Market Systems in Start Up: Learning for Innovation

Authored by: Luca Crudeli, Sarah Wall, Netsaalem Gebrie, and Jenesil Benito.

The Feed the Future Mozambique Agricultural Innovations Activity (FTF Inova) implemented by DAI Global, LLC, adopts and applies market systems approach principles in engagements with motivated partners to generate inclusive, sustainable growth in the agricultural economy.  In its first year of implementation, the project management team’s core task involved translating its technical approach and guiding principles into a set of actionable tools and strategies. This blog outlines three innovative strategies FTF Inova used to establish a culture of learning both within the project team itself and between the project and its partners/beneficiaries to promote the internalization of market systems principles, reinforce staff capacity building and market knowledge, and jump-start technical implementation.

When working with key agribusiness partners, FTF Inova employs a market systems approach to development assistance which involves co-creating business-driven strategies for growth that are consistently evaluated and adapted in order to target emerging market demands and to ensure the sustainability of results.  Within this approach, continuous learning – and proactively identifying and seeking out opportunities to learn and apply learning - is crucial.

In light of this, it became apparent early on in the project that creating a culture of learning within the project team, and by extension the project’s partners, would be a vital component of the project management team’s strategy for delivering results, especially given that the market systems approach happened to be a new concept for a majority of FTF Inova’s staff, the same staff that would need to apply this approach in practice with agribusiness partners.  Therefore, for FTF Inova’s project management team, prioritizing investments in ongoing learning would ensure that capacity building efforts provided staff with a deep and active understanding of the market system that the project is working to influence; encouraged adaptability; and stimulated thinking around creative methods for achieving the sustainability of project results. As such, continuous learning was viewed as essential for translating FTF Inova’s theoretical approach into a practical, innovative, and successful application.

To establish a culture of learning, FTF Inova’s management team identified and introduced a number of learning and reflection tools to FTF Inova staff. Three of the most unique and innovative that have generated notable results for the project, and which are applicable to market systems development projects around the world, are presented below.  

Practical training through simulation

FTF Inova’s ability to implement a market systems approach hinges on the project staff’s full understanding of the market system they are working to support. This includes not only understanding the actors and their transactional relationships, but the underlying drivers, trends, and social and cultural norms that underpin the market system and influence market actor decision-making.  Such components have a significant impact on where the opportunities and constraints in the system are and how these can be tapped into and addressed to break down the barriers to growth.

To speed learning and the development of staff understanding of market dynamics and the transactions, decisions, and relationships of beneficiaries and partners, FTF Inova engaged EcoVentures International to hold a series of innovative market system training sessions for project staff and partners. As simulation-based training, these sessions were particularly valuable in that they allowed FTF Inova staff and partner companies, input suppliers, buyers, and retailers to test new ideas regarding investments and business decisions faced in the real world, in a risk-free environment.  The training simulations provided FTF Inova staff and market actor partners the opportunity to pursue investment options, including strategies to improve customer retention, improve marketing, and stimulate market demand, to see first-hand how such investments would affect growth, profit, and outreach to smallholder customers. Through observing and facing the same economic decisions that their partners and beneficiaries encounter when selling and purchasing agricultural commodities, the simulation-based trainings not only provided FTF Inova staff with a nuanced understanding of the challenges and opportunities that exist in the market system, but also allowed staff to apply their newly-acquired market systems knowledge in practice for further learning.  

These training sessions were particularly integral for FTF Inova’s Portfolio Managers, who work closely with agribusiness partners to provide ongoing business strategy support and to co-design project-supported investments and upgrades. The training provided a space for open interactions, which in turn promoted trust and relationship building between Portfolio Managers and agribusiness partners.  As a result, the view of the Portfolio Manager-agribusiness partner relationship changed from one centered on material and financial support from FTF Inova as a donor, to a trusted partnership with each party able to work openly and productively together to develop business strategies that best address identified market challenges and more readily and swiftly target specific emerging market opportunities for business expansion. Observing and participating in these market system training simulations provided Portfolio Managers with the unique opportunity to understand the thought processes of agribusiness managers and what drives their decision-making, helping Portfolio Managers to effectively and efficiently fulfill their roles and responsibilities in the technical implementation of the project.

Avoiding reinventing the wheel through market systems knowledge exchange

To further ground market systems theory in practice, FTF Inova supplemented simulation-based training on market systems with a knowledge exchange program linking technical staff and Portfolio Managers with their peers from other programs with a similar scope and approach.

Under the knowledge exchange program, FTF Inova connected with the DAI-implemented, USAID Bangladesh Agricultural Value Chain (AVC) program, which, similar to FTF Inova, employs a market systems development framework and approach to deliver project results. Within its five years of implementation, the AVC management team and its local project staff have undergone an extensive learning process from repeatedly testing, adapting, and honing their strategy over the course of their activity.  Leveraging AVC’s experience as an invaluable learning opportunity, FTF Inova promptly created collaborative linkages between the two projects that would enable project staff to share ideas, practical experiences, challenges, and lessons learned.

To that end, FTF Inova and AVC coordinate monthly virtual meetings that cover a variety of topics from specific technical activities, to challenges encountered, to building and managing partnerships. These meetings contextualize market systems development principles and provide a forum for the FTF Inova team to identify systemic solutions and to discuss how to successfully apply them. In fact, for a number of FTF Inova’s ongoing challenges, AVC has already identified and tested solutions. While FTF Inova recognizes that solutions are not “one size fits all,” understanding what has been tried in other contexts as well as the pros and cons of various tested activities or solutions, speeds the pace and quality of FTF Inova staff learning to more rapidly deliver results.

Outside of structured monthly meetings, FTF Inova Portfolio Managers are connected directly to their AVC counterparts via email, Skype, and WhatsApp as quick reference resources for immediate questions or issues that arise when working with partners and stakeholders.  Through these informal communication channels, Portfolio Managers can easily ask – and receive answers to – questions like, “What activities have you tested to support inclusive buying?” or “How do you approach designing a Scope of Work for a marketing support firm?” And through knowledge sharing, Portfolio Managers can readily access relevant research and reference materials such as case studies on how AVC has implemented and adapted approaches in various sectors such as the input supply sector. By pooling knowledge and experience, FTF Inova and AVC itself are able to build their market systems knowledge and skills and more efficiently and efficaciously work through new challenges together.

Adaptive partnerships for evolving market trends

Finally, one of the cornerstones of FTF Inova’s market systems strategy is an approach to partnership engagement that prioritizes consistent reflection on activities and ensures regular learning loops when working with partners to adapt activities.  

The FTF Inova partnership engagement strategy adopted during the project’s start-up has proven to be pivotal in encouraging and expediting learning among FTF Inova staff and partners.  Like most other development programs, FTF Inova’s partnership engagement strategy includes a plan for active partner outreach, onboarding, and activity selection. Unlike most other development programs, however, and based on DAI best practices, FTF Inova’s strategy explicitly prioritizes and incorporates learning opportunities at each stage of a partner engagement.  For example, at the “Deal Note” [1] stage, FTF Inova partners receive support and investment for technical assistance and funding for an average of 3-6 months during which partners test and pilot initiatives as well as revisit the funding and assistance format to adapt the initiative and incorporate any necessary changes based on initial learning.  Then, as part of FTF Inova’s partnership engagement strategy workflow, the partner and their assigned Portfolio Manager meet at pre-established points set every three months for a formal opportunity to reflect and discuss what was learned from the activity, such as signs of progress, keys to success, and core challenges. The inclusion of such learning loops in FTF Inova’s partnership engagement strategy has reinforced among the FTF Inova team and its partners not only the importance of constant reflection, but the idea that learning gained from ongoing activities is highly valuable in achieving results as it allows for identifying and pivoting towards those activities that are most effective while adapting or scaling back those activities that are not generating intended results.

Concurrent with the development of FTF Inova’s partnership engagement strategy, FTF Inova began working with “early mover” partners, market actors identified during FTF Inova’s start-up value chain analysis that expressed interest and were prepared to invest in growing their businesses. These early mover partners offered an important opportunity for FTF Inova to expose its staff to managing partner engagements early enough on the project such that staff could quickly learn best practices, feed this learning back into the partnership engagement strategy development process, and contribute to the overall project strategy for subsequent work plans and partnership agreements.

With each early mover partner, Portfolio Managers co-designed pilot activities for investment or business model modifications to test and learn from improved strategies.  For example, two early mover partners - Tecnologia e Consultoria Agro-Pecuária, Lda. (TECAP), an input company, and Klein Karoo (K2), a seed company – were both interested in investing in their marketing strategies to better target smallholders and improve sales. FTF Inova Portfolio Managers presented a range of possible tactics co-developed over the course of a series of meetings that would improve each company’s marketing strategies, and let each partner select the strategy they felt best met their specific needs and structure. Ultimately, TECAP decided to invest in consultant support to roll-out a series of promotional events – a total of 40 different events at the regional level – that incorporated raffles, coupons, and other incentives for preferred dealers.  K2 opted to invest in a partnership with a local marketing firm to restructure and build the capacity of their internal marketing department, focusing specifically on improving customer segment targeting. As mini case studies, through their work with early mover partners, Portfolio Managers were able to learn, for future reference and adaptation, the results that two different strategies and approaches to marketing would yield based on firm size, strategy, and position in/relationship to the market system.

More importantly, support to these early mover partners on their strategies to promote market system changes provided FTF Inova’s Portfolio Managers with practical, hands-on experience in not only applying the market systems theory via co-designing pilots with innovative approaches to address value chain inefficiencies, but in drawing upon and reinforcing learning gained from the simulation-based trainings as well as through the AVC knowledge exchange.  Additionally, lessons from these initial interventions, such as building in procurement and operations considerations during the development of activities and simplifying the language and clarifying application requirements on partnership announcements, were applied to the final iteration of FTF Inova’s partnership engagement strategy, establishing a robust strategy for future partner engagements.

Each of the three tools described above – simulation-based market systems training, peer-to-peer knowledge exchanges, and adaptive partnerships – were instrumental in creating a culture of learning among the FTF Inova staff and its partners.  By prioritizing learning, FTF Inova staff now consistently reflect on and seek to learn from high-performing activities implemented under the project to nimbly pivot resources and support towards similar interventions to deliver sustainable results, being careful, however, to acknowledge that the system in which they are operating is not stagnant.  Therefore what works today may not work tomorrow. While FTF Inova sets ambitious results targets, by focusing energy on activities that are most effectively generating inclusive growth results, and by quickly adapting less effective activities, the project is and will be better able to ensure a high rate of return on investment.  Being purposeful about incorporating learning into the daily culture of a project is a key tool to ensure project partnerships and interventions are effective, adaptable, and ultimately generate sustainable results.

[1] Deal Notes are agreements between the partner and FTF Inova that detail the specific implementation of an activity or set of activities.