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How do we encourage innovation in markets? What can systems thinking add?

February 22, 2017
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Update: check out the comments on this post – v interesting

Earlier this month I spent a fun 3 days at a seminar discussing Market Systems Innovation. No really. I discovered a Market Systems 1community of very smart people working on markets, who seem to be on a similar journey to the people working on governance and institutions, who I have spent most of my time with in recent years. Chatham House Rule, so the speakers must remain shrouded in mystery, but I will say it was at the Rockefeller Foundation’s Bellagio Centre, just to make you jealous. FSG convened the event (I nicked their slides on the India dairy story),

The market systems crowd have been on a familiar journey: they started with a focus on individual entrepreneurs and firms – how to encourage them to innovate, grow etc? Then they became aware of the surrounding economic systems as barriers – what if you can’t get your products to market, or the banks won’t lend to you? So they learned to identify bottlenecks and obstacles and try to overcome them. But that is a static picture of the system – a series of snapshots. It misses the pockets of momentum, how the system is constantly changing, throwing up potential opportunities. Now the MSI folk are ready to ‘dance with the system’. That means thinking more about how to boost the system as an ‘enabling environment’ rather than just see it as a series of problems that need fixing. It also means studying the history of any given market system – essential to dig into the path that has brought it to its current state, and the influence that is likely to have on any attempt to change it. There was some really impressive use of timelines to delve into the history of particular markets like India’s iconic Amul dairy project.

I realize that probably sounds like a load of meaningless management babble, but I think there is some substance here. Bear with me.

The bit I got excited about (and pushed remorselessly) was the importance of social/gender norms that block off/open up areas of market activity without firms even realizing. There’s a great example from Bangladesh in one of the background papers for the conference:

‘Katalyst (a market development project) supported large private seed companies to expand their input distribution channels in the northern remote areas of Bangladesh to become more gender inclusive. Katalyst assisted with market research, developing a business model, and showing that women took leading roles in vegetable production and were an important clientele. Ultimately, the input companies were able to design and sell, via female door-to-door sales agents, small affordable packages of quality seeds to customers, 90 percent of whom were women. One leading company, Lalteer seeds, experienced a 50 percent hike in sales of mini-packet seeds to homestead producers in the chars. As a result women are growing more vegetables more efficiently, with positive implications on the household consumption of vegetables as well as increased disposable income for women from selling excess vegetables. Katalyst will build on this success by designing interventions to attract buyers to purchase from the farm gate so that women have access to output markets, without compromising their mobility. Such activities ensure that women are able to access markets without compromising their ability to meet household responsibilities or challenge norms around mobility.’

I was in a small group that was tasked with coming up with some guidance for market systems people on how to work with/on social norms. We identified 3 areas: diagnosis, working within constraints (like the Bangladesh example of finding markets solutions compatible with restrictions on women’s mobility) and deliberately trying to tackle norms head on. Few market systems organizations are going to go all the way to start campaigning for norm change (e.g. funding feminist activism), but all are capable of doing better on the first two categories– making norms visible (for example using a gendered market analysis), and finding work-arounds when norms are excluding people from markets. Another background paper looked at the care economy – v useful.

Finally, as with the governance debate, talk of systems thinking seems to generate two contradictory responses in market-systempeople. One lot cry ‘whoopee, we need some new, and preferably really complicated, toolkits’, and start messing around with Social Network Analysis and the like. The others say ‘let’s embrace ambiguity and doubt. Forget data, it all comes down to judgement.’ They cite investors looking for promising companies, who often say they ignore the business models and project proposals, which they assume will change massively during the course of a project. What they are interested in is the quality of the management team and its ability to sense and respond to change and new information. The second camp also loves broad enabling environment issues like transparency and access to information.

I fall somewhere between the two camps – we need some general tools (eg power analysis, systems mapping), but keep it simple – not some big new machine. But then it’s time to go and find the firms and individuals who are doing interesting things and see what you can learn (positive deviance). And add to that lots of advocacy on everything from access to finance to women’s rights.

Views?

Final plug. Oxfam has a rather good and non-geeky intro to market systems and an accompanying 5m video

12 comments

  1. Thanks for this blog, Duncan. A couple years ago, IDS, BEAM and Oxfam’s WE-Care programme in Ethiopia started collaborating on how to understand, assess and address unpaid care work (and the relevant social norms issues) in Market Systems approaches. The conceptual paper is here: http://policy-practice.oxfam.org.uk/publications/market-systems-approaches-to-enabling-womens-economic-empowerment-through-addre-603519
    and the research paper is here: https://beamexchange.org/uploads/filer_public/fa/73/fa73f0e0-f2de-4913-b409-fb6d575dbaad/unpaid_carework.pdf

    There is also great interest in the overlap between social norms and markets approaches, for the SEEP learning forum on WEE, to be held in Bangkok in late May. Many proposed ‘learning sessions’!

  2. Hi Duncan – I now see that you put the link into the text already – don’t know whether this makes my comment redundant, or just edit it.

    Thanks for this blog, Duncan. a couple years ago, IDS, BEAM and Oxfam’s WE-Care programme in Ethiopia started collaborating on how to understand, assess and address unpaid care work (and the relevant social norms issues) in Market Systems approaches. In addition to the conceptual paper linked above, please see the
    research paper here: https://beamexchange.org/uploads/filer_public/fa/73/fa73f0e0-f2de-4913-b409-fb6d575dbaad/unpaid_carework.pdf

    There is also great interest in the overlap between social norms and markets approaches, for the SEEP learning forum on WEE, to be held in Bangkok in late May. Many proposed ‘learning sessions’!

  3. Duncan, I’m currently trying to strengthen the policy implications for a gender and agri report, and so this blog is exceedingly timely and helpful. Thank you! Your points about better understanding and engaging with the normative environment and the rhythm of social change processes — sometimes fast and mostly slow — are spot on. And a shift to greater gender inclusion in markets, including through connecting women to advances in seed technologies, can sometimes leverage big change. But our comparative research on villlage-level change processes (coming soon under “GENNOVATE” from various CGIAR Research Programs…) illuminates how and why both women’s and men’s agency and opportunities matter for triggering the big transformations in gender norms, more equitable gender relations, more inclusive and better functioning markets, and faster poverty reduction . Stay tuned. Again, a very big thank you for such a meaty and useful briefing despite the Prosecco over lunch. Patti

  4. Thanks Duncan – it’s refreshing to see recognition of the ‘fun’ side of market systems innovation. There is lots more excitement at the BEAM Exchange -www.beamexchange.org – a platform for knowledge exchange and learning about market systems approaches, supported by DFID and SDC.

    Two recent highlights might be:
    A paper discussing the role of ‘economic evolution and institutions’ in systems change https://beamexchange.org/resources/860/ and
    A framework of practical guidance and tools for women’s economic empowerment in market systems https://beamexchange.org/resources/794/

    We are always looking for new resources and contributors to the ‘market systems innovation’ community.

  5. How interesting that you have just discovered the market systems community. Being an avid reader of your blog but also squarely a Market Systems Development (MSD) practitioner – I never realized you weren’t at all in touch with our groups. If anything this seems to point to the fact that a lot of us are following similar paths and have converging ideas – as you say we “have been on a familiar journey”. On the other hand, it begs the observation: we truly are working in silos! Would we learn faster if we weren’t? With the breadth of topics in development, is it feasible to start chipping at those silos? In any case, Women’s Economic Empowerment or WEE (gender in MSD programs) is an exciting and rapidly evolving area – stay tuned!

  6. Hi Duncan

    The ‘work arounds’ are particularly interesting when they open up new types of market activity that can have other leverage – as in the Bangladesh example (developing door to door marketing approaches that could be relevant for opening up other economic opportunities for women). Another well known example from our own work is the case of honey in Ethiopia. Women could not engage in honey production because traditional hives were placed in trees and it was socially unacceptable for women to climb tress. The solution – develop local modern hive production capacity. Women now engage in honey production and other enterprises and jobs are stimulated in hive production.

    More interesting again perhaps is the emerging interest in the next level up – what markets can do to directly change the norms. Large companies changing their marketing practises are often in the lead – “We are on a journey to achieve ‘Unstereotyped’ mindsets inside and outside our company’, (Paul Polman) http://www.thedrum.com/news/2017/01/18/unilever-advertising-holds-back-progress-when-it-relies-gender-stereotypes.

    but I think we can also point to more local examples of financial institutions and companies recognising the value of female employees in non typical roles.

    It is an area largely untapped by a lot of market systems programmes but interest seems to be increasing as evident by the SEEP WEE Forum this May https://weeforum2017.org/

    1. John’s comment is interesting. For me it highlights the systemic nature of the challenges but also the solutions. One way to interpret his examples is that they point to how new types of market activity impact the enabling environment (e.g. by influencing social norms), leading to new economic opportunities. Of course it’s not that simple and (in the jargon of systems), negative feedback loops can inhibit positive changes. Still, it would be useful to think of enabling factors in this systemic way, so that tackling norms head on is not seen in isolation from the work-arounds, but considering how the two interact as part of a broader approach.

      While few market systems organizations are going to campaign for norms change, more can be done. As we discussed on your blog in the context of Davos (https://oxfamblogs.org/fp2p/why-davos-should-be-talking-about-disability/), the actions of government, business, third sector leaders, those who are marginalised and their organizations shape the market system and create circumstances that support access or lead to barriers. These include ‘positive deviants’ who succeed despite the obstacles they face, and market actors who can help change attitudes and overcome stigma. More thoughts on market approaches and ‘leaving no one behind’ also here: https://beamexchange.org/resources/849/

  7. A market systems approach is something we’re looking at emphasizing more in my organisation. We work in economic empowerment, WASH, health and education in fragile and conflict affected states – working across the humanitarian and development spectrum. Being the education bod, I’m really interested in know if anyone has applied this approach to sectors not linked to real markets/ economies. I can see how the principles work – making sure you’re looking at the bigger picture. An example I guess in the education sector would be that building a school doesn’t necessarily result in children accessing education and learning (a rather crude example I know). The need to really explore the demand and supply barriers, looking at an ever-increasingly complex education market and social norms all seems to fit in this way of thinking. Any good examples out there, do send them my way! Many thanks in advance!

  8. Duncan, Hi. While systems thinking is (fairly) well embedded in the world of NGOs and donors, it is much less common among businesses, so late last year CARE (with SABMiller, Business Fights Poverty, and The Harvard Kennedy Corporate Responsibility Initiative) published “Growing Together” ” A Guide for companies to strengthen micro-enterprise market systems”. It’s quite a basic guide but Mike Albu of BEAM (see his comments above) told us that it was the best guide to market systems that he has seen for businesses. A point to note is that we thread the idea of social norms and attitudes, particularly re the role of women, throughout the practical advice in the guide, and also specifically highlight its importance (see page 10). The report is here: http://insights.careinternational.org.uk/publications/growing-together-strengthening-micro-enterprises-in-value-chains (oh and BTW, we’ve got a women and dairy value chain example in there, from CARE and BRAC in Bangladesh)
    Regards
    Gerry

  9. Market innovation has been a topic for a while – great to see other examples added in the comments. Another one to add to the list is from early 2010s is ‘From Islands of Success to Seas of Change’ that sought to understand if/how market innovation can go to scale, involving 100 leaders from business, government, NGOs, research, and farmer organisations. This endeavour recognised the value of positive deviants (the ‘islands of success’) but also its limitation – how to get to ‘seas of change’? http://seasofchange.net/wp/wp-content/uploads/2015/07/SOC2012report.pdf. So I’m wondering if ‘scale’ was discussed at Bellagio beyond ‘boosting the enabling environment’. If yes, what was said?

    While the norms discussions are very political and you mentioned power analysis, were discussions also held about the more structural political and financial issues inhibiting taking market innovation to scale? Eg race to the bottom for workers’ minimal wages, tax laws, national regulations for setting up new businesses, why banks avoid lending to smallholders/small-scale retailers, the threat that some positive deviants pose (e.g. absorbing environmental costs rather than discarding as externalities) to other businesses, corruption and ‘doing development as if politics mattered’, etc.

    Finally, I’m alarmed that anyone working on markets system would say ‘Forget about the data’… Did you mis-stereotype them? Entrepreneurs use masses of data. It doesn’t necessarily capture what matters to the people who matter at the bottom of the inequality pile. But surely data can’t be forgotten and is part of coming to a judgement?

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