Market Systems Training

BDS 2013 Pre-‐Conference Training Day 2

Market Facilita<on Concepts

Market Facilita,on

Is an ac<on or agent that s<mulates the market system to develop and grow, but does not become part of it

5

What is it?

6

Facilita,on Concepts Why: to increase the compe<<veness of the whole industry over <me

by: o  Fostering systemic shiKs towards:

§  broader and deeper commercially grounded rela<onships §  ongoing innova<on/upgrading §  benefit flows that drive shiKs in rela<onships and innova<on

o  Fostering improvement in cri<cal end market factors – product, opera<ons, branding

How to: o  Appropriate intensity (i.e. role and resources of project) o  Foster local rela<onships – buying down risks o  Self selec<on of project partners -‐-‐ rolling exit to test rela<onships and ownership

Why? Applied

7

Problem statement: The rice value chain relies on smallholder produc,on, but cannot compete because of the low produc,vity of par,cipa,ng smallholders

Why Ra,onale

Farmers performance is due to lack of capacity and untrustworthy private sector actors: •  Project provides output and

input services directly

Ugly

Bad

Good

Why? Applied 8

Why Ra,onale Farmer performance is due to knowledge and capacity gaps that result in limited effec<ve rela<onships with output market actors: •  Project assists in building output rela<onships,

•  Project provides direct training to smallholders

•  Project provides free or highly subsidized inputs

Ugly

Bad

Good


Why? Applied 9

Why Ra,onale Farmer performance is due to limited and ineffec<ve rela<onships on the output and input sides of produc<on: •  Project assists output firms to provide market

requirements maybe through improved aggrega<on services

•  Project assists input firms to extend distribu<on networks to the smallholder market with a focus on solu<ons (i.e., informa<on and services)

•  Project works with radio and local fes<vals to improve knowledge flows

Ugly

Bad

Good


10

Facilita,on Concepts

Why: to increase the competitiveness of the whole industry over time by: o  Fostering systemic shifts towards:

§  broader and deeper commercially grounded relationships §  ongoing innovation/upgrading §  benefit flows that drive shifts in relationships and innovation

o  Fostering improvement in critical end market factors – product, operations, branding

How to: o Appropriate intensity (i.e., role and resources of project) o Foster local relationships – buying down risks o Self selection of project partners -- rolling exit to test

relationships and ownership

How? Applied 11

Why: Farmer performance is due to limited and ineffec<ve rela<onships on the output and input sides of produc<on: o  Project assists output firms to provide market requirements maybe through

improved intermedia<on services o  Project assists input firms to extend distribu<on networks to the smallholder

market with a focus on solu<ons (i.e., informa<on and services)

How -‐-‐ Intensity •  Focus leYng value chain actors take the lead •  Project takes a very low profile by spreading its

par<cipa<on between output, input and to a lesser extent smallholders

•  Resources spread between actors depending on the responses/willingness of the actors to take on certain behaviors and drive firm and industry upgrading

Bad

Better

Even Better

How? Applied

12




How -‐-‐ Intensity

Project takes a very high profile with the smallholder and targets all resources on direct services to the smallholder

Bad

Better

Even Better

How? Applied 13




How -‐-‐ Intensity

Project takes a lower profile with smallholders and output firms, but will target resources on smallholder training and inputs

Bad

Better

Even Better

How? Applied 14

How -‐-‐ Rela,onships

§  Project facilitates output rela<onships by fostering effec<ve conduct (transparent and longer term) of those rela<onships

§  Project fosters a business ra<onale and improved capacity within output firms to maintain and scale up those rela<onships

§  Project nego<ates, some<mes conducts transac<ons with input, and delivers products to smallholders

Bad

Better

Even Better




How? Applied

15


§  Project creates strong and dependent rela<onships with smallholders to protect them

§  Project nego<ates and conducts transac<ons on behalf of farmers with output and input actors

Bad

Better

Even Better




How? Applied 16


§  Project Facilitates output and input rela<onships by fostering effec<ve conduct of those rela<onships.

§  Project fosters a business ra<onale and improved capacity in output and input firms to maintain and scale up those rela<onships

§  Scans for opportuni<es to include other support market actors

Bad

Better

Even Better




How? Applied

17

How -‐-‐ Ownership

§  Project responsible for output and input roles limi<ng the need for smallholders or other actors to change or own the process of behavior change

Bad

Better

Even Better




How? Applied 18


§  Project facilitates output firms to own the behavior changes needed to develop effec<ve rela<onships with smallholders,

§  Project limits role/interest of input firm by providing direct training and subsidies on inputs.

Bad

Better

Even Better




How? Applied 19


§  Project facilitates using tools to get all actors to take on key behaviors in order to access project support.

§  Project puts condi<ons on support dependent on buy-‐in and reac<on to ini<al project interven<ons.

§  Project knowledge management efforts track closely ownership and changing behavior to determine if changes are needed including exi<ng

Bad

Better

Even Better




20

Fostering Relationships and Ownership: o Buying Down Risks

§ Using project resources to reduce the risk of local actors to engage in transactions/shifts in business tactics that will lead to longer term commercial relationships and drive upgrading

o Self Selection §  Requires value chain actors to perform and action in

order to access project resource – the action has to lead to ownership of a behaviour change process

Facilita,on Concepts

21

Buying Down Risk: o Foster innovation in marketing and business

tactics

o Maintain local relationship focus

o Embed subsidy to mimic real life transactions

o Clarify exit in time and resources

Fostering Rela,onships

22

Buying Down Risks – How: o  Promotional events (i.e., discounts,

transports, demos, etc.) o  Internal firm upgrading/expansion

(i.e., management training, staff skills/internships, etc)

Promo<onal events

Cost share training and opera<onal costs for new smallholder manger posi<on

Cost share promo<onal discounts and demos with input firm to get farmers to tests products and services

Internal firm upgrading and expansion

Cost share training of mid-‐level managers with private input firms to promote and manage rural services delivery

Fostering Rela,onships Cost share with buyer large promo<onal event to explain/sell market opportunity to farmers

23

Buying Down Risks – How: o  Service delivery (i.e., certification

skills, equipment, research, etc.)

Service delivery Cost share equipment and training with Rice firm for service providers signing exclusive deals for discounts to their suppliers

Assist and cost share with input firm and spraying service providers a cer<fica<on process for individual sprayers

Cost share research with ICT firms/banks mobile banking pla[orms for transfer and payment services

Fostering Rela,onships

24

Self Selection:

o Ensuring ownership

o Setting hurdle to entrance

o Changing hurdle height as program evolves

o Using hurdles to manage rolling exits

Fostering Ownership

25

Self Selec,on examples: Rice firms has to has agree to SH

management and iden<fy specific managers to ini<ate the program

Rice firms must conduct internal systems review to iden<fy inefficiencies and informa<on gaps

Project assists training of mid-‐level managers on new supply chain management skills

Project cost shares upgrading of system to support new SH management strategy

Then Then

Fostering Ownership

Facilita,on

•  Intervening for relationships and ownership is more art more than a science § Goal is to do just enough risk reduction to

foster interaction and trust investments § Value is really only determined when someone

demonstrates via investment/behavior change § Rolling exit and wait and see are important

ways to use self selection

26

Crowding In

Incen<ves

Demonstra<on Effect Upgrading

Exit Strategy

Buying Down Risk

Incen<ves

•  Understanding and building on the drivers (interests and mo<va<ons) of the actors to take on a new behaviour (take on or par<cipate in a new ac<vity)

•  May be social, personal, financial, etc.

•  Agrovet and 3rd-‐party support services want to grow their businesses and make higher profits, by: •  developing beèr rela<onships with customers (for repeat sales from farmers)

•  reaching new customers (by selling to new farmers in rural areas)

•  making more sales (by making it easier to order, access and pay for their products)

Buy-‐down risk •  To demonstrate the benefits of new market behaviours, a project might decide to decrease (“buy down”) the risk of a market actor trying out the new behaviour -‐ using strategic “smart” subsidies.

•  It may seem too risky for the market actor to bear the cost and <me of taking on the behaviour/ac<vity on their own for the first <me

•  A cost share was used by the project to share costs for the open-‐air market day promo<onal stalls as a demonstra<on to agrovet that this would indeed bring in more customers and sales.

•  The project covered a rapidly decreasing % of the cost of transport for the first 10 open-‐air market days

Demonstra<on Effect

• Effects on the behaviour of individuals or firms caused by observa<on of the ac<ons of others and their consequences

• Uses early behaviour change adopters as examples / models

• Goal: deepen ownership of behaviour changes in the value chain actors, and broaden the change throughout the value chain so that it becomes a “norm”

•  Other input suppliers (agrovets) see how successful the agent network and rural market day promo<ons are, and start seYng up services to reach poorer farmers in rural areas.

Upgrading Inves<ng <me, money or other resources into improving the enterprise -‐  Process upgrading (new

produc<on techniques or improved technology)

-‐  Product upgrading (improving the product or other product lines)

-‐  Func<onal upgrading (improving skills)

•  Invested in new technology to improve his business (M-‐PESA payments, cell phone customer research tool)

•  Invested in bringing in new partners to be able to offer a more sophis<cated range of products and services

•  Invested in improving skills and buying new equipment to run local promo<onal events

Crowding-‐in •  Interven<ons catalyze or bring in other players and func<ons into the market system so that it works beèr for the poor.

Can result in: •  Expanded breadth (more transac<ons in the market)

•  Expanded depth (suppor<ng func<ons)

•  Expanded reach (new areas or markets)

•  Increasing number of agrovets may see the success of a business strategy to target rural farmers, and start copying or adap<ng the ac<vi<es of the agrovet

•  Increasing number of support service providers are seeing the benefit of partnering with agrovets to target poorer producers (spraying, soil tes<ng, …)

Exit Strategy • Stopping investments in a certain ac<vity once a certain level of uptake or behaviour change has been reached.

• “Rolling exit strategies” stop cost-‐sharing, using a wait-‐and-‐see approach, to see if a market actor self selects to take on an ac<vity by themselves, showing that they have the ownership and capacity to con<nue without the project’s support.

• The project stopped cost-‐sharing open-‐air market day stalls as the agrovet started seeing value and demonstrated the ownership, capacity and means to take on the ac<vity

• The project planted the idea of an agent network, but waited to see if the agrovet took the ini<al steps to put this in place before inves<ng more <me and money into strengthening the network.

Crowding In

Incen<ves

Demonstra<on Effect Upgrading

Exit Strategy

Buying Down Risk

7 Behaviour Change

Project Design Principles

and their applica,on to Market Systems Development

Project Design

Behaviour Change Principle Principle 1: •  Facilitate self-‐control

through commitment devices

Challenge: •  Imbalance between inten<on and ac<on;

• difficulty maintaining discipline

Project Design Principle •  Make the follow through on

a commitment easier

•  Iden<fy ways to encourage ac<ons that s<ck to the plan

•  Introduce expensive and/or aggressive contracts or penal<es

Behaviour Change Principle Principle 2: •  Reduce the need for Self-‐

control

Challenge: • Lumpy and/or front-‐ended income

• Difficulty managing cash flow

Project Design Principle •  Avoid exacerba<ng exis<ng

self-‐control problems

•  Reduce the need for people to exert self-‐control

Behaviour Change Principle Principle 3: •  Remove Snags to Choosing

Challenge: •  Default op<on (‘do

nothing’) is dispropor<onately significant

Project Design Principle •  Reduce the number of

things people have to do to take advantage of it

•  The default should align with the desired behaviour change; make the poor have to opt out through ac<on – they have to ac<vely select not to do something

Behaviour Change Principle Principle 4: •  Use Micro-‐Incen,ves

Challenge: •  Small incen<ves are enough

for large consequences

Project Design Principle •  Size of an incen<ve only

needs to be as large as the barrier that caused the problem

•  Incen<ves are both

economic and non-‐economic

Behaviour Change Principle Principle 5: •  Reduce InaOen,on:

Reminders and Implementa,on Inten,ons

Challenge: •  Inten<on to do something

requires several steps and so mul<ples possibili<es of forgeYng, or accidental or wilful neglect or abandonment

Project Design Principle •  Help people to remember

•  Make wilful neglect difficult and abandonment harder to carry out

Behaviour Change Principle Principle 6: •  Maximize the Impact of

Messaging: Framing Effects, Social Comparisons, Norms

Challenge: •  Message to relate the

person’s psycho-‐social percep<on on self to the intended outcome/goal

Project Design Principle •  Pay aèn<on to both the

benefits of doing something and the costs of not doing it

•  Create peer comparisons •  Message around what is a

‘normal behaviour’ •  Using mul<ple media:

informa<on campaigns, billboards, leèrs, television or radio adver<sements, and now personalized messaging through phones

Behaviour Change Principle Principle 7: •  Frame Messages to Match

Mental Models

Challenge: •  Exis<ng mental models

some<mes stand in the way of people adop<ng beneficial investments

Project Design Principle •  Provide informa<on or

evidence that directly targets the beliefs at the core of the flawed mental model has a beèr chance of success

Media

Final media slides to be inserted here

Tacit Knowledge

Explicit versus Tacit Knowledge EXPLICIT INFORMATION

•  Objec<vely verifiable and largely quan<ta<ve

•  Easily transmièd to others, stored in certain media, aggregated, and presented in summarized form

•  Useful for accountability purposes or informing higher-‐level programming decisions by donors and other external stakeholders

TACIT INFORMATION

•  Largely qualita<ve •  Stored in individual's head or

embedded within culture of the organiza<on

•  Gained experien<ally and thus cannot be easily ar<culated or explained to inexperienced par<es

•  Tacit informa<on held by field staff is a par<cularly cri<cal source of informa<on for internal monitoring purposes

•  Useful for guiding project management in complex and dynamic environments

Scenarios for observing tacit knowledge and ensuring it is captured, understood, and shared ...

Results Measurement

Proving and Improving Results

Proving Results Improving Results

M&E system capable of credibly demonstra<ng programme

results

M&E system supports improved

design and implementa<on of

interven<ons

System Requirements

ü Well defined indicators ü Robust measurement tools ü Robust monitoring plan ü Baselines ü Credible a`ribu<on strategy ü Credible aggrega<on strategy

ü M&E system generates <mely and relevant informa<on for management ü Knowledge management

M&E in a Market Systems Context

• Market development programmes explicitly acknowledge that systems are complex

• M&E needs to integrate complexity into the way it func<ons, including accommoda<ng for:

•  Formula<ng and tes<ng assump<ons, pilo<ng interven<ons, proceeding by trial and error

•  Scaling-‐up interven<ons that work, modifying or dropping interven<ons that do not work

•  Providing credible evidence on sustainability, systemic change and poverty reduc<on

Implications

•  Tradi<onal approaches to M&E are insufficient in market systems context:

• Measure results only at the middle and end of the programme

• M&E divorced from management func<on • M&E system uses LogFrame only • “Evalua<on” seen as an external ac<vity only • Use of Randomised Control Trials

Impact Profiles High-‐le

vel Impa

ct

Time Project Life,me

Direct Delivery Market Development

SCALE SUSTAINABILITY

• Market development programmes will have different impact profiles • Can take 1-‐3 years to deliver high-‐level impact • Progress can be bumpy!

Results Management Framework

• Theory of Change

• Results Chains

• Monitoring Plans

What is a Theory of Change?

Theories of Change posit the underlying causes that are driving poor performance and resul<ng limited benefits accruing to the poor. Theories of Change then provide an overview of the systemic change needed to improve performance, with a specific focus on how the poor will benefit from improved performance.

Monitoring & Results Measurement Cycle

1. Draw Interven<on Results Chain

2. Define Indicators

3. Establish Baseline

4. Predict Results

5. Data Collec<on

6. Data Analysis

8. Knowledge Management

7. Report Results

Theory of Change

Results Chains

• Results Chains map the systemic change process of an interven<on

• RCs are more granular and flexible than LogFrames • RCs are a key design and monitoring tool

Best Prac,ce: • RCs developed jointly by the M&E team and interven<on team

• Every RC includes boxes to capture systemic change: sustainability, copying / crowding-‐in

Results Chains: Basic Structure

System-‐level change

Ac<vi<es

Enterprise performance

Impact on poor men and women

• Programme facilita<on ac<vi<es

• Improved linkages between system actors • Improved market access • Changes in formal/informal rules • Introduc<on of new/improved interconnected systems (e.g. policy, inputs, finance, ICT)

• Improved produc<vity/compe<<veness • E.g. improved yields for small-‐holder farmers

• Increased incomes; more secure livelihoods • Job crea<on • Economic empowerment

Build your Results Chain!

Project iden<fies Millers willing to adopt new supply

chain strategy

Project facilitates strategic planning process on new supply chain prac<ces

Miller adopts new supply chain prac<ces (incl performance

incen<ves and transparent pricing)

Miller delivers embedded services to small-‐holders

Small-‐holders access new services

Small-‐holders apply new prac<ces

Targeted small-‐holders achieve higher yields & sales

Targeted small-‐holders increase incomes

Millers increase incomes

SYSTEMIC CHANGE

Copying by non-‐project supported Millers

Copying by non-‐targeted Small-‐holders

ACTIVITIES

SYSTEM

CHA

NGE

EN

TERP

RISE

PERFORM

ANCE

IM

PACT

Establishing Baseline

• To assess change, you need to establish a baseline for each indicator

• Common mispercep<on is to conduct one big baseline study of the target popula<on at the beginning of the programme

•  “Treatment” group is hard to define at start • A`ribu<on considera<ons can be difficult to understand at start

•  Some<mes necessary to conduct retrospec<ve baselines

• Best prac,ce: targeted baselines conducted for each interven<on, based on clear understanding of change process

Predicting Results

• Predict results for each box in the Results Chain: • What change do you expect? •  By when?

• Predic<ng results helps with: •  Planning data collec<on •  Tes<ng the underlying logic and making –  assump<ons explicit • Monitoring progress

• Best prac,ce: predicted impact is used to decide whether to proceed with an interven<on or not – interven<ons that offer low predicted Value for Money (VFM) are dropped or modified

Predicting Results: Rice Example

Project supports 2 Millers

1 Miller adopts new model

Miller offers services to 200 Smallholders during first season

50 Smallholders accept service condi<ons

Average yields increase by 20% for 50 Smallholders during first season

Average income increase by 20% for 50 Smallholders during first season

Applying Degrees of Evidence

MSE/Household level: May be able to a`ribute changes to project interven<on through sta<s<cal and qualita<ve research

Market system level: Use qualita<ve techniques to determine preponderance of evidence on effec<veness at market level

Triangulate evidence from all sources

Summary Check-list

•  M&E system is capable of “proving” and “improving” results •  Every interven<on has a clear results chain •  Specific and measureable indicators are defined for each box

in the results chain •  Baselines are established for each indicator •  Predicted results produced for each interven<on •  Every interven<on has a measurement plan, with appropriate

a`ribu<on strategy •  Data analysis is <mely and accessible •  Management decisions are made on the basis of evidence/

results •  Results are aggregated (controlling for overlap) and reported

in an accessible way

Technology

Market Systems Training