When Sequencing Matters: Why We Changed our Theory of Change

This past fall, I learned something big about markets systems change.

Over the summer, the Feed the Future Uganda Agricultural Inputs Activity went through a strategic realignment, following an external mid-term review. While the assessment uncovered many important points, this is the one that sticks in my mind the most: we need to better understand how to prioritize and sequence our interventions in market systems development.

Prioritizing and sequencing interventions is tough. When you do a market systems analysis, you could find dozens of things that could be improved in the market system. How do we know which ones to prioritize? How do we identify which ones should come first?

The way that some projects get around this question is by doing everything at once. On some levels, it’s a good idea to run small experiments through partnerships with market actors, and scale up/intensify what works, and close out what does not catch on. This is especially the case when trying out different business models, or figuring out if intervention in a particular sector is viable.

But I no longer think this is true for all aspects of market systems projects. Let me explain:

Up until this assessment, the Feed the Future Uganda Ag Inputs Activity had been splitting human and financial resources across three major areas of intervention:

• Pilot changes in business practices directly with agro-inputs businesses (e.g. implement and use a customer management system).
• Create social pressure against bad quality and counterfeits (e.g. anti-counterfeit hotline, consumer network events, etc.).
• Pilot changes in practices with supporting market business (e.g. financial institutions, ICT services, etc.)

In reality, piloting changes in business practices took primary importance, and the bulk of staff time was spent in this intervention area. The success of it depended on businesses recognizing the incentives for change, such as the potential to profit more or gain status in the community; and that market pressures would reward quality players and sanction dishonest businesses. The strategic assessment found that the agro-inputs system was so dysfunctional that the incentives to cheat were stronger than the incentives to adopt positive business model changes that benefited farmers and retailers alike.

I’ll give a bit of back story. Uganda has a big problem with counterfeit and sub-standard seeds, agro-chemicals, and fertilizers. Since the Feed the Future Uganda Ag Inputs Activity started, the assessment suggested that counterfeits were expanding and increasing in sophistication, causing downward pressure on prices because counterfeits tend to be cheaper. Combined with a lack of regulations, standards, or enforcement of consequences for bad behaviour, the incentives for businesses to minimize investment, possibly engage in sales of counterfeits, and generally disregard the quality of products or services, were stronger than the incentives to invest in offering excellent quality and service for customers (i.e. farmers). It just didn’t make good business sense to invest in long-term growth. The entire system was set up for short-term gains.

That was a pretty big blow to our theory of change, as a lot of it hinged on creating a demonstration effect from businesses who were willing to take the lead in trying out new business models. You can imagine the kind of anxiety that sets in from a finding like that – Do we have to start from scratch? Was all our work for the past 2½ years for nothing?

What emerged from our consultations thereafter was that this was not actually about starting over. It meant we needed to prioritize and sequence our interventions over the life of the Ag Inputs Activity.

So what exactly did that mean in practice? Mostly, it meant looking at what motivates market actors to behave in certain ways, and focusing on how to reshape that behavior – in other words, focusing on how to realign these perverse incentives. We needed to focus our efforts on enhancing the incentives to “be good” so they became stronger than the incentives to cheat. This entailed facilitating the improvement of rules and their enforcement, creating widespread social pressure against bad behavior, and creating space for “good” businesses to be rewarded while “bad” businesses are driven out of the market.

This changed the way we work. Instead of emphasizing one-on-one coaching relationships with businesses to encourage new business models, we are now focusing more on changes to the “rules of the game,” both formal and informal, through catalyzing action amongst larger groupings of market actors to control counterfeit sales (see one example here). We’d been doing some of this already, but dividing our attention across many activities, limiting our traction and results, and not realizing that other intervention areas were struggling precisely because we hadn’t made progress here first. So, this also meant putting some interventions on hold until the competitive environment improves.

This essentially has added a preliminary ‘step’ to our theory of change. Once the competitive environment has improved and incentives look different, then we can expect the rest of the logic to fall into place, and we can revive interventions we were previously doing.

This may seem obvious in retrospect. But when you’re in the thick of a program, sometimes it’s really hard to see. We were lucky to have assistance from an excellent external consultant (many thanks again to Marshall Bear and Ruben Banda!), but it would be nice if, as a sector, we had some guidance for how to do this on projects. How can we identify “warning signs” to alert us when our theory of behavior change isn’t working anymore? How do we identify the right indicators to measure these fundamental questions, rather than just counting beneficiaries and outputs?  How can we better incorporate this thinking on prioritization and sequencing into the design projects? It’s one thing to make space for regular reflection through quarterly reviews (as we do religiously at Ag Inputs), but it’s another to have ideas in the back of your mind on exactly what you should be reflecting on.

The impacts of this change in strategy have yet to be fully realized, but as months go by we are increasingly confident that prioritizing and sequencing has put us on a solid path towards achieving systemic, transformational change. I hope other projects can take these concepts into consideration when thinking about how to maximize their impact.