Listening to, and Learning from Market Systems

Listening to, and Learning from Market Systems

Market development requires us to have a finger on the pulse of not only economic opportunities that can include vulnerable populations, but also to the drivers motivating individuals to engage in economic activities.

I am working with 2 producer groups, but they are not really groups- they are a collection of individuals who want to increase their household incomes. And to participate in the classes that I am leading, they need to be a group. This is not an unusual circumstance- I have seen it all around the world. In fact when I was teaching at the Microenterprise Development Institute (MDI), I always encouraged my students to get their producers to form groups.

The common wisdom of forming producer groups is that collectively the individuals can:

  • decrease their input costs by buying in bulk
  • decrease their operating costs like transport by sending all their products to market together
  • increase sales by bulking their volume to sell to a lead firm or even sell to a higher value market with increased volume

working together-dice

 

This is all very nice theoretically- but truly, what is needed for a group to function?

  • Communication between members to share information and support each other
  • Responsibility to accomplish tasks that they volunteer for
  • Purpose for the group to exist that everyone agrees with
  • Trust between members

qualities of working together

When groups do not emerge from self organizing, then there usually is little to no communication between members, no one takes responsibility for what needs to be done, and the level of effort of individuals is usually inspired by an outside person who asks that something gets done. Self-motivation, will and collective concern is usually lacking in a group that did not emerge from self-organizing. In the end, the project becomes preoccupied solely with making the groups work instead of facilitating interventions that inspire systemic change.

Emergence and self-organization are two concepts inherent in a robust market system. Are we paying attention though? I’d like to deconstruct these concepts.

Emergence

Systems thinking is best described by EMERGENCE – the process where larger entities or patterns arise through interactions among smaller or simpler entities that themselves do not exhibit such properties. “The whole is greater than the sum of its parts” because the whole has properties and characteristics that aren’t central within the parts. The new properties only can emerge at the level of the whole.

Classic_View_of_Emergence

Donella Meadows in her article Dancing with Systems, which is also the final chapter in the edited book with her writings (Thinking in Systems- A Primer, 2008), talks about getting the beat of the system. I like that. Every system is telling us something, but are we observing and listening? Or are we imposing our assumptions and mental models on a system to make it work the way we want it to so that our outputs and outcomes are achieved?

In this particular instance, the project here is based on the premise that food security can improve if people can diversify their crops and household income streams. This makes sense and comes from lots of experience that has emerged from our field of work. Figure 1 presents a stock and flow diagram used to illustrate a simple system with a causal affect.

figure 1

Figure 1: Causal Relationship the Project is Attempting to Change

Figure 2 illustrates the intention of the project’s intervention to incorporate women into an economic activity through microenterprise development (MED) to enable them to earn an income, which will then result in decreased food insecurity.

figure2

Figure 2: Interventions to improve food security.

These diagrams are simplistic illustrations and do not take into account the complexity of factors impacting on not only food security and household income, but also the reality of the individuals who are to create the change in the system of food insecurity. Figure 2 above does not take into consideration any of the contextual constraints that impede the development of microenterprise even if capacity building was provided.

Food insecurity is a grave issue, and we have to start someplace. Microenterprise development (MED) has been an important initiative in our attempts to alleviate poverty. Yet the learning has indicated that the necessary inputs to create microenterprises like access to credit, understanding markets, promotion, basic bookkeeping, packaging, production, inventory control, and the list goes on, requires lots of human resources to create even a minimal number of successful viable microenterprises.

This project would have to link with and/or hire many types of skilled professionalsin in order to develop 122 enterprise operators  (the target of this component of the project). One also has to look at and analyze entrepreneurial characteristics of candidates participating in the project. An entrepreneur is determined, curious, innovative, self-disciplined, self-motivated, passionate, a risk taker, self-confident and adaptable.

entrepreneur strategy

 

In the field of MED, we have learned time and time again that most individuals do not possess most of these qualities and that these qualities cannot be taught, they are inherent in the individual. This goes for industrialized countries also. In fact, this learning has shifted the field of microenterprise development (MED) to move away from offering business development services (BDS) to individual businesses, to facilitating market development which is demand driven and can affect systemic change that benefits thousands of individuals and households.

To shed some light on the importance of context in an initiative, and how the context influences the outcome of any facilitated intervention, I present below in the following chart the project activities being implemented to achieve household food security with the women learning about MED. I also present how the women are impacted and affected by the context in which they live.

chart

 

Leverage Point

From a systems perspective, the context is not the problem here—it is the leverage point which is the place where alterations can be made in the existing system (food insecurity) to produce the desired set of changes (food security). One of the leverage points selected in this project was providing support to women to run their own business so they could earn and income and reduce food insecurity.

leverage

The chart above gives us information that supporting women with little education and few material resources to start their own business successfully requires lots of resources and handholding. The project has a year left, and to get 122 women business owners operational in groups is not viable when the individuals are not self-motivated, there is no will to collectively run a business and there is minimal risk taking because the margin of error is so minute due to lack of household resources.

 Self Organization

Self-organization is when a new way of interacting emerges out of what had been typical interactions at the local level. The process of self-organizing is spontaneous: it is not necessarily directed or controlled by any agent inside or outside of the system, there is no coercion here.

group holding box

If we look at what happened with the eruption of the Arab Spring when Mohamed Bouazizi, a Tunisian street vendor set himself on fire in protest of the confiscation of his wares and the harassment and humiliation that he reported was inflicted on him by a municipal official and her aides. The people had had enough of the harassment from their government when they were trying to earn a living and self organized to bring about change. Now what has replaced the Arab Spring seems chaotic and complex now, but it is a new order of interacting that emerged spontaneously.

The groups of women I am working with know each other, and interact with each other in their communities, not necessarily in a very close way, but they know each other. And they do want to increase their household income, but to expect them to collectively work together to achieve this, well that is more of pipe dream than anything. Their reason for existing as a group did not emerge from them, it was directed by the NGO.

Self-organizing makes for a more resilient system. Individuals who are interested in changing their lives by improving their income levels, as the women I am working with all are interested in- well heck, that is a good place to start. There is a common theme, which can be the glue to move forward with. Coercing individuals to become a group with incentives and benefits for the purpose of reaching more individuals is not going to improve income levels of individuals. If we step back though and see where these individuals are living, what skills they have, what assets they have and interests that are based in their reality, we have a starting place to then go out and identify and assess if there are market opportunities that the individuals would self select to engage in.

In review- the women are interested in earning an income. They have been showing up to the class, traveling and taking the time out from their households. This requires organization to have their children cared for when they are out, getting meals planned, and working around the transport issues. Being interested in learning can be a driver for change. The question that begs to be asked is this the right leverage point—can we improve food security at the household level with women operating micro enterprises? How could we harness that driver within the time and resource constraints that have been encountered thus far with the focus on MED?

Let’s return to the leverage point selected in this component of the project to address food insecurity—supporting women entrepreneurs so they can earn an income. If we listen to the women, they are indicating that they want to increase their household income. They have no labour market skills that permits them to be close to home to take care of their children and households. If we start with the desire to earn an income, let’s shift from the women supplying the market with a product to the women responding to demand for a product that was an input in a market system.

coconut

Coconuts are inputs for coconut milk

coconutmilk

Doing a market analysis of inputs that local factories require can reveal economic opportunities for rural households and growth for local firms.

 

For instance, what would we find out if a market analysis was conducted to see what agricultural products local Nicaraguan firms require as inputs for their products- for instance in a condiment or juice factory? This would shift the orientation of the project from supply oriented to demand oriented, and the buyer would establish the criteria for the sale- for instance volume, quality, delivery dates. The women would then be joining the labour market instead of being a business operator, which requires many more skills than providing an input for a lead firm. The experience of earning an income and working with a buyer can only contribute towards improving self-confidence while at the same time increasing the household income. Who knows what can happen from that point on! This is just an idea that needs to be researched and tested.

If we are attempting to affect change in a system, then it is critical that we pay attention to what the actors in the system are telling us- behaviour is not to be condemned or judged. Behaviour is shaped from experience and context. Now is the time for reflection on the part of the NGO I am collaborating with to revisit what they have learned thus far and adapt their strategy of increasing household income to assist families to be more food secure. Otherwise, all the effort being expended by the project, and the women, will result in little to no change in the ability of rural households to be food secure.

listen

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