opportunity. Kiva.org has democratized microfinance, providing over $200 million in loans since 2005 from individuals. The Gates Foundation has revolutionized data-driven development research and targeted intervention. The government of China now is the most important infrastructure lender in Africa.
It’s a shame the IMF and the rest of Bretton Woods find themselves rudderless. The enormous potential of the staff goes untapped.
So, by all means, the IMF should change the subject and then change its boss. But, while it’s at it, the IMF and all the Bretton Woods institutions should change their business model too.
Re-published with permission. Read the original blog post.
About the author
Matthew Clark
Matthew has more than 14 years of experience driving business strategy and building private-public partnerships. He has overseen Microsoft Inc.'s worldwide relations with international financial institutions like the World Bank and International Finance Corp., and currently serves as senior director for startup engagement with the company’s Strategic and Emerging Business Team, responsible for Microsoft BizSpark™ One, a global program that accelerates the growth of high-potential startups and builds a supporting community of incubators, investors and advisors around them. The views expressed in this article are his own and do not necessarily reflect those of Microsoft or Devex.