Market Systems Insights for DRG - Success as a Dynamic System

This is the second blog post on what Democracy, Human Rights, and Governance (DRG) can learn from market systems. The first post looked at the practice of market segmentation. I believe a lot of programming around DRG can borrow from market systems facilitation approaches. Market systems approaches are looking to move toward a dynamic and adaptive market system that is in "good health," while DRG approaches are often trying to fix core institutional frameworks that can serve to structure and enable inclusive and accountable governance of society. I want to explore a bit more what success means in a market system context, contrast this with a stylized DRG concept of success, and then consider implications for DRG programming of borrowing more from this idea of success.

Technique: Defining Success as a Dynamic System

Let me give a short sketch of how the market systems facilitation folks assess success - a dynamic and inclusive market system. This understanding rests on three core ideas. The first idea is that a strong market system is always improving as it changes - the firms within the system are striving to do better, never able to rest on having completed their work, in ways that improve its overall results. The second idea is that a strong market system leads to "crowding in" - a process by which people copy effective offerings and further tailor their own products to compete in the market. And the third idea is that the market system is innovative - generating its own ideas from how actors in the system interact and learn. All three of these have in common that they envision a successful market system as one where actors are constantly changing the system itself in positive ways. Even though none of them feels responsibility for the health of the market system as a whole, their collective actions keep it healthy.

This idea of success is captured in the list below, which is about assessing the enabling environment for a market system. The terms of the assessment embed the idea of a dynamic market system.

Enabling Environment Performance is Defined by Its Ability to:

Drive Constituents' Performance Improvements:

• Constituent investment in performance
• Benchmarking - performance compared to other countries, regions, etc.
• Societal benefit (poverty reduction, jobs, etc.

Crowd in Participants:

• Participants involved
• Forums and platforms for dialogue
• Awareness

Learn and Adapt:

• Evidence based
• Transparent monitoring
• Accountability to objectives

Consistent with their vision of dynamism as success, market systems facilitation is all about finding ways to facilitate connections that lead to change in the market system -- and this idea of serving as a facilitator of others is quite embedded in the way the work is talked about. The implementer speaks of brokering or building linkages or spurring crowding in of poor-serving innovations - work that contributes to key outcomes but is distinct from achieving those outcomes directly (there is no "providing farmers more fertilizer" or "spreading a new financial product" as accomplishments of the implementer). Success of the implementer is separate from the outcome of a healthy market system.

Comparison Point: Defining Success in DRG as Sound Institutions

By contrast, despite focusing on democratic governance as a participatory system, a lot of DRG programming does not take an explicit facilitation approach. Instead, it typically is framed as technical improvements to perfect regulations and laws to enable proper democratic functioning of the state. We are, to our credit, oriented more to function than to form - we've largely gotten beyond simple "best practices" models of voting systems or parliamentary procedures or public accountability. We often employ a more problem-driven, iterative and adaptive (PDIA) approach to addressing shortfalls in governance institutions.

Nevertheless, the underlying mental models seem to me to emphasize key reforms to improve institutions, where our programming drives those reforms as locally-generated solutions rather than facilitating local problem-solving. Success is defined as key reforms passed to "fix" the institutions of governance, rather than enabling local problem solving in an ongoing way. And the success of our implementers is indistinguishable from the successful end state of the governance system as a whole.

Further, despite moving away from particular best practices, in DRG there is often an idea of what actors should do that is idealized - for example, the idea that civil society "should" hold government accountable. In market systems, where each system is presumed to have arrived through self-organization, such "shoulds" do not apply to the roles within the system of its actors; firms do what they do and changing what they do requires figuring out ways to shift incentives.

Implications: Success as a Dynamic System in DRG

I wonder how some of our programming would change in DRG if our idea of success was not an inclusive or accountable set of institutions, but a socio-political system that was constantly innovating in terms of how people participate, how those in power are accountable to the society they serve, and how the democracy renews itself in a dynamic civic space.

I can imagine projects that aim to foster a healthier democratic polity giving greater attention to civic engagement and action, and working with a wider array of actors across government and civil society - something I've seen hints of in Liberia and Nigeria. I can imagine more appreciation of the value of youth not as recipients of civic education but as innovators in governance. I can imagine more attention to processes that spark citizens and governments to define and renew their social compacts, and then support their engagement to achieve their own commitments (this is, to be fair, a hallmark of some effective local governance programming, such as in Senegal, and supported by the latest evidence on social accountability). And in particular, I imagine that better measurement of our success would entail looking more carefully at the sorts of dynamic behaviors - continuous pursuit of improvement, innovation in approaches, crowding in by various actors - in governance, rather than at the quality of institutions against benchmarks or closing "implementation gaps" between the formal and the real.

I think that this also would significantly help align DRG programming with the vision of a journey to self-reliance. Self-reliance in a governance sense is a society that can cope with new threats or opportunities, enable participation around emerging issues, hold itself accountable despite shifts within its society and its neighbors, and find new and better solutions to injustice and exclusion. All of those require actors within a governance system who constantly learn, adapt, and improve - not just a static set of high-quality "rules of the game" or institutions. And they imply investments in accompanying local actors as they engage in problem solving, facilitating and brokering interactions so that they will continue without us, and making collective action more effective and inclusive without leading or sponsoring it directly.

If this resonates with you, I'd love to hear experiences from those who work on DRG around parallels to your own experiences, techniques consistent with a systems facilitation approach to programming, or suggestions around how we can unpack some of these notions further. And if this sounds like it misses the mark in terms of a potential gain for programming, I'd love to hear that also - in what ways does a market systems lens fail to fit what you see as our best work? In collaboration with folks in the market systems community, I'd like to provide more food for thought in this space, and suggestions of how to do that (training, webinars, etc.) would also be great.