Clinton Global Initiative: Markets as problem-solvers... with the chance of total failure

Here in the U.S., we hear the term "market-based solutions" often in the context of climate change, when we talk about economic tools like a carbon tax or cap-and-trade scheme to reduce pollution. But there are tons of examples of this approach being applied to issues all over the world. And today at the Clinton Global Initiative, there was plenty of discussion of what works, what doesn't, and why we need to embrace the possibility of failure.

Lotus Foods reported back on a commitment the company made at the 2008 CGI annual meeting to introduce to the U.S. food trade 3-5 sustainably grown rices by 2012. By the company's model, sustainably grown rice is grown using SRI methods. SRI is the System of Rice Intensification (I was ignorant of SRI until today, but after some research I've learned this is a big deal in agriculture and the developing world). In short, SRI methods give farmers the tools they need to increase their yields, use less seed, less water (rice farming uses 1/4 - 1/3 of the earth's freshwater reserves annually), and no agri-chemicals. Today, Lotus Foods reported that they are on their way to meeting that 2008 commitment and have connected thousands of family farmers in Africa and Asia with profitable food markets in the U.S. (consumers can find Lotus rice at Whole Foods, for example). Bottom line: Farmers have increased their incomes 25 percent, American consumers have access to healthy, organic and sustainable rice choices, and both groups are addressing problems like food security, climate change, and water scarcity.

These are the kind of solutions that really get me excited - the kind where nobody needs to be "convinced" of anything, but where the solution benefits both the producer and end-user immensely and tackles other global problems.

But how do you know when an idea for a solution is a good one? Do you just know it when you see it? Or only once it succeeds? New York Times columnist Thomas Friedman opined that market-based solutions  must have two characteristics in order to survive: 1) They must be scalable (if not, then they're just a hobby); 2) They must be sustainable (they cannot live and die on government funding).

It was within this context that Leila Chirayath Janah, founder of an organization called Samasource that connects those in the developing world with basic online job opportunities, made an interesting point that too many non-governmental organizations (NGOs), are afraid to fail. This leads to not enough risk-taking, which means innovation and solutions are moving fast enough, which means the world is left with lots of inefficient work that isn't having an impact. NGOs should start adopting what successful entrepreneurs do when implementing market-based solutions: Measuring their impact soliciting feedback.

In my experience, there is a growing awareness among NGOs that measuring success is critical for continued funding and, of course, as justification to the membership for continued dollars. So as we tackle more environment problems with market-based solutions and collaborative partnerships, NGOs are actually in a great position to learn about business best-practices (i.e. measurement and feedback) that could be shaped and adopted for their own use. And, knowing when to call it quits. "We have to get more comfortable with the idea of failure in the social impact sector," said Janah, in order to make way for those organizations with the best solutions that are having the greatest impact most efficiently.

PHOTO: Lucas Jackson/Reuters via PicApp