The Why, When and How of System Transformation

January 26, 2021


The Why: Untapped Billions

Every big crisis is an invitation for change. It unlocks potential that we are often unaware was even there. And we are not only talking about human potential. A recent McKinsey center for governance report found that 33% of the global GDP is spent on governmental expenditure – a figure which is expected to increase in the forthcoming period. If governments around the world decide to systematically transform the way the operate, the increased productivity could unlock $3.5 trillion dollars annually while maintaining their current levels of spending on public services. With the inefficiencies and vulnerabilities exposed by COVID-19, the world now desperately needs to boost the quality of key public services such as healthcare, education and transportation by changing the way governments do business. As the McKinsey report shows, governments would be wise to consider such transformations not as an increase in spending but rather as an investment that will allow them to tap into significant funding that could sustain the delivery of better quality public services. 

However, transformation is never easy. 80% of all large-scale governmental transformations around the world, mostly in developed countries, have failed to meet their objectives. Two key questions that need to be answered before actions can be planned and executed are “When to transform?” and “How to transform?” With these two questions at the forefront of our thinking, the UNDP North Macedonia Accelerator Lab embarked on a journey to design a portfolio of solutions that will tackle systemic transformation, “not because it is easy but because it is hard.”

The When: Shock and Transformation

As the oft quoted and misquoted Mark Twain reportedly said, “History does not repeat itself, but it rhymes.” Looking back at the impact of major events that shook the world, we can indeed see a pattern at work – shock and devastation followed by rapid growth, renewal and transformation. In the aftermath of the second World War, we saw the creation of international documents, financial institutions, and international governing bodies such as the UN, WTO, IMF intended to serve the people of the world and to ensure that such turmoil can be relegated to the past. The post-war years were marked by record economic expansion with sustained growth and high employment rates. The famed economist and Harvard professor Stephen Marglin branded this period the “Golden Age of Capitalism.” 

The 2014 Ebola outbreak led to a paradigm change in West Africa and the largest transformation of healthcare systems on the continent. The financial crises of 2008 brough the systematic transformation of capital along with new regulations on banks and financial institutions that are now suspicious of volatile movements and financial bubbles that can ruin countries. Thanks to that crisis, banks are now less profitable but safer. The aftermath of that crisis also saw the birth of the “era of startups”, further accelerating the pace of innovation and the transformation of our everyday lives through technology. 

Of course, we cannot conclude this part without talking about the latest global shock that we are still trying to navigate – the coronavirus outbreak. UN Secretary General Guterres rightly stated that the world is now facing the greatest challenge since the second World War. Understanding the pattern of past global shocks, we can also look at it as the biggest opportunity for transformation that the world has seen since the last global conflict. The same strength that allowed us to endure and rebuild from the devastating events of the past will help us overcome the COVID-19 outbreak now. If history is any indication, this is the time to create a post-COVID-19 “burning platform” that will galvanize support for system transformation.

The How: Tools of the Trade

There are many tools and methodologies that we must take into consideration if we want to know how to survive a disruption of this magnitude. Sensemaking, collective intelligence, co-design and other tools have been used for decades as part of the largest projects humankind has ever embarked on, though they rarely find themselves in the spotlight. 

Sensemaking is the sophisticated representation and organization of information to serve a task, in various contexts such as decision-making and problem-solving. It has been defined as "the ongoing retrospective development of plausible images that rationalize what people are doing." In that sense, we can think of museums as having used sensemaking to tell stories of the past that explain the present, long before the term was officially coined.

When the UN formulated the Sustainable Development Goals, it did so using the largest collective intelligence process to date, with 1 out of 1000 people on the planet having contributed to their formulation. As Acceleration Lab network team leader Gina Lucarelli puts it “Sustainable development is a wicked problem demanding systems transformation. Tapping into collective intelligence, when done right, is a powerful way to make the invisible visible in sustainable systems”.

At the beginning of the 20th century, Frederick Taylor interviewed and timed employees and evaluated their physical strength to develop the theory of Scientific Management with the aim to optimize the output of a steel mill. He not only laid the foundation for we know today as management (business) schools, but also did it using principles that later became known as participatory design or as we call it today co-design methodology. Santa Clause may not come up often in serious co-design literature, but his operations do in fact provide a good example of participatory design. He collects information (letters) from relevant stakeholders (children) within a design environment (Christmas) that ensures the presents he brings are usable and meet the children’s needs. 

So how can these tools benefit the day-to-day work of an Acceleration Lab? To help answer this, we will look at some practical examples from North Macedonia. 

Through the City Experimentation Fund, a joint initiative of UNDP and the Slovak Ministry of Finance to support cities in the application of innovative approaches, the North Macedonia AccLab and its partners will try to locate the city’s challenges by exploring the sensemaking technique of “deep listening”, with which we intend to hear not only the most vocal but also the unheard voices in our society. We will dig deeper to understand the challenges that the people without citizenship living in Skopje face. We will listen to the small businessowners in the city’s old Turkish bazar that are facing an existential crisis due to the pandemic’s impact on tourism. We will consider ways of incentivizing the people working in the unofficial “circular economy” of our city (collectors and resellers of waste- plastic and scrap metal, old furniture, etc.) to join the formal economy. We will explore how to bridge the gaps that prevent the city and the country from building a strong circular economy that has the potential to deliver 2,740 new jobs and 47 million euros in economic benefits by 2030, as projected in a recent report by UNDP North Macedonia and Dwaste on applying circular practices to six selected waste streams. 

Through a different project, we ran a digital co-design workshop focused on building a model for providing subsidies to vulnerable groups of citizens. 31 participants, from individual citizens to representatives of local and central government, CSOs and academia, pitched in through Zoom and Mural to ensure that we considered all angles. The initial model was developed by an external consultant based on desk research, but it was the co-design process that tweaked and finally validated it based on a varied set of perspectives that came together to give us the big picture. 

We will be applying this methodology at a much larger scale in the process of developing North Macedonia’s first National Development Strategy. In a country where top-down decision-making has been the norm in governance, often being blamed for enabling corruption, co-design is a welcomed tool for increasing transparency, accountability and citizen participation in governance. While all designers can benefit from participatory design to produce better solutions, this way of working should be considered one of the cornerstones of good democratic governance.

The Future: System Transformation as Evolution

System transformation should not be just a dream or a destination. It should be an ongoing process. As societies evolve, so do their needs, wants and responsibilities. The most resilient systems are those that can quickly detect and respond to society’s needs. It follows that system transformation is not a one-time “project”, but rather a philosophy for building and maintaining resilient, sustainable societies that can keep learning, adapting and transforming in pursuit of increased prosperity. It is only when we think of systems that have been slow to adapt and have fallen far behind the needs of society that system transformation appears as single gargantuan task. When continuously put into practiced as a governance and development philosophy, it comes into clearer focus for what it really is: a continuous and essential process for supporting the evolution of societies towards a brighter future.