Making the (Business) Case for Adaptive Management: Three Tips from the Private Sector

Matthew Baker is a MERL Specialist, Organizational Learning & Research on the USAID LEARN contract.

While we often turn to the private sector for inspiration, as I have noted elsewhere, sometimes the public sector is actually ahead of the curve in certain areas. Often the truth is more prosaic, and similar types of initiatives are being pursued in both the public and private sectors concurrently. One such example of this overlap is the work USAID and development partners are doing on adaptive management alongside Lean, Agile and Six Sigma project management approaches in software development and engineering.

So what can we learn from how the private sector is pursuing the principles of adaptive management? This blog post explores three main takeaways and unpacks how adaptive management can improve the quality and outcomes of our work.

First, take time to pause and reflect, ensure you bring enough and the right level of resources, staff or information to inform decisions around adaptation. In the manufacturing sector, Lean project management identifies and eliminates waste in the production process. As waste is eliminated, quality improves while production time and cost are reduced. While this is still one of the most widely used methods, one of the more popular examples draws on a closely related but distinctly different way of doing business: the Toyota Production System. Instead of focusing just on waste, it’s about maintaining “flow” within the production system. Two key concepts are involved. First, "jidoka"  which translates as "automation with a human touch," means that when a problem occurs, the equipment is stopped immediately, preventing defective products from being produced. The second concept is "Just-in-Time," where each process produces only what is needed by the next process in a continuous flow. This ensures that manufacturing proceeds smoothly while correcting and preventing faults and defects. While focusing on waste in development is an important accountability issue, there are two insights we can apply for development programs.

• Take time to stop, reflect and adapt. When someone on the assembly line sees that the car does not have all four wheels, the process stops. We should think of how we can do the same when we see that our theory of change or even an activity is not achieving the desired result. In the development field, this means looking for mechanisms that afford this flexibility. It also requires a culture within the team and between the team and donor in which this can happen, and holding ourselves accountable for making this happen.

• Use enough, but no more than needed, resources, staff or information to inform our decision-making. While on the assembly line this means having enough spare parts, in the development context it means having the ability to call on additional or different technical staff, adjust funds and have the appropriate type of monitoring and evaluation information. Practically, this means more flexible staffing arrangements, greater understanding by donors and implementers about when to shift, decrease or increase funds and ensure that monitoring and evaluation data is accessible for learning. For example, think dashboards and after action reviews that are produced as needed in response to contextual and program implementation, rather than predetermined by preset workplans.

Second, deliver value early through leveraging quick feedback on pilots and using integrated approaches and concepts such as Scrum methodologies to improve the performance of projects. Scrum approaches are traditionally used by the software development industry to manage projects in an adaptive, not predictive, way to produce software. Scrum is a departure from the top-down approach of Waterfall or Cascade method of planning where all the requirements and risks are known in advance. Rather than developing an entire computer program and then testing whether it works, it breaks up the program into more manageable chunks focused on functions in decreasing importance that are then developed in short ‘sprints’. Each sprint produces a particular piece of the program code for a function. One key benefit to this approach is being able to identify earlier on changes that may need to be made while the product is being developed. Life, of course, is rarely  so simple. Adaptive management in development attempts do something similar by allowing for changes to projects as they interact with beneficiaries, stakeholders and events. In development especially, we need to start with the assumption that we do not have the “best” approach from the outset but instead test it, scaling  appropriately. One challenge in development work is that the context is always changing. Unlike a piece of code that can be relied on do the same thing every time, our work may have different results over time. Therefore, much like the continual nature of lean manufacturing methodologies, we need to constantly monitor and track. If things are not working, then we may need to revisit our initial pilots to find another route.

Third, and related, adaptive management in development should focus on ensuring that we monitor, track and record the utility of adaptive approaches. The private sector has attempted to document the results of their adaptive approaches; international development would do well to do the same. GE has an illustrious history of employing adaptive approaches in their work, including one approach called Six Sigma. The company has been fastidious in chronicling its utility from the beginning. Back in GE’s 1997 annual report it stated that, “Six Sigma, even at this relatively early stage, delivered more than $300 million to our 1997 operating income. In 1998, returns will more than double this operating profit impact.”

While similar statistics are likely more challenging for the development sector, we should certainly aspire to detail our own successes in using adaptive approaches, recognizing that measuring this is much more complex for development given that we are not dealing with strict bottom lines but more intangible outcomes. Despite this, having the requisite facts as an implementer and a donor are even more important to demonstrate to the general public and elected officials that foreign aid funds are indeed being spent in the most prudent and effective manner. While funds for monitoring, evaluation and learning are often seen as separate from implementation, adaptive approaches in business underline how they are integral to effective and efficient implementation.

We therefore need to continue to gather, collate, analyze and synthesize evidence on when and how such approaches work. While evidence already does exist – see the recent update to the literature review on the evidence base for USAID’s Collaborating, Learning and Adapting approach – the evidence shows that there are organizational performance benefits from CLA, including improved financial and project management outcomes. However, the evidence base in development itself remains relatively thin.

Learning from other sectors on how they work in an adaptive fashion can provide us with tips on how we should do our work. Do you have good examples of how your organization or team conducts adaptive management? What could the private sector learn from how you work on adaptive management? Share your thoughts in the comments below.