GG2022 - Think Different Development
When Dr. Kim assumed the presidency of the World Bank six months ago, he confronted a world markedly different from the one his predecessor, Bob Zoellick, faced five years ago. Poorer countries have become richer. Richer countries have become poorer. And private philanthropies now outsize and out influence countries’ assistance budgets. Overlaying these dynamics is a radical shift in the global governance of development. The increase in the BRICS’ voting share in the World Bank board and talks that a “BRICS” bank is in the works has prompted several questions about the future of the World Bank. In order to tackle tomorrow’s development challenges and integrate new voices into the system, the World Bank should seek inspiration from the private sector. Long-held management principles pioneered by the franchising business model, such as decentralization and adaptation, along with newer business practices emerging out of social media industry championing openness and experimentation, provide useful guidelines in which to consider the changing role of the World Bank.
Lessons from the success of the franchising business model illustrate the advantages of taking a decentralized approach to management of international institutions. Private companies franchise to overcome financing and monitoring challenges and leverage entrepreneurialism and innovation that might not otherwise originate from a centralized location. Similar challenges exist in today’s international development institutions. Currently, only 60% of the World Bank staff is located in countries where programs are delivered and less than 45% of the tasks are managed in the field. The inefficiencies that emerge from this structure reduce effectiveness of program design and implementation. Because franchising creates tighter feedback loops from customer to company, it gives management the information it needs to adjust and change strategies midstream improving design and operations. The success of a decentralized model relies on headquarters playing a goal-setting role, ensuring efficient interoperability across departments, disciplines and projects, while practitioners in the field develop strategies for implementation and attainment.
Utilize local knowledge
By decentralizing, the World Bank will improve its operational capacity and leverage local knowledge. Multiple studies suggest that when communities identify their own challenges aid has the most benefit. It makes sense in business, too. Rapidly decentralizing operations and trusting local knowledge, Ecobank ascended the ranks of international banks and dislodged older incumbents, Standard and Citi. Ecobank’s success is in part a manifestation of what Yale Professor Jim Scott asserts is an “anarchist sensibility” that puts local knowledge – rather than planning and theory – ahead of everything else when implementing strategies for growth and development.
Adaptability over scalability
Development institutions have tended to prize scalability over adaptability in an effort to increase efficiency and the “impact” of each programmatic dollar spent. But this focus has led to the proliferation of output metrics, impact evaluation and monitoring departments that are themselves problematic and are often misapplied, narrow or premature. Programs that “lack scale” in impact evaluations have been phased out or isolated, on the theory that the cost of managing a non-scalable program outweighs the benefits of its successes. The principle of adaptability re-focuses development on what works, not on what might work on a bigger scale. Output-based aid programs such as “cash on delivery”, a program piloted by the Center for Global Development, is in the early stages of development and wider applications of cash transfers, which has been effective in early pilots, reposition adaptability at the center of the future of development.
It is now generally accepted that the future of development will increasingly involve “openness” — in data, models, reports, but also in budgets and management. Borrowing from the software development industry, global development institutions should build on recent efforts started by former President Zoellick, aimed at increasing the dissemination and utilization of the World Bank’s information among a broader spectrum of development practitioners. Making global development data more available can also be good business, as Google’s Android app market place and the commercial success of Linux software illustrate. By making part of its source code freely available, and providing data and usability features, Google not only built trust with stakeholders, it leveraged the “wisdom of the crowds” to create products efficiently and effectively. Much the same might be done with development programs: utilizing development institutions as platforms and their staff as curators of programs rather than creators of them.
The World Bank should strive for work processes that employ incubative and experimental approaches, rather than prescriptive or best-practice approaches to challenges. There is now growing recognition that knowing what works is achieved more effectively by “failing fast and often” — something author and economist Tim Harford calls “churn.” Statistical evidence backs it up: systems with more “churn” fix problems, learn and grow faster. Recognizing the value in constructive downtime for staff, Microsoft, Pepsi and IBM, have designated open research time where individuals are encouraged to pursue individual endeavors without fear of failure. Through its Institute and by co-hosting conferences like the FAILFaire, the World Bank is gradually advancing these initiatives but additional resources could be redirected to cultivate more agnostic approaches in its program development and operations.
The form and function of the World Bank will change substantially over the next five years. Satisfying a growing number of development players who view the world differently will require doing different things. But in moving forward, it might also consider what it already does differently.
Eliot Pence is a fellow of the GG2022 program and director at The Whitaker Group, an Africa-focused investment advisory and corporate strategy firm. This column is part of a series from the GG2022 fellows. For more information on the GG2022 please see here.