Progress in Market Systems: Going from Conceptual Theory to Real-World Solutions

MSD Hub editor's note (Michael Field, Senior Systems Specialist, Vikāra Institute):

This blog provides some interesting insights and lessons from the experience and perspective of ACDI/VOCA as an organization that has been applying MSD for over 10 years. The focus on learning, local contexts, adaptative management, and systemic change objectives are particularly important insights and lessons. It is also interesting how they have ramped up investments in the next set of MSD practitioners, which is critically important, but is not always given the importance it deserves.

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The global development industry is at a pivotal crossroad in the application of market systems development (MSD) approaches. Intractable global issues—from climate change-induced droughts, floods, and other natural disasters to severe food insecurity in many parts of the globe—are increasing. Market systems approaches could be, and often are, solutions to addressing these interrelated issues. But the approach has not reached its potential, in part because of the struggle in getting from theory to practical application.

ACDI/VOCA has been on a learning journey over the past 10 years to close this gap, implementing 32 market development projects, positively impacting more than three million people. Our systems approach has evolved with every new project and new partner or colleague, many of whom are present at this year’s Market Systems Symposium. We are happy to share some of our learning throughout this journey.

Building the Approach

In 2014, ACDI/VOCA and many talented partner organizations and consultants rolled out the market systems development approach framework and a dynamic learning agenda through Leveraging Economic Opportunities (LEO), a three-year USAID-funded contract. A lot of this work became foundational to the approach, as did USAID’s local systems framework to our understanding of systems dynamics. We have continued to benefit from the strong learning and collaborative networks within the MSD community. Our own trajectory has been fueled by this learning which continues to evolve.

We have also been driven by the application of our MSD approaches and tools to solve other problems too, such as changing social norms around gender and youth, influencing more nutritious food systems, conserving coastal regions, and supporting sustainable fisheries.

Operationalizing & Evolving the Approach

Navigating the path from theory to implementation was a formidable task. We put our market systems approach, introduced in 2018, to the test in Bangladesh, Honduras, Kyrgyzstan, Burma, and Kenya. These early experiences unveiled the complexities of translating theoretical insights into practical applications. As we work to right-size our approach, it has been a constant challenge to ensure clarity in management practices, overcome compliance hurdles and donor skepticism, and apply learning.

Cracking the Code: Key Learnings from a Decade of MSD:

1. Get to “good enough” analysis during your inception phase.

While zooming out to consider economic, political, and social systems is an important part of any market systems analysis, sometimes it’s more important to implement quickly. We found a six-month inception phase with many reports was taxing on staff and not strategic. To overcome this, we developed a market system diagnostic, which we use in close collaboration with local market actors to conduct analysis and generate useful and practical insights. Now, we see the value of continual learning from action and partner engagement.

2. Identify new partners early and often.

Recognize that analysis will not translate to impact without the right partners. ACDI/VOCA is now more focused on finding dynamic partners, not only during implementation, but also during the capture and proposal preparation phases. This ensures we have strong partners who will provide us with just as much learning, if not more, than our inception phase analysis.

3. Double down on local partnerships with grants and technical teams.

To drive transformative change, we need to be more adaptive in how we partner. This means developing responsive, collaborative, and learning-oriented relationships to meet business and global development goals. Historically, our training focused too much on conceptual frameworks rather than mechanics and innovations that exists within the local partnership space. This could not be truer than in partnership development, where the potential for impact and innovation gets overshadowed by compliance rules and regulations and project documents that fail to speak to market actors. To address this, we led adaptive partnership clinics, bringing together project cohorts to discuss technical topics related to their stage in the project lifecycle. These clinics have already led to adjustments, such as implementing umbrella agreements to work at the speed of our partners and adjust partnerships based on performance.

4. Provide comprehensive, customized capacity building and coaching.

Few projects will have a Chief of Party or Team Leader with unicorn-level systems thinking, market facilitation, and adaptive management skills. To carry out an MSD approach, a deeper investment in staff capacity building is imperative. ACDI/VOCA is moving beyond one-off trainings to launch an e-learning curriculum as part of staff orientation, fostering more peer-to-peer dialogues through demand-driven learning and enlisting experienced MSD coaches. Dealing with complexity does not require everyone to know everything. Instead, we are tailoring support to staff based on their areas of interest, steering clear of overwhelming jargon. However, essential attitudes and capabilities, such as problem solving, adaptability, curiosity, and a collaborative spirit, are requisite.

5. Invest in learning and adaptive management systems.

A key hurdle has been developing a learning system that seamlessly combines tacit and MEL data. Our goal is to continually test and improve interventions at an activity level, while contributing insight to a broader systems-level change assessment framework. How are we tackling this? By ramping up our adaptive management capacity building approaches with project staff. Each project now has a well-defined, but adaptable systems change strategy to drive broader project learning. We are also localizing learning functions with our partners to develop shared learning objectives.

Charting the Course: Aspirations for the Next Decade of MSD:

For inclusive market systems approaches to reach their full potential, we need to see internal and external shifts within industry. These are a few of the shifts ACDI/VOCA hopes to see in the next decade.

1. Change our value proposition for local partners.

ACDI/VOCA recently celebrated its 60th anniversary with local leaders around the globe, engaging in conversations about how we can assure our impact beyond the life of a project. We debated how we, as an organization, can transform our own value proposition to advance localization. This meant engaging local partners to contribute to systems change, as reflected in the figure below.

2. Support the next generation of systems thinkers.

USAID’s local capacity strengthening policy provides us an opportunity to nurture the next wave of systems thinkers and market systems practitioners. This involves intentional hiring and investment in project staff to broaden the pool of experts in the industry. ACDI/VOCA embarked on this journey through the launch of an Adaptive Leadership Working Group this year. The group aims to provide adaptive management training, cross-project staff exchanges, and identify and mentor emerging MSD leaders to pave the way for the next generation of Chiefs of Party and MSD Team Leaders.

3. Foster more MSD champions among donors.

A big determinant of success has been MSD champions in USAID Missions, as was the case for highly successful projects in Uganda, Bangladesh, Mozambique, and Honduras. MSD champions have an outsized influence in prioritizing systems change over short-term results. Unfortunately, there are still too few of these champions in the USAID ecosystem to advance more successful MSD activities at a faster rate, making MSD the norm.

4. Prioritize systems-level outcomes with reporting and accountability systems.

As the adage goes, “What gets measured gets done.” USAID projects and their Missions are chasing the same results project after project, without asking for evidence of how we left behind competitive, inclusive, or resilient market systems. With USAID’s new localization policy opportunities exist beyond merely funding local partners. The policy is evolving to assess not only the financial contributions, but also the extent of local ownership and influence.

Delivering on the Potential of MSD

ACDI/VOCA and our partners have made considerable strides in applying MSD, transforming sectors like textiles and food processing in Tajikistan and developing sustainable tourism in Honduras, for example. But there’s still a learning curve to fully unlock the MSD approach’s potential. One certainty remains—the relevance of MSD is more pronounced than ever. As global development systems thinkers, the onus is on us to define how the approach is best applied to solve increasingly complex, interrelated challenges.

Author: Hayden Aaronson