​By Peter Saling, Associate Director, Winrock International

,In the United States, May and June is graduation season, when America’s youth mark an important milestone in leaving behind known comforts and pursuing economic independence. The occasion is observed with platitudes from community leaders, politicians, business leaders, and celebrities about seizing the moment, the endless opportunities ahead of them, and being the change they want to see in the world. The messages are at once familiar and totally forgettable.

To my knowledge, not one of these speeches encouraged young Americans to be smallholder farmers. President Barack Obama spoke at my graduation in 2010. Can you imagine if someone had told his father his future was limited to smallholder farming?

Yet, this is the future envisioned by donors, development leaders, and programs throughout transitioning economies. Why should the young people of Kenya, Senegal, or Vietnam have their opportunities defined by programs meant to give them those same opportunities for economic independence? How can we, as development partners and implementers, encourage the boundless ambition and creativity of today’s youth?

At the Market Systems Symposium 2019, practitioners and thought leaders from throughout the development community met over three days to discuss the challenges young people face in agriculture, experience in designing and scaling interventions that create opportunity for youth, and how to engage young people as the leaders of transformational change, not those to whom change happens.
​
In keeping with the tired tradition of the graduation speaker, we arrived at a list. But not a list for young people; rather, a list for the adults in our industry intending to empower them. So to the donors, the developers, the designers, and the doers, these are our development rules for engaging youth in agriculture:

1. Don’t tell young people their future is only in smallholder agriculture. While a growing global population means the world needs more produce in the future, this does not mean the future needs as many farmers. The role of development practitioners needs to expand the possibilities for young people, not to define them.
2. Youth are not all the same. Development can’t treat youth as a homogenous group, under which a single treatment will impact everyone the same. Rather, development programs need to reflect the dynamic populations they hope to engage.
3. Let youth lead the solutions. How many programs expect implementers to “target” young people? Perhaps the best way to engage young people is to offer them opportunity to lead program design and interventions instead of merely being subject to them.
4. Don’t tell youth to wait their turn. Another common refrain in development programs is the need to develop solutions and systems to support the youth of tomorrow. How about letting today’s young people develop the platforms from which future generations can benefit for sustained growth?
5. Not all young people are entrepreneurs. The solution to job shortages throughout the developing world is not for everyone to become an entrepreneur, but to develop systems that support entrepreneurial youth so they can employ those for whom self-employment is not desirable.
6. Youth are rational decision-makers. OK, not all the time and not in every situation, but do you always make the right decision? Rather than being built on the assumption that if only young people had more information they would do the right thing, development programs need to recognize that young people will pursue their rational interests and our job is to encourage them and give them the tools to support them if it fails.

​A recent New York Times article boldly proclaimed, “Millennials ‘Make Farming Sexy’ in Africa, Where Tilling Soil Once Meant Shame.” The article went on to explain how young people in Ghana, driven by technology, social commitment and, yes, profit, are causing a cultural shift around attitudes toward agriculture in Ghana. As development practitioners, let’s expand the opportunities for young people in agriculture, not define them. Let’s bring sexy back.

If that had been President Obama’s message, perhaps I would remember more of what he said. 

By ​Sadruzzaman 'Tamam' Noor, CARE Bangladesh

1. Introduction 

The approaches being undertaken nowadays by the international donor bodies to improve lives of the general population in underdeveloped parts of the world differ significantly from approaches assumed a couple of decades ago. We have seen the emergence of systemic thinking and market systems development (MSD) approach that are quite distinct from the conventional aid schemes. We have predicted, observed and analyzed the merits of involving the market in pushing the agenda of enhancing living standards in the package of increasing inclusivity as a tool of sustainable business growth. This is mostly because we have learned to identify the root causes of market level failures that bars the flow of production and delivery of goods and services for all. As a result, and as a general solution, the market systems development professionals are putting up a great effort to increase the frequency and quality of interactions between providers and consumers through short term projects engaging the private sector anticipating behavioral changes at both tiers.

The market systems development programs (MSD) follow a number of facilitation guides that would help the managers to plan and communicate strategies to engage the private sector in achieving certain goals. However, as the vast majority of the aid workers working in this sector in developing countries are still graduating to this relatively new market systems approach and as the saying goes “unlearning is much more difficult than learning”, MSD project managers often face troubles in acquainting the team and other relevant stakeholders into the complex paradigm of systemic thinking. This article offers a summarized private sector engagement and facilitation approach to help project managers in this regard and trigger critical thinking within the team.

A good starting point is explaining how MSD works and why we need the private sector engagement to find solutions to most of the questions present at the market level. Let us start by trying to define these two in the following chapters.

2. Market Systems Development

Markets, just like any other system, are composed of several components such as actors (e.g. private companies, service providers, consumers), their relationships (e.g. transactional, partnerships), and the dynamics of the relationships (e.g. bargain power, influences). Apart from these, there are norms and perceived notions that dictate how these components function. Simply put, a ‘market’ is a thing that allows a range of actors to exchange values, in other words ‘problems and solutions’, which help these actors to survive and grow. The main role of markets is to provide the space to create opportunities for participation of buyers and sellers. The performance of a market is calculated from the quality and quantity of opportunities it creates and the proportion of the relevant population it invites to participate.

Markets move in the direction the actors chooses it to. Interestingly, when we observe markets, we identify two key issues:
a) Buyers and sellers do not efficiently foresee the outcomes of following certain directions in dysfunctional markets. This lack of foresight basically makes these markets low-performing.
b) Markets always rectify itself. Whenever there is a gap of certain product (a good or a service) in a well functional market someone usually steps up and fills it.

Now, these two issues may seem counterbalancing each other, and mostly it does. A low-performing market do have the need of policies, tactics and guidelines that may help it get better. This latent demand, once surfaced, can call out to entrepreneurs and authorities to adopt strategies and standards that can add value to the performance of the market. The only real issue to be addressed here is the speed of change. There are many actors who are extractive and do not see investing in growth to be profitable because no one else is doing it. This is where the MSD approach can offer it service to ‘accelerate’ the process.

Here is the thing, MSD professionals do not offer real solutions to real problems. Rather, they bring the actors together who might be interested in solving the problems. Hence, MSD approach tries to establish mechanisms that guide the market to become more resilient to internal and external threats by equipping them with systemic thinking patterns.

This is much easier said than done. One might wonder why extractive actors would listen to these external characters such as MSD professionals. This is exactly where the facilitation part comes.

3. Facilitating MSD Programs

An integral part of changing the direction of a market to make it more participatory and inclusive is to involve the private sector stakeholders who would be potentially benefited from such a change. Graduating businesses from having an extractive attitude to supporting growth and investing more on process innovations and product designing can lead towards increased traction. Moreover, we have seen many projects providing ready-made solutions to specific market level actors that brought immediate success, but died down as soon as the flow of donor money stopped. So, it is very important to ensure that the ownership of change lies with the agents of change, i.e. the market actors.

Putting things into perspective, even in high performing markets there is a very high (nearly 90%[1]) rate of failure for start-ups. However, if the market system is designed in a way it provides cushion for entrepreneurs to get back on their feet and try again, the total number of trials will keep increasing. Markets learn from their failures, adjust tactics, and retry enriching the institutional memory of the sector in the process. This is exactly how the world got popular products like NetFlix, Facebook, Uber and AirBnB, simple trial and error. This is a continuous process that helps markets to get better in terms of becoming more participatory and creating more opportunities.

Naturally, businesses strategize on evidences and peer learning. Innovations can be expensive, and with the lack of the ‘cushion’ we discussed in the previous paragraph, it can bear high risk in low-performing. Merging these two concerns an MSD program assumes two important roles such as –

The Evidence Collector MSD programs should analyze the market by gathering and dissecting data. There has to be some potential for growth showing benefit for the actors to make any change. The duty of generating tailor made business cases incorporating inclusive growth lies with the MSD programs.

The Guarantor MSD programs should help market actors to see the benefits of trying out new things, learning from failures and adjusting tactics. We often see private sector actors, especially in stagnant economies, showing reluctance to invest in innovations. This is where an MSD program can add real value in sharing the risks and shaping the behavioral patterns of private sector actors to move towards inclusiveness.

By Mike Field, Market Systems Specialist, EcoVentures International

​Over the last few years there has a been an interesting evolution in my thinking that initially was grounded in questions about systemic resilience.  Central to understanding resilience has been how societies manage risks around shocks and stresses.  However, from a systems thinking perspective, how communities are managing risks is only a small part of the challenge.  How to do societies mange risks across communities, regional etc.?  What are the patterns in investment, policies, etc. that indicate an orientation in how societies perceive and think about risks related to stresses and shocks?   In starting to investigate these and other questions regarding how a society could shift in ways to better manage known and knowable risks.  IN particular, why and how could a society via its political and market systems manage risks across groups/communities at a systemic level, which has in more developed countries limited the burden placed on individual isolated communities. 
 
Taking northern Kenya as an example, the communities have evolved ways to manage risks from shocks and stresses based primarily on their ability to absorb the risks through strong communal fabric.  All members of the community are essential threads in the fabric, and as long as community members can maintain their roles the fabric can absorb enormous amounts of hardship.  In addition to communal loyalty, communities seek to accumulate resources and see outsiders often as rivals for scarce resources.  Resilience programming has primarily sought to bolster a community’s ability to weather shocks and stresses by reinforcing their absorptive capacity, which makes complete sense. 
 
While much of this is not new, when systems lenses are applied to this landscape some interesting insights and questions arose.  Primary among them is a question about how does this landscape and the efforts around it align with efforts to get a country to middle income status.  More specifically are these efforts leading to an improved capacity at a nation-state level to manage stresses and shocks over time so they can remain on a path to middle-income status?   This question has implications past resilience tied to shocks like drought in northern Kenya as many NGOs that focus on the most vulnerable also focus on the resilience of those communities in relation to day-to-day stresses that leave them on a knife’s edge.   For organizations and practitioners working in areas prone to bigger shocks and stresses or those working in areas where vulnerable populations are often under stress related to basic needs, they have tended toward focusing on social safety net services as essential to stabilize the communities.  While this is makes sense, as practitioners have become more aware of systems thinking and applied systems lenses question continue to arise related to how such programming aligns with supporting a country towards becoming self-reliant. 
 
It would be expected that as a country moves toward middle income status and greater self reliance, it would also see the value in investing in mechanisms and tools to manage stresses and shocks in ways that reduces the burden on its populations.  This expectation brings to light an important conversation that has started, but needs to progress much further.  Specifically, how should/could practitioners engage around shifting the way the system provides social safety net services, as opposed to providing the services themselves.  The challenge here is that any such suggestion has to recognize that there would be a gap around social safety net services.  This challenge would not be easy to address but it is critical, especially once it is understood that social safety net services are central to market system development.  They are also essential to a society’s ability to manage resilience at a higher systemic level in ways that can mitigate and neutralize known and knowable risks without forcing individual communities to always take it on the chin. 
 
A serious conversation about how societies manage known and knowable risks including how that affects markets, political, social, etc. systems is essential.  It is increasingly clear that as a result of international development evolving multiple stove-piped areas of investment, many efforts now work at cross purposes.  Systems thinking has provided effective lenses to see how and why alignment across these domains is needed and possible – even if it is not going to be easy.

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.