What can we learn from 7 successes in making markets work for poor people?

September 1, 2017

     By Duncan Green     

Hi everyone, I’m back from an August blog break, with lots of great reading to report back on. First up, if you’re even slightly FSG coverinterested in how markets can benefit poor people, I urge you to read Shaping Inclusive Markets, a new publication from FSG and Rockefeller. The 60 page document explains their approach to ‘market systems innovation’, which we discussed at an event in February (blog here, so I won’t repeat it).

The new paper pulls together the lessons from 7 case studies of long term success, along with FSG’s top tips to aid donors, governments etc on how to promote inclusive markets. It covers lots of the How Change Happens topics (systems, critical junctures and tipping points, alliances, the importance of norms), but all in terms of how they affect the evolution of markets.

One case study stands out among the seven – the transformation of dairy farming in Gujarat from 1940 to the present, from an exploitative system where farmers were exploited by middlemen, to a vast network of farmer-owned organizations, who now receive 70% of the market price of an ever-expanding range of dairy products. (Other case studies cover Colombian coffee; Kenyan tea; Tourism in Costa Rica; Water provision in Manila and retail financial services in Kenya and the US, all of them taking place over decades rather than years).

Reasons for loving the report:

The use of timelines: The research invested seriously in building up a timeline of each case study, looking at the interaction between events, market rules and business models and practices. In my own work on case studies of change, I’ve found that investing early on in timelines has a huge pay off – helps pull out divergent stories of change, and the interaction between different elements (eg Indian independence, the role of particular business leaders, new technologies, grassroots mobilization). See the Gujarat dairy timeline for a sense of the scale, duration and systemic nature of the change.

Thinking in sDairy in Gujarat timelineystems: ‘One of the popular narratives in the philanthropic and aid sector today is about how we could take a single innovation and scale it up by overcoming obstacles in the wider system around it. Indeed, even experts at FSG and The Rockefeller Foundation have tended to operate with this perspective and written in the past about how this could be approached. However, when we look across the broad sweep of our case studies, what we see is less about the scaling up of any one innovation and more about how a panoply of innovations comes together over time, interacting with and building on each other, in order to progress the market. Importantly, these innovations reshaped not just business models and practices, but also the formal laws, regulations, and policies that apply in the market and the informal norms that guide the behaviors of various actors. Put more simply, we see innovation in relation to both the players and the rules of the game.’

Learning from Success: ‘What if we saw the wider market system not only as a place of failure, challenges, and barriers that we needed to somehow fix, but also as the source of innovation and change that could be supported and harnessed? Many of us working with market-based solutions and impact enterprise were used to seeing this innovative potential in the business sector, but were less accustomed to looking for it and appreciating it in other sectors, such as civil society and the public sector. And yet, just as is in the business sector, the pockets of innovation in the wider system represent the glimmers of hope, the seeds of opportunity that hold the potential for transformation. We believe that harnessing all of these areas of innovation is the key to helping to advance more inclusive economies.’

Critical Junctures: ‘A key theme that emerged from our case studies is how key innovators were able to exploit powerful external events,FSG triad such as economic or political crises, to push through change. However, the capacity of those innovators to do so was always built up before the events occurred. The implication of this is that we should support the capacity building of innovators to prepare them to take advantage of significant events and be ready to step up or otherwise adapt our support when those events actually occur.’

Saying ‘hey everything is complex’ can induce high levels of doubt and anxiety, with people endlessly commissioning further studies and putting off taking action. FSG does its best to avoid such ‘analysis paralysis’ by setting out a market systems approach that focusses on the interaction between market rules, business models and practices and social norms. Intervening in each of these requires a combination of

  • Analysis of existing documentation and data
  • Sensing and observing changes and patterns by engaging with and listening closely to a large network of actors embedded within the system, so that you pick up real time changes and opportunities
  • Probing the system by experimenting with initial interactions – a ‘portfolio of bets’ (a pilot, a piece of draft legislation to assess feasibility), on the basis of which larger scale interventions can be designed.

All great stuff – I’d be interested in your feedback on the paper