This post was written by Dennis Whittle. Dennis is the CEO of GlobalGiving, an international marketplace for philanthropy.
Standard IBM punch card
When I went to college in the late 1970s we used punch cards like the one pictured here to put information into the (mainframe) computer. Over the next thirty years, competition in computer technology led to rapid innovation. Over those same thirty years, the aid industry followed a decidedly different pattern of development.
In the early 1980s, the DOS operating system was a huge leap forward since it allowed people to use PCs on their own desktops. Ten years later, Microsoft released the Windows operating systems, which provided a graphical interface – another big advance.
All along, Apple had been selling its own graphical interface while struggling to avoid bankruptcy. But once Apple released its beautiful Mac OSX operating system, it rapidly gained market share, forcing Microsoft to develop (after several failures) a powerful new release of its Windows system. At the same time, Apple released the iPhone, a real game changer, especially when combined with Apple’s App Store, which provided a distribution platform for hundreds of thousands of small, independent developers to release software applications. As a result of its competitive success, Apple’s market value overtook Microsoft’s in May 2010. Some people think Apple’s new iPad could revolutionize the industry again.
DOS Operating System, circa 1982
The competition between Microsoft and Apple was based on what the customer wanted and liked. Both companies experimented with many products, some of which failed and some of which succeeded. They got rid (mostly) of the failed products and continually and incrementally enhanced the successful ones. Every once in a while (as with the graphical interface and the iPhone), they made giant leaps.
Contrast this with the aid industry, which, ironically, is managed in a centrally planned way even as it promotes market-based solutions to developing countries. The big aid agencies get very little feedback from their ultimate beneficiaries – the people they are trying to help. There has even been a recent trend around “partnerships and collaboration,” whereby agencies agree to divide up their business and not compete. For example, the World Bank might agree to concentrate on telecoms in a set of countries, while the ADB handles health. This further insulates them from competition. The result has been little innovation over the past decades.
iPad, 2010
The operating system example is a good metaphor in itself. What operating system is the aid industry using right now? Unfortunately, over the past sixty years, it hasn’t progressed much beyond punch cards. While there have been improvements to the various processes, the aid business is still based largely on a “mainframe” model, with a small number of mainframes such as the World Bank, ADB, UN, and bilaterals such as USAID, MCC, DfiD, and AusAID dominating the market. What will it take to move toward a distributed “desktop” model of aid, and to stimulate the parallel creation of the DOS, Windows, Mac OSX, and even iPhone operating systems?
What would a competitive distributed operating system for aid look like? Put your ideas in the comments, and I’ll write a follow-up post.
22 Comments
I’ve seen this comparison made between the business world and the “aid industry” before, and it seems to be very problematic. Businesses like Microsoft and Apple are out there for their own self-interest. They want to maximize their profits. This naturally happens by producing good products which people find useful.
In the “aid industry”, the goal is to help people. This is an extremely broad statement, but the idea of helping people is at the heart of what the “aid industry” is attempting to do.
This difference in incentives should be expected to make the two develop differently.
I also find it problematic how you seem to gloss over all of the changes that have happened in the development community. Concepts like sustainable development and microfinance are relatively new, and they are evolving quite a bit. A lot of academic work is being done on these topics, and our understanding of them is rapidly improving.
Your next post would do well to recognize these points. You may still be frustrated with the results, or lack thereof, that have come from the “aid industry,” but it is useful to give the complete picture of just how much work is going into development and improving development strategies.
As for your question, I think if we knew a really good answer to it, then we would already be starting to implement it.
I love the analogy.
In the early 80′s, it was cutting-edge individuals bringing their own PCs into work (mainly to circumvent sluggish IT departments) that kick-started the PC revolution. Today, the pattern is repeating as software-as-a-service tools are snuck in to large companies behind the CIO’s back.
Perhaps grassroots approaches (eg micro-entrepreneurship) which avoid the big agencies will be the Development analogue: it’s as if positive change is being snuck past the establishment. There’s no doubt that the ‘mainframe’-like homogeneous approaches to development are grossly inferior to rapid localized empowerment, in just the same way localized computing buried centralized mainframes.
Taking the analogy one step further, I wonder what Development’s cloud computing platform will be? Will we improve development approaches and tools to the point that they are versatile enough to be effective anywhere?
A competitive distributed operating system for aid would distinguish between development aid, operating on market principles, and emergency aid, operating on humanitarian principles.
Development aid would focus on improving infrastructure and institutions that constrain the investment climate in poor countries, with activity selection through cost benefit analysis. It would work with commercial banks to improve access to credit for mid size firms to generate private sector employment.
The model of independence for central banks has lessons for how aid programs could become more robust in their analysis and program selection, although selection of long term goals is harder in aid than in monetary policy.
Didn’t we agree in the Paris Declaration (or was it Ghana?) to more donor coordination, and more donor coordination meetings, and more meetings to coordinate the coordination of donor coordination meetings?
Aid is a failed product/Operating system. Therefore, we must get rid of the failed product.
Globalgiving’s activities can be terminated with immediate effect and the CEO can put his brilliance to more productive uses than writing blog posts about failed concepts.
Considering the number of NGOs in Africa alone you’d think we’re in the iPhone OS era of development.
I feel the main objective for helping the poor should be to supply them with the capital goods that allow the poor to make a living. It is very easy to determine if the people that you are trying to help are making money or if they are not. AID agencies often focus on providing “services” for the poor. Bad ideas are promoted by AID agencies because they provide “services”. If the poor make money they can buy their own “services”.
One of the most important lessons I learned from my first boss in development was that plunking down an firm/NGO/aid agency’s idea of what “should” develop a region will never work — a more effective route is to have the community vie for it. If the community is invested in the vision, it will be infinitely more successful. This is demonstrated in programs like READ Nepal where they have tangible buy-in from each village they touch.
The problem with big, nation-wide strokes attempted by organizations such as the World Bank is that they assume that if the idea is feasible, large-scale implementation will be possible. The reality is that overlaying external values atop a culture that often did not ask for them is bound to fail (not to mention all the internal actors who have incentive to work against the new system). A better solution would be to scale down to communities to propose an idea and let them compete for it — it’s not “if you build it, they will come,” it’s “if they want it, they will build it.” We (in the aid sector) just need to do a better job of providing the necessary resources.
The industry metaphor for aid is not completely off base as one reader suggested — community members are just as important to the viability of an initiative as customers are to the success of a product. Pretending like focus populations are helpless bystanders hasn’t been to the benefit of anyone.
Thanks for the good comments. I think Shannon is right on when she notes that big nationwide “strokes” of aid don’t work well because they don’t take into account different local needs and values. We need a distributed system that can let local communities express those needs. We have been piloting a couple of initiatives that allow this, and I will blog about those soon.
I like Paul’s idea that the poor should be able to “buy” services rather than having them supplied directly by aid agencies. One thing Bill E has suggested is giving the poor aid vouchers that they can redeem for the services they want from the aid providers they want. I love this idea.
Steve, you are right that there are a lot of NGOs in Africa and elsewhere. The problem is that, unlike Apple’s App Store, they don’t have a common platform for distribution and ranking. This is critical for ease of entry, exit, and adaptation of the NGOs. The App Store has generated fierce competition among apps, which are constantly improved by their developers in an attempt to please users.
B.R. – sadly, you are right. More coordination of that sort could actually be the problem rather than the solution. Note that market mechanisms provide an implicit form of coordination that is very different than top-down coordination.
Robert – would love to hear more about how you think central bank independence provides some insights into how the aid industry could work better.
Alex – I like this: “it’s as if positive change is being snuck past the establishment.” I think the question is whether the establishment will (or can) wake up in time to actually lead rather than be bypassed.
Fund experimentation.
Let me rephrase: Fund experimentation, Aid Watch. This is something you could be working on.
Finding funding for an unproved development idea is not easy. There need to be ways to fund research in aid, in which the “output” is the research.
Consider the aid worker’s perspective: once I get my piddly grant to work in literacy, am I going to spend half of it on project evaluation? No way. Funding is way too scarce to spend so much on rigorous evaluation.
Now, if someone were funding a research project, then that’s a different story. Then I can develop a method, and do the evaluation in a rigorous way.
Let’s see a system of small, competitive research grants for practicioners. The output requirement is a research paper. Less than $20,000; probably less than $10,000.
Adam
Here’s another bit on evaluation: when we try to get methodological results from development projects, we get neither. I have no incentive to honestly critique my development project, and every pecuniary reason not to do so. It’s far easier for me to go one of two routes:
(i) ask my good friend from another NGO to do an “external” evaluation
(ii) do a series of interviews and focus groups, in which I am 100% confident that my shame-conscious aid recipients will say exactly what I want to hear.
I don’t really see honest evaluation happening unless the evaluation is what is being funded, i.e., unless research is being funded.
Here here, Adam. Spot on.
I think the problem is inherent in the decision-making process from the beginning. Those who have funds have embedded socioeconomic agendas, which will always skew results towards a) falsification or b) ideological gain through overly gracious recipients and c) political aims.
A rehaul of the aid industry would focus on levelling the *social* playing field so that trade and growth would happen naturally. For example, media which generalises about ‘Africa’ or lumps together the poor as unable or unintelligent would be banned.
“Robert – would love to hear more about how you think central bank independence provides some insights into how the aid industry could work better.”
Paul Collier commented that central banks are at the right wing end of the bureaucracy while aid agencies are at the left wing end. It is a disturbing view of international development, indicating that the aid community is largely separate from the drivers of monetary policy. Yet performance of financial systems, especially access to credit by firms, is a widespread binding constraint to economic growth. Increasing private industry provides spillover benefits to the poor through jobs, customers, services, goods, etc. Increasing the wealth of the poor enables them to buy social services. If aid were more closely aligned to banking and trade it could do more to reduce poverty, through building national economies.
Central banks are asked by governments to manage currencies independent of political direction. When aid policy is shaped by government politics it promotes fragmentation and ineffectiveness. By setting longer term goals for aid programs, and requiring transparent and accountable performance, donor governments can improve aid delivery, with strong benefits for international peace.
A pointless analogy made worse by the puffery of a fairly dispensable luxury, the iPad, and a distribution network and operating system that is an abusive monopoly that provides a bottleneck for those that which to use its services and an totally user-unfriendly interface.
‘A competitive distributed operating system for aid’ means aid allocation on market principles. One way to do this is to work with commercial banks to share risk of lending to firms, by providing partial loan finance to borrowers immediately below the bank’s lending threshold. By lending at commercial rates to bank customers with good credit standing, funds can be increased for further expansion of commercial credit. Lubricating the operation of private firms has multiplier effect throughout the economy.
Interesting posts. I’d suggest however that it is more important to understand that the IBM / Microsoft / Apple et al battle was really about Open vs. Closed systems. IBM and Apple were always going to lose once Microsoft realized that if they opened up their OS they didn’t need to provide the applications – anyone could (as Apple finally came to understand.)
How this analogy transfers to development is questionable and potentially clumsy however. One could say that the development model is a closed system. We have the money, and we have the applications – and you may only ‘buy’ what we decide you can have, because it’s not your money. In an open system, the donor would offer the money but would not decide where it should go. Rather, recipients should regard funding as their own and program it where they most see fit. That way they might claim ownership and get it right.
Therein lies the problem. Donors will claim that they make joint decisions but the evidence is ambivalent at best. Recipients have no power, and no choice, unlike consumers. If a consumer sees a better app, s/he will vote with a wallet. Who owns the wallet in this case?
Nevertheless, I think that the open / closed model bears more consideration and might lead to some interesting conversations.
One of the ways that Apple brought the Mac world into mainstream business use was embedding MS OS in the product, allowing business applications like MS Office to be used on Apple products. This was in response to market demands (I worked for a major Apple reseller). It was both adaptation and admission that the product had to be modified to fill a gap or be limited to education and creative applications.
Your lack of mention of LINUX, a major attempt to develop outside the Apple or MS worlds, is a reflection that the “nobody’s in charge, everyone’s in charge” strategy hasn’t been effective in the technology industry.
A different technology strategy that I think has been more far-reaching is the Hewlett Packard strategy “distribute and print.” About 15 years ago, HP set out to distribute information and print locally. They have effectively undermined the off-set printing industry in North America with small, inexpensive printers. This strategy was embraced by computer manufacturers, leveraging the web to distribute information. We have this strategy to thank for lessening the amount of paper used in collective printing and increasing the importance of online information.
In both the OS and “distribute and print” examples, a strategy was developed in response to market forces, available resources and functionality. Strategies were modified along the way to fit current conditions, but there was an engine behind them, driving for results. Like the LINUX example, when you don’t have a collective strategic direction and marketing force, the impact is more fragmented and isolated successes are dwarfed by those with larger publicity machines.
Great comments and further ideas for mulling. Thanks, everyone.
Diane,
Excellent point about LINUX – but again we get caught in the analogy, which might not fit what we’re discussing in terms of development.
LINUX is an OS, not an app. If I’m a business and the OS fails, where do I go to complain and get a fix? Who has responsibility? Then again, to whom may I complain if I’m the recipient of development assistance that also fails…
If we are to carry the analogy, which part of development assistance is the OS, and which is the app?
What would it look like? It would not be distributed to nation states at national government level. Not to Hanoi but to Soc Trang. Not to Phnom Penh but to Siem Reap …
A competitive distributed operating system for humanitarian aid could set objectives from Matthew 25:35: ‘I was hungry and you fed me, I was thirsty and you gave me drink, I was a stranger and you welcomed me, I was bare and you clothed me, I was sick and you healed me, I was in prison and you visited me.’
Donors can pool funds to local agencies and their partners and resource them according to their success in meeting these humanitarian rights for food, water, recognition clothing, health, and justice. Competition between charities, including on building local capacity, can improve efficiency in locations where civil society has space to operate. Social protection provides the stability and security needed for private sector investment.
To some extent the NGO sector is already a competitive distributed operating system for aid, albeit more so for humanitarian emergency relief than for sustainable economic growth. Although the distributed catallaxy can operate in humanitarian situations as well as in business, market orientation has a trade-off against political viability. Market principles may be better suited to development programs that focus on economic growth, for example through donor partnership with commercial banks to improve access to credit for local firms in poor countries.
http://www.rovingbandit.com/2010/07/president-loses-election-in-somaliland.html provides some pertinent comments from Somaliland: “(quoting Nick Eubank) recognition–or more specifically the subsequent eligibility for foreign assistance which would almost certainly follow–has significant potential to upset Somaliland’s success. …in the absence of foreign aid, Somaliland’s government was forced to negotiate with a wide array of actors in order to develop a sufficient tax base, and it was as a result of these negotiations that the country developed highly representative institutions.” To which RB adds “You can probably guess what my solution would be. Don’t give aid to the Government of Somaliland. Give it to the people.”
This illustrates how government interference and the management of aid through official channels can constrain market efficiency in aid distribution, and that social programs funded by local tax and fees can be more robust and more accountable for quality. Does aid that undermines a government’s incentive to raise tax abet ineffective service delivery?
Commenting on Diane Bennett’s statement:
“Your lack of mention of LINUX, a major attempt to develop outside the Apple or MS worlds, is a reflection that the “nobody’s in charge, everyone’s in charge” strategy hasn’t been effective in the technology industry.”
Nobody mentions Linux because it works so well, you forget it is even part of your life. Linux apache servers run the 70% of the internet, like the blog we’re using right now.
The ideal aid system would be invisible, and communities would decide. But that will remain an ideal until we start tackling some root issues like corruption in police forces and the lack of rule of law.
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