A vision. A bank. A leader.

Muhammad Yunus

Leaders throughout history have been responsible for economic relief, revolutionary upheaval, societal division and its subsequent reconnection and many other notable events shaping what the world is today and its successive future. These are people with a domineering drive to change and have an impact on something that they believe strongly enough in and it’s this self motivation that sets them apart from the ordinary community. Is a leader born with this ambition? Can it be gained or even forced upon by others? Whatever is the catalyst for their determination, the personality traits of a leader can be identified and the surrounding factors of their lives can be used to identify their leadership style.

Upon accepting the Nobel Peace Prize in 2006, Muhammad Yunus can be quoted as saying "You cannot go on having absurd amounts of wealth when other people have problems of survival.” If you can bring an end to poverty, at least from an economic point of view, you can have a more livable situation between very rich people and very poor people, very rich countries and very poor countries. That's our basic ingredient for peace."(Yunus, 2006) Here is a man with a mission statement against poverty, his leadership skills and strategies have enabled relief and continued support against this prominent world issue, but what are the ingredients and environment that have shaped this individual?

Born on the 28^th June, 1940, Muhammad Yunus grew up surrounded by poverty. He was born in the Bangladesh village of Bathua, in Hathazari, Chittagong and was the third of fourteen children. His father was a successful goldsmith and education was always encouraged in the Yunus household. One of Muhammad’s greatest influences in what has become his life work was his mother. Sofia Khatun, always helped any poverty stricken beggar who knocked at their door by providing them food and shelter. This continuous extended generosity by his mother complemented by the poor environment he was surrounded by set an example to Muhammad of how a single person can have an affect on many lives and seems to have influenced Muhammad to devote his life to abolishing poverty.

“She was full of compassion and kindness and probably the strongest influence on me. She always had money put away for any poor relation who visited us from distant villages. It was she through her concern for the poor and the disadvantaged, who helped me discover my destiny and she who most shaped my personality”(Yunus, 1998 p29.)

Later on in life, as he progressed through his study and profession, in 1974, as a professor of economics at Chittagong University Muhammad conducted a field trip in which he led a group of students to a poor village. Within this village they interviewed a poor woman who made bamboo sticks for a living that she financed through small loans at interest rates as high of 10% per week. Muhammad’s learning from this was as follows;

“Had she been able to borrow at more advantageous rates, she would have been able to amass an economic cushion and raise herself above subsistence level” Website (Yunus, 2006)

These early learning’s and realizations eventually formed what was to become Muhammad’s life devotion.

Muhammad states that when he thrust himself upon this environment, he came to the realization that he could no longer connect with all the “elegant” economic theories which he taught as a professor of Economics on a daily basis. In order to carry out his vision he would have to re-learn economics by surrounding himself yet again in the poor environment he was trying to alleviate.

To date Muhammad Yunus greatest achievement has been the creation of the Grameen Bank. Against strong government and bank advice, Muhammad continued issuing Micro-loans until in 1983 he formed the Grameen Bank, meaning Village Bank. Today, the Grameen bank consists of 1084 branches in over 47 villages, 12,500 staff with more than 2.1 million customers.

Entrepreneurs tend to begin with a vision and what separates them from the average community member is their ability to arrive at a feasible solution through, amongst other things, their courage, passion, locus of control and pure belief in what they are trying to achieve. These are characteristics that can be observed in many entrepreneurial leaders which lead to certain behaviours within this leadership style, some of which are, visionary perspective, High degree of enthusiasm and creativity, and dislike for bureaucracy. Through the study of his legacy, it starts to become apparent how Muhammad not only possessed many of these characteristics that make an entrepreneurial leader but also certain behaviors within this leadership type.

Bona fide visionary is one phrase that can be used to describe Muhammad Yunus. Ever since he was very young, it is evident that Muhammad has had a clear vision of what the world should be and hence developed this leadership characteristic quite early on in life. Firstly, this vision was influenced by his mother and secondly the poverty stricken environment in which he grew up in. Visionaries have the tendency to identify a problem, and arrive at a solution effectively. Muhammad’s work reflects this. His work is a rethink of the relationship between the rich and the poor. He has taken elementary economic wealth creation methods and made it available to the very poor and disadvantaged.

His visionary style of leadership is also evident through the way new employees of The Grameen Bank are selected and trained. Muhammad states that in order to produce a staff member with the up most of devotion to The Grameen Bank, it is essential that the person hired have no prior work experience. The person must come from a disadvantaged background in order to be able to teach the ideals of what the Grameen Bank stands for. He believes previous work experience tends to distract from what they are trying to teach at Grameen.

To extend on this, one cardinal rule adopted at The Grameen Bank is not to hire experts who have previous work experience within the banking sector. Muhammad states;

“Old experts using new language to fit the new mood in the organization that hires them would be a blueprint for disaster. That is why we have made it a rule of Grameen never to hire anyone who has worked in a traditional bank, for it would take to much time to reprogram them to our iconoclastic ways.”(Yunus, 1998 p160)

“To build this level of motivation and commitment, we have found it is important to pick fresh young people to run our branches”. (Yunus, 1998 p. 160)

Those who have no previous work experience of any kind are the best suited. Muhammad believes and has adopted in his business that it is easier to teach his ideals to fresh untaught minds so they have a greater chance to see the world through his vision.

An internal locus of control seems to be a dominant characteristic in entrepreneurs. Locus of control can be defined as “the way in which individuals attributes responsibility for events that occur in their lives to factors within themselves” (Dubrin, 2002 p 312) An internal locus of control refers to one’s belief that they are in control of their own lives and their choices will result in a chosen outcome if the commitment is there.

From his life work it would be evident Muhammad adopts an internal locus of control. The main example that can be used to illustrate this is the way Muhammad has created an empire through his vision of a poverty free world. The way in which Muhammad began his ideas of Micro Credit demonstrates an immense internal locus of control. In an interview with Paul Covey he states;

“You asked about my vision. All I felt if you would like to call it a kind of drive was can I make myself useful to another person” (Covey, 2000)

He then goes on stating how he discovered that in many cases a very small sum of money can go on to sustain a very large group of people. Subsequently he went on to finance many of his first loans personally and served as guarantor for many others.  It should also be mentioned that he attempts to relay this concept onto not only his employees through their training but also to his cliental. By relieving a major burden that many of these people face in establishing a successful career he has been able to allow many individuals to a sense of self achievement and internal locus of control.

He displays his internal locus of control by acting and delivering a plan to his vision to end poverty. Many people are aware of the immense poverty in the world but tend to feel quite powerless and come to the conclusion that it is out of their control. This is where Muhammad differs in this issue as he never doubted that there should be a feasible solution to this world problem, rather he always had in his mind a ‘what can I do to change this’ attitude. Reading through all the documentation available on Muhammad’s work, it starts to become clear the he always possessed this internal locus of control about his vision.

“The general picture that emerges of an entrepreneur is a task-oriented and charismatic person. Entrepreneurs drive themselves and others relentlessly, yet their personalities inspire others” textbook. (Dubrin, 2001 p. 316)

Entrepreneurs are generally task-oriented leaders as they are the ones with the secret ingredient to their idea. They need to possess the specific characteristics which embody this leadership style.

Two components of the characteristic of task-related leaders are passion and courage. It seems to be the norm of the entrepreneur to completely throw themselves onto their aim, working relentlessly to achieve their goal. They also posses courage for taking bold risks and accepting responsibility when something fails.

This characteristic tends to put a strain in personal relationships which was sadly the case for Muhammad. Upon pursuing his vision, his 10 year marriage broke down and he had to leave his wife and beloved child to peruse his vision of a poverty free world.

Amongst other things, some essential elements of the entrepreneurial leadership style include a high degree of enthusiasm and creativity a visionary perspective which has already been explained and a strong dislike of bureaucracy. Creative leaders tend to be characterised by thinking outside the box and coming up with new initiatives to overcome problems.

“Today, when people ask, how did you come up with all your innovative ideas? You are not a banker by training. How did you set up Grameen? I tell them: We look at the conventional banks, and we turned everything around.” (Yunus, 1998 p. 118) From little initiatives, such as visiting their clients instead of their clients coming to them to reduce the fear felt by the poor and illiterate by visiting their offices to more substantial risks taken by Grameen, such as the very little proof of collateral needed to take out a loan with Grameen, Muhammad has successfully set up an institution that thinks outside conventional norms.

Staff members at Grameen are punished if they are seen at the office. There are notices on the office which read,” if any staff member is seen in the office, it should be taken as a violation of the rules of the Grameen Bank.” The philosophy at Grameen is that staff is not paid to sit around in the office rather to be with the people. This extends the abnormal structure of the bank. The informal structure of the bank also reflects the aim of the organization.

The very way Muhammad has set up the idea of Micro-credit and the micro-credit economic model also demonstrates Muhammad’s creative thinking and his creative solutions to poverty continue to change millions of lives for the better.

Muhammad also tends to have a strong dislike for bureaucracy. 94% of customers at Grameen bank are women. This is not by chance.

“…traditionally, banks in Bangladesh are gender-biased and do not want to lend money to women.(Yunus, 1998 p.87)

Women constitute less than 1% of the banking system in Bangladesh. When a woman approaches a conventional bank for a loan, they are firstly asked if the have discussed it with their husbands and whether they have their husband’s support. If the answer is no to any of these questions, the loan will not proceed. This system angered Muhammad deeply as, through his work he discovered that poverty affects women greater than men. Lending to this majority of those in poverty not only made business sense, but Muhammad also found that lending to women brought about change in poverty a lot sooner.

Due to the fact that women tend to suffer more during devastating events such as famine or floods, rather than men he found that they were also willing to work harder than men to get themselves and their children out of poverty. It made not only business sense but also ethical sense to target women to be the main borrowers of the Grameen bank.

Unconventional, innovative, creative, passionate with immense courage is just a few words that can be used to describe Muhammad Yunus. With his entrepreneurial leadership style he has been able to successfully transform people’s way of thinking of the most elementary economic concept – the concept of scarcity. He has successfully set up The Grameen Bank, transforming the lives of many poor and disadvantaged people.

Through the study of Muhammad Yunus and his work, it seems that he has derived his leadership style through the environment which he grew up in and deeply believing in his cause.

“Credit is the last hope left to those faced with absolute poverty.”(Yunus, 2006) That is why Muhammad Yunus believes that the right to credit should be recognized as a fundamental human right. It is this struggle and the unique and extraordinary methods he invented to combat human despair that sets Muhammad Yunus apart as a truly entrepreneurial leader.

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