Complexity theory, adaptive leadership, and cash-on-delivery aid: one of these things is not like the others

How do you make decisions and manage resources in the face of complexity? It’s a tough nut to crack. Owen Barder recently wrote several blog posts on the implications of complexity theory for development. The whole series is highly recommended reading. I could write several more posts just highlighting all the great insights there, but instead I’m going to focus on my one gripe. (Cause I’m a blogger, and that’s just how we roll.)

First, a short and totally inadequate summary

The overall analytical framework of Barder’s posts resonates deeply. In short: Development is an emergent property from a complex adaptive system encompassing political, economic and social factors. Complexity theory implies that development policy can’t actually create development. Policymakers should instead take a more humble approach, emphasizing dynamic properties like experimentation and feedback. Barder laid out the basis for a “complexity-aware approach” to the results agenda that recognizes the need for adaptive management of complex interventions.

(Got it? Seriously, just go read his whole series — starting with What Is Development?)

But something is amiss…

Despite all the parts that I agree with, something bugs me about the third post in the series (co-authored with Ben Ramalingam). When it came time to lay out the practical implications of complexity theory, Barder and Ramalingam pointed to two ideas that the Center for Global Development (CGD) is supporting: Cash-on-Delivery (COD) Aid and Development Impact Bonds. It felt like a bait-and-switch.

I’ve written previously about my discomfort with COD aid. I think the approach treats a developing country government like a contractor. It increases the government’s accountability to the donor in a way that could greatly undermine whatever democratic accountability may exist between the government and its citizens. In response to my previous post, CGD’s Bill Savedoff argued that the transparency components of COD aid (e.g. publicly sharing the contract) will at least be better than current practice. That’s true. But I remain unconvinced that those components are inherent to cash-on-delivery. If donors and recipient governments were willing to agree to a real level of transparency, those components could be implemented as part of current practice.

One metric to rule them all

In my mind, the defining feature of COD aid is the use of a single metric to trigger disbursement. Before the contract is signed, the various actors involved must agree on a narrow, clearly defined, and measurable metric of success. Then they stake large amounts of money on that metric. This approach locks in the result being sought. The target can’t be changed later, or the whole process would lose legitimacy.

Development Impact Bonds (DIBs) take the COD aid concept a step further by bringing in another set of actors: private investors. Under COD aid, the developing country government fronts the resources needed, while expecting to get cash down the line. Under DIBs, the upfront resources come from private investors, who would then receive payout at the end. The accountability chains are a bit different in each and it will be interesting to see what role the private investors actually play, but the importance of the chosen metric remains the same in both approaches.

Embracing complexity… from a distance…

This is why I called it a bait-and-switch: pegging large sums of money to a single metric is the opposite of engaging with complexity. Rather than embracing complexity, these approaches seem to be avoiding it.

Barder and Ramalingam gave a few reasons why they think COD aid and DIBs are good complexity-aware approaches, including the following:

[COD aid and DIBs] avoid the need for an ex ante top-down plan, log-frame, budget or activities prescribed by donors. Because payment is linked only to results when they are achieved, developing countries are free to experiment, learn and adapt.

There is no attempt to follow money through the system to show which particular inputs and activities have been financed; it is important for governments to learn about whether certain activities are working, but it is futile for donors to speculate about the extent to which those changes would happen without them.

Reading these reasons, it seems like the benefit of these approaches is to absolve the donor of dealing with the complexity. Unfortunately, these approaches offer no guidance to the developing country government and their partners who are implementing under these frameworks. The work itself becomes no easier. Sure, the donor avoids a top-down plan, log-frame, etc. and no longer has to monitor activity as closely, but someone still has to plan and manage the efforts. Someone still has to budget, to put financial controls in place, to hire and evaluate staff, to ensure the effort achieves the pre-defined result — all within a context of complexity.

Adaptive leadership

Barder and Ramalingam offered general principles for what they call “results-enabled adaptive leadership” drawn from evolution theory: variation, an appropriate fitness function, and effective selection. In other contexts, they’ve written more about adaptive leadership (e.g. see this one from Ramalingam). I agree with most of what they have to say on the topic. Where I part ways with them is on the idea that COD aid and DIBs create the necessary environment for this type of leadership. I don’t see it. The agencies operating under one of those agreements would be free from certain donor constraints and reporting requirements, but they would also be locked into the One Big Metric with no flexibility in the goal. I’m not sure that’s a net-positive in terms of complexity-awareness.

My critiques aside, I appreciate the effort to marry complexity thinking with the results agenda. I share Barder’s conviction that the two can co-exist harmoniously. However, I think the correct approach is to inject complexity into our understanding of results, rather than to become rigid on the results and kick the complexity down the line.

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Interested in complexity in aid? Then you should definitely be reading Ben Ramalingam’s blog, Aid on the Edge of Chaos. You can also check out other complexity posts on Find What Works.