By Marcus Jenal, Partner, Mesopartner

Bridging the conceptual and the practical
What I enjoyed the most about the Symposium was the ability of the event to bridge conceptual discussions with very practical experiences. One of the discussions throughout the Symposium was on how to use concepts and frameworks from systems thinking and complexity in practice. But then there were also many sessions where people talked about their experiences, for example when a bunch of project leaders shared the stage in a plenary session and talked about what they are excited about and what keeps them awake at night.

I also enjoyed the thematic track on Market Systems Resilience as there are some really interesting explorations going on in various projects. Also there, the participants were able to discuss conceptual questions around resilience with practical challenges projects face when working towards Market Systems Resilience and attempting to measure it. There were lots of other interesting discussions in and between the sessions, for example on the question how we become more effective in learning as a field of practice and avoid repeating the same failures over and over again.

I want to send out an appreciation to the organisers who have been able to pull together an amazing bunch of people and that at only the second instance of the Symposium, which premiered in 2018.

Designing better behaviours?
There was, however, a concerning trend that I picked up in various sessions. As MSD projects do not generally provide grants or build infrastructure but facilitate change by working with and through partners, behavioural change has grown in importance, also driven by insights from behavioural economics gaining more broad recognition. The questions asked are for example: How can projects shape behaviours of buyers of agricultural goods to change their business strategy from short-term extractive to more oriented towards building a sustainable business? Or how can projects influence market actors to show behaviours that would improve their resilience, e.g. by making them save more, buy insurance, or diversify their assets?

In one exercise, the participants were asked to come up with statements a market actor would make who shows ‘bad behaviours’ (which often reflects current behaviours) and statement one would make who shows ‘better behaviours’. Once we know the two apart, we can convince the market actors that it is in their own interest to take up these ‘better behaviours’ that are described to them by the projects.

We know that behaviours are shaped by many different factors, including but not limited to a person’s history, knowledge and experience, their social and commercial relationships, formal and informal norms and customs, values and beliefs, etc. All of these factors, as well as how they come together in the particular moment, influence how people make sense of what is going on and how they behave as a result. Recent research even shows that the current mood as well as what people eat for breakfast that day influences their sensemaking. In the logic of behaviour change in MSD project this is unfortunately often conflated into a simple ‘they don’t know better what behaviour would be good for them’. Hence, if a project works with the people and shows them the light of a better way to behave everything will work out. I’m using on purpose a stark formulation here to make a point, reality is most certainly more nuanced.

Besides the complexity on how behaviours are shaped, also the complexity of the context needs to be taken into account. We cannot really define what ‘better behaviour’ looks like, as we cannot predict what outcomes a specific behaviour would result in in a complex context. If we convince a number of actors to become more inclusive and move their business strategy away from short-term extractive behaviour this could well lead to the end for these companies in a very competitive environment which does not value these traits. From evolutionary economics we know that it is not only the things that we try that counts, but also the selection environment in which they are expressed. So instead of designing ideal behaviours in an unpredictable context, we should encourage diversity and variety in behaviours and at the same time we need to work on the selection environment on which behaviours are valued in a market. In addition, whatever I have heard as examples of ‘better behaviours’ during the Symposium is strongly influenced by Western normative views on how the world should work. It doesn’t help if we say that a trader should build up more trusting and long-term relationships with his or her suppliers if the whole incentive structure around this person shapes a behaviour that is short-term focused and extractive. This can be a very rational reaction of these people to their reality. So we should assume that given all the factors the people perceive they are making the right decisions for them at the moment.

There is also a moral reason why I think directly targeting people’s behaviour is problematic. Who are we to go to a country or region and tell the people how to behave? On what moral basis can we as development actors argue that our interpretation of reality and the required behaviour to respond to this reality is superior to the people who actually live in this reality? The same moral argument has been made against nudge-type interventions in general, but I think it becomes much more powerful in development with development workers coming from developed countries and/or totally different cultures (and the symposium was, probably representing a good sample, still dominated by mostly white, western development workers) – this is simply patronising.

But what is the alternative? 
We find an alternative approach in complexity thinking. We can catalyse attractors, change constraints or increase diversity. Catalysing attractors means that we can supply a place for new behaviours to crystallise. This can for example be through making existing divergent behaviour more visible, i.e. working with so called ‘positive deviance’, or by exposing market actors to different realities that might stimulate some exploration of different behaviours. Changing constraints would look at why certain behaviours are not taken up, e.g. because there are strong social norms that prevent them or because there might even be formal rules that do not allow them or severely hamper them (e.g. red tape). A project can work with such institutional or structural aspects like constraints, but the exact change in behaviour that will become visible on the surface will be an emergent result of this work – i.e. it cannot be predicted. This means we need to be cautious and tread lightly, ideally by using safe-to-fail probes. Increasing diversity and variety of things tried in the system opens up new options for different behaviours. This could be different business models, different processes, or different products. A project can stimulate this by working on and strengthening the local innovation system. It generally means working through meso organisations like technological or extension organisations, research stations or educational organisations like universities or vocational training institutions.

For me the fact that many are trying to design the ‘better behaviour’ is a symptom that we as a community often still default back to our traditional modes of working where we identify a problem and try to find a solution. So in that sense we haven’t made the switch to a way of working that is truly informed by complexity thinking. The types of solutions may have shifted from doing capacity building or building factories or cold storages to designing better behaviours. But it is still about fixing problems through designed solutions, rather than about attempting to work on the evolutionary potential and the development trajectory of the system. 

Another thing that I picked up is that people still ask for concrete tools and methods they can implement in their projects. This is also a symptom of the linear, reductionist way of thinking: “If I can find the right tool I can design the right solution”. In reality, complexity requires us to deeply explore a context by engaging with it. Pathways will emerge as we do that. There is heuristics guidance on how to do this (like our Systemic Insight approach), but here is no recipe as what needs to be done and how is unique in each context.

All in all, I think events like the Market Systems Symposium provide important spaces to grapple with these ideas, methods and concepts and learn together as a community. I’m already looking forward to the Market Systems Symposium 2020!

​By Zenebe B. Uraguchi, Programme Coordinator, East and Southeast Europe, Senior Advisor, Sustainable & Inclusive Economies, Helvetas

Among the many relevant sessions, there was a creative poster at this year’s symposium, as shown in the cover picture for this blog. Everyone was taking a picture in front of the poster and I also joined the crowd. Beyond picture taking, the poster listed ten key features that supposedly describe what market systems thinking is expected to involve.

With a second thought, I wasn’t quite sure whether I embody these ten features to be “qualified” as a market systems thinker. To begin with, I don’t know why there were ten features; I also don’t dare to make a reference to Moses’ Ten Commandments! Here are the ten features:

• See what is below the surface; find points of leverage; look for patterns in behaviour
• Feel comfortable with change; constantly adapt to market signals; celebrate learning; constantly adapt to market signals;
• Facilitate and catalyse change; committed to durable systems change; embrace testing and trailing

While I'm committed to the above ten features, I felt walking the talk isn’t that easy. Below I list few reasons alongside selected features of market systems thinking.  

Facilitate and catalyse durable systems changeIncreasingly many implementors of development initiatives are embracing – at least from their declarations and reports – the market systems development approach. The Symposium was proof of such emerging trends. It wasn’t dominated by “the same old faces, with a few more wrinkles every year, using [confusing] jargon to present the same old stuff.” There were diverse organisations and people and not just the usual suspects that have been at the forefront of promoting the approach. This’s definitely encouraging, as it provides increased momentum for doing development differently.   
We need, however, to be sincere and critical.

First, listening to several discussions, presentations and informal discussions gave the sense that the level of understanding of the market systems development approach is quite different. This’s problematic and worrying, and I am not trying to make a mountain out of a molehill. For example, the approach isn’t just about private sector engagement or development. It doesn’t exclusively focus on “markets” in the economic sense. Development cooperation is a multi-stakeholder endeavour. Increasingly, this’s becoming apparent. It involves not only the private sector, but also public-sector actors and civil society. We need to ask ourselves: who is best fit to do under what kind of context?

Second, there were impressive cases demonstrating good practices and successes. The cases and the extensive discussions were eye-opener. Yet, most of us seem to be less concerned about a major problem – the evidence on impact of the market systems development approach is thin! This is a very, very big elephant in the room. The BEAM Exchange and ITAD worked on developing the evidence map of different initiatives. The conclusion is that “we still need to expand the evidence base to better answer in-depth questions about who benefits and how, and in what circumstances the approach can be most effective.” For this reason, the Eastern Europe Unit of HELVETAS, covering several countries, is currently preparing a regional impact assessment of labour market systems projects to know what works and what doesn’t and why.  
There's also another, apparently abstract and small but crucial challenge: the lack of consensus on what constitutes systemic change. Most projects seem to struggle to define concretely what it means and how to support it.    

See what is below the surfaceThis means conducting proper analysis before moving into actions. It involves understanding of relationships and social norms within a system. With the risk of over-complication, the purpose is to have a better insight regarding constraints and identify opportunities.

In reality, we often conduct one-off or long and boring studies which we never bother to look back once we’re done or update the studies later for that matter. This problem is especially true with dynamic sectors such as ICT in which trends quickly change and development practitioners need to keep abreast of changes.

In addition, one can dig deeper to find root causes, but several different interconnected and interdependent elements and structures may be the reasons for the failure or underperformance of a system. For example, why the education system isn’t producing skilled young people in Kosovo; why the tourism sector isn’t  attracting more visitors and hence employers invest and create more jobs in Bosnia; or why young people and their parents aren’t having relevant and attractive information to decide what to study or which career path to choose in Albania.  

Look for patterns in behaviour. This, I guess, refers to good understanding and identification of formal and informal norms and values of actors or partners in (not/under) performing their functions. The norms and values are about relations, interactions and connections between people, organisations and other networks. Understanding how social norms work and navigating them carefully for effectively influencing positive changes is highly important. How often are we paying good attention to such factors?

Long-term change in behaviour is rarely a simple process. As our experience from 15 projects globally shows, most monitoring and results measurement systems are designed to capture quantitative data. This means that, narratives (qualitative data)fail to “understand existing perspectives, beliefs, decisions and norms, or the way these are changing in response to interventions and other environmental factors.” In other words, we often pay more attention to formal and quantitative (observable) changes.

Of course, there's good progress mainly in health interventions (e.g. water and sanitation, HIV) but not in other initiatives. Let us take change in gender relations, be it for income or employment impact. Men and women don’t exist in isolation from surrounding informal rules and social norms. In other words, it isn’t simply the interaction between men and women that determines the outcome of gender equitable relationships. Complex networks of social norms are often at play. Another example is in the skills development area. In the Balkan region, a pattern has been emerging in the skills development area in which more and more training providers play critical role on job matching. Such a trend is also playing an important role of lowering the risk of unemployed youth to invest in new training programmes, as training providers are involved in ensuring the job placement of trainees.

Celebrate learning, including the “oops moments”Most conferences, unfortunately, lack honest inquiry where successes are proudly packaged in glossy formats and heavily disseminated and presented. One of the new introductions by the Symposium was consultations on several topics. Even though participation was quite low, topics such as “taking learning seriously” were important.

There’s a reason why I’m focusing on learning. Development initiatives suffer from the deficit of ensuring that learning is durable.

First, learning is taken as an add-on and not part of our work. Therefore, the culture of learning is weak. Fear, embarrassment, and intolerance of failure drives our learning underground and hinders innovation. Learning and innovation is helped or hindered by the surrounding system. Therefore, the importance of learning and innovation from oops moments have more value when individual experiences are linked to organisational culture.

Second, even if learning happens, it’s just owned by development projects. There’re scant cases of development projects working with actors such as universities. This means, organisations and leaders will need to proactively nurture learning and innovation to be owned by systems actors in the countries where we work. Without this, the experiences will remain limited to few individuals who dare and feel safe to share their knowledge and learning.

One last word…It’s easy to get so caught up in the daily grind that development practitioners lose motivation or excitement for their job or interests. Taking a break from our day-to-day responsibilities creates new settings for developing ideas. Conferences or symposiums can be rejuvenating by being inspirational and offering energising opportunities. Listening to other people share their ideas and feeling their enthusiasm gives us the energy to tackle new challenges. In other words, conferences can be an important reminder that we are not on our own.

Hats off to the organizers of the Market Systems Symposium! And look forward to the 2020 sessions….

​By Elizabeth Eckert (RTI International) with Marcus Jenal (Mesopartner)

By: Mike Field, Senior Technical Advisor, EcoVentures International

When working on private sector development it is often cited without question that profit motives are good.  The thinking goes that a firm that makes a profit would have to make their customers happy in order to sell to them and as a result generate that profit.  While this thinking on its surface makes sense, it is founded on a set of assumptions that when seen through various systemic lenses is quite flawed.  Let’s start with a definition of profit. As a banker once stated in a training, profit is an opinion based on accounting rules.  It is not a universal thing, but an evolved definition related to accounting and tax requirements.  So in most cases, when people say profit they really mean gross margin or what is left of revenues once you subtract out costs.  Even if we leave aside the detailed accounting definitions and only frame the discussion around a very general idea of profit meaning what a business person gets to take home, then we are still left with a range of assumptions related to how markets function.  Understanding how markets function is where systems lenses have proven very valuable in uncovering important misguided assumptions about profit.
 
Going back to the original statement that profit motives are good, the assumption is that markets and market forces universally reward business that add value through customer satisfaction and that companies that cheat customers are sanctioned effectively.  This assumption in how markets reward and sanction firm behavior is at the core of the concerns that good systems thinking highlights.  More specifically, in most countries where there is widespread poverty, market systems are biased in favor of more extractive behaviors like rent seeking, mis-information, fake products, adulteration, etc.. – i.e., tactics and behaviors that business people can do to extract revenues without providing value in return.  In many cases such biases can become rooted in social systems resulting in a process of institutionalization where norms emerge reinforcing the behavior.  For example, if we take a case of an ag input provider that sees an opportunity to begin selling fake seeds, how would the market sanction that input firm if:

• there are no consumer protection services available to farmers,
• farmers are not effectively linked to information sources or networks to ask/learn about seed quality relative to other factors that might affect yields;
• farmers are not tracked or engaged so their feedback further up the retail distribution network is muted/not heard by other potential seed companies,
• the lack of effective competition to provide better/more customer-oriented options,
• the limited role media plays in advocating for its audiences, etc.

 
The multiple important mechanisms required in a market to sanction poor behavior relative to value addition are not present so sanctioning is not effective.  In this scenario, it is likely that the farmers would not be able to recognize that the seed seller is cheating them, and since competitors or third party organizations like media or consumer protection NGOs are not organized to advocate on behalf of the farmer and against the seed seller, it is unlikely for the seed seller to be sanctioned.  More likely, the seed seller would be rewarded for cheating the farmers by gaining more revenues with lower costs.  Further it would be rational for the seed seller in such market conditioned to think that maximizing profits would mean cheating more. 
 
In this case above, the profitability of the shop is not an indicator of adding value as the shop is specifically reducing value in the system – it is extracting value from the system not only in real financial terms in that it is taking financial capital in exchange of something that has no productivity value, but also because it is reducing the efficacy of social capital by further eroding trust.  The systemic feedback via the lack of sanctions and rewards from having immediate higher margins would also reinforce that kind of behavior to be normalized, which is exactly what is observed in many developing country contexts.  The result is that firms that are profit driven in systems that reward extractive business practices would, as a normal course of business, engage in behaviors (i.e., selling/buying tactics) that capture value at the expense of their customers/suppliers.
 
Given that in international development where many if not most market systems are biased in favor of extractive business practices, profit is especially a poor indicator of positive change at firm or market system level.  Even further, the greater the profit orientation of firms within such a system often suggests that the underlying incentives pushing extractive behaviors is deeply rooted in the system and will be difficult to change.  If most firms are aggressively applying tactics to extract value from their suppliers, staff, and customers then that would be an indication of a system’s strong bias in favor of markets that have self-organized to capture resources (i.e., and not add value).   It is important to understand that such biases are mostly likely related to a risk management strategy that accumulates resources as a means to deal with shocks/stresses. 
 
The table below provides specific firm and systemic patterns that indicate an extractive or a value addition orientation of a market system.
 
A good market systems project will focus its efforts on catalyzing firms to see the value in behaving in ways that align with a value addition orientation.  They would also try to catalyze systemic changes that also align with a value addition orientation.  Simply assuming profit motive is good further a myth in how market work and why they are not providing appropriate benefits to a wide enough set of citizens.  Systems thinking is critical to understanding the orientation of market systems and how to shift that orientation to being more value added.

A good market systems project will focus its efforts on catalyzing firms to see the value in behaving in ways that align with a value addition orientation.  They would also try to catalyze systemic changes that also align with a value addition orientation.  Simply assuming profit motive is good further a myth in how market work and why they are not providing appropriate benefits to a wide enough set of citizens.  Systems thinking is critical to understanding the orientation of market systems and how to shift that orientation to being more value added.

​
There are strong signals across the international development sector that intentional, systematic, and resourced efforts to improve strategic collaboration, organizational learning, and adaptive management are being mainstreamed into the work of development projects with the goal of improving development outcomes, increasing stakeholder self-reliance, and reducing donor dependence. The May 2018 Market Systems Symposium in Cape Town, South Africa event not only highlighted the benefits of these approaches, but also embodied them.