How might a systems approach change the way aid supports the knowledge sector in Indonesia?
For some reason, the summer months seem to involve a lot of cups of tea (and the occasional beer) with interesting people passing through London, often at my second office in Brixton. One of last week’s conversations was with Arnaldo Pellini, who has been working for ODI on a big ‘knowledge sector initiative’ in Indonesia. Five years in, the team is thinking less in terms of a knowledge sector, more as a knowledge system, so we discussed what systems thinking might add to the work.
We started with the evolutionary cycle: systems evolve through the endless churn of variation, selection and amplification. Variation = rate of mutations – new species, new companies; Selection = some are fit for the landscape, others are rubbish and die out; amplification = the fit ones expand or proliferate and become Facebook, Google, or ants. At some point, they may become so dominant that they start to stifle new cycles of variation, at which point governments (or ant-eaters) need to get stuck in to reduce their power.
So how might this apply to a programme team managing the funding / receiving funding (the KSI is funded by the Aussies) to look for wasy to strengthen a knowledge system?
A programme team could look to deliberately accelerate the rate of mutation: it could fund research to speed up the emergence of ideas and technologies, or support start ups to put those ideas into practice, (eg by helping them find start-up capital) or encouraging entrepreneurs/venture capitalists to come and do it instead.
Say KSI helps seed the system with 30 new start-ups or support innovative ideas in established organisations in the knowledge system. How could it make sure that the fit ones prosper and the unfit ones die? (programmes tend to struggle with deciding when to stop funding something that does not show traction). If the start-ups are operating commercially, there is a bottom line that can do that for you – one of the great strengths of markets is the ‘creative destruction’ that constantly selects new winners, and kills off losers. If they are not operating in a market logic, you need to find an alternative mechanism for feedback and selection, preferably not a bunch of aid wallahs behaving like Roman emperors giving thumbs up/down to the gladiators. Customer feedback? Evidence of demand?
A few good ideas have popped up, and survived. How can they go to scale or expand in a huge country like Indonesia, and as fast as
possible? Is it access to finance? Or maybe turn them into a social franchise (‘project in a box’) that can be rapidly replicated and adapted by anyone interested in picking it up?
No donor or other would-be philanthropist can tackle all of these, nor should they. There is an autonomous system of knowledge already there, churning out ideas, successes, failures and change. Perhaps the best thing to do is first understand that system, then try and identify where the web of variation, selection and amplification is weakest, or is breaking down, and try and focus your attention there. Maybe they could draw on Dani Rodrik and Ricardo Hausmann’s work on growth bottlenecks.
One implication of this approach is for the way programmes design their budgets and spend money. Twelve months or even 5 year budget cycles struggle with a system approach. Here is an idea. What if programmes could transfer the underspent budget from one year to the following year to support the initiatives that show traction? Or, what if programmes could start with a small budget to support experimentation at the early stages and increase the size of the annual budget over time? There is probably a need here to rethink how budget and planning processes fit with the stages of evolution of a system approach. For example, variation might be a lot more about facilitating the exchange of ideas and connections, which needs people more than cash.