The Patterns of Possibility

February, 2022

In Building Better Systems¹, we introduced four keys to unlock system innovation: purpose and power, relationships and resource flows.

These four keys make up a set. Systems are often hard to change because power, relationships, and resource flows are locked together in a reinforcing pattern to serve the system’s current purpose. Systems start to change fundamentally when this pattern is disrupted and opened up so that a new configuration can emerge, serving a new purpose.

In this article series we delve deeper into these four keys and provide practical advice on how they can be put to use. This article is about relationships.

Systems are defined by the patterns of interactions between their parts: their relationships. Those interactions generate the outcomes of the system as a whole. Transforming the outcomes of a system requires remaking its relationships and then unlocking the other keys to system innovation: purpose, power and resources. This shift in relationships allows all those in the system to learn faster, to be more creative. System innovators redesign the relationships in the system to allow dramatically enhanced learning across the system, and thereby generate far better outcomes.

Nothing stands on its own in a system, everything is related.

A system is a collection of parts which come together repeatedly to achieve an outcome. In Harnessing Complexity, Michael Cohen and Robert Axelrod say a system creates “enduring patterns of interactions which shape the behaviour of many players into a coherent whole.”² The system thinker John Holland defined a system as: “A configuration of interacting, interdependent parts, connected through a web of processes and interrelationships which form a whole that is greater than the sum of the parts.”³

Each part on its own has limited significance; it’s when they are brought together that they form a system and so become more powerful. On its own, a container, a crane, a ship or a lorry can achieve very little. Put together in the right way, they can make a system - containerisation - which changed the world in the second half of the 20th century.⁴ The container on its own is a stand-alone product. Containerisation is a system and that system is made by the relationships between its parts.

System innovators create new patterns in the relationships which define a system: almost twenty years ago the Australian system for helping unemployed people find jobs went from being highly bureaucratic and centralised, to become a decentralised system in which providers were rewarded by results;⁵ many of us used to buy our holidays indirectly through travel agents who booked packages, but now we book directly with providers using the internet; Ikea created a new system for people to furnish their homes by persuading consumers to become participants and producers, building their own furniture. Big changes in any industry usually involve a shift in the ways the parts are related to allow people and organisations across the system to learn how to rise to a new level of performance and generate better outcomes.

Shifts like these are sometimes brought about thanks to digital technologies, which make new relationships possible by removing the need for traditional coordinating institutions. The M-Pesa mobile payments system in Kenya, for example, allows for direct, peer-to-peer money transfers without going through a banking system. It achieves this by turning shops and kiosks into the local delivery point of a payments system, forgoing the need for banks to handle payments. An indirect, centralised and quite bureaucratic banking system has been outmoded by a direct and decentralised technology platform.

However, technology is only one factor in these shifts. The relationships which define a system are just as often reorganised by a new social philosophy and values, which shift both power and purpose. The cooperative philosophy of Buurtzorg, the inspirational Dutch care collective, allows self-organising teams considerable autonomy to decide where to invest their time, according to their clients’ needs.⁶

New patterns of relationships among workers allow them to form new relationships with clients by dispensing with the need for a managerial hierarchy to direct them. The Green Transition, for example, will require systems to be remade to be circular and regenerative rather than linear and wasteful.⁷

System innovators bring about profound shifts in the patterns of relationships which define a system.

To understand how negative, stressful dynamics can become positive ones, take an example from financial services.¹⁹

Mainstream banks are not well set up to help people with irregular incomes. As a result of the bad experiences these people have with banks, they do not trust them. That means they are underbanked and that increases their risk of financial distress because their options for managing their money are limited. That makes it more attractive for them to deal with unscrupulous providers, such as payday lenders, which only exacerbate financial insecurity, and in turn makes them even more unattractive as customers for banks. This is an example of people trapped in a system with a deteriorating dynamic.

Yet as innovative financial service providers such as Wagestream, Trezeo and Dinghy have shown, if financial services companies can develop new products and services for those with irregular incomes who might be in financial distress, that leads to more people being banked. As a result, they are better able to manage their money, less insecure, and they become better customers at the same time. Distrust and distress is reduced on all sides.

To find points of stress which can become productive:

• Look for stresses where the frustration is felt by several players, for example, clients and workers, politicians and funders. Fraying relationships within a system, with managers and politicians demanding more output, workers feeling they are already at their limit, and service users feeling hard done by, are a sign that a system needs fundamental redesign. This creates a potential point of shared interest, from inside and outside the system, around which new solutions can emerge.

• Look for potential solutions which have made this stress point their creative niche. Signs of apparent chaos emerging at the edges of a system - the disproportionate cost to public services of families leading troubled lives, for example - are another sign that systems might be inadequate for the conditions they work in. These spaces might also be most open to new approaches because the system’s failure is clear. Another approach is to look for 'positive deviants' at points of stress. For example, a food programme serving malnourished families in Vietnam started not by understanding the causes of hunger, but instead exploring how a handful of families managed to gather enough to eat nevertheless. Their tactics gave the programme designers an insight into what potential solutions there were.

• Establish spaces for collaboration where those involved can understand that the stresses they share are linked and the basis for a potential solution. Invite people to explore how to reconcile and heal conflicted relationships. This is where negative cycles of distress and insecurity can become virtuous cycles of giving and receiving, praise and commitment, growth and learning.

New systems emerge where new relationships can form: relationships between consumers and producers, suppliers and investors, regulators and commentators. These spaces are not high-tech accelerators nor R&D labs which focus on producing bits of technology. To create a new system you need to develop several related ingredients: we call that a minimum viable system. System innovators need spaces where they can develop their ventures and ideas alongside complementary innovators whose innovations they will need for the success of their own approach. These are places where all the players involved in creating a new system mix: entrepreneurs and innovators with investors and patrons, commentators who shape tastes and give a field its coherence, consumers willing to try out new approaches, and competitors who are also collaborators. This allows interdependent, collective learning across the multiple players in the potential system. For that to be possible, they need to attract a diverse range of people from all levels of the system.

A minimum viable system can only be shown to work in practice. The Chicago World Fair of 1894 provided the setting for the emergence of a stable, minimum viable system for electrical power, combining innovations from Westinghouse, Edison and Tesla, with investment from JP Morgan, among others.²⁰ Containerisation emerged as a viable system when the shipping company Matson, based in Hawaii, set up a reliable system to ship freight between Hawaii, Oakland and Los Angeles.²¹

In sum:

• Find points of productive tension, where there are real opportunities to turn frustration into innovation; where negative, destructive and dysfunctional dynamics can become positive, productive and generative dynamics. One way to think of this is to find “social acupuncture” points where relatively small interventions can have a big impact across an interconnected system.²²

• Establish spaces for collaboration where those involved can understand that the stresses they share can be the basis for a potential solution.

• Create a practical space for the new relationships to form which can provide the skeleton of the new minimum viable system.

Timing counts in all relationships. System innovators have to be adept at acting when the opportunities to form new relationships are most promising. But that requires patience and preparation so that you are ready when the opportunity presents itself. And it pays to be aware of the wider context in which you are working so that you can position yourself to be in the right place at the right time. System change rarely comes about as a result of a blind date.

New systems emerge when system innovators position themselves to harness much larger forces of social and economic change. Containerisation took off as globalisation led to massive increases in international trade. Ford’s system of mass manufacturing was part of a wave of industrial development which also involved electricity and mass consumerism.²³ You are more likely to achieve big change by understanding how your venture can draw on the wider changes building up in society.

Opportunities for lasting system change often come in moments of flux and breakdown, when it becomes possible to use that flux to break through to a different kind of system. An extreme example is the way that Pakistan innovated a new social safety net as the Covid pandemic took hold in 2020.

As the Covid-19 crisis enveloped Pakistan in April 2020, the government imposed a lockdown which meant that the many millions of people earning subsistence incomes in the cash-in-hand economy were not able to feed their families. The government implemented an emergency economic package which earmarked money to make $75 payments to most of the 24m people paid cash daily for informal work. The challenge was how to get the money fast to the people who needed it most, who by definition did not interact much with formal institutions, and many of whom were functionally illiterate.

The woman charged with this job was Dr Sania Nishtar, head of the anti-poverty agency Ehsaas, located at the heart of government.²⁴ She had two things working in her favour. Almost everyone in Pakistan had access to a basic mobile phone and everyone had a unique citizen identification number. Dr Nishtar got government departments and mobile phone service providers, who had never previously collaborated, working together for the first time to create a free SMS number to which people could text their unique citizen identification code to claim the $75 payment. Within days, millions of messages were flooding in, each with a unique ID number, which had to be sifted by a quickly assembled data analytics platform. Getting the cash to only the people who were eligible required setting up local distribution centres and enlisting shopkeepersto act as cash dispensers. Ehsaas had to send out messages in batches of 300,000 to 500,000 to just the right people, alerting them to pick up their cash, to make sure the local infrastructure was not overwhelmed.

Within eight weeks Ehsaas managed to make $75 available to more than 8.8m people to support nearly 52m dependents by assembling an improvised, public and private, national and local, digital and face-to-face system, which relied on both small shopkeepers and mobile telephone companies, artificial intelligence and an army of community volunteers. It was a new system built on a web of relationships which Dr Nishtar and her team had knitted together.

The Ehsaas story exemplifies three aspects of timing that system innovators need to make work for them:

• Be ready for the opportunity when it arrives. Preparation that builds relationships comes into its own in a time of flux. Dr Nishtar had made a previous unsuccessful effort to get an alternative system off the ground a year earlier. The plans created in that ill-fated effort were dusted off in the crisis. Many of the basic ingredients were already available; they just needed to be connected in a new way.

• Crisis is only one reason why a system might be in flux. It may be a change of political leadership, an economic shock or the emergence of a movement in civil society that provides the impetus for change. Whatever the cause of the flux, make the most of times when boundaries that hold back innovation break down: boundaries that demarcate disciplines, government departments, the public and the private. Encourage regulators to lift the normal rules and norms which hold back risk taking and collaboration. Learn rapidly in real time with your partners. System innovators need to know how to act boldly in pivotal moments.

• Be ready to follow through. Innovation can often turn out to be little more than a holiday romance: diverting but irrelevant. Lasting relationships have to be sustained by people making good on their commitments to one another. That was the challenge facing Dr Nishtar as the crisis receded and a measure of normality returned. Be ready to capitalise on the moment to turn a new relationship into a lasting one.

The critical role in this process is played by convenors who bring together the many players involved in system change.²⁵ The power to convene system change takes a rare combination of conviction and pragmatism: a commitment to a cause combined with a recognition that solutions only emerge collaboratively through shared learning. Good convenors are able to grow creative communities joined in a shared cause to explore what is possible and to make change together.

Convenors go under several guises. Some call this role system stewardship; others refer to them as system orchestrators. A system convenor is anyone who takes responsibility for remaking the relationships and interactions which comprise the system and which enables shared learning.

System convenors are not project managers, facilitators, visionary charismatic leaders, brokers, counsellors or mentors, although they may well deploy these skills. System convenors:

• Create an invitational narrative which attracts people to come together to explore possibilities for system change.

• Help people to see the opportunity from different perspectives, which requires empathy and imagination.

• Encourage people to move across and flex boundaries of organisations, disciplines and professions to promote learning through unusual exchanges.

• Develop a shared narrative of the new alternative system which also gives each of those involved a new narrative about their own role.

• Work on power, both hard and soft, informal and formal, to shift the mindsets of those in power and to build up the influence of those with little power.

System convenors help make connections across the system. But they do not work alone. In a system, everything is related and so every player in the system needs to see interconnections in order to achieve bigger change. Insider-outsiders are influential people inside a system who can see why it needs to learn from new ideas emerging outside it and who find ways for these ideas to be taken up within an established system. System shifting entrepreneurs can see that the success of their venture rests on how they connect with consumers, investors, policy makers and activists to create an emerging market, such as renewable energy. Commissioners, regulators and investors help provide the authorising environments in which new relationships can form and new solutions emerge.

To support a new system, the people and organisations involved need to come to see themselves as an ecosystem, if not a movement, to bring about change in markets, social practices and public policies.

Reflecting on how she pulled together a national micro-payments system in a couple of weeks, Dr Sania Nishtar put the opportunity this way: “It is just the tip of the iceberg of what is possible if you are willing to push the envelope, if you are willing to be a bit daring, if you have the imagination to map out how the individual pieces of an ecosystem can gel in a systemic way… when you can knit together standalone solutions then the sky’s the limit.”²⁶

Many of our biggest challenges are the result of complex, interlocking patterns of dysfunction, which are continuously recreated and reinforced through the rational choices of consumers, companies, workers, policy makers and investors. These systemic patterns are seemingly impossible to break despite the costs associated with them being widely acknowledged.²⁷ The challenge and the opportunity for system innovators is to untangle, disrupt, shift and remake these patterns.

How, with limited resources, can you remake the patterns for an entire system to create an alternative system which generates better outcomes? That means doing more than arresting or ameliorating the negative dynamics of the current system and it means going beyond improving it. It requires transformation, through systems collectively learning and creating new ways of working around a new sense of purpose.

This requires bringing together a diverse group of people who will be involved in creating the new system, at the right moment and in the right place. Their task is not to design a new system on a blank sheet, nor to try to fix the problems in the current system. Instead, they need to take advantage of conditions of flux and disruption, to identify and take advantage of the forces from which a new system will emerge, based on a different pattern of relationships.

Many of our biggest challenges are the result of complex, interlocking patterns of dysfunction, which are continuously recreated and reinforced through the rational choices of consumers, companies, workers, policy makers and investors. These systemic patterns are seemingly impossible to break despite the costs associated with them being widely acknowledged.²⁷ The challenge and the opportunity for system innovators is to untangle, disrupt, shift and remake these patterns.