Do you agree that sometimes we make things more complicated than they need to be? I sometimes think we complicate economic development activities right past the level that would lead to successful implementation. This complication comes from the multitude of donor requirements that must be satisfied, the political-bureaucratic realities of the places where projects will be implemented, the academic purity to which all of us may aspire at times and sometimes from our own lack of sufficient knowledge of a situation to allow simplicity to rule.
U.S. Senator, Vice President and orator Hubert Humphrey used to apologize for his long speeches saying that he had not had time to make them shorter. “Shorter” implies that presentations must be tighter and more thoughtfully constructed to ensure that the necessary ideas are conveyed effectively. Similarly, “simple” project does not mean “slap-dash” or “simplistic”. Simplicity requires a careful crafting of the activity to economically engage the necessary resources (human, financial and logistic) to meet a given challenge.
This post deals with simplicity in project design and implementation and offers a few examples from my own experience. I am sure that most readers will have their own examples of how simplicity has added to the effectiveness of their own efforts or how unnecessary complexity has constrained the implementation of others. There is a comment box at the end of this post where I hope you will add your own thoughts on the subject. I would especially like to see your ideas regarding how a practical level of simplicity might be achieved in project design.
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Keep It Simple
“Keeping it Simple” does not mean being simplistic or taking a paternal attitude towards the people we work with. It does mean considering any new interventions (training, technology, organizational development) within the context of where people are – what they think, how they live and what they can afford in terms of cash (or other) cost and risk. Two of my own experiences may help to illustrate the above points.
Kenya Milk Coolers:
The first took place in Kenya in 1969 and 1970 where I was serving as a Peace Corps Volunteer working with agricultural cooperatives on Mount Kenya and in the Aberdare Mountains. One problem being experienced by farmers in the area was that a large portion of the milk they were selling to the Kenya Cooperative Creameries (KCC) was being rejected or down-graded for quality reasons. The KCC was only picking up milk from designated collection centers once each day – in the morning. This meant that the part of their evening milk that was not needed by the family had to be stored overnight without benefit of refrigeration. This resulted in the high level of losses being experienced as the uncooled evening milk inevitably deteriorated.
I was the only non-Kenyan member of a team within the local Ministry of Lands and Settlement. One goal our team had set for itself prior to my arrival was to help small-scale farmers in our area double the meager income they generated from milk production. This could be accomplished by any of several steps they might take to improve their husbandry practices (e.g. dipping their cattle to protect against ticks/East Coast Fever, vaccinating, artificial insemination, etc.) or by providing better feed for the animals (grains or fodder crops). It was clear though that their incentive to make these changes, all of which would involve some cost and thus risk, would be low or nil unless they could find a way to store their eening milk for sale the following day without spoilage.
Several possible solutions were suggested for the milk storage problem – all involving engines, pumps, compressors and CAPITAL COST. Neither our project nor the farmers themselves had the capital required to implement those solutions or to keep them running once in place. Clearly, some other solution was needed.
First, we needed to understand the technical parameters of the problem – how cold does milk have to be and how quickly must it reach that temperature to avoid spoilage? Then we needed to understand the environment within which the “solution” must operate. In this case the cooperatives were all operating in mountainous areas of the central Kenya Highlands (above 5000 feet) and all had access to fast-flowing streams whose water was only a few degrees higher than the target temperature for stored milk.
The task was to find an effective and low-cost means of applying these factors to the farmers’ problem. A basic consideration of the principles of physics reminds one that one way to cool water is by evaporating it. My grandfather used this principle in the storage of his own milk in Western Oregon when, during the summer, he placed cans of morning milk in a water trough and covered them with a wet gunny sack while waiting for the milk truck to come by later on. The warm air moving around the wet gunny sacks accelerated evaporation of the water in the gunny sacks and removedheat from the milk in the cans. Evening milk was separated with the cream either being made into butter or refrigerated for sale with the milk the next day. The skim milk was fed to his pigs. Nothing was wasted.
I had also learned someplace that another way to promote/speed up evaporation is to run water over charcoal. I am still not physicist enough to know exactly why it works but a few simple trials did prove to everyone’s satisfaction that it would work. The next step was to figure out how to do it.
The solution turned out to be the use of a very simple flow-through system that would divert already cold water from a nearby stream, pass it through a chamber filled with charcoal (in this case the chamber was the open space between the double stone walls of a shallow water tank) then into the tank itself and out through an overflow drain that would return it to the stream from which it came only a bit farther down the hill. The milk in the metal cans in which the farmers delivered it would then be placed in the water to be cooled, covered with wet gunny bags, and wait for the morning milk pick-up.
Discerning readers with an engineering background can undoubtedly suggest twenty ways of improving on this simple design if they could agree that it might work at all. I can think of a couple of improvements myself. The point is that it DID work and the rejection rate for farmers’ milk immediately went down by 80%. It was a simple solution to a clear problem that farmers both understood and could afford. Cooperatives throughout our district used their own money to construct such systems over the next several months. It is not a general solution to milk cooling problems around the world – not “scalable” in the parlance of today — because environmental factors are always different. It would not be “appropriate” in the plains of Tanzania, the coastal areas of Honduras or most other areas but in the mountains of Kenya it did the trick just fine.
Ghana Sugar Factory:
Another example took place in Ghana a few years later (1974-75) where I was managing a Technoserve program to promote private SME development – one of the earliest programs of its type, I believe. This example also illustrates the value of looking to “old” solutions for “new” technological problems. A would-be client came to us with his plan to develop a very small-scale factory to process sugar cane grown by small-scale farmers. The original intent had been for the sugar cane to be sold to the large state-owned sugar mill in the region. In a drive to improve its profitability (reduce the losses that would eventually force its closure in fact) the large mill had drastically reduced the area from which it would collect cane for processing, leaving the small-scale sugar cane farmers of the Mankessim area some 15 miles from the nearest access point to their only market.
A brief (pre-internet) search for appropriate and available technologies for use at the very low levels of processing being planned for (+/- 25 tons of sugar cane per day) quickly showed that no such production lines were available “off the shelf”. Market research did, however, indicate a good potential for selling the small quantities of unrefined crystal sugar that would be produced locally if the production solution could be found. Profitability was largely based on the tangled thicket of import controls (legal monopolies) and price controls the government of the time had woven for itself. Nevertheless, that too was a part of the environment within which any such enterprise would have to operate.
Despite the lack of scale in the proposed operation, (Sugar cane processing is normally a very high-capacity, capital intensive process,) production of crystallized sugar would still have to involve the standard steps of crushing, clarification, concentration, crystallization, centrifugal separation, drying and packaging. The search for solutions to this problem involved a much larger team than just the client/entrepreneur and ourselves. We also involved a local metalworking/engineering company with links to Indian small-scale industrial engineering experience, industrial (this time commercial laundry) equipment suppliers and volunteer consultants from the United States.
The solution we finally settled on combined certain aspects of the Khandsari sugar technology from India (similar to Mexican panela) with old-fashioned sorghum syrup production technologies from the Southern United States along with certain elements that we invented for ourselves as needs arose. We ended up with imported three-roll sugar cane crushers from India feeding into locally made clarification tanks, concentration pans and crystallizers before passing the rab/mesquite into a modified laundry centrifuge (from Denmark) where the molasses was separated from the crystal sugar. The molasses was sold for animal feed and distillation while the sugar was moved to a drying room of our own design before being packaged for retail sale.
The good news was that when we “pushed the button” it all worked – after some “tweaking”, adjusting and a fair bit of rough language, of course. The bad news was that our analysis had missed a critical factor and we had made the process more difficult than it needed to be. We had assumed that the objective was to make crystal sugar for sale in the local market. When this had been accomplished we found that, in the rather peculiar economic environment of Ghana in the mid-1970s, there was an equally profitable, and much easier to address market for 65° brix sugar syrup. This product was much easier to produce because the cooking time (concentration) could be reduced and crystallization, separation and drying were not necessary at all. And, as an added benefit, the whole process was much easier to manage. The necessary adjustments were quickly made and this small company operated successfully for 15 years, creating jobs for local workers and a market for local farmers, before another in a long line of government policy changes effectively put it out of business.
One of my fondest memories as a much younger development cowboy deals with the trials we all went through (blood, sweat and tears) in putting that production sysem system together (e.g. trying to stand 18 inch by 30 foot steel sewer pipes on end in just the right position to serve as furnace chimneys using only ropes and strong backs). The lesson I always remember though is the mistake we made in trying to “Keep it Simple.” It still wasn’t simple enough the first time because we had identified the wrong problem. We should have gone back another step and realized that the problem was not how to make crystal sugar. It was really how to make money from sugar cane in a particular environment. This is why today I still cause more than a few clients (and colleagues) to roll their eyes and sigh at my insistence that they precisely define the business they are in before we can go further in considering their problems and how they may be addressed most effectively. The solutions won’t be the right ones if the objectives are not correctly identified.
The key element that I would emphasize in both of these cases, and numerous others that might be added, is that they are really pretty simple. Both were ultimately successful to the extent that a reasonably straight-forward logical process, making use of the fullest possible understanding of the environment, imperfect though that will always be, and a modicum of creative curiosity can arrive at reasonable and frequently cost-effective solutions. And, all of this can take place without the benefit of multidisciplinary task forces, international conferences or computerized data banks. In fact, an observer slightly more cynical than I am might suggest that there is an inverse relationship between the utility of a given SME development tool and the number of such devices that are required to figure it out and apply it. One of the keys to “keeping it simple” is to keep it local and specifically relevant, relying to the greatest degree possible on local knowledge and common sense. Of course it is true, as Will Rogers once suggested, that “Common sense just ain’t as common as it ought to be.” We can, however struggle in that direction.
I have found that taking a generalized and disciplined analytical approach to the identification and diagnosis of SME problems is useful. I have yet to find any generalized solutions to those problems, however. The “magic button” of enterprise development remains to be uncovered. The “simple” solutions are often not “scalable”. They will most often not meet the demand of many current donors that solutions must be “scalable,” dramatic and immediate. That is, development solutions must be applicable to a large population or crop or industry in order to be a good investment of scarce development dollars. It has been my experience, however, that the “best” solutions for a given problem in a specific place are most often not the best solutions for what outside “experts” identify as being the same problem for another group of people in a different place. Most simple solutions, once generalized become bureaucratized and modified to suit the needs of various donors to the point that their applicability to the SMEs and real people we work with in the field is tenuous at best.
The most effective means I have found for developing small and medium enterprises is to focus on the individual enterprise – understanding its situation and helping to identify logical next steps towards its long term strengthening. This is the “simple” approach: a series of small solutions for small enterprises rather than a “mega” solution for all of them. Lessons can certainly be drawn from one situation to help in responding to another one but cookie cutter solutions, whether they be about micro-finance or organizing to make irrigation services available to small farmers are seldom appropriate. The value chain approach, which is currently in vogue, applied logically can be a valuable tool in the process of pinpointing interventions of maximum value. Many of those interventions will still have to be implemented at the enterprise level and integrated to other, complementary activities in other fields (e.g. government or finance) to be effective.
In our search for just the right SME development “tool” we are often faced with the absence of the “tool” that is really needed. In those cases we and our client entrepreneurs are forced to find and adapt “second best” solutions. The whole area of institutional business finance/commercial credit offers an illustration of this point.
One of the common weaknesses of the developing economies in which we ply our craft is in the area of finance. Institutional immaturity (lack of experience), corruption, distorted markets (by government’s demand for available capital) make it essentially impossible for SMEs to obtain the financing they need through channels that would be considered normal in the developed world.
The response of many donors (official and NGO) is to throw in more money, subsidize its cost (while loudly denouncing the idea of subsidized credit) and make it available on terms that would never be accepted in a more developed environment – often distorting normal/good business practices of the banks through which they pass it if they do not avoid the banking sector entirely. The effect of this can be a weakening of the banking sector rather than stimulation of its evolution and growth.
The plea to “Keep it Simple” applies to this area as well. In this case there is still a requirement that individual problems require individualized solutions. While we hopefully learn useful lessons from all of our experiences, the lemming-like application of methods from one situation to another frequently result in frustration and waste and often negative learning on the part of the people the programs are intended to help when the original big promises and good intentions are overtaken by hard reality.
Small Trader Finance in Nicaragua:
In 1996, I was asked to travel to Nicaragua to advise on the development of a small trader credit scheme for women that had been previously implemented successfully in Bolivia. The Bolivian program, which was aimed at very poor Indian women in La Paz, included, along with small amounts of short-term trading credit, educational programs aimed at helping these women break out of the poverty trap into which they were born. I never evaluated that program myself but have no reason to doubt reports that both aspects of the program (training and credit) were successful and appreciated. A USAID official who was familiar with this program decided that it would be just the ticket to help market women in Nicaragua reduce their borrowing costs and become more profitable.
Women traders in the urban markets of Nicaragua were much less appreciative, however. For one thing, they were much more educated and world-wise than their Bolivian counterparts and less interested in the maternal and child health, nutrition, hygiene and other training programs that were “offered” as part of the new program. Participation in the training programs was, in fact, a pre-condition to being deemed eligible for credit. No training, no credit. But they saw the training requirement as an additional “cost” of their credit since it was going to require the investment of their time that was sorely needed elsewhere.
A second factor affecting their responsiveness was the fact that several other well-intended donor-financed micro-finance programs were operating in the same market – all offering different terms and different combinations of ancillary programs and openly fighting for “market share”. The degree to which credit was actually lacking in this market was therefore disputable. I have never been one of those who felt that international donors fighting for a share of the need in a poor community is very productive or appropriate. There are those who make strong arguments in disagreeing with me on this point but I remain unconvinced.
One of the steps we took to better understand the actual situation of the traders in this market was to survey more than 100 of them. The strongest, and most surprising, finding of this survey was that the credit source actually preferred by a clear majority of the women was the traditional money lender from whom they could take their loan in the morning, use it all day, and repay it, along with an astronomical (in percentage terms) interest payment, in the evening all within the market itself. No muss, no fuss, no time “wasted”. It turns out that they felt more comfortable dealing with the high effective interest rate than they did with the ancillary agendas of the various NGO lenders.
What positive values did they see to the traditional money lender system?
- It was predictable. The money lender would be there everyday ready to do business.
- Transaction costs were minimal. Yes, they saw the time that they would be required to devote to the training being “offered” by the NGO as a transaction cost they could not afford.
- It was flexible. The money lender would “understand” their short-term problems – within known limits.
- No collateral was required. If they repaid their loan today, a new one would be offered tomorrow. If they didn’t, the consequences were equally clear.
Would they have preferred a lower rate of interest? Of course they would have. But they did not see that the interest rate, which they knew how to manage, was more of a disincentive than the various conditions of the subsidized donor programs. They preferred the simple and transparent solution.
Micro-Finance in Guinea Bissau:
Yet another example, referred to in a different context in my previous post, involves a different sort of “keeping it simple” – this time in Guinea Bissau in 1994-95. I was asked by an American NGO (Africare) to assist its local team in the design of a program to commercialize small-scale agriculture in a large part of the country where even the money economy was established only tenuously. There was no bank branch in the entire province and very low levels of any other service governments are normally expected to provide for their people (health care, education, electricity, telecommunications, roads). Most of the population lived in small, isolated villages subsisting on what flora and fauna they could harvest from the forest along with a bit of upland rice they produced on small plots slashed and burned within the forest itself. Whatever small surplus they might have (rice, cashews and a bit of palm oil for the most part) would be sold to itinerant traders passing through from Senegal who could set their own prices and usually pay “in-kind” (sugar, soap, cloth, etc.) for the products that they would then carry off to sell in the urban markets, or in the case of cashews, export whenever prices would be highest.
Our task in this case was to create a sustainable incentive for these folks to increase and improve their production, and thus their incomes. Discussions with groups of men and women in several locations, often under the mango tree at the center of the village, made it very clear that they felt that their biggest problem was their lack of control over the marketing of their produce. Despite their isolation, they understood very well, and correctly, that their products could be worth far more to them IF they could store them until the “lean” season (or export season in the case of cashews), IF they could move them to the urban center (Bissau City) for marketing themselves, and IF they could negotiate prices themselves and sell for cash. The problem as they saw it was that they had no way to do any of those things.
We needed to work with those groups of local people to find a way to help address the problem without creating a long-term (and therefore usually destructive) reliance on outside resources coming from the donor – the NGO in this case. While the people in this region had no experience with credit, they were able to come together and work effectively as groups when a common purpose was identified (by them). This had been demonstrated in the past by the development of community wells, schools, community centers, communal farming plotsand even raising the money collectively to send one or two from their community on the Haj the year we were planning this project. But that is a story for another day.
With these factors in mind, we were able to work together to assemble a program to help formalize self-identified groups, mostly women but some all male and some mixed as well, assist them in the preparation of appropriate simple storage facilities, teach the basic bookkeeping and inventory management skills necessary to run their programs and lend them small amounts of money (less than $1,000 per group of 8 to 15 members) to be advanced to group members against the delivery of marketable produce – charging a “commercial” rate of interest (which is pretty hard to establish in a barter economy) to be deducted along with the amount originally advanced at the time of sale.
The twist in this case, to gradually build the sustainability of the effort, was to credit a portion (one-half) of the interest collected from each group to the group itself as the basis of its own capital fund if they would “tax” themselves an equal amount from the proceeds of selling their goods. Thus they could see that as they used and repaid loan funds, they were also accumulating a fund of their own with which to carry on the program after the donor withdrew. This was sufficient incentive, along with their natural integrity, to see the program through at least two complete cycles that I witnessed with nearly perfect repayment rates and profitability sufficient to increase members’ incomes significantly even after the capital deduction was made.
I cannot be sure that the program did not self-destruct or fall victim to the political chaos that overtook the country a bit later, but I have no reason to think that was the case. Even if that did happen to some of the groups (they all managed themselves independently), valuable lessons were still learned and people gained some experience that might be adapted in other ways to solve their own problems in other areas.
The key to the program’s success was its simplicity. Consider the following elements:
- Groups were self-identified based on a shared interest identified by members – before the donor came along to suggest what those interests might be;
- Institutional bureaucracy, with which they had little positive experience, was minimized;
- Each group was responsible for holding its own collateral (participants were paid a partial advance against product as it was delivered, thus no future “performance” was required of them);
- Each group had confidence (because they were familiar with NGO staff and programs) that successful completion of each cycle would make them eligible for larger loans in subsequent cycles as their capital accounts grew;
- Each group elected its own leaders and did its own marketing with very high levels of participation and transparency;
- The perceived (actual?) risk of each participant was limited to the difference between the advance payment, which was geared to a percentage of the “normal” market price at the time of harvest and the second payment they would receive if the product sold for a higher price.
Other examples of successful simple designs abound yet the “big” development money still seems to have an irrational affinity for the “Next Great Thing”, the magic button that will apply generally to solve the world’s development problems. There are, of course, some problems that can be attacked in “big” ways – things like eliminating malaria and broadening access to cell phone technology and improving education. There is an important role for the Gates Foundation, the Clinton Global Initiative and the Carter Center. But, maybe more of those big problems as well would get solved if we focused more attention on doing many small, simple things, while looking for opportunities to learn from experience and leverage those small things into bigger things.
What do you think? Can we focus on doing small things without accepting that the end result will be small impact? Please share your experience and ideas in the comments box below and forward the blog link to anyone else you think might be interested in the subject. You will be assured of receiving e-mail notification of future posts and keeping up with the conversation that develops, by subscribing in the side bar at the right.