Marjorie Kelly on the Emergent Ownership Revolution

Do you need something more tangible to use when talking about social business?

Is the 'social purpose' argument a bit thin for you?

According to Marjorie Kelly in Towards Mission-Controlled Corporations: Extractive vs Generative Design there are 5 elements of a generative ownership-driven design framework for social businesses:

1. Membership – How can we have the right people forming part of the business? How can they contribute to the running of the business? What roles and authority can they have?
2. Purpose – What purpose can a business have beyond profit-making for shareholders? What problems might it solve? How is 'wealth', and value spread within the local community?
3. Governance – Who is the board? Who does the board answer to? 
4. Finance – Where does the money come from? Where does it go? How does it circulate through the business? How does it generate wealth and value?
5. Networks – How does the business get access to goods, services, information? How might the exchange be carried out? How might it be non-financial? How might it reach beyond typical boundaries e.g. geography?

Scaling and systemic change in market systems programmes

Many reports on pro-poor business, especially from the grey literature, call for companies to ‘scale
up’ their impacts, with systemic change sometimes seen as a means to scale, as well as impact. Yet
there is an important distinction to be drawn between systemic change and efforts to achieve scale.

Scale is about numbers. It is about increasing the size, amount or extent of a business and development approach, through working with large corporations that have a vast reach, through
partnerships, or through replicating and multiplying results. The WBCSD (2013) describes scale as a
combination of the number of people reached, geographic footprint, and sales or procurement volume. While economies of scale and return on investment are important for business, as they can determine whether ventures are commercially viable, scale implies nothing specific about development impact.

Systemic change is about transformation in the structure, dynamics and relationships of a system.
Where business and development initiatives target systemic change this implies delving behind immediate problems or symptoms and tackling underlying causes to deliver tangible and enduring benefits with significant impacts on the material conditions or behaviours of large numbers of people, going beyond those directly involved in the initiative.

There is also a time element. Scale may be achieved in a (relatively) short period, but changes are not necessarily long-lasting. With systemic change, often the initial activities are niche, involving small and isolated impacts and unstable structures, which take a long time to strengthen and stabilise. However, where these innovations eventually drive systemic change, the result can be dramatic with lasting impacts over long time horizons.

Market systems analysis to evaluate change and transformation of a market system can be carried out by looking at 3 main questions:

1. How was ownership in a pro-poor business initiative structured? Initiatives led by an existing company, initiatives led by a new company that was created in response to a specific development challenge, formal partnerships between two or more entities, and multi-party platforms involving a large number of organisations with broad, shared objectives are different ways in which ownership by the market actors in a system (and not the donor or the market facilitator) will lead to actual systemic change.
2. Were key elements of systemic change part of the design of the initiative? Did it address issues that originate from the system and its elements (institutions, policies, relationships, resources, power structures, values and behavioural norms), rather than challenges specifically relating to the value chain and individual actors. Did the initiative distinguish between incremental initiatives around efficiency, quality and productivity, which rarely drive systemic change, and radical niche innovations that change the underlying constraints in the system?
3. How have changes to behaviours and norms been observed and monitored? How have they demonstrated that change has been sustained and long-term and not short-term, ad-hoc, or with undesirable unexpected consequences?

Adapted from John Humphrey, Professorial Fellow Institute of Development Studies (IDS), 'Market systems approaches: A literature review', December 2014 and available at Beam Exchange and Jodie Thorpe, 'Business and international development: Is systemic change part of a business approach?', Evidence report 42, August 2014 and available at Institute of Development Studies (IDS) 

Article - In health, let countries run their own programmes and take a systems perspective

A nice blog on lessons learnt in global health. Advice? Let poor countries run their own programmes and take a systems perspective ...

This blog was originally published here on the Guardian website.

Lessons in global health: let poor countries run their own programmes

In 2008, Square Mkwanda found himself in a quandary: international pharmaceutical companies had just donated millions of dollars worth of drugs to treat Neglected Tropical Diseases (NTDs) in his native Malawi but the civil servant had no money to distribute them and they were stockpiling in the ministry of health’s warehouses. “I thought, what am I going to tell pharmaceutical companies? That I let billions of kwachas’ [Malawi’s currency] worth of drugs expire because we couldn’t spend just a few millions to distribute them?”

So he talked to his minister of health and they managed to free up enough funds to distribute the drugs in eight districts. By 2009, the distribution programme had reached all 26 districts and was entirely funded by Malawi. Seven years on, Mkwanda, who is the lymphatic filariasis (LF) and NTD coordinator at Malawi’s ministry of health, proudly announced that Malawi has interrupted transmission of LF (pdf), the second country in Africa to do so.

Putting neglected tropical diseases under spotlight

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Leadership like that demonstrated by Malawi was one of the key themes in thethird progress report of the London declaration on NTDs, produced by the consortium Uniting to Combat NTDs and released at the end of June. The report said: “Endemic countries are demonstrating strong ownership and leadership, in variable financial, political and environmental circumstances, to ensure their NTD programs are successful in meeting 2020 targets. Countries are achieving elimination goals, more people are being reached, and the drug donation program for NTDs, the largest public health drug donation program in the world, continues to grow.”

In the wake of the Ebola crisis and in preparation for the sustainable development goals, these success stories are important best practice examples for the global health community as it rethinks how to effectively deliver sustainable programmes. Recognising the opportunities for lessons learned, the World Health Organisation called the elimination and control of NTDs a “litmus test for universal health coverage (UHC)” – one of the targets of the new development agenda.

Other countries are joining Malawi to take charge of their public health initiatives. Bangladesh, the Philippines and India are now financing 85%, 94% and 100% of their NTD programmes respectively. Motivated by growing evidence of the impact of NTDs on child development and productivity (and as a result on economic growth) 26 endemic countries met in December 2014 to sign the Addis Ababa NTD Commitment, in which they agreed to increase domestic investment for NTD programme implementation. The Addis commitment was an initiative of Ethiopia’s minister of health Kesetebirhan Admasu. Explaining why more governments are showing interest in this work, Admasu said: “NTDs are not only a health agenda, but a development agenda too, for which the poor pay the highest price.”

These country-owned programmes come in different guises but at the heart of every successful one is an integrated, multi-sectoral approach. Ethiopia for instance requires that every partner working on trachoma implement the fullSAFE strategy – Surgery, Antibiotics, Facial Hygiene, Environmental Improvements – and not just the ‘S’ or ‘A’, on which development programmes tend to focus.

Brazil decided to include NTDs in its national poverty reduction programme, which has other development targets such as education, water and sanitation. Municipalities, who implement the programme, are given free rein to tailor interventions to best suit their circumstances (a peri-urban municipality would have different issues from an Amazonian location for instance). 

Other countries used the single funded programme they had – onchocerciasis in Burundi’s case – as the building block to a fully integrated, multi-disease programme. There the ministry of health put in place a dedicated NTD team and worked with national and international partners to build a national programme that has been immensely successful. By end of the programme in 2011, national prevalence of schistosomiasis had been reduced from 12% to 1.4%. 

Will the SDGs be the last hope for lost causes?

Read more

Country ownership doesn’t just encourage policymakers to come up with strategies to reach their entire populations with health interventions but it also enables them to practice good resource management. Mkwanda says that NTDs brought good discipline at the ministry of health. “As with NTDs, we sit and budget. And we do not segregate diseases – integration isn’t just for NTDs, it’s for the whole essential care package.” 

The story gets even better as countries in the global south, such as Brazil and Nigeria, are not just coming up with their own programmes but also funding others’. Marcia de Souza Lima, deputy director of the Global Network for Neglected Tropical Diseases says the new funding streams will guarantee that NTD programmes outlive traditional support (a large proportion from philanthropic foundations) but she concedes it also makes them susceptible to leadership change – although recent elections in Brazil and Nigeria suggest this hasn’t been the case.

Article - Apparel sourcing opportunities in Madagascar and Mauritius

An interesting perspective on apparel industries in southern Africa. The video also includes evidence of how intra-Africa trade is supporting the growth of the apparel industry where the exports of fabric from Mauritius go to Madagascar to feed producers and workshops.

Madagascar and Mauritius are not small fish third-tier suppliers. Their factories supply to major global retailers - CMT cited in the Mauritius segment of the video supplies to Puma, Marks and Spencer, Topshop and H&M.

Article - Why re-think retail? Consumer expectations are changing

The blog was first publshed here on Thoughtworks by Dianne Inniss

We explored why retailers need to evolve, and what they should consider in response. How they respond tactically will vary by retailer, but here’s some food for thought

Why Re-think Retail? Consumer Expectations are Changing

 Consumers are making their voices heard like never before. Here's what they're asking for:

• Immediacy: Like the fictitious Veruca Salt. consumers are saying “I want it now”. One hour Amazon delivery, Uber on demand and streaming media are all responses to  - as well as drivers of - this demand for immediate gratification. And delivery expectations will only continue to accelerate. 
• Personalization:  Consumers are saying “I want what I want.” They are expecting more personalized and customized services that cater to them as individuals. Whether it is personal stylist recommendations from StitchFix or Le Tote, custom portfolios and investment products from online financial advisors or artisanal coffee at their local cafe, consumers expect retailers and other service providers to deliver solutions that are uniquely targeted to them and their needs.
   
• Ubiquity:  Consumer are saying “I want it wherever and - however - I want it.” Although the term omni-channel is quickly becoming hackneyed from overuse, consumers do want to be able to use whatever channel they want, in the ways they want, at the time that best suits them, not the retailer. They also want to conduct transactions on their own terms, defining how they want retailers to interact with them (from full service to completely self-service) at any given time.
   
• Information Control: Consumers are saying “I have all the information I need… now I want to be edu-tained.” Consumers are inundated with information. Brands and retailers no longer define themselves. Rather, they are being defined by customers who have access to peer reviews, blog posts and more information than ever before. Given the overload of information, consumers are looking for retailers to help make sense of it all… and to cut through the clutter by entertaining them and keeping them engaged.
   
• Congruence:  Customers want their retail experience to fit into the broader context of their lives, and to be seamless across channels. They want their service providers to recognize them no matter where they enter a transaction or how they choose to interact. Put simply, they are saying “I want a unified experience.” 

• Implications  - What Consumers Need

   Given these changing expectations, retailers must provide customers with solutions that address their well-defined needs:
  • Context – “Understand me where I am. Fit into what I am trying to do.”
     
  • Empowerment – “Give me the tools to be a smarter consumer, and to lead a better life.”
     
  • Engagement – “Entertain me; my attention span is short and lots of people are competing for my attention and my time.” 

  What to Do About It:  Retail Response

  We think that the way to address these needs is to bring disruption to the retail value chain. As consumers interact with retailers, many incremental steps add value to or subtract value from the experience. Disruption is about increasing the ratio of value-adding elements throughout the path to purchase.
  We propose that there are three possible strategic choices when creating disruption to drive value
  • Disrupt the product delivery value chain – Find ways to reduce the non-value-adding steps between the time a customer identifies a need and the time that the customer uses the product which addresses that need. For example, Amazon Dash allows customers to order certain products with the touch of a button as soon as they realize they need them.
     
  • Disrupt the customer experience value chain - Understand customers’ transactions within the context of their whole lives, and address the broader set of needs beyond any individual transaction. For example, ALDO uses “look books” at the point of purchase to help customers understand how a pair of shoes might into a complete wardrobe, or work for multiple different wearing occasions.
     
  • Disrupt the retail model value chain – Challenge the notion of what it means to be a retailer. This might mean becoming a clearinghouse for consumer-to-consumer transactions and/ or expanding the definition of retail to create new means of entertainment and engagement. Domino’s Pizza Mogul program in Australia has managed to do both. 
  These options provide an initial framework. Each retailer needs to tailor its response with an approach that is anchored in its own unique brand promise. Couple this with investments in the business processes and enabling technology to create strategic differentiation, and retailers will open a host of new ways to address changing customer expectations. 

Article - Oversimplifying behaviourial science

Why are simplistic solutions dangerous when addressing complexity? Do they promote simplified and lazy thinking? Do they result in linear solutions based on 'low-hanging fruit' for complex problems?

Does the new found energy and excitement around behaviourial science, psychology and marketing for selling products (both in wealthy consumer driven markets as well as in low-income bottom-of-the-pyramid markets) run the same risks?

This blog post was originally published here by Jesse Singal

Here's an excerpt.

"Although this product sounds like a fun idea, I’d worry that it could be distracting for drivers and it’s misleading to cite these rather complex and nuanced studies as evidence that looking at a smiley emoticon will make us all happier on the road," he concluded.

So no, MotorMood isn’t scientifically proven. But why should it be? It’s a light-up smiley face! Either people will like it and support it and buy it, or they won’t. Science shouldn’t have anything to do with it.

I’m only picking on this one Kickstarter because it’s a particularly silly example, and because this style of claim is so common right now. The emails arrive daily with the expectation that Science of Us and, presumably, the dozen other sites a given company is pitching, will breathlessly report shaky scientific claims that exist solely to prop up or draw attention to a given product or company.

This is a waste of everyone’s time, and in the long run it makes it hard for people who don’t think or write about this stuff for a living to understand what scientific claims really are, and what making and testing them entails.Surely there’s enough room in the world for actual, real-life science, and for products that are just fun (or stupid, depending on your opinion) but don’t need science’s imprimatur.

In other words, there’s no need to drag behavioral science into areas where it doesn’t belong. Like, you know, light-up smiley faces on Kickstarter.

The Iceberg Illusion by Sylvia Duckworth

The picture was originally found here on a Facebook feed

Article - UK supermarkets criticised over misleading pricing tactics

Great steps forward in the UK. Helping consumers feel justified in their feelings of anxiety, confusion and mistrust. I know in the past, supermarket managers have hidden behind trading standards and claimed that their price tactics are in line with the rules and fully endorsed by the trading standards office.

And, this argument is very relevant everywhere where are market systems at work!

When working in 'retail' as a market system intervention, one thing that development projects need to remember is their role in market regulation. This means the policies and institutions and an adequate oversight function in the system to curtail predatory, confusing, misleading behaviour by retailers. Including agro-inputs firms (agrovets), animal and human health service providers, small grocery shops for the urban or rural poor etc...

The article was originally published here on the Guardian website.

UK supermarkets criticised over misleading pricing tactics
Rebecca Smithers Consumer affairs correspondent
Thursday 16 July 2015 09.09 BST

The competition regulator has criticised the UK’s leading supermarkets over their pricing, after a three-month inquiry uncovered evidence of “poor practice that could confuse or mislead shoppers”.

The Competition and Markets Authority stopped short of a full-blown market investigation but has announced a series of recommendations to bring more clarity to pricing and promotions to the grocery sector.

The top tricks supermarkets use to confuse customers

 

Read more

It plans to work with businesses to cut out potentially misleading promotional practices such as “was/now” offers, where a product is on sale at a discounted price for longer than the higher price applied. It also wants guidelines to be issued to supermarkets and has published its own at-a-glance guidance for consumers.

The investigation by the CMA was launched following a “super-complaint”lodged by the consumer group Which? in April, which claimed supermarkets had duped shoppers out of hundreds of millions of pounds through misleading pricing tactics.

Which? submitted a dossier setting out details of “dodgy multi-buys, shrinking products and baffling sales offers” to the authority, saying retailers were creating the illusion of savings, with 40% of groceries sold on promotion. Supermarkets were fooling shoppers into choosing products they might not have bought if they knew the full facts, it complained.

The supermarket sector was worth an estimated £148bn - 178bn to the UK economy in 2014.

In its formal response to the super-complaint, the CMA said the problems raised by the investigation were “not occurring in large numbers across the whole sector” and that retailers were generally taking compliance seriously. But it admitted more could be done to reduce the complexity in the way individual items were priced, particularly with complex ‘unit pricing’.

We have found that, whilst supermarkets want to comply with the law and shoppers enjoy a wide range of choices, with an estimated 40% of grocery spending being on items on promotion, there are still areas of poor practice that could confuse or mislead shoppers. So we are recommending further action to improve compliance and ensure that shoppers have clear, accurate information.”Nisha Arora, the CMA’s senior director, consumer, said: “We welcomed the super-complaint, which presented us with information that demanded closer inspection. We have gathered and examined a great deal of further evidence over the past three months and are now announcing what further action we are taking and recommending others to take.

Richard Lloyd, the executive director of Which?, said: “The CMA’s report confirms what our research over many years has repeatedly highlighted: there are hundreds of misleading offers on the shelves every day that do not comply with the rules.This puts supermarkets on notice to clean up their pricing practices or face legal action.

“Given the findings, we now expect to see urgent enforcement action from the CMA. The government must also quickly strengthen the rules so that retailers have no more excuses. As a result of our super-complaint, if all the changes are implemented widely, this will be good for consumers, competition and, ultimately, the economy.”

The CMA has been in close contact with retailers cited in the dossier, asking them for explanations for the misleading pricing and promotions. For the first time in its history, it has used social media including Twitter and Facebook to get more consumer and focus group feedback. 

This is only the sixth time Which? has used its super-complaint power since it was granted the right in 2002. It last issued a super-complaint in 2011 when it asked the Office of Fair Trading (OFT) to investigate excessive credit and debit card surcharges. The OFT upheld its complaint. The right to make a super-complaint to the CMA or an industry regulator is limited to a small number of consumer bodies such as Which? and Energywatch. After Which? submitted its dossier to the CMA, the regulator had 90 days in which to respond. Which? said more than 120,000 consumers had signed a petition supporting the super-complaint and urging the CMA to take action.

A decade ago Citizens Advice helped bring the payment protection insurance scandal to public attention by lodging a super-complaint with the now-defunct Office of Fair Trading.

http://www.theguardian.com/business/2015/jul/16/uk-supermarkets-criticised-misleading-pricing

Article - Are we spoiling the private sector?

This blog was originally published here on the SEEP MaFI website.

Are We Spoiling the Private Sector?
by Md. Rubaiyath Sarwar in 2012

"As market facilitators, we strive to make the market inclusive...facilitate some small changes with the hope that the market system will open up to the poor! And we work with our ever so accommodating partners-more often than not lead firms. In the process, we keep on knocking from door to door, asking the private sector if they are willing to partner with us. And then, we negotiate, select the partners and implement our interventions. The interventions fetch excellent results. So much so that we do the same thing with the same partner in a larger scale. We call it replication. And then we involve more partners to do the same thing. We call it scale up. In some cases we say no to our beloved partner as we believe we have solved the market problem. But to our surpise, few months later, we see our partner doing almost the same thing with another project funded by another donor. Do we see another form of distortion taking place? Aren't we making ourselves too dependent on the lead firms? Why are our interventions often skewed towards the lead firms? What about other market system actors which include- civil society, professional associations, the government, the NGOs, cooperatives...? Do we always need to have commercial incentives to have sustainable impacts on scale?"

---

Over the last decade we have observed increasing donor investment on market development projects for ‘large scale,’ ‘systemic ‘ and ‘sustainable change’ in agricultural and industrial sectors in Africa, South Asia and South East Asia. The projects proved that the donors can get better value for their investment if the private sector is attracted to invest on the interventions. More importantly, the partnership between the private sector and the project on cost sharing basis evolved as a principle tool to reposition development projects from being providers of critical services to being facilitators of the services.  I have been a direct participant in this paradigm shift and evolved from being a project manager to becoming a technical advisor and evaluator of market development projects in agricultural, industrial and health sectors in several countries that include Bangladesh and Nigeria, the two hotspots for market development projects in the world. 

As my roles shifted and my exposure expanded across different sectors in different countries and contexts, I observed an alarming trend.  It was becoming increasingly evident that (i) market development and support to lead firms was becoming increasingly synonymous (ii) there were projects inThe question attracted wide range of participants contributing to a technically rich discussion. Contributors included Mary Morgan-Inclusive Market Development Expert, Scott Merrill- Independent Consultant, Marcus Jenal, Specialist on Systemic Approaches for Development and James Blewett, Director of Markets, Enterprise and Trade Division at Landell Mills Ltd. All the contributors shared the feeling that indeed there is a risk that market development projects, if not carefully managed, can lead to a new form of market distortion where the private sector become reliant on donor funds.  However, they also reiterated the importance and significance of the collaboration with the lead firms and suggested several approaches that could mitigate the risk of the private sector becoming reliant on donor funds.

Mary suggested that partnerships work when the disparate goals of the private sector (making profits), vulnerable and poor producers (being able to produce and sell their produce at an acceptable price) and the development projects (increasing income and employment for the poor) converge towards the overall goal of inclusive market development (sustainable and systemic change in the market for employment and income generation of the poor).  While acknowledging the potential pitfall of partnerships, Mary pointed out that the risk might be higher in their absence.  She contributed further to the discussion by raising the point that often the support provided by the projects is much too heavy for the private sector to deliver once project support is withdrawn.  As evidence, she cited a case involving Wal-Mart and Mercy Corps in an intervention on developing an inclusive supply chain for Wal-Mart in Guatemala.

The questions raised by Mary were addressed by Scott who argued that the risk of distortion is high when the projects fail to adopt good practices for partnerships. He proposed that instead of pushing the private sector towards the partnership, the development projects should seek to pull the private sector towards the development goal by soliciting proposals from the lead firms. He suggested that we should be careful with how we use the term ‘partnership’ since it could be interpreted as the lead firms being subcontractors or sub-grantees. Scott emphasized on the need to establish objective selection criteria, conduct due diligence and structure relationships with lead firms to ensure sustainability of the interventions. Scott proposed to support the lead firms to develop a business plan so that the commercial benefit from the intervention could be laid out in details prior to the inception of the intervention. This could ensure that the firm owned the development activities and continued to deliver the service after the project support was withdrawn. 

James Blewett reflected on his experience in managing a challenge fund project in Afghanistan and argued that challenge funds reduce the risk of distortion in private sector engagement since it seeks to proactively engage the prospective grantees (which include lead firms) in design, co-investment and management of the interventions.  He also suggested the use of financial modeling tools used by investment projects to determine ‘tipping points’ so that the project’s financial contribution to the intervention is just enough to incentivize the private sector to address the investment risk associated with the intervention.

A very important contribution to the discussion came from Marcus who suggested that before deciding on the financial arrangements and technical support, the projects should ask why the private sector is not investing on the intervention on its own if it made commercial sense. He advocated for ‘form follows function’ approach and suggested that the projects should partner with lead firms when it is clear that the vulnerable will benefit from the partnership. Marcus argued that the lead firms often do not invest to reach out to the vulnerable not because they haven’t seen the opportunities, but because of a dysfunctional regulatory system, which according to him is the systemic constraint that needs to be tackled.

From the discussion it was evident that while the need for collaboration with the private sector is real, there needs to be further push from the donors, development projects and practitioners to ensure good practices and reduce risk of distortion in the market systems due to over-engagement with the private sector. The discussion also revealed that there are good practices and models that are being followed and discussion around these models could help market development practitioners to be better able to answer to why they have partnered with the lead firm, what support (financial and technical) they should be providing and why, and finally, how the lead firm is expected to sustain the intervention after the project support is withdrawn.  the same region or country competing for partnership with same lead firms (given that there are not too many in the country that qualifies to become a partner) (iii) the proliferation of market development projects in the same sector led to increasing number of lead firms receiving funds from them that ended up subsidizing their R&D, distribution and marketing costs and (iv) it was becoming difficult to evaluate whether the intervention resulted in systemic change since the lead firms continued to replicate the intervention with funds from other projects once the support from the original project was withdrawn. This prompted me to ask the members of the Market Facilitation Initiative (MaFI) whether they shared the feeling that probably it is time for us market development practitioners to be a little cautious when we approach lead firms.   

Article - Resilience v efficiency: a systems thinking heavyweight bout

(The blog has been reproduced from where it was originally found on the Practical Action website here.)

Resilience v efficiency: a systems thinking heavyweight bout

By Glen Burnett, September 3rd, 2014

Sometimes, Practical Action can really get absorbed in systems thinking. We’ve been working in this space since about 2003, and some of its principles have served as the foundation of some great successes we have had. For an oversimplified approach, think of a terrarium. You have soil, plants water and air all living inside a closed pot (it isn’t considered a true closed system, because sunlight gets in, but you get the idea). If you were to adjust different segments of the system, you might see different developments: more water might mean more growth, or more growth might also mean the system burns out.

So what happens when this system shifts, and you start looking at populations? Plants become people, soil becomes the economy, maybe even water stays the same, and you consider the impacts of clean water in a community. That evaluation is a key part of how Practical Action often engages with communities. Two key features of systems are resilience, which often shows up in our climate adaption work, and efficiency, which is often considered key to creating transformative impact in the lives of the poor—because if something isn’t efficient, it will probably not be as replicable, and you lose that whole transformative impact component.

These two systems characteristics are inversely related: resilience is a trade-off for efficiency.

What does that mean? When we talk about resilience in relation to the extreme poor, we are often talking about those who are able to bounce back when they face a system shock. That could be a drought, a flood, or an economic collapse. If you think about it, resilience gets built up by being able to quickly adapt to a change in a system, and that often means there are multiple support systems created that can create the flexibility needed for that change. In the case of drought, that might mean there are several different kinds of crops that are raised, some that work better in wet seasons and some that work better in dry seasons. This could also mean there exists a knowledge base that allows for more resilience as well—you become a generalist as opposed to a specialist so you can perform multiple tasks.

Then there is efficiency. However you achieve it, be it economies of scale, or through specialization, efficiency is important, because it means you are completing a task more effectively. If you can increase efficiency, you will be able to replicate that task. So when people talk about creating transformative change in a community, efficiency is often necessary for that change to take root. Think of a treadle pump. The first time someone built one, it probably didn’t work very well, but over thousands of years, the design has been improved upon, to the point where many look very similar: they are cheap to build, easy to replicate, and in a word, efficient, given their circumstances.

These days, efficiency is a major focus in many drives to end poverty. You have limited resources, and efficiency allows for expansion that maximizes those resources. But it also means that you are developing systems that require many of your “resources” (READ: people) to specialize in a given approach. As a result, you aren’t as flexible, and your trade-off is resilience. Think of GMO super crops—they are efficient, because they can be made to resist certain pesticides, and can grow bountifully. But they aren’t resilient, because once an infestation comes along that is particularly brutal to that crop, there is no other crop there to create resilience—food prices go up, and people go hungry.

So does this mean that the world should be extremely resilient? Or should we focus our efforts wholeheartedly on efficiency, hoping to create economies of scale that are extremely good at overcoming system shocks? Ultimately, this conversation starts sounding more like one with a personal finance advisor. If you are preparing for the future, you need a diversified portfolio. Like in that terrarium, finding the appropriate balance is key, and it will rarely be wholly efficient or wholly resilient.

http://practicalaction.org/blog/programmes/climate_change/resilience-v-efficiency-a-systems-thinking-heavyweight-bout/

Article - How systems thinking can impact climate change

(The blog has been reproduced from where it was originally found on the Clinton Foundation website here.)

How Systems Thinking Can Impact Climate Change

By Dymphna van der Lans

Sep 19 2014

Systems thinker: a phrase that has come to define my method for problem solving, my approach to tackling the world’s greatest challenges, and most importantly, who I am today. When I was asked to serve as the CEO of the Clinton Climate Initiative, I had the opportunity to reflect on what led me to this point and how my identity as a systems thinker would ultimately shape our mission moving forward to confront the complicated threats of climate change.

I was fortunate to be raised by systems thinkers as I grew up in the Netherlands, where everything and everyone is close together. Since there is no wilderness, very little land and very little space, we have to be thoughtful about our resources and about each other, and I have carried these lessons with me to where I am today.

The world, as I see it, is made up of systems, and is the result of any interconnected set of elements that is coherently organized in a way that achieves an outcome.

The world, as I see it, is made up of systems, and is the result of any interconnected set of elements that is coherently organized in a way that achieves an outcome. A tree is a system. A forest is a system. I am a system. Systems are often embedded in larger systems, which are embedded in yet larger systems. The earth’s climate is a system comprised of the subsystems of our atmosphere, our oceans, the land, and human society.

The earth’s climate is a system comprised of the subsystems of our atmosphere, our oceans, the land, and human society.

“Systems Thinking” views outcomes as the result of the interactions between the various elements of a system and recognizes that systems often contain within them the causes of their own success, and — this is critical— the causes of their own failure. Similarly, “Systems Problems” are problems that have origins in the interactions of the elements of a system, characterized by a high degree of interconnection and interdependence with other variables around them.

Climate change may well be the most complex systems problem that we have ever faced. In our modern economy, almost every human activity is linked to the use of fossil fuels or other sources of climate-altering greenhouse gases. Every time we buy or download a book, every time we cook a meal, every time we travel across town, we are impacting the climate.

In our modern economy, almost every human activity is linked to the use of fossil fuels or other sources of climate-altering greenhouse gases. Every time we buy or download a book, every time we cook a meal, every time we travel across town, we are impacting the climate.

At the same time, almost everything that sustains and enriches our lives is affected, directly or indirectly, by the changing climate. At the Clinton Foundation, we realize that access to clean water, the price of our food, national security, the health of ourselves and our loved ones, economic opportunity for this generation and those to come, all are placed in jeopardy by climate change.

We must insist on solving more than one problem at a time and on tackling multiple interrelated challenges at the same time. We need the resolve to address systems rather than symptoms. A solution will not be effective or enduring if it creates new problems. And so, we need new business models, new technologies, new policy frameworks, and most importantly, new ways of engaging with each other.

We are moving away from focusing on single technologies to using a whole systems approach as we recognize that there is no single silver bullet solution to stopping climate change.

The Clinton Climate Initiative (CCI) does exactly that in its unique systems thinking approach. We are moving away from focusing on single technologies to using a whole systems approach as we recognize that there is no single silver bullet solution to stopping climate change. Rather than narrowly focusing on one approach, like renewable energy as the only solution, we take a more holistic view to developing systemic solutions. We collaborate with world-class partners to increase the resiliency of communities facing climate change and to create replicable and sustainable models for others to follow.

At the core of our engagement philosophy is Systems Thinking; identifying and activating leverage points that can create significant, positive impact in climate change mitigation and energy transition for communities around the world. CCI has worked with governments and communities to build data systems to better inform decisions and policies on the management of land and natural resources. CCI has also developed waste, water, and energy strategies with our Small Islands partners to create impact from boosting the local economy to women’s empowerment. Finally, CCI has introduced innovative financing mechanisms by partnering with employers to bring energy efficiency benefits to lower home energy expenses and improve people’s lives and their living and working environments.

Through our programs, focused on landscapes and land use, energy supply and energy demand, and energy efficiency, we aim to work together to tackle these systems problems. Now we call on you to take action, to start thinking about your home, your country, your world, and your climate as a system. We ask that you join us in creating solutions that take into account the entire system and all its complexities. Together, we can work to create measurable, meaningful and lasting contributions—one system at a time.

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https://www.clintonfoundation.org/blog/2014/09/19/how-systems-thinking-can-impact-climate-change

Article - Digital finance for smallholder farmers - a systemic approach

This USAID Microlinks article describes a systemic approach to building financial systems for digital-based smallholder farmer finance. This approach is naturally scalable as it has the in-built mechanisms for growth.

These interventions use the following design tactics:

1. Behaviour change principles such as, features and incentives to make it easier for people to adopt a new practice for the first time 
2. Multi-level design - digital services can both bring in new behaviours as well as make existing good practice more efficient and automated and easier to stick to
3. Savings and insurance services for resilience and long-term sustainability 

Source: How Digital Financial Services Can Meet The Financing Demands Of Smallholder Farmers, LIZ DIEBOLD, Agriculture Finance And Investment Lead, NANDINI HARIHARESWARA, Senior Digital Finance Advisor, And HARSHA KODALI, Agricultural Finance Specialist PUBLISHED ON JUNE 16, 2015, AVAILABLE AT WWW.MICROLINKS.ORG/BLOG/HOW-DIGITAL-FINANCIAL-SERVICES-CAN-MEET-FINANCING-DEMANDS-SMALLHOLDER-FARMERS

Article - Market-based economic systems - the basics!

Economic systems

Market-based economic systems have many advantages in comparison with command-based ones. These include:

Consumer sovereignty

Resources are allocated towards the satisfaction of the consumer, who is 'king' (sovereign) - firms can only survive if they consistently satisfy consumer demand. The more they satisfy the consumer, the greater their profits.

Choice

Firms may compete with each by offering different products, providing consumers with a wide choice.

Price and non-price competition

Competition keeps prices down and drives up the quality of goods and services.

Automatic adjustment

The price mechanism works automatically, as prices convey information about relative scarcity without the need for a government.

Rationing

Prices fulfill a vital role in terms of rationing scarce resources - the greater the scarcity, the higher the price, and the more it is conserved.

Utility and profit

The price mechanism allocates resources towards products that provide the highest utility and the greatest profit, hence benefiting consumers and producers.

Efficiency

All participants have incentives to be at their most efficient. The production of goods is efficient because firms need to keep costs as low as possible.

There is a considerable incentive for the owners of factors of production to be as efficient as they can be so that they can command the highest incomes.

Innovation

Firms usually need to innovate to retain consumer loyalty and win new customers from rivals.

The disadvantages of market-based systems

However, market systems have disadvantages, including:

Under-valuing non-traded services

Some goods and services cannot easily be traded in markets, such as healthcare, education, and defence. With these goods, the value attached by market forces is unlikely to be the 'real' value of the service.

Missing markets

There is the problem of missing markets, which arises when consumers have a need or a want but where no firms are able to enter the market to supply, and markets do not form, as in the case of public goods.

Incomplete markets

There is also the problem of incomplete markets, which arises when firms only supply a part of the whole market demand, such as the case of merit goods.

Externalities

Some goods and services generate costs and benefits that are not taken account by consumers and producers. These costs and benefits are called externalities.

Lack of purchasing power

Some consumers have no purchasing power, such as the disabled, because they are not able to work in the labour market. Without work, they cannot derive an income, and are unable to purchase goods and services.

The case for mixed economies

Mixed economies combine aspects of market systems and central planning. It is accepted that mixed economies provide a more optimal allocation of scarce resources because:

1. Markets can be used to allocate resources to producing goods and services in which they excel, such as private consumer goods like cars, computers and holidays.
2. Planning can be used to allocate resources to those goods and services that markets fail to produce sufficiently, such as education and policing – and solve the problem of missing and incomplete markets.
3. Governments can regulate markets to ensure that they work effectively in the interests of consumers.
4. Governments can allocate resources towards the unemployed, and provide a basic purchasing power, via a benefits system, to the disabled and others who cannot sell their labour.

Article - Diffusion of innovations theory

Diffusion of innovations

Diffusion of innovations is a theory that seeks to explain how, why, and at what rate new ideas and technology spread through cultures. Everett Rogers, a professor of communication studies, popularized the theory in his book Diffusion of Innovations; the book was first published in 1962, and is now in its fifth edition (2003).^[1] Rogers argues that diffusion is the process by which an innovation is communicated through certain channels over time among the participants in a social system. The origins of the diffusion of innovations theory are varied and span multiple disciplines. Rogers proposes that four main elements influence the spread of a new idea: the innovation itself, communication channels, time, and a social system. This process relies heavily on human capital. The innovation must be widely adopted in order to self-sustain. Within the rate of adoption, there is a point at which an innovation reaches critical mass. The categories of adopters are: innovators, early adopters, early majority, late majority, and laggards.^[2] Diffusion manifests itself in different ways in various cultures and fields and is highly subject to the type of adopters and innovation-decision process.

The key elements in diffusion research are:

Element	Definition
Innovation	Innovations are a broad category, relative to the current knowledge of the analyzed unit. Any idea, practice, or object that is perceived as new by an individual or other unit of adoption could be considered an innovation available for study.[14]
Adopters	Adopters are the minimal unit of analysis. In most studies, adopters are individuals, but can also be organizations (businesses, schools, hospitals, etc.), clusters within social networks, or countries.[15]
Communication channels	Diffusion, by definition, takes place among people or organizations. Communication channels allow the transfer of information from one unit to the other.[16]Communication patterns or capabilities must be established between parties as a minimum for diffusion to occur.[17]
Time	The passage of time is necessary for innovations to be adopted; they are rarely adopted instantaneously. In fact, in the Ryan and Gross (1943) study on hybrid corn adoption, adoption occurred over more than ten years, and most farmers only dedicated a fraction on their fields to the new corn in the first years after adoption.[6][18]
Social system	The social system is the combination of external influences (mass media, organizational or governmental mandates) and internal influences (strong and weak social relationships, distance from opinion leaders).[19] There are many roles in a social system, and their combination represents the total influences on a potential adopter.[20]

Five stages of the adoption process

Stage	Definition
Knowledge	The individual is first exposed to an innovation, but lacks information about the innovation. During this stage the individual has not yet been inspired to find out more information about the innovation.
Persuasion	The individual is interested in the innovation and actively seeks related information/details.
Decision	The individual takes the concept of the change and weighs the advantages/disadvantages of using the innovation and decides whether to adopt or reject the innovation. Due to the individualistic nature of this stage, Rogers notes that it is the most difficult stage on which to acquire empirical evidence.[11]
Implementation	The individual employs the innovation to a varying degree depending on the situation. During this stage the individual also determines the usefulness of the innovation and may search for further information about it.
Confirmation	The individual finalizes his/her decision to continue using the innovation. This stage is both intrapersonal (may cause cognitive dissonance) and interpersonal, confirmation the group has made the right decision.

Change agents bring innovations to new communities– first through the gatekeepers, then through the opinion leaders, and so on through the community.

Adopter category	Definition
Innovators	Innovators are willing to take risks, have the highest social status, have financial liquidity, are social and have closest contact to scientific sources and interaction with other innovators. Their risk tolerance allows them to adopt technologies that may ultimately fail. Financial resources help absorb these failures. [40]
Early adopters	These individuals have the highest degree of opinion leadership among the adopter categories. Early adopters have a higher social status, financial liquidity, advanced education and are more socially forward than late adopters. They are more discreet in adoption choices than innovators. They use judicious choice of adoption to help them maintain a central communication position.[41]
Early Majority	They adopt an innovation after a varying degree of time that is significantly longer than the innovators and early adopters. Early Majority have above average social status, contact with early adopters and seldom hold positions of opinion leadership in a system (Rogers 1962, p. 283)
Late Majority	They adopt an innovation after the average participant. These individuals approach an innovation with a high degree of skepticism and after the majority of society has adopted the innovation. Late Majority are typically skeptical about an innovation, have below average social status, little financial liquidity, in contact with others in late majority and early majority and little opinion leadership.
Laggards	They are the last to adopt an innovation. Unlike some of the previous categories, individuals in this category show little to no opinion leadership. These individuals typically have an aversion to change-agents. Laggards typically tend to be focused on "traditions", lowest social status, lowest financial liquidity, oldest among adopters, and in contact with only family and close friends.
Leapfroggers	When resistors upgrade they often skip several generations in order to reach the most recent technologies.

Source: Wikipedia