The Birth and Death of Big Institutions

The failure of development is closely tied to the ossification of big institutional structures.

The World Bank was born as a vehicle for reconstructing Europe after World War II, a task it carried out with amazing success. But when it morphed into a massive institution to address global poverty, it didn’t do so well. Schumacher launched a revolution in design with his admirable book, Small is Beautiful, but the appropriate technology institutions that emerged from it became ossified, failed to address market forces and died.

The radical notion that education should be available for the masses gave birth to our existing educational institutions which operate more as assembly line sausage stuffers than creative learning environments.

The revolutionary idea that a thief should be rehabilitated instead of cutting off his hand or killing him evolved into the notion that this could be best accomplished by  placing him in a monastic cell conducive to spiritual reflection.

It only took creative planners a few years to apply the concepts of the economies of scale by piling large numbers of monastic cells on top of each other to give birth to our present correctional monstrosities, which  offer intensive training in advanced burglary techniques and a graduation gift of the ex-con brand which makes it extremely difficult to ever land a decent job.

Is there an inevitable political process by which turns radical innovation into conventional wisdom and which gives birth to ossified institutions whose perverse effects can only be addressed by the next disruptive innovation?

I hope not.

I have devoted my life to fomenting a revolution in design and a revolution in big business centered on serving the other 90% of the world’s customers.

But I am increasingly concerned that we might only be successful in creating the next generation of ossified destructive institutions.

I can’t get it out of my head that French revolution gave us Napoleon Bonaparte.

And the steam engine created the wage slavery of the industrial revolution at the same time it helped millions move out of poverty.

The Russian revolution gave us Joseph Stalin whose new institutions of control and repression implemented the famine in the Ukraine that successfully exterminated 20 million members of the proletariat who dared to express ideas of Ukrainian nationalism

In the Communist Manifesto, Karl Marx said

“The history of all hitherto existing societies is the history of class struggle” ——-freeman and slave, lord and serf, guild-master and journeyman, in a word oppressor and oppressed, stood in constant opposition to each other —(in)—-a fight that ended, either in a revolutionary re-constitution of society at large, or in the common ruin of the contending classes”——-

“The immediate aim of the Communist is the————formation of the proletariat into a class, overthrow of the bourgeois supremacy, conquest of political power by the proletariat”

Inspired by Marx’s dream, bloody revolutions in the name of the proletariat seized power in Russia, Vietnam, China and Cambodia.

But the institutions installed by these revolutions replaced the existing ruling class with new elite drawn from the proletariat, whose excesses in personal enrichment and mass extermination of perceived enemies quickly put their predecessors to shame.  Mao moved into the Imperial Palace in the Forbidden City, organized the efficient recruitment of more concubines than the emperors who preceded him, and engineered a famine that starved 40 million peasants to death.

If we are successful in fomenting revolutions in design and big business to serve the poor people of the world, how do we know that this won’t give birth to institutions that are just as destructive as the institutions created by the revolutions in China, Russia, and Cambodia?

I have no answers to this question.

But I believe that people who foment revolutions should also assume responsibility for probable ill effects.

With this in mind, here are some initial questions and ideas about the destructive institutions that could emerge if the revolutions in design and big business I dream of become successful.

I have talked to teams of students designing new de-mining tools without ever having visited a mine field, students designing tools to make charcoal without understanding how poor people improve their incomes by selling the charcoal briquettes they make, and teams of students so convinced that they will create the next revolutionary product and make a fortune doing it that they forget to talk to the customers they are designing for. If these patterns of design arrogance and lack of respect and curiosity about customers and markets become institutionalized in the hundreds of new courses now springing to teach design for the poor, their impacts will be just as trivial as design for the rich. Building an institutional structure which makes ongoing learning about customers and markets an inherent part of the design process is the sure cure for this predictable malady of the design revolution.

Inserting Bottom Billion Prosperity in the DNA of Big Business Serving Poor Customers

The revolution to create new international businesses that profitably serves poor customers may get so distracted by money and profits that they revert to the mass marketing of effectively branded useless products and services. I think the only way to prevent this is to make improving the livelihoods of the 2.6 billion $2 a day people in the world a permanent part of the mission of each new company. The problem is that I don’t really know how to accomplish this.

When IDE helped farmers in India who were virtual serfs to waterlords gain access to their own water by installing treadle pumps, they didn’t attack their previous lords and masters. They were happy to augment their incomes by hiring on to the farms of waterlords as laborers.  With a level playing field in access to water, they were able to negotiate much more attractive wages. I have no doubt that creating a level playing field that gives poor people open access to income-generating tools, information, and markets is a much more effective tool to improve the lives of the proletariat than fomenting eternal violent class struggle with the bourgeoisie.

Many people have warned me that helping poor farmers improve their livelihoods will anger the power structure and do no good for my continued health. But I’m still alive and healthy, and more convinced than ever that a million farmers with treadle pumps are hard to stop. I agree with those who say that a root cause of poverty is powerlessness. But political power, especially in rural villages, is inextricably tied to economic power. I have talked to hundreds of small farm families whose growing prosperity coincided with growing respect and influence in their communities.

This is probably the most difficult thing to pull off I can think of. As IDE began to grow I did my best to instill a culture of ongoing innovation and contrarian thinking into the institutional structure that was rapidly emerging. I’m still not sure how to institutionalize disruptive innovation, but I know that it requires a decentralized leadership structure, and an ongoing process of empowerment and out of the box thinking for all of the players in the organization – the very same processes that poor people need to master to successfully move out of poverty.