Organizational Adaptation and Leadership

Week 7 Discussion: Organizational Adaptation and Leadership3 Unread replies3 Replies

The readings this week focus on theory and practical design to create and lead adaptive organizations in complex and chaotic environments.

• How does theory inform leadership practice from an adaptive design perspective?
• What factors must leaders consider when managing change to adapt to chaotic internal and external environments?

Provide a rationale for your responses, supporting your discussion with references to and citations from your readings. Be sure you adhere to APA guidelines for citations and references.

Your post should be 250–500 words.

Derivation of Factors Facilitating Organizational Emergence Based On Complex Adaptive Systems…
E:CO Issue Vol. 11 No. 1 2009 pp. 19-34
Academic
Derivation of Factors Facilitating Organizational
Emergence Based On Complex Adaptive Systems
and Social Autopoiesis Theories
Ghada Alaa
Information Technology Institute, Ministry of Communications & Information Technology, Egypt
Modern turbulent business environments
are characterized by rapid change that
make businesses unpredictable, which
brings emergence to the core of modern
organizations. Deriving factors facilitating organizational emergence has been
undertaken by drawing on complex adaptive systems (CAS) and social autopoiesis
theories. Social autopoiesis was particularly chosen as it focuses on social elements,
such as communication, morale, trust,
etc. and their relation to social emergence,
whereas CAS theory concentrates more
on adaptive mechanisms that make a CAS
produce emergent order, such as inter-relations, interactions, edge of chaos, feedback, etc. This led to the identification of
various factors facilitating emergence and
the development of a framework for utilizing these factors that were organized into
two dimensions. First the factors are classified as either tangible or intangible. Second, the factors are classified as either dynamic, i.e., realize emergent properties, or
they are concerned with the enabling infrastructure, i.e., enable the dynamic factors
to become effective, or they are controlling factors, i.e., they attempt to balance
excessive change with stability to prevent
descent into chaos. The framework was
applied to an Information Systems Development (ISD) project which showed that
it is applicable to any type of business sector. This framework is argued to be a step
forward to realize organizational emergence based on complexity principles derived from literature. The split between
factors facilitating emergence and generic
principles of CAS is not clear in the complexity literature and it is argued to be an
important contribution of the paper.
Alaa
Introduction
I
n turbulent business environments organizations need to react quickly and creatively
to make the most of new opportunities and
business models. These new imperatives of
business practice require organizations to selforganise and become more flexible to handle
change (Goldman et al., 1995). Of key importance to organizations in responding successfully to change is the concept of emergence.
Complexity science, it has been argued, is a
way of addressing and improving such capabilities in organizations, as it is concerned with
the role of chance, emergence and contingency
in the face of frequent and continuous change
(Montuori, 2003). McKelvey (1997), Stacey
et al. (2000) and Mitleton-Kelly (2003) illustrate the growing interest in understanding
organizations and new management practices
in terms of theories of complexity that seek to
provide new ways of thinking and reasoning in
relation to emergent behavior.
In this paper factors facilitating organizational emergence have been identified by
interpreting complex adaptive systems (CAS)
and social autopoiesis theories with the aim of
identifying mechanisms or strategies that raise
the emergent properties of social business enterprises. Social autopoiesis was chosen as it focuses on social elements of emergence, such as
communication, collaboration, morale, trust,
etc., whereas CAS theory concentrates more
on adaptive mechanisms that make a CAS produce emergent order, such as inter-relations,
interconnectivity, edge of chaos, feedback, etc.
A thorough literature review of managementrelated contributions in the field of complexity
and social autopoiesis theories was undertaken
to extract mechanisms or strategies that are argued will facilitate the emergence of new work
arrangements in the face of frequent change.
Based on this a framework has been derived
19
that summarizes the so-called factors that facilitate organizational emergence. The framework classifies factors as tangible and intangible, and it differentiates between dynamics,
enabling infrastructure and controls, amongst
emergence factors. Preliminary validation of
the framework was carried out through its
empirical application in the context of an information systems development (ISD) project, a business to business e-commerce portal.
Results show that the framework is generalizable and can be applied to any kind of business
sector. It provides insight into the various elements of emergence realized or missing in the
business enterprise. By enforcing factors facilitating emergence and avoiding factors prohibiting emergence, it is argued that organizational emergence will be leveraged leaving space
to project teams to innovate and continuously
evolve appropriate solutions in order to adapt
to an ever-changing business environment.
Complex Adaptive Systems Theory and
Organizational Emergence
C
omplexity science seeks to explain the
process of self-organization, emergence
of new properties and the spontaneous
creation of new order. The behavior of complex
adaptive systems (CAS) is typically unpredictable, but exhibits various forms of order and
regulation. Complexity principles emphasise
that emergence of properties and creation of
new order are not explicable from a purely reductionist viewpoint, but the whole is greater
than the sum of the parts (Kaufman, 1993).
Therefore the focus of attention shifted from
understanding the parts or entities of which
the whole was composed to the interaction of
subsystems (agents) to form a system (Lewin,
2000). Heylighen (2001) defines CAS as a system composed of interacting agents, which
undergo constant change, both autonomously
and in interaction with their environment.
Heterogeneous agents exhibit various agent
behaviors that can be defined in terms of “simple rules” where they adapt and evolve through
their interactions and by changing their rules
through learning as experience accumulates
(Holland, 1996).
20
Many contributions define CASs and
describe their main characteristics and principles. While a uniform description or interpretation of CAS is still not provided, several key
aspects that characterise CAS were suggested
in the literature. Different authors surveyed
various complexity literature (e.g., Axelrod &
Cohen, 2001; Dooley, 1997; Holland, 1996;
Kauffman, 1993; Lewin, 2000; McKelvey,
1997, 1999) and based on that characteristics/
principles of CAS were outlined. For example,
Benbya & McKelvey (2006) derived eight main
characteristics of CAS to include large number
of components, variation and diversity, selforganization, dynamism and liveliness, adaptation to their environment, interactions, nonlinearity and selection. Mitleton-Kelly (2003)
identified ten generic principles that characterise CAS, these include connectivity and
interdependence, coevolution, far-from equilibrium/edge of chaos, space of possibilities,
feedback, historicity and time, path-dependence, self-organization, emergence and creation of new order. Whereas, Webb & Lettice
(2005) suggested six pertinent complexity science principles that include self-organization,
edge of chaos, diversity, historicity and time,
unpredictability and pattern recognition. The
different characteristics/principles of CAS are
summarized in Table 1, which illustrates how
the literature overlap and also complement in
order to form a broad overview of the major
characteristics of CAS. From the comparison
(Table 1) it is apparent that Benbeya & McKelvey (2006) were more concerned with the
agent-based interpretation of CAS, where CAS
consists of large number of agents that interact
and re-structure their inter-relations and behavior as response to change (American view
of CAS), whereas Mitleton-Kelly (2003) &
Webb & Lettice (2005) interpret CAS as energy-driven actors residing at the edge of chaos/
the far from equilibrium transition phase (European view of CAS).
Organizations can be defined as complex adaptive social systems that evolve and
produce emergent behavior in an unpredictable
way (McKelvey, 1997; Mitleton-Kelly, 2003).
As according to Baskerville et al. (1992) organizational emergence is characterized as the
E:CO Vol. 11 No. 1 2009 pp. 19-34
Benbya & McKelvey
Mitleton-Kelly
Webb & Lettice
(2006)
(2003)
(2005)
Large number of components
x
Variation and diversity
x
x
Connectivity and
x
interdependence
Far-from equilibrium/edge
x
x
of chaos
Unpredictability and nonx
x
linearity
Space of possibilities /
adaptation to environment
x
x
(context)
Interactions
x
Feedback
x
Pattern recognition/learning
x
Historicity and pathx
x
x
dependence
Selection and Selfx
x
x
organisation
Coevolution
x
Table 1 Characteristics/ Principles of Complex Adaptive Systems.
organization being in continual change, following no predefined pattern and never reaching a steady state. Although CAS theory is
traditionally associated with natural sciences,
Kim & Kaplan (2006) argue that CAS in management domains can be interpreted as actors,
interacting with their environment and other
actors within neighborhoods, and employ a
variety of context-bound strategies in steering
the behavior of actors towards maximizing the
perceived interests or benefits of the organization. CAS in management contexts marks a
fundamental paradigm shift from a mechanistic perception of an organization towards a selforganizing, autonomous understanding (Stacey et al., 2000). The past view of organizations
is seen as a hierarchy of components, whereas
organizations are now seen as social networks
of autonomous components or actors that are
organized by themselves and exhibit the previously discussed CAS characteristics (Table 1).
Alaa
Social Autopoiesis and the Autopoietic
Enterprise
L
uhmann (1986) redefines social systems
as entities of communications that recursively produce and reproduce, which
he refers to as social autopoiesis. The word
autopoiesis means “self-production”, so a living, biological system is called autopoietic as
it produces and is produced by itself (Mingers,
1994). Essential features of autopoietic systems are that they are autonomous, bounded
and self-making. They consist of components
that have specific properties where the overall
behavior is generated through interactions between the components (Mingers, 1994). Human societies also possess features of autopoietic systems, as they are capable to survive by
their own and change their entire structure and
appearance (Beer, 1995). Considering human
societies as autopoietic systems is useful in
analyzing enterprises in terms of the form and
structure they take and how they transform
and reform over time (Whitaker, 1995).
The issue of how autopoiesis can be applied to social systems pointed out difficulties
21
in the transfer of the natural sciences’ concepts
of autopoiesis to social domains. As autopoiesis implies the production and reproduction of
the constituent components, so for social systems it is difficult to specify what do they exactly produce and reproduce (Mingers, 1994).
There are two primary approaches in applying autopoiesis to social systems (Whitaker,
1995):
Enterprises as Autopoietic Systems
This view advocates applying concepts of autopoiesis theory, such as autonomy, self-making
and self-reference, on the social system. It is
criticized in terms of its straight forward applicability on social system’s constituents that
are human beings and that need according to
autopoiesis theory to re-make themselves (Varela, 1981). In addition social systems do not
exhibit topological boundary that is another
attribute of autopoietic systems (Mingers,
1994). Therefore, Luhmann (1986) redefines
social systems as entities of communications,
or in other words the constituent elements of
social systems are communications. He argues
that autopoiesis of social systems is realized
through production of communications, i.e.,
in social systems communications recursively
produce and reproduce. Another interpretation characterizes social systems as a system of
concepts, ideas, descriptions or messages that
interact and self-produce (Varela, 1981).
Enterprises as a Medium for Autopoiesis
Maturana (1988) argues that social systems are
not themselves autopoietic but constitute the
medium for autopoiesis, i.e., social systems
interact in a way that autopoiesis of actions
and interactions contribute to the survival of
the social system. Thus, this view advocates
that the social system is constitutively emergent from interactivity among its participants.
This generates networks of interactions and
relations through structural coupling between
participants and the social system. In that regard Küppers (1999) suggests the analysis of
social interactions and their dynamics of reformation.
22
Regardless of the two different interpretations of social autopoiesis it is important
to identify and understand the emergence of
new behavior within social contexts and what
social mechanisms may drive social interactions and their reformation. Thus, the application of autopoiesis in social contexts needs to
take into consideration the dynamics of social
interactions and inter-relationships, as well as
the network of communications that develops
between the actors. For this paper we will explore social autopoiesis literature and review
their interpretations and arguments towards
improving the emergent properties of a social
enterprise. Based on the analysis carried out in
the rest of the paper it is argued that communication, collaboration, interactions, trust and
morale are the driving force of social autopoiesis. Furthermore, it is important to develop
an understanding of the intersection between
the literatures of social autopoiesis and CAS, as
this area is still nascent and under research.
Why Derive Factors of Emergence?
M
itleton-Kelly (2003) suggests that
the complexity approach to management is about fostering and creating
enabling conditions, which will permit an organization to explore the space of possibilities
and facilitate the creation of new organizational forms that will be sustainable in a constantly
changing environment. This means it is important to identify elements/factors of emergence
that improve the ability to respond to change
and let work arrangements emerge according
to what the situation implies, rather than being dictated in advance. Alaa and Fitzgerald
(2004) support the same view and emphasise
the need to instill into organizations habits and
dynamics that improve their emergent properties instead of leaving them happen by chance.
It is important to identify factors that will encourage and reinforce emergence and avoid
those that suppress or inhibit such activities.
Once inhibitors are removed and enablers put
in place, new behavior emerges enabling the
business enterprise to quickly adapt to change.
Generic principles/characteristics of
CAS, i.e., conditions and attributes that characterise CAS were widely identified in the
E:CO Vol. 11 No. 1 2009 pp. 19-34
literature (see Table1). But Holland (1996)
outlined more specific elements of CAS, i.e.,
mechanisms they adopt to realize such characteristics. These included aggregation of interactions, flows, internal building blocks and
structure hierarchies, which ensure free propagation of change, adaptation and emergence
of new order. Thus, Holland (1996) outlined
constituent elements of CAS and mechanisms
they adopt to realize emergent behavior rather
than characteristics/properties of CAS. This
split between mechanisms/factors that facilitate emergence and generic characteristics/
principles of CAS is not clear in the complexity literature and it is argued to be an important
contribution of this paper.
It is argued that in order to harness
complexity concepts in business contexts an
explanatory framework that identifies enabling
factors of emergence is required to put generic
characteristics/principles of CAS (Table 1) into
action. Therefore this research aims at identifying factors of enabling conditions that could
improve the emergence of new order in organizations. Various factors facilitating emergence
were suggested in scattered literature that will
be surveyed and collated into a framework in
the following section. This will show how the
different factors that would facilitate organizational emergence can be integrated and interlinked. The framework provides a roadmap
that guides based on complexity principles
managers and employees to harness emergent
properties in their organizations.
in social and management disciplines. A thorough review of complexity and social autopoiesis literatures is undertaken in this section
with special focus on management-related
contributions to extract mechanisms or groupings of factors that are argued will facilitate
emergence in social and management contexts.
The analysis resulted in a classification into
several groupings; dynamics (social construction factors/intangible dynamics and adaptive
factors/tangible dynamics), enabling infrastructure (tangible and intangible), and control
factors (tangible and intangible). Dynamics
are factors that realize emergent properties,
the enabling infrastructure include elements
that enable the dynamics to become effective,
whereas controlling factors attempt to ensure
balance of dynamics to prevent descent into
chaos.
Social Construction Factors/Intangible
Dynamics
The review of the literature resulted in the
identification of social drivers and stimulators
that have been suggested as important in facilitating emergent social behavior. These are
identified in bold and are of course frequently
overlapping, as follows:
•
The development of autopoietic society requires communication, meaning and consciousness that form an essential driver of
emergent behavior (Luhmann, 1986);
•
Constant dialogue is an essential social
driver that creates a willingness to communicate with a growing level of trust, both
of which enable coevolution of a social enterprise. For example trust facilitates better communication, which in turn enables
the formation of activities and processes as
response to problem situations (Lewin &
Regine, 2003);
•
Facilitation of interaction in the development of social organizations put cooperative interaction and relationships at the
centre of organizational emergence, which
can be achieved through participation, collaboration and team working (Stacey et al.,
2000);
Derivation of Factors Facilitating
Organizational Emergence
M
ost of the work on complexity and
the development of complexity theories have been undertaken in the
context of the natural sciences and there has
been relatively little work on developing or
applying such theories in the social sciences.
The literature generally suggests that there is a
fundamental difficulty in attempting to do this
because of the nature of human beings and human interactions, and specifically the notions
of emotion, conflict and cultural elements.
However more recently a number of attempts
have been made to apply complexity principles
Alaa
23
•
•
•
Interactions are important in the business
ecosystem in order to respond to the problem situation and take appropriate actions.
Local interactions are responsible for new
order creation and emergence of global
structures (Lewin, 2000);
The quality of interactions between human
agents is a function of the diversity, density, and intensity of those relations. These
may be formal or informal, designed or undesigned, implicit or explicit (MitletonKelly, 2003);
Individual motives or intentions and individual emotions and morale act as driving forces for social autopoietic systems
influenced by interests, social context and
forms of cooperation and collective behavior towards achieving a specific goal (Küppers, 1999).
Thus, the important social construction factors
are communication, collaboration, interaction,
trust and morale. These appear to be the important elements of complex social systems as
they are responsible for social interactions and
stimulation of creative thinking that will lead
to human empowerment and leveraging selforganization. Next we look at more mechanistic or adaptive factors/tangible dynamics.
Adaptive Factors/Tangible Dynamics
According to Whitaker (1995) the dynamic
of an evolving social entity is determined by
inter-component relationships that outline its
form and internal arrangements. Complex behavior arises from the inter-relationship and
inter-connectivity of elements within the social system and between it and its environment
(Mitleton-Kelly, 2003). Thus, adaptive factors
are required to improve the ability of the social
system to re-arrange, re-form its structure and
quickly respond to change, these include the
following elements:
•
24
Complexity theory implies that the internal dynamics and form of a system play a
major role in determining its behavior. In
a social context each individual belongs to
many groups and different contexts and
the contribution depends partially on the
other individuals within that group and the
way they inter-relate (Lewin, 2000; McKelvey, 1997);
•
Propagation of influence through an ecosystem depends on the degree of connectivity, interdependence and strength of coupling (Heylighen, 2001);
•
The degree of interdependence between entities may not always have beneficial effects
and lead to flexibility because as one entity
tries to evolve or adapt and improve its fitness other entities may respond by hindering this process and impose additional effort or cost (Küppers, 1999);
•
In human systems, connectivity between
individuals or groups is not a constant or
uniform relationship, but varies over time
(Mitleton-Kelly, 2003);
•
Complexity thinking is about wholes and
complex inter-relationships. This requires
boundaries to be drawn around issues and
the break-down of the problem under consideration into manageable wholes for better understanding of the problem situation
(Holland, 1996);
•
Difficulties created by the unpredictability of complex human processes and interdependencies are problematic, therefore
short-term orientation and simple solutions
(simplicity) are likely to result in better outcomes and more predictable developments
whereas long-term solutions are likely
to fail, as requirements and conditions
can only be articulated and understood as
events evolve (Stacey et al., 2000);
•
Conditions for experimentation and exploration of possibilities need to be provided
as complexity theory suggests that several different chances and attractors will
be possible and need to be explored. This
also usually implies small-scale orientation
in order to quickly try out various options
and get quick feedback (rapidity) without
requiring large scale resources and time
(McMillan, 2004).
Thus, the more mechanistic, adaptive factors
reflect the degree of interdependence, connectivity, structural coupling and quick re-formaE:CO Vol. 11 No. 1 2009 pp. 19-34
tion of internal arrangements represented in
flexibility, short-term and small-scale orientation, simplicity and rapidity. These elements
help facilitate fast response and quick, internal
adaptation and re-formation of system components.
Enabling Infrastructure
In order to facilitate emergent response an enabling infrastructure is required that allows
emergence to occur, without such an infrastructure dynamic and emergent behavior will
be limited or repressed. Aspects of an enabling
infrastructure that facilitates emergence in social contexts include:
•
Hierarchy and structure are pre-conditions
that enable or inhibit the emergence of new
behaviors and working ways (Heylighen,
2001);
•
Action of organization members is shaped
to a high degree by the existence of specific
organizational form and structures (Levinthal, 1997);
•
Conditions that facilitate the day-to-day
management of an organization, for example, management style, good leadership
and the provision of psychological space
and freedom are necessary for learning
and emergence to occur (Lewin & Regine,
2003);
•
Enabling infrastructures also include cultural conditions that facilitate new work
habits and intensions, such as manoeuvrability and risk-taking in ambiguous,
uncertain situations (Kelly, 1995);
•
Established research in complexity suggests that rigid procedures and bureaucratic regulations hamper emergent behavior.
(Carlisle & McMillan, 2006);
•
Analysis of the influence of external factors like power, money and control regulations like contracts and conventions is also
important as these often act as constraints
that limit social dynamics in complex situations (Stacey et al., 2000).
Control Factors
Complexity theory in social contexts is designed to enable creativity, spontaneity and
emergence but it also requires some kind of
moderating or control mechanisms, which
seeks to balance excessive change with stability,
possibilities with constraints, innovation with
tradition, etc. (Lewin, 2000; Montuori, 2003).
In order to adapt to a changing environment,
the system needs a variety of stable states that
is large enough to react to all changes but not so
large as to make its evolution uncontrollable or
chaotic (Küppers, 1999).
•
Stability is sustained by the property of the
edge of chaos that limits the spread of destruction through the system. Change and
stability are thus balanced and the edge of
chaos is a critical point of the system, where
a small change can either push the system
into chaotic behavior or tip the system back
into a more stable state (McKelvey, 1997);
•
Edge of chaos is controlled by equilibrium
models which attempt to bound a system
to ensure that the system is always pushed
back to stable conditions and will not result
in absolute chaos (Whitaker, 1995). Also
termed stability dynamics (Heylighen,
2001) which counteract excessive change
before it endangers the essential organization;
•
The mechanisms by which complex systems maintain control and achieve certain
goals is by feedback, learning and frequent
small adjustments to counteract any excessive tendencies to change (McMillan,
2004);
•
Continuous reflection, learning and circular causality mutually reinforce social
relationships and interactions (Küppers,
1999);
•
Simple high-level rules are a way to achieve
a balance between dictation and freedom
enabling team members to interact with
each other guided by these rules (Stacey et
al., 2000).
Based on the above analysis of literature we
identify the first grouping of factors facilitating
Alaa
25
emergence, i.e., dynamics that include those
factors that operationalize the emergent behavior. The factors of a complex social system
are also classified into intangibles and tangibles.
Intangibles represent the social factors that
uniquely characterise social human systems,
as opposed to natural systems, whereas tangibles represent the mechanistic/adaptive factors, those elements responsible for the internal connectivity of system components. Social
construction factors include communication,
collaboration, interaction and trust. These are
important to raise human empowerment and
self-organization. On the other hand adaptive/
mechanistic factors reflect the degree of interdependence, connectivity and quick internal
adaptation of the social system components.
This is represented in flexibility strategies,
short-term and small-scale orientation, simplicity and rapidity mechanisms that will facilitate fast response and quick re-arrangement
of the entities within the enterprise.
The second grouping is the enabling
infrastructure that enables or allows the social
and adaptive elements to either be effective or
inhibited. This includes organizational structure, hierarchies, management style, work culture, leadership, etc. These elements can also
be tangible, such as structures, hierarchies and
external factors or intangible, such as culture,
management style and leadership. The third
grouping is control, as in order to facilitate
emergent behavior without complete chaos or
anarchy, controls need to be in place and maintained, but they need not to be too restrictive.
This will ensure a balance between excessive
change and stability (edge of chaos). For example, reflection, circular causality and learning are intangible controls, whereas feedback,
continuous adjustment, and generative rules
are tangible controls. The different groups and
elements of each category are illustrated in Figure 1 that collates the various factors extracted
from literature. It is argued that this forms a
useful framework for identifying and understanding factors that facilitate organizational
emergence.
A Case Study: An e-Marketplace Portal
W
e now move on utilizing the “Organizational Emergence” framework (Figure 1) to interpret an information systems development (ISD) project
in modern, turbulent environments. Ciranet is
a B-B (business-business) e-marketplace relevant to the pharmaceutical sector in Egypt.
It offers electronic trading tools for the pharmaceutical industry covering drugs, cosmetics, medical supplies, personnel and childcare
products. A portal application had already been
developed before the fieldwork was carried
out. The development approach the company
adopted covered planning and management,
analysis and design, and development and
maintenance activities towards the implementation of the IT-based marketplace application.
The framework (Figure 1) will be applied to
the different stages of the development process
which identifies factors that facilitated and/or
inhibited emergence in the ISD project. In so
doing it is possible to identify if this project
possessed elements of emergence or not.
Planning and Management
The management team adopted a long-term
planning approach that caused some problems, as it froze the organization with a set of
assumptions that were likely to change, due to
rapid changes in the environment. Problems
were also identified with the hierarchical organizational structure and the command-control
style of management adopted. For example,
one individual, the business consultant, was
dominant in defining the requirements, often
ignoring the ideas and contributions of other
team members that might have made the project more successful. This limited collaboration
and reduced trust among team members and
project stakeholders. The researchers, in an
Action Research mode tried to intervene and
introduce a more agile approach into the organization but this was resisted by the management who were used to the optimization-oriented work culture.
Analysis and Design
The original analysis and design approach focused on business process modelling of the
26
E:CO Vol. 11 No. 1 2009 pp. 19-34
Controls
Intangibles
Tangibles
Reflection (Circular
causality)
Feedback
Continuous adjustment
Learning
High-level Rules
(These will ensure a balance between excessive change and stability
and thus sustaining the edge of chaos)
Dynamics
Intangibles
Tangibles
Communication
Flexibility
Collaboration
Simplicity
Interaction
Short-term orientation
Trust
Small scale
Morale
Rapidity
(These will raise human
empowerment & thus improve
self-organization.)
(T hese will reflect on degree of
interdependence, connectivity
and quick mechanistic
adaptation)
Enabling Infrastructure
Intangibles
Tangibles
Management style
Organizational structure
Leadership
Hierarchies
Work culture
E xternal factors (regulations,
etc.)
(T hese enable or allow the dynamics of emergence to either be effective or inhibited.)
Figure 1 Framework of Factors Facilitating Organizational Emergence
(Organizational Emerge Framework)
Alaa
27
Planning &
Management
28
Analysis &
Design
Development &
Maintenance
E:CO Vol. 11 No. 1 2009 pp. 19-34
Component-based
development
Flexibility
Flexible, re-usable
architecture (e.g.,
component-based)
Hierarchical
Organizational
structure
Technical
architecture
Optimizationoriented
Realize Enabling
Infrastructure in
ISD
Command-control
management
Work culture
Management style
Enabling
Infrastructure
Realize Controls
in ISD
Quality controls
No continuous
adjustment
Reflection &
Learning
Feedback
Testing & Reviews
No continuous redevelopment
Iterative
development
Prototyping
No Generative Rules Heavy-weight
development
methods
Controls
Table 2 Analysis of Factors Facilitating Emergence and Ways to Realize Them in Ciranet/ ISD Project (Inhibitors in Italic)
Short development
cycles & parallel
development
Incremental
development,
prototyping
Small scale
Rapidity
Complex designs
Realize Dynamics
in ISD
No Simplicity
No Collaboration
No Trust
Long-term
orientation
Dynamics
pharmaceutical trading supply chain. For example, the order lifecycle was decomposed
into order preparation, order placement, order fulfilment, etc., also the ‘return of expired
products’ lifecycle was identified and was extensively analyzed. During the fieldwork, over
a period of five months, problems were identified with the use of the heavy-weight development approach (no high-level/agile rules). It was
systematic, comprehensive and plan-driven,
which tended to limit and inhibit emergence
in turbulent business environments, such as ecommerce. For example, the researchers identified problems and drawbacks resulting from
the developers becoming overwhelmed with
too much detail from the comprehensive analysis of the e-commerce workflows. This made
the team produce complex, rather than simple
designs and led the developers to ignore requests for changes. As the project progressed it
became clear that the requirements needed to
be re-thought and that some degree of innovation, as the business environment shifted, was
required and yet this did not happen, at least
partly because of the work already invested in
the complex designs and a reluctance to abandon this.
Development and Maintenance
The IT application was outsourced and in contrast to Ciranet and its management, the development team of the outsourcing company
adopted a more incremental, iterative development approach, where the systems modules
were incrementally implemented and more
flexibly improved with new features and addons as deemed appropriate. These represent a
kind of small-scale and feedback mechanisms.
The team also used prototyping techniques
that facilitated small scale and incremental development, this also helped and enabled some
reflection and learning. For example, the first
prototype covered the basic functions, such as
the catalogue and shopping cart, and then the
prototype was refined through feedback from
the clients. Rapidity was achieved through
short development cycles and parallel development that quickened the development cycle.
Furthermore, the portal was implemented
with component-based technology that proAlaa
vided some degree of flexibility as it utilized
re-usable components as the technical architecture. Then the modules were tested to fix
errors and customer reviews were arranged to
identify any flaws or problems with the business rules, which helped assure the quality of
the software product (quality controls). But after launch of the application there were no attempts to continuously adjust and re-develop
it to cover updates and deal with the changing
necessities of the business context which prohibited the emergence of the IT application.
The different factors that facilitated or
prohibited emergence at each stage of the development process in Ciranet are illustrated in
Table 2 that distinguishes between the factor
of emergence and the way/strategy to realize it
in ISD discipline. The factor represents the factor that will facilitate emergence, whereas the
strategy is the way that will operationalize this
factor in the particular domain under consideration, i.e., ISD for this case (see Table 2).
Thus, from the analysis of the case
above it is found that social construction elements, such as collaboration, trust, etc. were
missing in Ciranet. For example, the lack of
collaboration between the business consultant
and the development team, the commandcontrol culture, etc., and this inhibited emergent response. But some tangible dynamics of
emergence existed as introduced by the outsourcing company, such as rapidity, realized
by short development cycles and parallel development. Small scale aspects were realized
by incremental development, and flexibility
was achieved by component-based development. However, other dynamics were found
that inhibited emergence, e.g., the long-term
orientation and complex designs. Also, the enabling infrastructure was found to be mainly
inhibiting emergence. For example, the command-control management style, hierarchical organizational structure and optimization
oriented work culture. Whereas, the technical architecture was found to contribute to the
facilitation of emergence, as it was based on
a component-based, re-usable architecture.
Additionally, the control mechanisms in the
case were too rigid as Ciranet relied on heavyweight development methods that produced
29
rigid designs and thus limiting the developers’
freedom, despite the more agile approach adopted by the outsourcing company. So, based
on the analysis of Ciranet and the application
of the “Organizational Emergence” framework (Figure 1), many factors were found that
potentially inhibited emergence (according to
the framework) and yet there were also a number of other factors that should have facilitated
emergence. Thus, complete emergent properties were not fully-realized in the case but this
is perhaps not surprising as most projects are
probably somewhat mixed in relation to emergent factors. Figure 2 summarizes the analysis
that was undertaken as illustrated in Table 2.
Factors helping to encourage emergence are
in plain text and factors inhibiting emergence
are in italic, whereas between brackets are the
strategies that were taken to operationalize the
factors in the ISD domain.
Reflection
T
he proposed framework that outlines
factors facilitating organizational emergence (Figure 1) was utilized to analyze
an information systems development (ISD)
project in turbulent e-commerce environments. It is found that the “Organizational
Emergence” framework is useful as it represents an interpretive analytical tool that provides insight into the elements that facilitate or
prohibit emergence in real case projects (Figure
2). The case is an example of an unclear situation where the tangible factors, such as flexibility and rapidity might have been expected
to enable emergence more than they did, while
ignoring intangible factors, such as communication, collaboration and trust have dramatically prohibited human stimulation and selforganization, thus limited emergent response.
It also shows the importance of the enabling
infrastructure and the controls in determining
whether emergence will occur and without anarchy or not.
As the “Organizational Emergence”
framework was derived from contributions in
social and management contexts that it is applicable to ISD projects provides support to
the framework and its generalizability. Thus,
the identified factors facilitating emergence;
30
e.g., flexibility, small-scale approaches, shortterm orientation, communication, collaboration, etc. are generic to any social enterprise/
business sector. But the strategies that realize
the factors are specific to the business domain
under consideration. As shown in Table 2 different strategies were adopted in the ISD domain to operationalize the generic emergence
factors identified in Figure 1. For example,
prototyping technique operationalizes both a
small-scale approach, as well as an experimentation tool to support reflection and learning,
component-based development realizes flexibility, iterative development represents a feedback mechanism and leads to adjustment of the
IT application, etc.
Thus, Figure 1 addresses generic emergence factors in social and management contexts, whereas Figure 2 provides the same
framework but with special attention to ISD
requirements and targeting strategies that will
operationalize these factors in the ISD domain.
But there are some factors specific to ISD, as derived from the above analysis of the case (Figure 2). For example, technical architecture and
quality controls were not addressed directly in
the management literature, these factors reflect
enabling infrastructure and control elements.
The technical architecture is a key element of
Information Technology (IT) infrastructure
whereas quality controls are used as a way to
control the development process and ensure
the quality of the software product. Furthermore, it is found that unlike in management
discipline ISD focuses more on the internal
project elements, e.g., technical architecture,
development methodology and techniques,
etc., not paying much attention to external factors that affect the emergence of the project.
In addition it is important to notice that
the introduced framework is holistic where the
identified factors do overlap and sometimes
produce counteracting tension. For example,
it is unlikely to collaborate, unless you communicate and interact, there is also no way to
reflect and learn unless you have a kind of feedback mechanism, etc. Other factors produce
counter-acting effect, e.g., extensive analysis
of flexibility and producing re-usable designs
might be time consuming and therefore will
E:CO Vol. 11 No. 1 2009 pp. 19-34
Controls
Tangibles
Intangibles
Feedback (iterative development)
No continuous adjustment (no
continuous redevelopment)
Quality controls (testing & reviews)
No Generative Rules (heavy-weight
methods)
R eflection
L earning
(prototyping)
Dynamics
Tangibles
R apidity (short development cycles
& parallel development)
Small-scale (prototyping,
incremental development)
Flexibility (component-based
development)
Long-term orientation
No simplicity (complex, not simple
designs)
Intangibles
Lack of
Collaboration
Lack of Trust
Enabling Infrastructure
Intangibles
Management style
(command-control)
Work culture (optimisationoriented)
Tangibles
Organization structure
(hierarchical)
Technical architecture
(flexible, reusable
component-based)
Figure 2 Organizational Emergence Framework for Ciranet
(Inhibiting Factors of Emergence in Italic)
counter-act the rapidity factor, etc. The project team needs to manage and balance this uncertainty and tension as a way of surviving in a
turbulent environment.
In light of this discussion it is concluded that the “Organizational Emergence”
framework represents a foundation to realize
Alaa
social/organizational emergence by enforcing
factors that facilitate emergence instead of leaving them happen by chance. The framework is
a step forward on generic characteristics and
principles of CAS (see Table 1) as it provides a
way to realize these principles through factors
and strategies in action. It is also important to
note that the framework does not provide pre-
31
planned business solutions or so called all-inclusive rules that model all possible business
settings. Instead it raises the emergent properties of organizations so that project teams can
freely innovate and evolve suitable business
solutions to address the particular business
context. The framework provides the following uses and benefits to business and industry:
Creates a way to articulate intangibles of organizational emergence
The framework articulates the importance of
intangible factors of emergence in social contexts, such as communication, collaboration,
morale, etc. These have been previously missed
out or partially acknowledged intuitively.
Creates an emergence mirror of the enterprise
It provides a mirror for the company to identify
what factors of emergence have been stipulated
and what other factors have been undermined
or completely missed out.
Creates a way to manage and align emergence
factors
Emergence is a holistic phenomenon where the
identified factors are intertwined and sometimes produce counteracting tension. As the
framework portrays the different factors under
consideration it is possible to determine the
importance of each of them and how to align
them and balance their effect.
Creates a way to balance emergence and avoid
anarchy
It offers a new lens in balancing between enabling conditions of emergence and complete
chaos. This is achieved through the control factors that need to be not too restrictive.
I
Conclusion
n this paper complex adaptive systems theory (CAS) and social autopoiesis have been
interpreted with the aim to identify factors
realizing emergent properties in organizations.
Social construction elements, such as communication, collaboration, interaction, trust,
etc. are argued to be critical drivers of human
empowerment and thus self-organization,
whereas mechanistic, adaptive dynamics like
32
flexibility, short-term orientation, small scale
approaches, simplicity and rapidity will ensure
fast response and quick adaptation to the problem situation. However, emergence cannot be
fully realized without the necessary enabling
infrastructure that will allow the dynamics of
emergence to become effective, e.g., management style, work culture, organizational structure etc. Also appropriate control mechanisms,
such as feedback, reflection, learning, etc., need
to be in place in order to balance absolute freedom and restrictive structure to ensure emergence to happen without descent into anarchy.
The elements or factors in each category have
been identified and related in a framework, to
help understand and analyze the phenomenon
of emergence in social organizations.
It is important to point to the difficulty
we faced in identifying factors facilitating organizational emergence. As complexity principles emphasise that emergence is a spontaneous process, so how can a framework represent
this phenomenon? In that regard it is important to note that the introduced framework
guides project teams with factors or strategies
that will enhance their free response to problem situations rather than dictating them with
pre-planned business solutions. The framework can be seen as a significant improvement
on generic complexity principles suggested in
literature, such as diversity, large number of
agents, interactions, edge of chaos, etc. that
refer to emergence characteristics but without
providing a clue on how to realize these concepts in action. A case, a business-business
e-marketplace application, has been used to
show how the framework can be used and how
the factors can enhance the emergent properties of the project.
Especially, it is important to notice that
the framework represents a holistic approach
where the various identified factors are intertwined and some of them may produce counteracting effect. This uncertainty and tension
are major characteristics of the emergence phenomenon and if managed properly it is argued
will determine the success of organizations in
modern turbulent environments. Future research will focus on further validation of the
framework through other empirical applicaE:CO Vol. 11 No. 1 2009 pp. 19-34
tions. Especially of interest is to test if the
framework does help companies better understand and manage the emergence phenomenon
and put forth intentionally factors that raise
the emergence of new work arrangements, or
not? Generalizability and completeness of the
framework are also important to test in future
work.
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Alaa
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Ghada Alaa holds a PhD in Information Systems, Brunel University, UK where her research focused on strategic requirements modelling for e-commerce systems and improving
information systems development methodologies in fast-changing environments by building on complex adaptive systems theory. Her
research interests are in the areas of e-commerce, web-based development, agile development methodologies and complex adaptive
systems theory. Prior to the PhD studies, she
worked as web developer and systems analyst
in the Egyptian Cabinet’s Information and Decision Support Centre. She also holds an MSc.
in Business Information Technology and a BSc.
in Biomedical Engineering. Her PhD work was
presented as one of best 40 international information systems research projects for 2003,
ICIS (International Conference of Information
Systems) Doctoral Consortium, Seattle, USA,
2003.
34
E:CO Vol. 11 No. 1 2009 pp. 19-34
Stanford Social Innovation Review
The Emergence
of Subversive
Charities in China
By Christopher Marquis, Yanhua Zhou, & Zoe Yang
The Power
of Lean Data
By Sasha Dichter, Tom Adams,
& Alnoor Ebrahim
Leading Change
Through
Adaptive Design
By Maya Bernstein & Marty Linsky
Winter 2016
Volume 14, Number 1
Making Big Bets for Social Change / The Power of Lean Data / The Emergence of Subversive Charities in China / Leading Change Through Adaptive Design
Making
Big
Bets
for Social
Change
How to close the gap between what
donors say they want to achieve and
where they actually put their money.
By William Foster, Gail Perreault,
Alison Powell, & Chris Addy
Winter 2016 / Vol. 14, No. 1
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F e at u r e s
26 36
Making Big
Bets for Social
Change
By William Foster, Gail
Perreault, Alison Powell,
& Chris Addy
Why does such a large gap
­exist between what donors say
they would like to achieve with
their philanthropy and where
they actually make their biggest bets? And how can we
close it?
The Power
of Lean Data
By Sasha Dichter, Tom
Adams, & Alnoor Ebrahim
For years, the complex and
costly nature of impact
­measurement has kept many
social enterprises from doing
it—or from doing it well. But
a series of recent projects that
incorporate lean design principles show that it’s possible
to gather high-quality impact
data quickly and inexpensively.
O n t h e c o v e r : Illustration by Christian Montenegro
42
The Emergence
of Subversive
Charities in
China
By Christopher Marquis,
Yanhua Zhou, & Zoe Yang
A new type of charity has
emerged in China that is
able to sidestep some of the
controls that the government
places on NGOs. By basing
themselves on the Internet,
these new charities can more
easily engage Chinese citizens,
raise funds, and tackle politically sensitive issues.
48
Leading Change
Through
Adaptive Design
By Maya Bernstein
& Marty Linsky
Change is fun. Change is
hard. Between those truths
yawns a large gap that poses a
challenge for would-be change
makers. Yet by integrating two
widely influential practices—
design thinking and adaptive
leadership—social innovators
can manage transformative
projects in a way that’s both
creatively confident and
­relentlessly realistic.
1
2
Stanford Social innovation review / Winter 2016
, Trust for impact entails the ability to cross
boundaries, to find a slice of common ground,
and then to work together despite sharp
disagreements. —From THE TACTICS OF TRUST, P. 61
D e Pa r t m e n t S
8
4 EDITOR’S NOTE
Show Me the Money
SSIR ONLINE
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Equity and Collective
Impact / The New Network Leader / Redesigning
International Development / Points About PFS /
Racing to Disagree
17
17 Generations
Together
Home-sharing programs
in France provide students with a place to live
and seniors with a source
of companionship.
BY JOhn LAUrenSOn
8 A Slick Vehicle for Street
Food / Money for Nothing? /
Mentoring Meets Its
Match / Muni Bonds for All
FIELD REPORT
13 Revitalizing
a Village
A community in rural
Vietnam has become the
site of a project that seeks
to export a successful
South Korean development model.
BY tAI-YOUnG KIM
& YOO-JIn Lee
15 Civil Rights
Goes Digital
In both online and offline
venues, activists at Color
of Change are pursuing
the fight for racial justice
at Internet speed.
BY cOreY BInnS
VIEWPOINT
55 Harvesting Lessons
A social enterprise that
served farmers in Kenya
had to close down, but it
yielded a healthy crop of
insights about failure.
BY ISABeLLA hOrrOcKS
CASE STUDY
20 Donations
Within Limits
W H AT ’ S N E X T
59
MSF France, the founding
section of the organization widely known as
Doctors Without Borders,
has struggled for more
than four decades with
the question of whether to
seek and accept corporate
support. Leaders of the
organization now have an
answer—and it’s anything
but simple.
BY SArAh SAnDFOrD,
Anne-cLAIre PAche,
& ArthUr GAUtIer
57 A Checkup on PRIs
For one leading health
funder, program-related
investments promise to
help underserved
populations.
BY MArGAret LAWS
59 Pro Bono
Goes Global
Some big law firms are
venturing into developing
regions to offer voluntary
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the rule of law.
BY SArA AnDreWS
& LISA DeWeY
61 The Tactics
of Trust
Participants in a large,
complex collaboration can
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DAvID SAWYer
& DAvID ehrLIchMAn
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RESEARCH
63 A Sense of Site / Grading
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BOOKS
67 Only in New York?
Tom Farley’s Saving Gotham
revIeW BY PrItPAL S.
tAMBer
68 Change Gets a
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Roger L. Martin &
Sally R. Osberg’s Getting
Beyond Better
revIeW BY KrISS
DeIGLMeIer
69 Learning From
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Dale Russakoff’s The Prize
revIeW BY KevIn hUFFMAn
70 A Tale of Two
Futures
Duncan McLaren & Julian
Agyeman’s Sharing Cities
revIeW BY APrIL rInne
71 The Price of Giving
Linsey McGoey’s No Such
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revIeW BY MArIBeL MOreY
72 L A S T L O O K
Water to the People
congratulations to
our 2015 gleitsman
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Stanford Social Innovation Review / Winter 2016
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Show Me the Money
s managing editor of
Stanford Social Innovation Review, I receive
lots of news releases
trumpeting a large gift
made by a philanthropist or a foundation to a nonprofit. Many
of these are six- and seven-figure gifts,
but some are eight figures or more—what
the authors of this issue’s cover story call
“big bets.”
You’d think that these big bets (of $10
million or more) were always a good thing,
but all too often that’s not the case. The
problem with many of them is that they go
to institutions that are already well funded
or that do little to improve society’s ills.
Instead of donating $25 million to build
a homeless shelter or to expand an afterschool program, most wealthy donors give
money to construct a new museum wing or
build a new university gym.
According to data collected by the
authors of “Making Big Bets for Social
Change,” during a recent 12-year period
about 80 percent of big bets went to nonprofit institutions (such as universities, hospitals, and cultural organizations), and only
20 percent went to nonprofit social change
organizations (such as human services,
conservation, and economic development).
Other writers have taken the wealthy
to task for giving such large sums to institutions that largely serve to prop up
their own class. And still others have
criticized the US tax code for allowing
the wealthy to get a tax deduction while
doing so. But few researchers have dug
deep to understand the social change organizations that have gotten big bet gifts
and why they were able to do so—the
“outliers” and “positive deviants.” That’s
what makes this article so interesting.
A
It turns out that some nonprofit social
change organizations are actually pretty
good at garnering big bets. In fact, 28
social change nonprofits received four
or more big bets between 2000 and 2012
(the 12-year study period). You could
probably guess the names of some of them,
like Nature Conservancy and Teach for
America. But others might surprise you,
like Youth Villages and Institute of International Education.
Of course, not every nonprofit needs a
$10 million-plus gift, or could make good
use of that much money if it did get one.
But plenty of nonprofits are proven and
ready to tackle a social problem if they
only had enough money to do so. And yet
few wealthy donors are willing to step up
and fund them.
One donor that is willing to bet big on
nonprofit social change organizations is
the Bill and Melinda Gates Foundation.
The foundation has been criticized for
many things—some of them rightfully.
But one thing you have to give the Gateses
credit for is that they put their money
where their mouth is. Between 2000 and
2012 the Gates Foundation gave almost as
many big-bet dollars to social change as
all other US donors combined. That’s all
donors, not just all foundations.
Yes, Gates has more money than other
foundations, but the threshold for a big
bet is $10 million, not $100 million. Plenty
of donors could write that big a check
for social change if they wanted to—but
they don’t. Social change nonprofits must
do a better job of making themselves big
bet ready, but it’s ultimately the bettors
themselves who decide where to put their
money. It’s time that more of them begin
to invest in social change.
—ERIC NEE
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Stanford Social Innovation Review / Winter 2016
ssireview.org
D I G I TA L H I G H L I G H TS
designed for this disruption
and we must prepare for the
reaction that these solutions
will [elicit].”—Steve Wright,
Conches Consulting
Equity and Collective Impact
This series makes the case for embedding an
explicit focus on equity throughout any collective
impact effort. Articles examine the root causes of
outcome disparities, provide concrete examples
of how to intentionally bring equity considerations
to the forefront, and point to tools and resources
that practitioners may want to consider applying in
pursuit of lasting and systemic social change.
ssireview.org/collective_impact_equity
The New Network Leader
This nine-part series takes a deep look at the
“network entrepreneurs” who lie behind some of
the most sophisticated, large-scale solutions to
social problems—in areas such as environmental
conservation, education, and economic development. By catalyzing networks, or organizations
that function like networks, these entrepreneurs
drive an exponential increase in scale beyond
what their own organizations could accomplish.
ssir.org/network_entrepreneurs
See also “The Tactics of Trust” (page 61), a related story in this
issue by David Ehrlichman and David Sawyer, who contributed
to the “New Network Leader” series.
F R O M T H E B LO G
Redesigning International Development
In their September 28, 2015, article, “Using Design Thinking to Eradicate Poverty Creation,” Martin Kirk and Joe Brewer of /The Rules,
and anthropologist Jason Hickel argued that the international development industry needs to change how it defines the problem it’s trying to address, face “a built-in blindness to power dynamics,” and rethink the language it uses to describe poverty. They wrote:
“
The bulk of the well-meaning development projects that have been
rolled out in the Global South over the past 65 years—costing hun-
dreds of billions of dollars—have had very little positive impact on poverty
numbers. … How has this happened? The answer is that the preferred development model suffers from severe, monumental design flaws. … All of
these flaws are on display in the development industry’s latest Big Plan—
the Sustainable Development Goals (SDGs)—which promises … the total
eradication of poverty by no later than 2030. Unfortunately, the underlying
design of the SDGs—like the development industry from which they are
emerging—is too unsound to make this ambition a reality.”
“
READERS RESPONDED:
To reduce ‘the development industry’ to a single
monolithic entity on [a] mission
to eradicate poverty without
addressing underlying causes
is short-sighted. It obscures
the diversity of actors and approaches. … To reduce the Sustainable Development Goals to
a set of growth-driven measures
to tackle income poverty is factually incorrect. … But the inconvenient truth is that we need
to create a new world from the
shell of the old. As [with] similar
international frameworks … this
far from perfect mix is probably
the best the global community
has on offer at the moment. …
We can ill afford to waste time
on false dichotomies or self-proclaimed holy grails. More than
ever, our task is to up the game
by learning how to combine a
variety of approaches, including
design thinking, in the service
of systemic change.”—Remko
Berkhout, Hivos
“
MARTIN KIRK REPLIED:
Design thinking … isn’t a
holy grail. … [But it] helps
expose essential fundamentals that the SDGs have … sidestepped. … Our point is that the
SDGs in no way help with that.
In fact, they perpetuate the old
by endorsing the fundamentals
of the economic paradigm that
currently exists. … [You assert]
that the development industry can’t be described as acting monolithically. They have,
self-evidently, just done it, by all
publicly endorsing the SDGs.”
“
Many times the excellent
solutions proposed by design thinking are defeated by
entrenched power[s] who see
the solutions as encroaching
on their profits and/or power.
… To challenge entrenched
power and the systems that
sustain it we have two roads.
The first is activism. … There is
great potential to bring design
thinking to new forms of activism. The second is disruption
through innovation. … My guess
is it’s a combination of the two,
but I do think we must explicitly aim to disrupt power. We
must build solutions that are
“
We are talking about deep[seated], socio-cultural
problems exacerbated by scarce
resources and constant threats
to livelihoods. … The new architecture of development is going
to have to come from the inside
out[—]localized solutions that
are first, politically and socially
palatable and have buy in from
those that promote them.
The outside[-]in approach
is done.”—Mike Blakeley,
Nathan Associates
Read these comments in full and other
comments online.
ssireview.org/development_design
B O O KS
In Squandering America’s
Future: Why ECE Policy
Matters for Equality, Our
Economy, and
Our Children,
Susan Ochshorn
shares a series of
“policy tales” that
illuminate fundamental problems in
the US education
system and argues
that inappropriate
standards and assessment are thwarting children’s
capacity for innovation—and thus
the nation’s ability to prosper.
Read an excerpt from this book,
as well as excerpts from other
recent titles, and browse book
reviews online.
ssir.org/books
Follow SSIR Online
View an eBook of this issue online
or download a complete PDF.
5
6
Stanford Social Innovation Review / Winter 2016
“
It seems like pay for performance can be used by
philanthropy to leverage its impact but it isn’t likely to
be a substitute for philanthropy.”
SSIR ONLINE
CO M M U N I T Y
Points About PFS
In an Up for Debate feature, V. Kasturi
Rangan and Lisa A. Chase argue that advocates of the pay-for-success (PFS) model
have oversold it in some ways while also
failing to emphasize some its most important strengths (“The Payoff of Pay-forSuccess,” vol. 13, no. 4, p. 28). In response
to the article, commenters at SSIR Online
extend the authors’ discussion of PFS by
making points of their own about using that
model. “It seems like pay for performance
can be used by philanthropy to leverage its
impact but it isn’t likely to be a substitute
for philanthropy,” writes Jeffrey C. Walker,
vice chairman of the UN Secretary General’s
Envoy for Health Finance and Malaria.
Walker suggests that the future of PFS
may lie in generating PFS contracts that
tackle large problems and extend across
multiple countries. “We need more sizable deals,” he writes. Examples of such
deals that are now in the works, he adds,
—Jeffrey C. Walker in his comment about “The Payoff of Pay-for-Success”
include Malaria Bonds (to support the distribution of bed nets) and Human Capital
Bonds (to fund the training of community
health workers). Joshua Genser, a consultant who works on PFS programs, contends
that critics and defenders of PFS both tend
to neglect an important advantage of the
model: PFS contracts don’t just increase the
available funding for social programs; they
“also have the virtue of shifting the risk of
[program] failure … away from [government
payers] and onto the investors,” he writes.
Racing to Disagree
A Viewpoint article by Joanne Weiss about
the US Department of Education’s Race
to the Top program brought forth a flurry
of comments at SSIR Online (“Competing
Principles,” vol. 13, no. 4, p. 57). Most
of them are highly critical—critical both
of the program and of Weiss’s article, which
focuses on design principles for developing
a competition-based policy initiative. “The
title of this piece is fitting. The principles
providing inspiration to the next generations
The call for nominations from around the world is open
October 1 to December 15, 2015
The Charles Bronfman Prize celebrates the vision and endeavor of
an individual or team under the age of fifty whose humanitarian
work, combined with their Jewish values, has significantly improved
the world. The goal of the Prize is to recognize dynamic leaders whose
innovation and impact serve as inspiration for the next generations.
An internationally recognized panel of judges selects the Prize
recipient(s) and bestows an award of $100,000. For information about
the nomination process, including guidelines and forms, please visit
www.TheCharlesBronfmanPrize.com
www.facebook.com/TheCharlesBronfmanPrize
competing here are right and wrong. Clearly,
you [Weiss] have not raced to the top of anything but greed and abuse of power,” writes
Cheri Kiesecker, an education activist from
Fort Collins, Colo. Some readers took issue
with the very idea of designing a program
like Race to the Top. “I find it embarrassing
that there are people in this country [who]
believe that competition for funding public
education is moral or appropriate,” comments Melissa Marini Svegelj-Smith, an
educator who works in Cleveland. Victoria
M. Young, an author and education advocate, expresses a similar view: “Competitive grants? What a horrible way to do the
business of educating all children!” Race to
the Top, Young asserts, was “a poorly designed experiment” and a “waste of tax dollars.” Like several other commenters, Young
argues that Weiss and her Department of
Education colleagues designed the program to have a structural bias: “You set the
rules. Then you say winners were picked
that ‘had outstanding ideas for improving
educational outcome.’ You forgot the part
about how they had to be in lock step with
what you leaders already decided.” Christine
Langhoff, a Boston-based educator, highlights Weiss’s discussion of a Race to the
Top rule that required participating states
to change laws related to teacher evaluation.
“Translation: let’s cut teachers and principals out of the equation; they’ll just be in the
way,” Langhoff writes. One commenter who
defends the program is Peter Cunningham,
executive director of Education Post, a nonprofit organization that promotes education
reform. “Race to the Top helped spur more
needed change in four years than the previous five decades of reform: higher standards,
teacher evaluation, robust interventions in
low-performing schools and the use of data
to drive decisions,” writes Cunningham,
who served with Weiss as assistant secretary for communications and outreach
in the Department of Education. Another
commenter, Christopher Chase, then counters Cunningham point by point. “Robust
interventions in low-performing schools?”
writes Chase, a professor in the Department
of Literature at Seinan Gakuin University
in Fukuoka, Japan. “No, what you helped
Ms. Weiss to do was assist mayors in big
cities like Chicago and Philly [to] shut down
schools, and then open charter schools to
channel taxpayer money to the investors
and billionaires behind all of this.” ■
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Stanford Social Innovation Review / Winter 2016
! HOT LUNCH: In May 2015, patrons
gather around a new food cart, one of a
fleet of solar-powered carts that Move
Systems is rolling out in New York City.
New approaches to social change
Cities
A Slick Vehicle for
Street Food
By suzie boss
he 5,000-plus food
carts that operate in
New York City deliver a movable feast. They
serve an estimated 1.2 million meals each day and offer
menu choices that range from
hot dogs to halal plates. In recent decades, moreover, street
eats have evolved to reflect the
tastes of immigrants and the
talents of a new breed of foodie
entrepreneur. Yet the carts
themselves still run on dirty
propane and noisy generators.
A start-up called Move
­Systems aims to bring longoverdue upgrades to the mobile
part of the mobile food industry. “We want to dramatically
reduce emissions and improve
on safety,” says James Meeks,
CEO of Move. To further that
goal, his company is introducing a new fleet of eco-friendly
food carts. The first Move
carts started rolling out in
­September, and the company
expects 500 of them to land
on ­Manhattan sidewalks by the
end of 2016. (Other cities have
expressed an interest in the
concept as well.)
The redesigned cart, known
as the MRV100, is currently
in its pilot phase. It uses compressed natural gas (CNG) and
solar power. (Clean Energy
­Fuels, a CNG supplier, is a partner in the project.) Meeks, citing
a report from Energy Vision, a
US environmental group, says
that replacing an old cart with
T
an MRV100 model “is like taking
200 automobiles off the road in
terms of reduction in particulate
matter.” By replacing diesel generators with solar- and batterypowered electrical systems, the
Move cart also has the potential
to decrease urban noise levels.
During the design phase,
Move asked vendors to weigh
in on everything from kitchen
layout to the use of electronic
sensors for monitoring food
temperatures. The result is a
sleek-looking rig with big windows, stainless steel siding, and
built-in refrigeration and sink
fixtures. The cart’s L-shaped
kitchen has plenty of elbow
room, and vendors can configure it to make anything from
stir-fry dishes to smoothies.
Move, based in Queens,
N.Y., is also introducing less
visible innovations. It’s partnering with First Data, a
­financial services company,
to provide a point-of-sale system that allows vendors to
swipe credit cards and to manage inventory electronically.
In addition, Meeks is encouraging mobile app developers
to create tools that will help
customers locate the nearest
cart—or even place an order.
For now, Move aims to
minimize the cost to vendors
for using its carts. Vendors
must pay for CNG resources
that they use, but revenue
from sponsorships and advertising is covering the cost
of building and maintaining
Move equipment. In the first
phase of its pilot, Move is providing 100 carts to military
veterans at no charge. Meeks,
a former US Army ­officer
who served two tours of duty
in Iraq, is especially keen to
serve that group. “This isn’t
just about food carts. It’s
­urban innovation,” he says.
One of the first people in
line for a Move cart is Mike
Cook, a 62-year-old disabled US
Air Force veteran who served in
Vietnam. He’s planning a menu
of vegan and vegetarian wraps
and mock-meat burgers for his
photographs courtesy of move systems
8
Stanford Social Innovation Review / Winter 2016
suzie boss is a Portland, Ore.-based
journalist who writes about social change
and education. She is the author of Bringing­­
­Innovation to School and contributes
­frequently to Edutopia.
John Laurenson is a Paris-based
c­ orrespondent for the BBC. He also
­contributes to the American Public
Radio program Marketplace.
food scene for Turnstile Tours, a
social enterprise. In his tours, he
dwells as much on the stories behind the carts as on their diverse
menu choices. “Vendors contribute something special to the
city,” he says. “For immigrants,
food carts have always been a
way to get your foot in the door.”
But although Hoffman appreciates the clean energy benefits
that the new carts will bring, he
doubts that they’ll do much to
curb street noise. “This is New
York City. There’s noise everywhere,” he says. n
Government
Money for
Nothing?
By John Laurenson
cart, and he expects to open for
business in the Union Square
neighborhood of ­Manhattan
by the end of 2015. The design of the MRV100 “allows
us to deliver more restaurant-­
quality food,” Cook says. “Most
health food items are time- and
temperature-sensitive.”
To get his new enterprise
off the ground, Cook has taken
advantage of a business boot
camp that Move is supporting,
and he has enrolled in an entrepreneurship program for vets
called First Data Salutes. He
also meets regularly with other
veterans—people who have
served in Iraq, Afghanistan, and
Vietnam—who now run street
food businesses. “Move is making it easier for veterans to find
their way,” he says.
Brian Hoffman gives walking tours of the New York street
n the welfare office at
City Hall in Utrecht,
The Netherlands,
Geoff and his partner, Talita,
are getting ready to enroll in
the city’s welfare program.
(Both of them declined to
give their last names.) Until
recently, they ran a Thai restaurant in Utrecht. “These
last four weeks have been the
hardest of my life,” says Geoff.
“[We have] no money. We just
lost our business, and all our
friends are gone.”
The welfare benefit in Utrecht
provides a monthly payment of
900 euros (about ($1,000) for an
individual or 1,600 euros (about
$1,800) for a family. What if the
city offered that benefit without attaching any strings to it?
To Geoff, it’s an intriguing idea.
“How do I apply?”
At the start of 2016,
Utrecht will begin a two-year
I
experiment in turning welfare
logic on its head. (As of the
fall of 2015, the experiment
was awaiting approval by the
Dutch national government.)
Today the provision of welfare in The Netherlands, as in
most countries, is highly conditional: Claimants must prove
that they’re looking for work.
They must accept work when
it’s offered to them. They can’t
work and still claim a benefit.
They must do “volunteer”
work. And so on. In Utrecht,
officials want to find out what
would happen if they simply
gave benefits-eligible people
money—without conditions.
One term for that approach
is “universal basic income,” or
UBI. The idea of UBI originated
on the political left, but it has
also won support from conservatives such as the late Milton
Friedman, a Nobel-winning
economist. The theory behind
UBI is that giving people a set
minimum income will free them
from “wage slavery” and enable
them to go to school, care for a
loved one—or give up their day
jobs to pursue their dream jobs.
Although the Utrecht experiment will affect only people
who already receive income
from the state in the form of
welfare payments, it may shed
light on the potential virtues of
the UBI model. “We know that
the current system doesn’t really work,” says Nienke Horst,
project manager for the experiment. “Maybe there’s a more
positive way.”
The experiment, devised by
scholars at Utrecht University,
will divide 300 people who are
currently on welfare into several groups. First there will be a
control group that is subject to
existing eligibility rules. Members of a second group will have
no obligation to look for work,
but any outside income that they
earn will count against their
benefit payment. Members of
another group will get extra income for doing volunteer work.
Members of yet another group
will lose money if they don’t perform volunteer work. And those
in one group—the UBI group—
will have complete freedom to
do whatever they want: Even if
they get a job on their first day
of receiving benefits, they can
just pocket the extra income.
Paul de Beer, an economist
at Amsterdam University, says
that the UBI-inspired option
­offers a few big advantages—
and not only for people on welfare. “The cost of administering
and monitoring the social security system would be reduced
drastically,” he says. “And it
might contribute to a betterfunctioning labor market.” In
particular, de Beer suggests, it
might be possible to jettison
minimum wage laws and other
forms of labor market regulation. “Workers are still well
protected because they can
­always fall back on their basic
income,” he says.
Other Dutch cities are exploring UBI-based approaches
to welfare policy. Officials in
Tilburg says that their city will
follow Utrecht’s lead, and similar projects are under consideration in Enschede, Groningen,
Gouda, Maastricht, Nijmegen,
and Wageningen.
In Germany, meanwhile, an
experiment is under way that
comes closer to the original UBI
concept. It’s a private effort, and
9
Stanford Social Innovation Review / Winter 2016
it’s not limited to people on welfare. In 2014, 19,000 UBI advocates created a pool of money
via crowdfunding and then
used a lottery to award 11 participants no-strings-attached
monthly stipends of 1,000 euros
(about $1,100). One recipient
gave up his job in a call center
so that he could study to become a teacher. Another used
his newly won freedom to write
a doctoral dissertation.
Back in Utrecht, Geoff and
Talita mull over a question
about what they would do if
they received a UBI-style benefit. Would they slump onto
the sofa and reach for their remote control? “I’d keep looking
for work anyway, because 900
­euros is not enough,” says Geoff.
“And even if it was 1,000 euros
more, I would still look for work,
because [on welfare] you have
nothing to do. I’ve been at home
a month now. It’s disgusting!” n
Leadership
Mentoring
Meets Its
Match
uma, a social enterprise that launched
in Indonesia in 2009,
aims to lift people out of poverty by creating new business
opportunities through ­mobile
technology. Thousands of
­Indonesians have signed up
to be Ruma agents, and in that
role they sell mobile minutes
and provide bill-pay services
to people in their village. Early
success has attracted investors and philanthropic supporters. But Aldi Haryopratomo,
founder and CEO of Ruma,
worries about his next move.
“If you think about scaling up
systems and processes now, you
will pay for it later,” he says.
R
For support in making that
next step, Haryopratomo has
solicited advice from afar.
Mike Starkenburg, a technology industry investor now
based in Orange County, Calif.,
helped the Ruma team think
through a range of challenges—
“everything from product management and system scale-up to
logistics,” ­Haryopratomo says.
“Lessons from [­Starkenburg’s]
experience in scaling up
e-commerce companies helped
us design our processes and
systems better.”
RippleWorks, a Redwood
City, Calif.-based nonprofit that
launched in April, matches earlystage social entrepreneurs from
the developing world with tech
industry talent from ­Silicon
­Valley and beyond. Unlike many
other skills-matching efforts,
this one aims to facilitate intense, short-term engagements.
Ruma is among the first five
­enterprises that RippleWorks
has chosen to support.
The mission of RippleWorks
is to provide “human capital,
not financial capital” to promising social enterprises, says cofounder Doug Galen, a veteran
entrepreneur who teaches in the
Startup Garage at the Stanford
Graduate School of Business.
The other cofounder is Chris
Larsen, CEO of Ripple Labs,
a software company that has
developed a digital currency.
Larsen pledged seven billion
units of virtual currency (valued
at $60 million) to get the nonprofit off the ground.
Before launching RippleWorks, Galen interviewed
­investors, academics, and aspiring social entrepreneurs around
the world to find out what
those entrepreneurs need most.
“The best ideas are already getting funded. The core challenge
[that companies] face is scaling,” he explains. Galen understands the value of having ready
access to expertise. “If I have
a challenge, I can walk into a
Starbucks in Redwood City and
run into somebody I can ask
for help,” he says. That’s not
so easy in places like Jakarta,
­Indonesia, or Nairobi, Kenya.
RippleWorks approaches
matchmaking with considerable care. On the enterprise side,
it looks for growing companies
with a social mission that have
already attracted substantial
funding. “That eliminates financial resources as a key barrier
to success,” Galen says. He and
his colleagues target companies
that have strong performance
n HELP DESK: Doug Galen, cofounder
of RippleWorks, meets in Nairobi, Kenya,
with Dennis Ondeng, CTO of Kopo Kopo,
a mobile money platform company.
metrics but are now confronting
a specific challenge. On the mentor side, RippleWorks recruits
C-level executives and highlevel technologists who have
limited time to volunteer. “We
want people who are world-class
at their particular skill,” Galen
says. “They are in the middle of
amazing careers. They have been
looking for a bite-sized way to
apply their skills [as volunteers].”
After RippleWorks matches
an enterprise with an expert,
it continues to play a supporting role. “We sweat all the
details and manage the project so that the expert and the
enterprise can focus on solutions,” Galen explains. Most of
the mentoring work happens
virtually. Some mentors, however, choose to meet with their
partners on site. In that case,
­R ippleWorks handles logistics
and absorbs travel costs.
The efficiency of the RippleWorks model appeals to Wayne
Fenton. He has more than 20
years of experience in leading projects for companies like
Cisco Systems and eBay, and
photograph courtesy of rippleworks
10
Stanford Social Innovation Review / Winter 2016
he’s now vice president of engineering at iControl Networks,
a provider of solutions in the
security and connected-home
field. At least once a week, he
takes time to speak remotely
with Dennis Ondeng, chief technology officer of Kopo Kopo, a
mobile money platform company in Nairobi. Kopo Kopo has
built a large customer base in
Kenya but faces software challenges as it prepares to migrate
its platform to other countries
across Africa.
“I was immediately able to
start adding value,” Fenton says.
“It’s a good match for my skill
set.” He contrasts this work
with previous volunteer gigs in
which his contribution didn’t
go beyond swinging a hammer.
“I’m not the best carpenter, but
I know a lot about software.”
RippleWorks leaders expect
to have 10 matches in place
by the end of 2015. The next
challenge, according to Galen,
involves deciding how fast to
expand the reach of the organization. “We want to drive
the most impact,” he says. “Do
we do that by working with
50 companies a year, or 500?
If we’re successful, we’ll drive
social good from [developing
world] companies and create
more engaged global citizens in
Silicon Valley.” —Suzie Boss
Government
Muni Bonds
for All
very day, the US
­municipal bond market raises $1 billion
for public works projects—
roads, bridges, schools, and
the like. Most ordinary citizens know little or nothing
about the ­financing of those
E
projects, and they don’t have
a clue about how they might
take part in that process. Now
a San ­Francisco-based start-up
called Neighborly aims to disrupt the $3.6 trillion market
for municipal bonds (“­munis”)
by ­making that market more
­accessible to communityminded individuals.
Buying bonds to support local projects “used to be as much
a part of civic life as voting for
mayor,” says Jase Wilson, cofounder and CEO of Neighborly.
He cites early-20th-century
projects like the Golden Gate
Bridge—which was funded
through $35 million in bond
sales—as examples from a bygone era of civic investing.
The intervening decades have
brought new layers of regulation and market complexity, he
explains: “You need a PhD in
finance to invest in something
that supports your community.”
Another virtue of municipal bonds is that they often
pay tax-free interest. Yet bond
­issuers have structured the
market so that only people
with deep pockets can enter it.
The standard price per bond
is now $5,000, and purchases
typically come to $25,000
or more. “You almost never
see somebody buying a single
bond,” Wilson says. Consequently, buyers are more likely
to be institutional investors
that seek a financial safe haven
than individuals who want to
support specific local projects.
Wilson and his team aim to
bring down the price of entry
by launching an online platform
that streamlines transactions.
Currently, the municipal bond
market involves a long string of
underwriters and resellers who
mark up prices with each transaction. “It’s middlemen, plural,”
Wilson says. Each markup, he
Document Outcomes s Measure Impact s Inform Change
Services and products for nonprofits and
funders to measure the impact of community
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Stanford Social Innovation Review / Winter 2016
adds, “drives up the costs to
taxpayers and reduces the end
investor value.”
Neighborly wants to eliminate the middlemen and reset
bond prices to an amount
that even young investors can
afford. As proof of concept,
Wilson points to the city of
Denver. In August 2014, Denver
offered Colorado residents
a chance to buy $500 bonds
to fund $12 million in road
improvements and other building projects. There were no underwriters and no intermediaries. Instead, citizens could buy
the bonds online or over the
counter at Denver City Hall.
“They sold out in 23 minutes,”
Wilson says. “Give people a
reason to invest, and they will.
There’s something magic [that
happens] when the money is in
touch with the need.”
In mid-2015, Neighborly was
testing its online marketplace
with a select group of accredited investors. In one demonstration project, the company
offered “microbonds” priced
at $500 to fund school construction projects in San Leandro, Calif. Doing so required
Neighborly to purchase previously issued $5,000 bonds and
then to break them into smaller
bonds to sell on its platform.
“We jumped through numerous legal hoops to make these
microbonds available,” the
company reported in a post on
its website. “It was an experiment to show what small-scale
retail investing in municipal
bond projects could look like.”
The municipal bond market may be ripe for disruption. Since the financial crisis
that started in 2008, margins
on municipal bonds have become ever thinner, according
to Thomas Doe, president of
Municipal Market Analytics, a
research firm based in Concord,
Mass. “There’s still a lot of
money [in municipal bonds],
but the opportunity isn’t as
enticing” to some investors as
it used to be, Doe says. Meanwhile, the backlog of infrastructure projects that require public
funding continues to grow.
Wilson and his team might
help fill this funding gap “by
coming at the business in a
new way,” Doe suggests: “They
may turn out to be like the
Southwest Airlines or JetBlue
of the municipal bond industry.” Neighborly doesn’t have to
limit its appeal to small-scale
investors, though. “It’s a nice
idea to say that every twentysomething should have a municipal bond,” Doe says. “But
why not use the same platform
to go to [wealthy] people and
aggregate capital for larger
projects? That could do tremendous good for the country.”
Early funders of Neighborly include Formation 8, a
venture capital firm based in
San Francisco, and the actor
Ashton Kutcher. As yet, the
company hasn’t settled on a
revenue model. One option is
to act like a traditional underwriter and charge communities to issue bonds sold on its
platform. But Wilson has a
different model in mind. “It
may be more interesting,” he
says, “to think of us as a software company” that charges
a licensing fee for use of the
platform. If Neighborly’s software could bring increased
efficiency to the bond underwriting process, the cost to
issue bonds would drop from
the current norm of 2 percent.
“What if we could bring that
[cost down] to 1 percent?”
Wilson asks. “That would save
states billions [of dollars].”
—Suzie Boss
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