New podcast episode published on System Insight: Episode 6 On Competitiveness

I hope you are all following our Systemic Insight podcast series. Instructions below!

We have just launched a new episode on the Systemic Insight Podcast. In this episode, I discuss with Marcus the concept of competitiveness. The chat was inspired by some reading Marcus had been doing that condemned competition to be part of the driving force that makes our society so extractive and unequal.

The topic of competitiveness comes up often in our work, and I hope that this episode will add value to the discussions that our followers also must be having about the concept.

In particular, Marcus quoted two quotes from Daniel Wahl’s book ‘Designing Regenerative Cultures’ to exemplify the argument. To contrast this viewpoint, we explore the positive aspects of competition and why competitiveness and in particular systemic competitiveness in the way it is used by Mesopartner and others still are and will remain important concepts in economic development – and why they can indeed also be forces that drive a positive transformation of society towards a more sustainable future. We also asked Christian Schoen to share his opinion on competitiveness in development.

Find the episode on Libsyn or Apple Podcast.

Linking: 5 Differences between complexity & systems thinking

If you are interested in complexity and systems then you have to look at this great post by Sonja Blignaut – 5 Differences between complexity & systems thinking.

Thinking out loud: Is aid systematically unsystemic?

Originally published on 26 August 2013, edited and republished on 23 July 2019

I am taking a risk with this post, but I am sure my regular readers will bear with me as I think out loud. I have been fortunate in the past few months to have been able to focus my praxis almost completely on the topic of complexity and systems thinking in development, with a particular emphasis on innovation systems and the technological evolution of industries and regions. Shifting from advocating for a different approach to actually assisting with the shift has been a really exciting venture.

Disclaimer: These are my own opinions and do not reflect Mesopartner’s views. 

Systems and complexity thinking is now central to Mesopartner’s,  work (see our Systemic-Insight theme page). Not surprisingly, my main customers for working on systems and complexity are not those involved with development programmes per se, but meso level institutions tasked with supporting industries and sub-sectors to innovate, grow, compete and increase employment. It is no secret to most of you that I am very disillusioned with aid and development cooperation at the moment.

When you dive into the literature on complex adaptive systems and how they tend to function naturally, you cannot help but wonder whether aid and development cooperation is in a very systematic way trying to fight the very things that make economic systems so amazing. There are several universal phenomena about complex systems that seem to be ignored (I will highlight just a few that I found personally the most challenging to deal with in my work):

  • In complex systems, resources are allocated (or taken up) by those best able to make sense of the situation, using a combination of knowledge, resources and past experience. Marcus Jenal reminded me that people also exercise power and use their influence to take up these resources. It is a reinforcing loop referred to by systems thinkers such as Donnella Meadows as “strength to the strong”. It is even mentioned in the Bible and in other spiritual and philosophical texts. This presents us with the first dilemma as we can often sense that the way resources are distributed is not fair or just, and that many agents in the system will resist any attempt at redistribution.
  • Even when systems become unstable, they do tend to find a kind of equilibrium range. This means that systems will by their very nature resist our interventions as they strive towards some natural range.
  • When a system remains in a suboptimal state (in our judgement it is not delivering what we think it should deliver), we can almost be certain that somebody somewhere is using their power or influence to keep the system in a suboptimal state to extract rents from the situation. It is unnatural for systems to remain “broken” over an extended period without someone influential in the system benefitting from it.
  • Related to the previous point, the ability of an external agent to assess whether a system is broken is debatable and not questioned often enough. Even if the actors in the system believe it is broken, the system might just be behaving in a very natural way. Examples can be found in finance (who wants to lend money to potential losers when they can guarantee returns rather by lending to potential winners) or in agriculture (brokers overcome scale and uncertainty by aggregating volumes, and in return for their risk they earn good profits). There is a second dimension to this: if we ask the actors in the system what is bothering them, they will in most cases shift the blame for their decision or indecision somewhere else.
  • What is good for the system is not always good for the agents in the system and the other way around. An example is that strategies to promote exports or employment growth might actually have a negative effect on many small enterprises while having a positive effect on medium and large-sized enterprises. Or strengthening smaller enterprises might have a negative effect on the current account (through increased imports) while at the same increasing jobs in the service sector.
  • One of the weakest points of influence in a system is the actor, while one of the strongest leverage points is the purpose (often not articulated formally) and the rules (social institutions) of the system. Although it is much harder to change, the purpose of the system is the most important leverage point, followed by rules and the nature and frequency of interrelations. Yet most development programmes target particular actors, ignoring the implicit or unexpressed meta-purpose of the system. Furthermore, most measurement systems measure outputs at the level of the actor, instead of monitoring behaviour in the system. Behaviour (informed by social rules) is a better (yet harder to quantify) measure as it tells us something about the purpose, the meta culture and actors’ attitude towards his or her own health and the health of the systems. This is also a characteristic that I find personally challenging, as it takes time to change the purpose and the rules of the system. In many cases, people simply cannot even explain the purpose of their systems or the rules they follow, which are instinctively based on their values. Changing the purpose of a system requires people to change their priorities, their values, the way to judge success (or failure) and the way they perceive their role in a system or society.
  • There is a relationship between the actors and their artifacts (equipment, assets, machines, tools, etc,). Old, broken or outdated equipment is a symptom of old, broken and outdated business models implemented or executed by the actors. Somehow this is made possible by both the social context and the social as well as the economic technologies. Giving an actor a new artifact (equipment) does not necessarily change the system in the long term, as the actor is still the same. I have often witnessed how an old factory with outdated equipment but that is managed properly can outperform a modern factory run by incompetent management (management itself is an economic and social technology). Providing incentives for an existing business to buy new equipment is to address a symptom and not a cause of sustained underperformance. But an existing actor with a new attitude, better information or different behaviour is able to use existing artifacts more effectively. In the real world, this means that upgrading the equipment in a business is the wrong place to start. Rather promote new entrepreneurs or people who can better use the existing equipment. Physical technologies co-evolve with economic and social technologies; we are not dealing with an equipment problem only.

How do we get development programmes to embrace some of the strengths of complex systems? For example:

  • In complex systems, agents make decisions in a decentralised way. They make these decisions based on their perceptions of their environment and their perceptions of alternative futures, based on the information at their disposal. Thus flooding the system with valid information and promoting the view of how new knowledge or technologies can increase returns is much more valuable than physically trying to fix the actor. Education, technology demonstration and supporting experimentation are ways to provide entrepreneurs with better information to support decision making. It is often very difficult in developing countries to find this type of information which is needed for decision making support by entrepreneurs or firms.
  • A complex system exists of agents(or actors)and their artifacts, the interrelations between the agents and their common (system) purpose. Often in development, we describe only the actors, while ignoring the fact that a system has other elements that are important to include in our description. Already describing a target system as “small farmers using outdated equipment advocating for state protection” is already a much better description of a typical system, as opposed to “poor small farmers who are suffering”. We can also not just focus on “technology” without considering social and economic technologies.
  • In complex systems, the behaviour of the system emerges from the behaviour of all the elements in the systemThis emerging behaviour, in turn, has an effect on all the elements in the system, which gives rise to complexity. In complex systems there are strong feedback loops between the elements in the system and the overall observed behaviour or purpose of the system. As economies become more complex, and as inter-dependencies between different systems increase, so too it becomes more difficult to predict or anticipate how a system will change, adapt or respond to a change. This means that we have to be more sensitive to the feedback loops. Our greatest weakness is that we are outside the system, but this can also be turned into a strength if we use our distance to provide a neutral perspective on how the system seems to be behaving.
  • Even if we acknowledge that complex systems also frequently resist change, it is necessary to acknowledge that complex systems are very sensitive to small changes. Can we identify the areas where the system is least resistant to change? Can we support small safe-to-fail experiments in the areas where the risks seem high? Can we help the system to develop alternative paths that the actors can try out? Let us make sure that we increase the options available to the stakeholders and NOT fall in the trap of pushing stakeholders to adopt a “silver bullet” approach.
  • In complex systems, proximity (closeness) and connectivity (social networks) really matter. Every agent is connected to other agents and to the greater system in many different ways, and each agent typically affects every other agent through their effect on the system and their close neighbours in the system. The behaviour of any given actor affects the perspective and behaviour of other actors who are close to them. This means that we should also work with the existing structures and not create new artificial networks. If your first instinct is that the stakeholders are poorly coordinated and therefore that more coordination is needed, then you are pushing the system in the wrong direction.
  • The starting state really matters. And so does the development or evolutionary past of the system. The history of the system is still very evident in the system, and it affects how the system responds to choices, opportunities, failures and challenges. Thus the future of the system is affected by its past in unpredictable ways. This is why a solution that works in one place will almost certainly not work in another.
  • In complex systems, correlations may be strong, but causation is weak or hard to identify with certainty. In fact, what caused a particular response in the past might have no effect in the future, so perhaps trying to understand causation is in itself a future exercise. It is often impossible to figure out cause and effect and its direction in a complex system. We should not propose interventions with “guaranteed” linear outcomes. We should rather use our resources to assist developing countries to try different ideas by assisting in the creation of multiple viable paths. This is a task with very uncertain outcomes, which is exactly why our counterparts don’t pursue these risky options.

For me, development cooperation and aid need to embrace the principles of complex systems. Dave Snowden, in a Cynefin training arranged by Mesopartner in 2013, commented: “you absorb complexity, you don’t delude yourself into thinking you can eliminate it”. What I am really surprised at is how my clients in the public sector meso institutions and in the private sector find it easy to embrace the principles of complexity, while development programmes resist these same ideas. For so many of the private sector people with whom I am now working, these principles are useful as they help to explain why certain well-intentioned interventions did not yield the expected results.

My frustration is that when we discuss these same principles with aid partners or development cooperation programmes which support the very same institutions with which I am working, they find many excuses for not embracing these principles. For instance, last week I was told that “we need a clear project plan (a.k.a. an impact chain), based on a detailed assessment so that we can precisely measure our impact. We need to clearly state and then work towards our indicators so that we have evidence that we have achieved change”. Read that sentence again and count the number of times “we” and “our” are used. It seems to me that development is about delivery or applying resources and not about supporting the evolution and expansion of complex economic systems in developing countries. Never mind how sceptical development organisations are about the insights of local stakeholders as to what is really going on in the system, and how confident they are that they know exactly what the problem and the solution are.

I cannot help but wonder whether aid and development cooperation is systemically unsystemic.

23-07-2019 comment by Shawn. I decided to re-publish this post as I still find the same patterns in development. As a team, Mesopartner has moved deep into complexity thinking and have made profound changes to our consulting practice, research themes and capacity building events. Yet, much remains to be done. We are constantly also challenged by our clients in development who have to meet their funder’s requirements for predictable and quantifiable results, despite the people in these development organisations knowing that their interventions might not be addressing the real needs in a developing country.

What do we mean with systemic?

There are hundreds of ways of describing the word systemic. Yet in development it is important that we at least narrow down the definitions as to not cause confusion.

Richard Hummelbrunner describes three emergent features of methods and approaches from systems thinking:

  • An understanding of interrelationships
  • A commitment to multiple perspectives
  • An awareness of boundaries

Richard then explains that each of these features focused in the development of the systems thinking field in the last fifty years. Up to the 60s, the focus was interrelationships. This was followed by an increasing awareness of the different perspectives as a critical issue. This affected the way people recognized interrelationships. In the 1980s the focus shifted towards the boundaries of the system, as practitioners realized that they system had to be bounded in some way to allow for diagnosis. This raised the ethical question of who decides what is part of the system and what is not, as the shifting of these boundaries has great influence on what is revealed and understood when the system is diagnosed.

Our firm, Mesopartner, is known for the “Systemic Competitiveness” framework that we use in our work. The framework originated within the German Development Institute in the mid 90s. One of the common misunderstandings about Systemic Competitiveness is that people confuse systemic with systematic. The latter in my mind would refer to a very detailed and exact way of understanding and doing things that may be very rigid. This may detract from the fact that to really understand a system we might have to embrace complexity, dilemmas and issues in a more dynamic way, something that a very recipe driven systematic approach may not allow.

Reference:

Williams, B and Hummelbrunner, R. 2010. Systems concepts in action: a practitioners toolkit. Stanford Business Books.

ESSER, K., HILLEBRAND, W., MESSNER, D. & MEYER-STAMER, J. 1995.  Systemic competitiveness. New patterns for industrial development. London: Frank Cas.

MEYER-STAMER, J. 2005.  Systemic competitiveness revisited. Conclusions for technical assistance in private sector development. Mesopartner

Linking to Complexity

If you are interested in the topic of complexity then surf over to Marcus Jenal’s page where he provides some insights on the topic. Marcus is a very good thinker and practitioner I always enjoy the questions he asks.

Also take a look at Aid at the Edge of Chaos and Owen Abroad blogsites for more insights on complex adaptive systems and development.