Carlos Blanco is a 2019-20 Oxford MBA student and participant on our co-curricular programme, Impact Lab. He reflects on one of the Impact Lab Masterclasses taught in Michaelmas term, an ever growing and popular discussion by social entrepreneurs, systems change.
An organisation in Pakistan that enables smallholder rural, off-grid farming communities to meet their farming and household needs using livestock as currency. A network of entrepreneurs built up in the favelas of Brazil. An NGO skirting anti-abortion laws by providing access to safe procedures in international waters. A private company building a new business model that monetises fuel efficiency while introducing more sustainable fuel sources. What do all these examples have in common? According to Dr Paulo Savaget and Professor Steve Evans they represent different ways to achieve Systems Change.
Systems change is hot stuff right now. Across organisations trying to create sustainable impact the new holy grail is to affect large-scale systemic change. But what is a systemic problem? What is Systems Change? And how do we affect Systems Change? On Tuesday 12 November Paulo and Steve provided a masterclass on Systems Change through the Skoll Centre for Entrepreneurship that touched on each of these questions.
There are many ways to conceptualise systems change
Paulo started by highlighting the characteristics
of systemic problems. They can’t be solved by a single organisation, have no
single solution, are bound within a system that is greater than the sum of its
parts, are poorly specified, are self-reinforced and are interconnected.
Paulo then outlined early insights from the Skoll Centre’s System Change Observatory that identified seven ways Systems Change is conceptualised:
Disrupting the status quo
Influencing chains of cause-and-effect
Coordinating agents better
Scaling change in numbers or scope
Scaling institutional or cultural change
Scaling an organizational model
There are three pathways to action
According to Paulo and Steve there are three pathways to affect systems change.
Intervening in the configuration and features of a system
Paulo highlighted from his research (Sustainability Hacking: conceptual development and empirical exploration) on sustainability hacking to bring this pathway to life.
A sustainability hack is an unconventional solution that deviates from embedded institutions, i.e. the rules of the game, to address a systemic problem. Sustainability hacks work around the ‘rules of the game’ to accomplish ‘good-enough’ results promptly. Paulo went on to present the five ways sustainability hacks intervene in the configuration and features of a system: emulating value flows; repairing missed value; exploiting a loophole; mirroring feedback loops; reformulating the logic.
Getting the best out of interdependencies
Steve outlined that this pathway requires systems thinkers to first search for connections within a system, particularly those connections that are not obvious or seem illogical. If you can’t find those connections, you then need to expand the boundaries of the system and make the problem bigger to find the variables in the system people ignore.
Looking beyond the organisational-level
The final pathway involves understanding the four failed value exchanges among multiple stakeholders (e.g. investors, employees, suppliers, customers, the environment or society) across a business network:
Systems thinkers and leaders need to reframe systemic problems and recognise their limits
Steve challenged the room to change how each one of us thinks about systemic problems. Instead of setting targets and objectives, he challenged us to influence the systems around us by reframing systemic problems with ambitious visions for the future.
Paulo then reminded us that systems thinkers need to recognise their limits and understand that in complexity, we can’t find a solution, only ‘manage messes’. Most importantly, systems thinkers and leaders need to be humble and recognise the extent of their ignorance to affect Systems Change.
Author bio: Carlos Blanco is an Oxford MBA 2019-20 student. For the past five years he has worked with the not-for-profit, government and private sector in Australia to drive systems change. He is increasingly interested in building broad coalitions of government, not-for-profit and private sector organisations to address humanities most pressing systemic problems.
In March 2019, we had a daylong session that integrated in-person attendance with contributions from participants around the world. This meeting incorporated opinions from previously conducted unstructured interviews to identify the most relevant issues and concerns regarding systems change among this first round of Observatory contributors.
The discussions raised were far from exhaustive. The value of this study lies in starting an exploration of topics that have not yet been systematically studied and understood with practitioners who, despite sharing similar concerns, are approaching problems differently.
From our discussions, four key themes emerged:
Definitions and conceptions of systems change
The intersections of systems change, social entrepreneurship, and scaling solutions
Implementing systems change
Measurement and evaluation of systems change interventions.
The first two refer to the connections between systems change, social entrepreneurship and scaling-up an intervention in the social impact space.
The last two themes consider the principles for designing and implementing systems change activities and the challenges in setting up measurement and evaluation instruments for system change interventions. Given the diverse experiences of our interviewees, our findings highlight different mechanisms, challenges and prospects to positively drive and evaluate system change. We will share snapshots on these themes to map relevant issues and spark deeper conversations.
One of the salient issues in systems change work is the relative lack of over-time data on ventures that pursue a systems approach to social innovation. This limits our understanding of how system change is conceived and pursued to address a wide range of challenges. Beyond this initial study, the SCO intends to explore what happens in the life-course of these ventures, shedding light on aggregate patterns across ventures and over time.
The SCO can contribute by providing key outputs on systems change in action. This includes identifying the skills required to engage in systems change, approaches and pathways to change that organisations follow over time and their experience with implementation. This can help entrepreneurs identify what skills to build and activities in which to engage.
The ambition of the SCO is to add value to the field by keeping in mind the relevance of our research for our stakeholders. We intend to offer value by leveraging our academic skills to undertake translational research in order to produce, compile, and disseminate knowledge that can be useful for academics and practitioners in the field of systems change.
Our Early Career Research Fellow, Tanja Collavo, examines the reasons why there is a gap between research and practice.
Knowledge is fundamental to solving the wicked problems of our societies. But academia is very rarely explicitly included in the list of players that should contribute to solving global challenges or called upon as a provider of relevant and useful knowledge. Given the amount and quality of knowledge about global issues and potential solutions that sits within high education institutions all over the world, this looks like a missed opportunity. Why is this the case?
Firstly, academics rarely leave their “ivory tower”. Academic papers are not easy to understand for other audiences due to their technical and sometimes theoretical language. Moreover, potential users frequently discard them because they are too long to be read in a short time or to be grasped quickly. Researchers still try and connect with practitioners, i.e. individuals and organizations working in any sector, only at the end of their research projects or, in the best cases, when they are collecting data. This does not allow practitioners to inform the research project and leaves them skeptical about the relevance and applicability of findings. Therefore, trying to share knowledge in more immediate and simple forms, and engaging in a constant dialogue with practitioners who are working on wicked problems would be a critical step for academics, and their knowledge, to contribute to the creation of social and economic development.
Secondly, practitioners too frequently do not recognize the potential value of academic knowledge. In the past years, I have conducted interviews with several third-sector organizations and individuals working to improve the lives of others. I encountered many prejudices around what academics know and do not know, and I heard too often the idea that an organization already “gets it all”, given its track record and experience on the ground. The truth is, many practitioners are too busy with “survival” and day-to-day decisions to be fully up-to-date on their sector, on best practices, on what is coming next or what is happening in similar and connected contexts. Recognizing that academics have the privilege to get to know multiple sectors and/or organizations and that they have the time and neutrality to spot what is and isn’t working, might help practitioners to advance faster in the realization of their social goals and might also favor a stronger involvement of academia in the solution of wicked problems.
Thirdly, the current institutional context makes it difficult for academics and practitioners to collaborate. Academic careers are based almost exclusively on the number of publications and the prestige of the journals in which they appear. Publications usually require several years. Meanwhile, practitioners usually need to show short-term results, responsiveness to issues, entrepreneurialism and problem solving. This makes it risky to spend the time to connect with academics, who often present in-depth analysis and no course of action. Therefore, unless there is an effort to at least partially align the incentives and cultures in the worlds of academia and practice, collaborations might remain difficult.
Finally, it is difficult for academics and practitioners to get to know each other. Even when researchers and individuals working to solve wicked problems want to connect, they often do not know whom to reach out to ‘on the other side’ or how to get their attention. There is therefore a strong need for initiatives and intermediaries to bridge the gap between academics and practitioners, understanding where potential connections might lie and how to create them. Academic research centers, foundations, network organizations or international bodies like the UN would be in a privileged position to act in this sense.
Time is a precious resource when dealing with wicked problems and grand challenges. A better connection and knowledge exchange between academia and practice could reduce mistakes and the duplication of efforts and could favor the diffusion of best practices and a better understanding of different contexts. This, in turn, could improve solutions and accelerate the creation and growth of the social and environmental impact produced by different individuals and organizations. So why wait? The scale and urgency of the world’s challenges calls for immediate action, and each of us can make the difference at least in one of these four critical points.
DPhil (PhD) candidate in Economics at the University of Oxford, and Skoll Centre affiliated researcher, Muhammad Meki, and his colleagues describe their early research into launching a microequity programme in Indonesia for microentrepreneurs in collaboration with Allianz.
In many developing economies, a significant proportion of households derive their primary income from microenterprises involved in retail, light production of goods such as clothes, trade, and smallholder farming. Individuals who operate and work in such small firms tend to be poor; as such, improving their performance offers the potential for wide-scale poverty reduction.
There has been much talk about the potential for microfinance to lead to such poverty alleviation, however recent rigorous evaluations of microcredit have revealed more limited impacts. Reflecting on the evidence, it may be more appropriate to view microcredit as a way to ‘grease the wheels’ of development, rather than as a ‘silver bullet’ for transformational change (Banerjee, Karlan, and Zinman, 2015). Recent research also suggests that to help entrepreneurs better manage their enterprise, personalized approaches like consulting and mentorship can have more significant benefits than generic business training programs (Karlan and Valdivia, 2011; McKenzie and Woodruff, 2016; Valdivia, 2015; Bruhn, Karlan, Schoar, 2018; Brooks, Donovan, and Johnson, 2017).
First TNF investee and first graduate to mentorship phase — fish cake producer.
Since a key part of economic development is the movement from having most people working in small enterprises, to working as employees in larger, more productive enterprises, some experts believe that we should focus more on the small set of ‘transformational’ entrepreneurs rather than on the large group of ‘subsistence’ entrepreneurs (Schoar, 2010). Even the aforementioned microfinance studies showed that while microcredit does not generate large impacts on average, it can provide a significant boost to relatively more successful entrepreneurs (Banerjee, Karlan, Zinman, 2015; Meager, 2016).
TNF investee — broilers and gas cylinders seller.
Adding microequity to the picture?
Equity-based financing may be an alternative way forward for transformational entrepreneurs, since it can provide them with a more flexible form of finance that is better suited to the needs of a growing business, especially as it often comes with personalized support from investors to overcome the unique business challenges they face. While equity financing has the potential to grow rapidly in emerging markets, especially with developments in financial technology and the digital economy, the minimum financing amounts tend to be well beyond the needs of many grassroots entrepreneurs. What they may need is a more nuanced form of equity-based financing, tailored to microenterprises: microequity.
Lembaga Demografi (LD) enumerator interviewing TNF investee.
Trust Network Finance
With the intention of exploring the potential for equity-based financing for microenterprises in Indonesia, Allianz Indonesia has embarked on a microequity pilot project near Jakarta called ‘Trust Network Finance’ (TNF). The program involves 4 phases:
A selection phase in which microentrepreneurs are provided with a small initial amount of interest-free financing for their informal business, which increases if they repay successfully and share some of their profits, i.e., if they show characteristics of ‘transformational’ entrepreneurship;
A mentorship phase where selected entrepreneurs are appropriately matched with mentors for personalized business development advice. Mentors are incentivized to invest their ‘sweat equity’, which will be formalized as a 10% ownership share in the enterprise at the third phase;
A formalization phase in which entrepreneurs undergo formal business registration, and TNF and the mentor take formal equity stakes in the business;
A graduation phase, in which TNF reduces its ownership stake, by selling to the owner or an external investor and using the sales proceeds to refinance the program.
As entrepreneurs graduate through the phases, they gain the right to recommend new entrepreneurs for the program and even become mentors themselves, building up the ‘trust network’.
LD enumerator interviewing TNF investee
Some preliminary evidence on this new approach
TNF has recruited approximately 150 clients since the pilot started in June, 2016, with the most advanced participants now having advanced to phase 2. In late 2017 we surveyed 80 clients, with the aim of learning about what kinds of people were joining TNF and what attracted them to join.
Clients tend to like TNF, seeing it as a unique product;
Client understanding of the later phases of TNF is relatively low on average, which likely reflects the relative complexity of this unfamiliar venture capital-like model, compared to conventional microcredit;
There seem to be two groups of clients in the pilot: (i) a (larger) group of less dynamic entrepreneurs, who mostly see TNF as a convenient way to get operational financing for their enterprise, and are more likely to leave the program during the selection phase, and (ii) a (smaller) group of more dynamic entrepreneurs, who are relatively more attracted by the opportunity to reach the mentorship stage;
Many clients in this majority-Muslim nation see the interest-free TNF product as complying with Islamic law, and this was a very important factor in them joining.
These early results are promising, and provide some guidance for TNF as it scales up. Perhaps the network of clients can be harnessed to better identify and target the transformational ‘diamonds in the rough’, who can use TNF to become successful generators of wealth and employment.
The research has been funded by the Department of Foreign Affairs and Trade (DFAT), Government of Australia, through a core grant to the Abdul Latif Jameel Poverty Action Lab Southeast Asia (J-PAL SEA). The views expressed in this publication are the authors’ alone and are not necessarily the views of the Australian Government, J-PAL SEA or other partner organizations. We thank our colleagues at J-PAL SEA, and the Demographic Institute at the University of Indonesia (LD UI), for their support in implementing the research. We thank the team of Trust Network Finance at Allianz Indonesia for their support on this research.
Muhammad Meki is a PhD candidate in Economics at the University of Oxford. He is interested in the effect of equity-like financial contracts on the investment and growth of microenterprises in developing countries.
Simon Quinn (@simonrquinn)is an Associate Professor of Economics and a Deputy Director of the Centre for the Study of African Economies at the University of Oxford. Simon’s research interests lie primarily in the study of firms and development.
Russell Toth (@russell_toth) is a Senior Lecturer (Assistant Professor) in the School of Economics at the University of Sydney. He is a development microeconomist, with primary research interests in the development of the private sector in developing and emerging market countries.
Oxford Saïd Researcher and Early Career Research Fellow, Tanja Collavo, gives us a whistle stop tour of her recent DPhil research.
The cultivation of networks is one of the most popular tools for supporting social entrepreneurship and social innovation. Venture philanthropists, hubs, foundations, national and local networks all try to foster social impact by connecting social innovators with their peers, with potential investors and donors, and with individuals and organizations that can become their mentors and advisors. Yet, there is little knowledge on “best practices”, on what works and what doesn’t, and on the different ways in which network-based support to social innovation can be structured.
Over the past four years, I have analysed the features of four very different social entrepreneurship support organizations (a foundation, a venture philanthropist, a network organization and a trade association). Each of them has been successful in supporting the growth and development of social entrepreneurship in England over the past 15 years through the creation and management of multi-stakeholder networks. I was surprised to find that, despite their differences, each of these organizations engages in similar activities with regard to network-management.
Shared network strategies
First of all, the four agencies invest significant effort in signalling through multiple means the initiatives and success of the individuals and organizations that are affiliated to them. For example, they talk about their operations, impact and achievements on websites and newsletters. In addition, they engage with local, national and international media platforms (newspapers, magazines, televisions, etc.) so that the positive news coming from their contacts can spread even beyond their own reach. Furthermore, they organize yearly award ceremonies that provide additional coverage and popularity to the most successful part of their networks, usually the social entrepreneurs and enterprises that they are trying to help.
Secondly, the four organizations have proactively created within their networks an environment favouring the coming together and collaboration of individuals and organizations from different sectors and backgrounds. For example, these organizations publish blogs and articles on the benefits of cross-sector collaboration and propose common projects to their network members in a way that highlights what each of them can obtain from collaborating with individuals and organizations from other sectors. Furthermore, they train their members in multiple ways in order to reduce sector and cultural barriers among them. Each of the four organizations has also developed a narrative stressing how real change and impact are only possible in the presence of cross-sector collaboration.
Thirdly, the four agencies often try to elevate the reputation of the social entrepreneurs and enterprises present in their networks. They set up free events, webinars and initiatives explaining the benefits of social entrepreneurship for society and its superiority to other means to deliver social impact. Additionally, they present social entrepreneurs and enterprises in their online and offline communication, as well as in their events, in an enthusiastic light, defining them as the changers of the world or the creators of a more just and inclusive society. The elevation and legitimation of social innovators in these (and other) ways puts them in a stronger position when negotiating for help and support with players from other sectors that might be more established and resource-endowed than they are.
Finally, the four organizations manage the unavoidable competition (for funds, recognition for the “best approach”, attention, etc.) among the social entrepreneurs and enterprises that they support in a way that makes it possible and almost natural for them to collaborate and share ideas. For example, two of the agencies encourage friendships and frequent contacts among their network members, another one directly adopts a negotiation role when collaboration is needed among “competitors” for a specific project. In general, all four have tried to attract enough opportunities and resources into their networks to be able to provide something to everyone, so that the social entrepreneurs and enterprises they support do not perceive that the success of a peer might mean their own failure.
However, despite the engagement in similar activities, the four organizations did not appear equally effective in leveraging their networks to help social entrepreneurs and enterprises. My data showed that if an organization manages a relatively small network – no more than 100-150 social innovators and partners/supporters – then it is in a good position to effectively employ its contacts to help social entrepreneurs and enterprises. Indeed, a manageable network opens up the possibility to know well enough the resources and contacts available and to propose meaningful connections and strategic advice. Additionally, in small networks it is easier to create a family-feeling and to set clearer expectations about each member’s contribution to the “common cause” — in this case the enhancement and scaling up of social impact — thus also making the maintenance of collaborations and connections easier.
On the contrary, if an organization deals with a larger network, its ability to provide helpful connections and advice is necessarily limited by the impossibility of knowing well each of the individuals and ventures attached to its network. In this case, the added value of the organization is rarely based on its offering of connections but derives instead from other resources. For example, one of the organizations analysed, which manages a large network, was praised by social entrepreneurs and enterprises for its delivery of helpful information on the legal landscape for social entrepreneurship and for signalling the resources available in the sector in terms of funds and expertise at the local level. Alternatively, organizations managing large networks might think about using their contacts to attract funds to redistribute among their affiliates for expenses they have a hard time getting funds for, such as capacity building or experimentation.
Are networks helpful?
Absolutely, but only under certain circumstances which are often determined by the network size and by the organization’s own capacities and resources. Therefore, a networking strategy should be tailored to the type of network an organization is managing. In any case, the analysis of four successful “networkers” in the social entrepreneurship sector suggests that the creation of connections and networking opportunities should be sustained through supporting activities, such as the four described above: the showcasing of a network’s members and projects; the establishment of an environment supporting the creation and maintenance of cross-sector connections; the support of social entrepreneurs and enterprises in negotiating with other players; and the management of internal competition.
None withstanding the importance of networks and the opportunities they provide to support social impact in many different ways, in a space that is almost saturated with networks it might also make sense to map out what is already there and maybe join or support an existing network rather than building a new one. Because several organizations provide similar types of support but not all of them do it effectively, in some instances it might make more sense to pool resources across “networkers” in order to jointly deliver a more powerful and comprehensive support rather than to keep trying to build new networks. If my research confirmed one thing is that there is already a lot of help available in the social entrepreneurship and social impact space but often “networkers” do not have the resource or capacity to be effective in everything they do and social innovators might end up not accessing any type of support because of the excess of supply makes it difficult to understand what network might be the right fit.
Tanja Collavo is a Skoll Centre Early Career Research Fellow, DPhil student at Oxford specialising in networking organisations operating in the social entrepreneurship sector. In the fall of 2017, Tanja spent an academic term at Stanford University to participate in PhD workshops in sociology and philanthropy and to discuss her working papers with Stanford Faculty. Here she gives her candid revelations after spending some time outside the ‘Oxford bubble’.
In the social impact world, people often discuss the importance of empathy and of putting yourself in the shoes of those people you’re trying to help. The truth is, when you live and work in the same place for a long period, and spend time with a like-minded crowd, it is extremely difficult to think outside the box. I have spent the last four years at Oxford University as a DPhil (PhD) student and, without noticing, I became entrenched in the ‘Oxford way’ of doing things, especially of interpreting the world of academia.
Only when I left Oxford to spend a term as a visiting scholar at Stanford University, did I realize how I had started to take for granted many things that were actually Oxford-specific: from small things like calling the final PhD examination a “viva”, to bigger things like the interpretation of a doctoral degree as a solitary challenge. Three months in a ‘different place’ suddenly showed me that to truly feel empathy or understand other people, cultures and ways of thinking, we should give ourselves at least some months in a new reality, in particular the reality of those we want to connect with, or help.
Besides this very general reflection – which seems obvious but we often forget when giving advice to social entrepreneurs, intrapreneurs and change-makers – I came away from California with several insights about practice in the context of academic research within the social impact world:
The study of social impact (and of organizations oriented towards producing it) should be a multi-disciplinary endeavor. The Stanford Centre on Philanthropy and Civil Society (Stanford PACS) organizes a termly workshop that gathers PhD students and post-docs from different departments such as the business school, sociology, economics, political economy or history, and allows them to discuss philanthropy or civil society organizations through multiple perspectives. The combination of these perspectives has provided me a more thorough understanding of the third sector and of its key components such as foundations, associations, social enterprises and non-profit-distribution organizations. Furthermore, it has generated new insights on their historical evolution and on how some of the third-sector’s current features have been the product of a cultural and historical shaping rather than something written in stone. These new insights have improved my ability to read the sector I am looking at ― social entrepreneurship in the U.K ― and have showed me how some of my data actually speak about broader phenomena that might even be more relevant and interesting than those I am analyzing. They also showed me that without understanding the broader context and arguments, research cannot be explanatory or complete.
Research advances more quickly and has more impact if it happens in teams rather than as an individual project. Working at Oxford, I got used to being alone in developing a research proposal, gathering data and figuring out how findings can be relevant for practitioners in the social impact space. At Stanford, I instead discovered that alongside their doctoral project, PhD students participate in several team projects, which are led by a member of faculty and to which researchers at different stages of their career contribute. The presence of a team increases the amount of data collected and analyzed and the chance of reaching conclusions that are well elaborated and developed. Indeed, working in a team where people have different backgrounds and levels of experience creates a constant feedback loop, as well as the feeling of being part of something that really matters, because it is far greater than a single individual and her interests or skills.
Identifying a community of practice helps with getting feedback and with remaining excited about a project or topic. Because of my work in relative isolation, I often had doubts about what I was working on, how I was approaching it, or whether my research was something that could actually help individuals and organizations to improve their practices in delivering social impact. By having multiple opportunities to connect with peers that were interested in my same field or theories, I received important feedback, had the opportunity to bounce ideas and to test what was interesting and relevant for people who were not as invested in my research project as I was. Most importantly, sharing my insights and data and discovering that other people were excited about them, made me excited again about what I was doing and about its potential to have some academic and practical relevance.
The frequent engagement of faculty with students and its genuine interest in learning about new projects and ideas fosters a productive research environment. I was really surprised by the ease with which I could interact with world-class faculty at Stanford. All the professors I contacted found at least thirty minutes to listen to my project, even if they had no obligation to, and some of them even invited me to join their workshops in order for me to meet other students, learn about their projects and get additional feedback on mine. Attending these workshops allowed me to appreciate the extent to which a close and frequent interaction between faculty and PhD students is extremely beneficial for both. Faculty remains on top of their game, gets new inspiration, and actively participates in the training of those who will become their future colleagues. Students feel supported, have a point of reference whenever they are in doubt, and learn quickly how to network in the academic environment.
Now that I am back, I am determined to bring some of the positive insights and practices that I experienced at Stanford back to my own community in Oxford. If I learnt something in these months at Stanford it is that we should all strive, whenever we have the opportunity, to leave our nest, get ready to learn and confront ourselves with different realities. Especially if the goal is to create real and lasting social impact, we cannot afford to be entrenched in a single community.