Market Systems Approach Through Simulation

Rubyat Tasfia Rahman

For AVC’s 5th Quarterly Portfolio Meeting, all the teams came together for 2 days and had discussions regarding the Project’s performance in the last quarter. The Project operates under the Market Systems Approach and one of the ways in which the Project applies this approach is by finding leverage within the local system that can drive system change from within the system.  One of the more important leverage points within market systems is a lead firm. Finding and developing a relationship with a lead firm make for a tricky process and as a result, an important skill for the team.

The Market Systems Team is comprised of technical leaders who work with select market actors from within the market system that have the interest and ability to catalyze change from within the targeted agricultural market systems.  For AVC, by working through lead firms, it is better able to effect real and durable change that is leading to increased rural incomes, rural employment, and grow the market systems more inclusively. The theory of change behind working with these market actors is that if they improve their strategies and business practices, making them more inclusive, they will create competitive pressure that drives others in the system to follow suit. An example of such a partner would be an input supplier firm who serves the farmers with quality inputs.  Under the Market System Approach, AVC would facilitate the supplier in changing his/her strategies which would lead to the firm adopting a range of new tactics that would eventually drive the firm to be more value-adding and customer-oriented. Ultimately, even when the Project is long gone, the partner continues to serve the market with quality inputs for his/her own revenue-generation incentives, but now more effectively and efficiently with the help of the newly-adopted tactics, and the farmers continue to have better access to quality inputs. Thus, sustainable development is achieved.

The Market Systems Team decided to depict how the technical leaders make use of this the Market System Approach with the help of a simulation game during the Portfolio Meeting, where the audience was split into 5 teams and each team was asked to think from the perspective of a technical leader and make decisions about activities with various partners. The modality applied is explained as follows:

1.  Each team was allocated USD 16000 to award to partners as grants for various activities which they (the teams) were asked to choose later on in the game. The game was divided into two rounds, like two modules of contracts that the Project sets up with partners in the real world.

2.  Each team was given a piece of paper containing profiles of 5 prospective partners. The teams were asked to choose any 2 partners that they would like to work with.

3.  Based on the partners each team chose, they were given choices of activities that they can implement with the partners. The activities were printed on cards which contained information about how much grant money they had to pay to invest in specific activities and how many points they would earn for those chosen activities. Within each set of activity cards for each partner, there was one hidden special activity card which was a System Change activity. This activity, if chosen for implementation during round 1, would give the partners bonus points and reduced costs of investment in round 2.

For e.g., for Partner B, the activity “Establish QMS and acquire certification” is a System Change activity. Implementing this activity would help standardize and elevate the quality of the partner’s supply chain, and would make it easier and more effective for the partner to implement other activities like attracting export clients or branding its produce as of good quality to consumers.

4.  Then there was a draw of lucky cards with each team, which either left them with more points/more money or fewer points/deducted money.

5.  Round 2 started with the teams being given another set of choices of activities for investment under Round 2. If any team chose the special card for any one partner or both of their partners during Round 1, then they could earn more points for lesser amount of money for the new set of activities. If they failed to choose the special card for their specific partners, then they paid the regular amount of money for fewer points. The two scenarios were distinguished with asterisk marks on the money and points for the special cards, and no asterisk marks for missing out choosing the special cards.

6.  Next, there was a round of dart-board game where the purpose was to bring out the ever-present uncertain environment of working in a Project. More often than not, a Project faces a host of external pressures and disruptions. Some are positive and some are negative to the aims of a project. These are beyond the project’s control and can be both local (such as local political unrest, cultural maladjustment, infrastructural barriers) and international (such as shifts in global economy, unpredictable decisions from the donor’s end, disruptions in global/regional political stability). The dart-board game served to represent one such externality related to a donor. One member from each of the teams who had grant money left over at the end of the game was asked to come to the front and throw darts at a dartboard. The dartboard had regions of “WIN” and “LOSE”. If he/she hit “WIN”, then his/her team received a Project extension and so, was awarded extra points. If he/she hit “LOSE”, then his/her team were told that the donor is having a funding challenge, and so they were penalized.

7.  Finally, the scores were tallied up, and the winning team and the runners-up team were given awards.

8.  The session was wrapped up with discussions explaining the logic and the turning points of the game, and about the message and the key learnings that the Market Systems Team intended to convey through this simulation game.

**Acknowledgments: The modality for the simulation game was inspired by Margie Brand’s Agricultural Input Supply Market System Simulation Training, which she offered at Dhaka in March to an audience of supply chain managers from NAAFCO, one of AVC’s partners. Margie supports practitioners and donors in strategic planning and facilitation, intervention design and implementation, and capacity building and training. She has trained over 4,500 trainers and master trainers, and has developed market systems development, value chain, enterprise, microfinance, and entrepreneurship curricula and tools, which have been translated into over 15 languages and used in over 35 countries. 

***Rubyat Tasfia Rahman is an Associate in the Market Systems Team at USAID’s AVC Project. She recently graduated from IBA, University of Dhaka and is passionate about food security. Rubyat’s favorite pastimes are travelling and trying different kinds of food.

Women flower farmers take the center stage at Bangladesh Flower Fest 2017

Lamia Anwar Shama

Flower festivals are celebrated all over the world around the year to promote the national flowers of the countries. Bangladesh jumped on the bandwagon last year with Bangladesh Flower Fest 2016. The fest was organized to acquaint the flower lovers of Bangladesh with the local varieties of flowers, create public awareness around the local flower market and to bring all the flower value chain actors under one platform.

Following the success of last year’s flower fest, this year flower fest was organized at a larger and grander scale and to reach as many flower lovers as possible. Along with promoting the local flowers of Bangladesh, this year the flower fest focused on endorsing and recognizing the efforts of women flower farmers at stimulating growth in flower sector.

One of the barriers to inclusive growth in the sector is the uneven representation of women in the market. Women are involved in almost all levels of flower value chain starting from production to trading to sometimes retailing. But they are not yet exposed to the market as much their male counterparts are. Their only target is to produce/procure the flowers and sell it to the next value chain actor. The men in the house are the ones that actively take part in the flower trading.

However, things have started to change and more women are coming out of their houses to take part in flower business. To use this momentum and make them understand the business context, this year AVC brought flower farmers from Jessore to participate in the fest. The fest gave them the opportunity to directly communicate with the customers which was a first for them. A pavilion featuring stories of these inspiring women was set up at the center that attracted a lot of attention. Being set up at the center, in the three days of the fest the women farmers became the stars of the flower fest. People were even lining up to hear their stories and take photos with them! They also got to understand the customers’ mindset and how innovative and new accessories with flowers can be made to cater to customers’ emerging needs. So, this flower fest sort of acted as a vehicle for the flower farmers to instill in them the idea of how they can expand their business through innovative and value added flower products besides the traditional buying-selling.

***Ms. Lamia Anwar Shama  works with USAID’s Agricultural Value Chains Project  as Marketing and Entrepreneurship Development Associate. She graduated from the Institute of Business Administration (IBA), under the University of Dhaka. She is a Mentor and Global Student Ambassador at Thought for Food (TFF) Challenge Program.

Agricultural Innovation Cycle in Bangladesh: Nonexistent or flawed?

Shafinaz Hossain
Shafinaz Hossain

Innovation or in simple words, continuous improvement has been the biggest hype in the last few decades. It usually happens with the development of a totally novel approach or around the alteration of existing ones and sometimes is enough to disrupt the whole system. However, pursuing innovative ideas is about balancing opportunity with risk. There’s always a chance that the innovation might not work out but there’s also ways to mitigate that.

Taiwan, the tenth most innovative economy in the world is also one of the world’s biggest semiconductor suppliers. In the 1950s and 60s, Taiwan was very similar to Bangladesh in a lot of ways; dependent upon foreign aid for development. But, that changed pretty quickly when Taiwan intentionally pursued the strategy to build wealth through innovation.

The risk of a bump in the economy was alleviated with privatization of government organizations which made the system more efficient and emphasis was put on education that encouraged engineering and innovation. They also realized that being stagnant was never a choice as other countries would soon catch up and rival them with cheaper prices. South Korea and Hong Kong also pursued similar economic shifts, moving away from cheap, labor intensive manufacturing to skilled service industry and luxury shipping respectively. The idea of constantly evolving has never been more important; even the simplest of tweaks can bring a world of change into our system.

But, Bangladesh has not yet pursued a similar shift/economic growth, and remains with a starkly smaller and more sluggish economy from these Asian countries primarily because we don’t have the incentives or strategies that values innovation. We lack understanding in what innovation necessarily means. Most of us assume it to be something in the line of a very modern, sophisticated product that is unattainable. We don’t think along the lines of a new market segment, value added services or find a new way to an old business model. We simply do not want to cross boundaries.

This is partially because it’s easier and cheaper to imitate. People innovate when they see that innovation will give them a competitive edge and they will only put in their resources when they see that they will get a premium price for it. But, unfortunately, the consumers in Bangladesh do not yet have the mindset to pay the extra price for the added value.

Bangladesh, with its 160 million people should have been a lucrative market for any investor. The sheer masses of this population represent a huge market, where people are interested in producing, buying and consuming innovative products. The Bangladeshi market calls for frugal, scale able, trustworthy and user friendly innovation which clearly the manufacturers are unable to tap into.

Our market works best when we come together, when interactions between multiple stakeholders happen. Having a shorter innovation cycle especially in agriculture clearly requires multidimensional involvement from all the patrons in this effort. However, with all the merits of the holistic approach, the firms still continue to shy away from the interaction and we are left with a low level of innovation given Bangladesh’s human capital resources.

Currently, where we are at is not the worst place to be nor do we need any revolution to change things around. What we need is to look at the challenges that stop us from moving forward and work around those specific bumps/ potholes. We only need a few of the firms to move away from the old, traditional practices and think about disruptive ways that will eventually put enough pressure on their competitors and the overall market will evolve to be more innovative.

The inefficient innovation cycle cannot only be explained by the inactive participation of private sector; government research bodies play a role in stifling innovation as well. Despite having a fixed amount of allocated fund, research bodies inadequately address the problem mainly due to the lack of communication with private sector.  The solutions that they come up with don’t do much problem solving for the customers as they do not coordinate with private sector before conducting research on a new product. So, the final product is not appropriate for commercial sale and thus that one prototype never sees the light of the day.

Some of our policies do not even support innovation; the heavy taxation on machinery components and spare parts import is one big barrier for agro machinery manufacturers. On the other hand, the duty on agro technology from India or China is much less; home grown machineries thus cost way more than the imported ones. New companies do not want to enter the scene because of the difficulties of doing business in Bangladesh.

The academia also needs to come into the innovation cycle and work alongside the private sector in order to build the trust that lacks among the target customers when it comes to local agro innovation. Instead of putting funds into their own research, the private sector can perhaps commit a bit of their time and money to the academia and counsel them about the market need. The academia in turn can take in as much market information as possible to come up with relevant technology.

With academia, public and private sector working together, the task of attaining a shorter innovation cycle will be much easier. For this to happen, communication needs to be given the highest emphasis at this point. When it comes to making a technology work, communication is the key for business success.

***Ms. Shafinaz Hossain  works with USAID’s Agricultural Value Chains Project as a Research and Technology Commercialization Associate. She graduated from the Institute of Business Administration (IBA), under the University of Dhaka. She was the Winner of the Thought for Food (TFF) Challenge 2015 organized by Syngenta Corp in Lisbon, Portugal; the 1st Runners Up of Business Today Impact Challenge 2015 (BTIC) organized by Business Today and Princeton University in New York, USA.