A markets systems specialist at the BEAM Exchange and Practical Action Consulting. He has more than 15 years’ experience in international development and specialises in the facilitation of market systems development and organisational learning. Lucho coordinates The Market Facilitation Initiative (MaFI), a working group of the SEEP Network helping practitioners to become more effective facilitators of inclusive market development programs.
Some things I’ve learnt:
- The people who live and breathe in the system are those who have to come up with the solutions to change it. Inputs from external experts are useful but they have to make sense to the people in the system.
- The system, not the poor, must be the unit of intervention if we want sustainable impact at scale.
- You have to listen to the system. Truly listen; without confirmation biases, without ego, without expectations, without intention, listen quietly and openly.
- Market engagement is empowering in itself. We do not always need to empower ‘poor’ people before they are ‘ready’ to engage with other market actors.
- Never trust actors who always say yes and never question you as a facilitator.
- Never underestimate the transformational power of seemingly irrelevant actors. Let them ‘do their thing’ and pay attention to the reactions of the system.
- Every event in the system has the potential to change it, opening new, sometimes unexpected, entry points and closing entry points that we thought were open. Flow with the energy and rhythms of the system.
- Scaling up is a fractal process. The whole system has to resonate with the solutions implemented in a fragment of it. The more the fragment has the properties of the wider system, the easier the solutions from the fragment will be accepted and adopted by the broader system.
- Facilitation is not always equivalent to ‘light touch’. Facilitation is the creation of appropriate conditions for the market actors to change their system in ways that make sense to them, at their own rhythms and maximizing their own resources. Sometimes intense and long-term investments have to be made to get the system moving.
- Market systems can deliver sustainable impact at scale if three processes take place at the same time: empowerment for engagement, interaction for transformation and communication for uptake.
- We see what we measure; we measure what we value.
- Do your homework to avoid obvious mistakes but then jump in the water and learn as you swim.
Some of the challenges:
- Firstly, in my view there is a huge disconnect between theory and practice.
Theorists often say, ‘we get it’, but they don’t. What they don’t get is that the deeper you get into it, the more counter intuitive this work is. At the same time practitioners in the field will say ‘I have practical experience, I get systems’ and this is dangerous too. The two groups could learn a lot from each other.
- Secondly, people in development are often very keen on the ‘hard’ aspects of systems change; economics, viability, measurement and evaluation, program design.
Bureaucrats can digest this. But when you look at what makes or breaks a project, so often it’s the skill of facilitators. How they see the world and interact with it (e.g. the market actors and the forces that influence their behavior).
Facilitating systemic change requires skills and attitudes that bureaucrats can’t grasp and or measure easily with their current paradigms and practices. This makes it difficult for donors and other development agencies to invest because they can’t see the importance of the human element and the need to enable flexibility, uncertainty, trial-error-learning, and adaptability in the development process.
- Thirdly, the discourse of value for money dominates donors’ mindsets and is dangerously permeating the perceptions of the public.
But no functional system can be resilient without what I would call “exploratory inefficiency”. There is a risk that if we don’t produce evidence of the effectiveness of the market development approach the fad will go and donors will look elsewhere. But there is a paradox: under the traditional donor-implementer paradigm, the approach finds it very hard to deliver on its promise of sustainable impacts at scale and, therefore, to produce evidence of its success.
As a result of all this, MaFI is currently in the process of evolution from a general focus on market systems development to one on that explores the cognitive aspects of facilitation of market systems development programs. Questions like - how do successful facilitators behave? How do they think? What paradigms and tools they use? How do they identify key stakeholders and engage with them?
Systems of interest
I work on market systems and peer-learning networks in Latin America, South Asia and Eastern Africa. Most of my work is designed to help practitioners gain a better understanding of how to use a systems lens in their efforts to make markets more inclusive, productive and efficient.
If these practitioners are more effective at facilitating (enabling, catalysing) structural changes in market systems, more people will get out, and stay out of poverty for longer periods of time. This will happen with less effort, less cost and less friction, compared to traditional development approaches that focus on the poor and deliver solutions devised by experts from outside of the system.
My systems change network
The building blocks and principles that make up the field of market systems development have been around for many years, but the communities of practitioners who see themselves as part of this field started to form during the 2000s. There are many platforms where practitioners connect. I have been involved or participated in the creation of:
- The SEEP Network
- The BEAM Exchange
- The Latin American Network for Market Systems Development
- The Academy of Professional Dialogue
For example, I helped to create MaFI, which aims to close this gap in knowledge by advancing practical principles and tools that assist practitioners working in pro-poor market development to move from market assessments and program design to implementation.
During my time as the coordinator of MaFI (since 2008), the group has produced learning products based on MaFI's online discussions, webinars, and in-person meetings, and also seeks to influence the debate about rules and principles of international aid that hamper inclusive market development.
The value of the market systems development field is relatively big and growing. I would guess that, currently, there are around 20-30 market systems programs running, worth around $3-10 million each. Some people may argue that there are more market systems development programs but I have seen many of them that fail to use the principles of the approach properly. When it comes to the implementation of these programs, the devil is in the detail. For example, how you select and train your staff, how you build a culture that enables open sharing of mistakes and learning, how to change tactics and even strategy quickly, how to use less program money and more systemic resources, how to pay attention to early indicators of change that give you clues about the future behavior of the system; how to select, engage and communicate with market actors, how to help them experiment with new ideas, etc.
- Quantum physics (the duality of nature -e.g. light- and the need to embrace probability and uncertainty). The Tao of Physics.
- Theory of relativity (the importance of the different perspectives of the observers, the connection between matter and energy – the equivalence of seemingly different entities if we look deep enough).
- History (the non-linearity of cause-effect in society, the importance of small events, the Butterfly Effect in society, the importance of institutions, rules and beliefs, nothing is sacred or fixed -just human constructs that we decide to respect or idealize, the failed war against drugs). Why Nations Fail.
- Behavioural studies from psychology, management and economics. Predictably Irrational, Dialogue and the Art of thinking together.
- Macro-economics (e.g. interest rates and their effects on the economy, connectedness and interdependency in international trade, Ricardo’s ideas about specialisation and trade, effects on taxation in productivity). The Art of War and the Tao Te Ching.
- A few authors I admire: Bertalanffy, Einstein, F. Capra, David Bohm, Heisenberg, William Isaacs.
As a systems network builder, how do you fund yourself?
I do most of the network building out of pleasure. I love seeing connections happen. I fund this with my own resources and through specific consultancy projects.
My next questions
I am currently exploring how market systems development can contribute to the field of impact investment. Donor-funded programs introduce cultures, procedures and incentives into the organisations working to transform market systems that clash with a more organic, bottom-up, exploratory, endogenous approach. I think impact investment has the potential to do this if companies of different sizes and scopes have the right contextual (systemic) conditions to drive change that makes business sense while adding social and environmental value.