Friday, April 06, 2007

Don't bug me, I have more important things to do...

In my last posting, I said it was time to take off the gloves and - mixing my metaphors - to proclaim out loud that the emperor has no clothes. The current aid system does not work. For anyone interested in a detailed examination of that question, I suggest The Elusive Quest for Growth by Bill Easterly. Like me, Bill spent over 14 years at the World Bank, so his book is a blend of inside experience and academic rigor.

But I want to make one thing clear. It is not the people or the resources of the World Bank and other agencies that are bad. To the contrary, the people are for the most part incredible, and the resources unequalled. The problem is the system, which turns the whole into much less than the sum of its parts.

In the 1930s, Ronald Coase developed the theory of the firm. The theory argues that firms exist because they are able to produce more value than employees could produce if they worked independently. In other words, the whole is greater than the sum of its parts.

In the months before I left the World Bank in late 2000, I systematically asked my colleagues what percentage of their potential value they felt they were delivering. The answers were uncannily clustered around 25%. My colleagues were telling me that their potential was about 3/4 wasted.

I know of no scientific way to determine whether this percentage is correct. But let me tell you a story that may help illustrate.

When we did the first Development Marketplace in February 2000, over 300 teams from around the world showed up to set up booths in the towering atrium of the World Bank to pitch their ideas and compete for $5 million in funding. There was an incredible spectrum of groups, ranging from Ugandan women who had never been outside their home province; to supreme court justices from Latin America; to scientists from NASA. For once, it did not matter who you were - all that mattered was the quality of your ideas.

As I walked through the atrium, I came across one booth manned by these young scrappy guys who looked totally out of place. It turns out they were from Mexico and had an idea related to agriculture and rural development. One of my jobs that day was to help groups prepare their pitches before the judges came by for the formal presentations. As I listened to these young guys, I realized that the technical aspects of their idea were excellent and innovative, but they were missing a whole policy-related dimension that could affect the results dramatically.

I immediately pulled my colleague Mike aside and said "Who is the Bank's best expert on Mexican agriculture?" "Jim X," he replied. I said: "Go to Jim's office right now and tell him we need him down here."

A few minutes later, Mike called me on my cell. "Jim says forget it; he is too busy."

"Too busy?" I replied, "That's crazy - put him on." I got Jim on the line and told him we needed him.

"Forget it," Jim replied. "I have much more important things to do. I have to get this report to the board by next Friday and I am way behind. Oh, and by the way, that Development Marketplace you are running down there is a waste of time. It looks like a circus."

I got Mike back on the phone and told him to get Jim down here by any means, including physically bringing him down if necessary. I looked at my watch. The judges were due to come by in one hour.

A few minutes later, Mike showed up with Jim in tow. Jim was looking very unhappy.

"You are really upsetting me, Dennis," he said.

"I only need 30 minutes of your time," I told him, explaining the situation and introducing him to the Mexican guys.

Jim was in a very, very bad mood as he turned to them.

I stood back and watched as Jim starting talking to them in Spanish. At first he was looking down his nose. But as the conversation progressed, Jim realized that these guys had a good idea - and it showed in his face. He got down off his high horse and huddled with the guys and starting drawing diagrams on a sheet of paper. I went away to visit some other teams, and after a while I came back, and they were still in the thick of it.

"The jurors will be here in ten minutes," I said.

"Hold them off! Hold them off - we need more time," Jim pleaded.

"I can't hold them back - they are coming - they have only one more interview before they get here," I said, pointing at my watch.

Jim returned to the huddle, and they were all talking excitedly.

Fifteen minutes later, the jury panel showed up. Jim stepped back and off to the side and pushed the guys forward toward the jurors. I could not hear what happened, but I could see it. The jurors starting asking questions, and the Mexican guys were answering, hesitantly at first, but their confidence was building steadily. The questions and answers came fast and furious, and toward the end of the twenty minute interview, the Mexican guys even seemed to be anticipating some of the questions. The judges were nodding and talking among themselves as they left.

Jim leapt out of the shadows with a big smile on his face and shook the hands of all the guys. "Excellent, excellent," I heard him telling them. I left them all debriefing excitedly and walked away.

Later that day, Jim tracked me down. "Dennis," he said, "I want to thank you for dragging me down here. That was probably the most enjoyable and productive hour I have spent in my entire career at the World Bank. Those guys were awesome. I felt like the coach of an underdog college basketball team in the national championships. I am going to help them develop that idea further, regardless of whether they win an award here. We have already agreed I will go visit them next time I am in Mexico."

Sure beats writing reports for the board, doesn't it?