How can we make sense of all the changes taking place around
us? More importantly, how can we
create the change necessary to attack our most pressing societal problems?
building blocks. I will
return to this theme again and again in other posts. But for now: a preview.
Eric Beinhocker's Origin
of Wealth leans on the theory of complex systems to show how, little by
little, a small thing like a wheel gets incorporated into increasingly complex
components and systems. First we
see carts, then bikes, then the Audobon.
More building blocks mean more
complex combinations built from them.
And these combinations give rise to greater variety, greater
sophistication, and greater wealth.
Brian Arthur's The
Nature of Technology provides a related account, up to a point, but emphasizes
how change is not always gradual and continuous. For instance, piston-powered propeller airplanes began as
rather simple machines and performed well for short flights. But when these planes began to fly at
higher speeds at higher altitudes, their limitations became evident. To address them, engineers began making
a series of increasingly complicated modifications until, finally, an entirely
new means of powering a plane appeared:
the first jet-engine. This invention was not further evolution of
the piston-propeller arrangement but, instead, was based on entirely different
principles. It was much simpler
too, the original prototype of the jet engine having just one moving part!
In my book, Design
Your Life, Change the World: Your Path as a Social Entrepreneur, I have
examined how similar ideas apply to social enterprises. Often, social enterprises evolve
gradually, becoming increasingly effective as they become ever more
complex. As an illustration: Once, local banks were as much fixtures
of communities as mom and pop grocery stores (been to one of those recently?). Over time, they began to add remote branches
and, as regulation allowed, expanded their reach to increasingly distant
locales. These changes were
intended to create more efficiency, more competition, and more choice.
Overseas, a similar evolution began to include poorer and
poorer customers as first, nonprofit organizations and later, for-profit banks
began to offer microcredit and other microfinance offerings. Still, microfinance excludes ten times
as many customers as it serves.
Poor clients are expensive to serve, even more so when they are at a
distance. Branches are too
expensive in many parts of the world.
Yet in Kenya, an invention
has dramatically changed the situation.
Much like the jet-engine, which overcame the deficiencies of propeller
planes by incorporating a completely new principle, M-Pesa overcame financial
exclusion, especially created by distance, by creating an alternative form of
money. Kenyans buy this currency,
which is installed on their cell phones.
This e-currency can then be
safely, conveniently, and affordably transferred to someone else by sending a
financially secure text message.
Urban workers can remit money to relatives in the countryside. Micro-entrepreneurs can buy trinkets or
agricultural products to resell without the insecurity of relying on bus
drivers to transport their payments or the inconvenience of taking the bus to
make payments themselves.
How successful is M-Pesa? Over half of all Kenyans use it, nearly three times as many
as have bank accounts. M-Pesa has created
similar services in Tanzania, Afghanistan, and South Africa. It recently created a partnership with
Western Union that allows funds transfers to Kenyan M-Pesa customers from 45
Is this a "one-off," relevant only to citizens without ready
access to banking services? Not at
all. Mobile wallets (as they are
known) are moving "up market" to the United States and the rest of the
developed world. Tech stalwarts
(Apple, Google, and others), mobile carriers (including Deutsche Telecom, China
Unicom, Verizon), and financial institutions and credit card companies (among
them Chase and Visa) are all exploring how they can capture this huge,
What was created by the invention of alternative currency
has begun to evolve.
Let's consider this illustration from an evolutionary
The banking system changed in ways that resemble biological
evolution. New variations (say, bank branches) are tested for their performance (would
people use them?) and, when successful, they proliferate.
Producing societal-level change isn't under the control of any
single organization. Consider the environment. No company or
government, of course, "controls" efforts to address climate change. Yet there are many ways organizations play
roles in striving to stem our environmental problems.
How can we stack the odds so that they are successful?
By encouraging variation, creating fair and effective tests,
and ensuring that winning ideas truly proliferate. These are not abstract ideas without application. For instance, the tests performed in
the marketplace (profit, sales) give distorted results that fail to account for
environmental (mis-)behavior. As
the adage goes, you get what you measure, and we are measuring the wrong
things. Similarly, proliferation
can come from replication, but exposing winning ideas to others provides
another means to increase their scale.
But we must be cognizant, too, that invention is sometimes necessary
to spark progress when we are at an impasse. Methods like recycling, just like propeller-powered planes, can't
evolve far enough to achieve our environmental ambitions. Recycling is better than tossing, but as
a practice it still fails to promote better, inherently green methods of creating
products in the first place. That
is where invention becomes critical, to create "jumps" in evolution rather
smooth, gradual refinements.
Markets in carbon avoidance, for instance, are built on the premise that
you can buy the benefits of others' good behavior. From this new premise various ways to create and operate
these markets emerge, themselves subject to variation, testing, and proliferation. Invention begets evolution.
These two forms of change - gradual, continuous; and
radical; discontinuous - operate by creating and re-organizing building
blocks. We can think of building
blocks as fundamental elements that underlie the process of creating
change. To be architects of change,
we must learn to recognize and harness them. I intend this blog entry itself to be a conceptual building
block which we return to, and build on, as we understand how to improve