Love Thy Neighbor

The international development community will always look back on 2010 as a banner year for development policy in the United States. It was the year when development was first recognized as a pillar of national security. It was the year of the first ever-Presidential Policy Directive on Global Development. And it was the year of the State Department's first Quadrennial Diplomacy and Development Review. 

So yeah, a lot happened in 2010.

As an implementer in the field, though, I will always look back on 2011 as the real banner year. 2011 is when USAID translated all of the new high-level development policy work from 2010 into operational guidance for USAID’s staff and implementing partners. 2011 is when the rubber hit the road. Specifically, the USAID Policy Framework introduced in September of 2011 laid out seven new operating principles to shape the Agency’s strategies and guide its programming. These seven operating principles were:

1. Promote Gender Equality and Female Empowerment
2. Apply Science, Technology, and Innovation Strategically
3. Apply Selectivity and Focus
4. Measure and Evaluate Impact
5. Build in Sustainability From The Start
6. Apply Integrated Approaches to Development
7. Leverage “Solution Holders” & Partner Strategically

This was all taking place around the time that USAID launched the Southern Africa Trade Hub (the Trade Hub) in late 2010, a project that I have been working on in various capacities over the last several years. One of the Trade Hub’s highest profile accomplishments stands out as an example of what a project can do at the programmatic level when USAID’s operating principles are used to shape the design of development assistance. For today’s blog post I thought I would share the story behind the success.  I’ll start with a little background for context.

Background

South Africa has historically been home to a vibrant manufacturing industry and among the industries where it was always particularly strong was the manufacturing of textiles and apparel. In the late 1990s, however, South Africa’s textiles and apparel industries started to decline and by the end of 2010 South Africa’s industry looked like it was on the verge of collapse.

The implosion was driven by several factors, but the straw that broke the camel’s back was the 2005 expiration of the WTO’s Multi Fibre Arrangement (MFA) that had kept large quantitative ceilings in place to restrict Chinese exports.  The quotas had been used primarily to protect the large developed markets in the US and Europe, but they had indirectly assisted South African companies by protecting them from the threat of highly competitive apparel imports. Once those MFA quotas expired the global apparel industry became exposed, virtually overnight, to China’s unparalleled competitiveness in apparel. Between 2001 and 2010 South Africa went from being a net exporter of apparel to a net importer. South Africa finished the 00's with a trade deficit in apparel of over $1 billion.

And the turmoil was not isolated to South Africa - it hit the entire region of Southern Africa. For decades many of the smaller countries of the Southern African Development Community (SADC) had also been producing apparel. Several of these countries had even been manufacturing apparel for export.  Countries like Mauritius, Lesotho and Swaziland - and even South Africa to some extent - had originally benefitted from the MFA because the imposition of the quotas back in the mid 90s had driven much of the apparel manufacturing capacity in the large quota-constrained producers to smaller, less developed countries.

Not surprisingly, the chain of events that had crippled South Africa’s industry wreaked the same kind of havoc on the smaller apparel-producing countries in the region, and this is where things stood with the textiles and apparel industries in Southern Africa when USAID launched the Southern Africa Trade Hub (Trade Hub) program in September of 2010.  

Opportunity Knocks

The situation was clearly grim at the time, but when the Trade Hub looked at all the carnage that had taken place across the textiles and apparel industries in Southern Africa they saw an interesting development opportunity emerging.

The opportunity that the Trade Hub saw for Southern Africa was linked to events unfolding in China.  Production costs had been increasing in China because its labor markets had started tightening. Sustained periods of high growth had created a massive domestic market for apparel in China, and this new demand had started competing for China’s historically export-oriented output. Finally, Chinese companies had started turning down small orders because they could no longer compete on price without the full use of their production lines.  The door had started opening for other apparel producing countries to compete on a niche basis with China.

This was a particularly big deal for Southern Africa. Cheap Chinese apparel imports were largely responsible for the implosion that had taken place in South Africa’s textiles and apparel industries. China’s exports of apparel to Southern Africa had grown tenfold the past decade - from around $100 million in 2001 to over $1 billion in 2010.

From the Trade Hub’s perspective, the picture was clear:

1. South Africa - the largest economy in Sub Saharan Africa - was importing over $1 billion of apparel every year, mostly from China.
2. Production costs in China were on the rise and Chinese manufacturers were starting to turn down the kind of small orders/limited production runs that typified many of South Africa’s apparel imports.
3. South Africa’s neighbors - especially Lesotho, Swaziland, Madagascar and Mauritius - had both apparel manufacturing skills and under-utilized production capacity.

Put these three things together and the solution is clear right? Love Thy Neighbor!

What South Africa really needed was a way to bring the region’s apparel manufacturers to their doorstep. In fact the need for a new regional trade platform around textiles and apparel was so clear and compelling that the Trade Hub made it the cornerstone of the project's support for textiles and apparel.

Putting The Principles To Work

Remember that the whole point of this blog post is to highlight how the Trade Hub was able to embrace the new operating principles from USAID’s Policy Framework that had just been released to guide the design and implementation of Source Africa.  I’ll tell the story by describing how it came together in the context of three of USAID's principles.  

Operating Principle #1 - Apply Selectivity and Focus



By making “apply selectivity and focus” one of its seven core operating principles in 2011 it is clear that USAID was asking its staff and implementing partners to do a lot more homework in the design phase of a program to figure out specifically where it would be possible to generate impact, and to focus resources on those areas.  In the context of the Trade Hub’s work in textiles and apparel what this meant was figuring out which export markets provided the strongest opportunities for the region’s apparel manufacturers.

Here it is important to keep in mind that USAID's Trade Hubs had all originally been set up as mechanisms to help countries in Sub Saharan Africa increase their exports to the United States under the African Growth and Opportunity Act (AGOA).  So, to even consider selecting - and focusing on - an export market other than the United States would have been unheard of before USAID made “apply selectivity and focus” one of its seven core operating principles in 2011.

The reality back at that time was it made little sense to focus any significant resources in Southern Africa on promoting exports of apparel to the United States under AGOA because of recent market conditions in the US, political uncertainty around whether the US would be renewing AGOA, and some lingering non-tarrif barriers related to the overall enabling environment in Southern Africa. Of course promoting trade to the US under AGOA would still be part of the platform, it just could not be the core focus back then because promoting trade under AGOA had a long fuse to results ... the fuse to results in South Africa was a lot shorter. (A lot has changed with regard to the US Market and AGOA since then)

There was also an undercurrent at the time in the region’s industrial policy. A body of research that was reshaping the developing world’s perspective about big, global value chains had caught the attention of policy makers across SADC. This research was suggesting that global consolidation, asymmetric markets and evolved power structures were all increasing entry barriers, and making the upgrading process more complicated and contested in global value chains like apparel. And, the research was also pointing out how growth in end markets of the large developing countries (like South Africa) offered more attractive “regional“ opportunities for exporters.  A prominent regional economist at the University of Cape Town was spearheading a lot of the research, and thereby drawing attention of regional policy-makers towards South Africa as one regional market where the benefits of up-gradation and spillovers seemed more likely, and more accessible. 

Ultimately it was the confluence of all these issues, in aggregate, that pushed the Trade Hub to look at South Africa’s market as the best opportunity for the region’s textiles and apparel industries to have a significant and measurable impact over the life of the program.

Operating Principle #2 - Leverage “Solution Holders” and Partner Strategically

Once the Trade Hub had identified South Africa as its anchor market for promoting trade in textiles and apparel, the next step was identifying a "solution holder” to work with. In this case what the Trade Hub needed was an organization that could assemble the entire complex array of South African apparel buyers and engage them with the region's manufacturers. Where do you find that? How about the company that had been putting all those Chinese manufacturers together with South African buyers over the past ten years? That’s exactly who the Trade Hub found. 

The Trade Hub identified Leaders in Trade Exhibitions of South Africa (LTE) as the solution holder. LTE is a small, woman-owned South African event management business that has specialized in trade exhibitions for the textiles, apparel and footwear industries in Southern Africa since the mid 1990s. At the time LTE had been running the ATF Expo in South Africa for almost fifteen years. The ATF Expo had become the premier forum in South Africa where international exporters of textiles, apparel and footwear from all over the world came to South Africa every year to showcase their products for South African buyers.

That’s the key thing that LTE brought to the table for the Trade Hub - LTE brought a vast network and relationships with South Africa's apparel buyers. Over a 20 year period LTE had built connections with sourcing heads, merchandizers and technologists from all of South Africa’s chain stores, independent retailers, boutiques, distributors, wholesalers, importers, agents and manufacturers. In other words, if you were an apparel manufacturer that had started exporting to South Africa over the past 20 years there’s a very good chance that your connection to South African buyers was initiated through a platform established by LTE.

And I think the Trade Hub had a great pitch to get LTE interested. “Let’s join forces so we can do for the countries of Southern Africa over the next ten years what you’ve done for China and the rest of Asia over the last ten.”  Both sides were clearly interested. The hurdle was figuring out how to get it done. 

Operating Principle #3 - Build in Sustainability from the Start

USAID and its implementing partners have been hosting conferences and events, organizing buyer/supplier meetings, and sending beneficiaries to international trade shows for decades. While this classical type of donor-funded support is generally always positive in terms of outcomes, and sometimes leads to measurable results in terms of linkages and sales, it has always had issues in terms of sustainability. Well, the guidance coming out through USAID’s new Policy Framework was clear. The Trade Hub had to build in sustainability from the start - and that required a new way of thinking. 

The Trade Hub determined that the best way to make its initiative sustainable from the start was to begin with the end in mind. The process of imagining the end up front led to two important decisions. First, the Trade Hub asked LTE to assume complete ownership of the event from day one. In fact, the very first bullet point of the Trade Hub’s MoU with LTE required LTE to register all the intellectual property associated with the event in its own name. Second, the agreement clearly specified that while the Trade Hub would assist with certain elements of the event, LTE as the event owner would assume full financial responsibility for the costs of the Trade Show and full financial risk associated with the event.

It is difficult to put in words how much of a departure this kind of arrangement was from the conventional way of doing things with USAID programs. Instead of having USAID own, control, staff, and finance the activity, the Trade Hub decided to put a local partner in the drivers seat on day one. It was an unconventional move, but it was the move that made the most sense given USAID's new operating principles, because it meant that from day one decision-making about the event would made on a commercial basis.

Results

Once LTE and the Trade Hub had reached an agreement everyone went to work to put together the first event.  The first production of Source Africa was held in Cape Town, South Africa in April 2013. USAID, the Government of South Africa, Enterprise Mauritius, and several other regional stakeholders across the industry all lauded Source Africa as a visionary platform and tremendous success. The second and third productions of Source Africa were held in June 2014 and June 2105, both again in South Africa’s mother city of Cape Town. The last event attracted 226 exhibitors and more than 1300 visitors from 28 different countries.

While each Source Africa event has certainly promoted global exporting opportunities with the inspired support of the American Apparel and Footwear Association (AAFA), and while each event has attracted interest from buyers representing both the US and European markets, the commercial success of the event thus far is clearly linked to its facilitation of regional trade opportunities within Southern Africa. The exhibit below shows why (click to expand).

Annual exports of apparel to South Africa from its SADC neighbors more than doubled between 2010 and 2015, an increase of US $243 million. And over the past five years South Africa’s SADC neighbors have increased their share of South Africa’s apparel imports by 12 percentage points (from 15% to 27%). Over that same period China’s share of South Africa’s apparel imports decreased by 7 percentage points (from 60% to 53%). What is particularly interesting about the trend illustrated above is how little market share was gained by manufacturers from the emerging powerhouses in Asia (i.e. Bangladesh, Vietnam and Cambodia.) In most large, developed markets the new Asian powerhouses have taken the predominant amount of China’s market share losses - that is not the case in Southern Africa.

Now I don’t want to overstate the case. Yes, the doubling of SADC’s apparel exports to South Africa over the last five years is impressive, but it's not all just because of Source Africa. The trend started a couple of years before LTE put on the first Source Africa show. Source Africa’s contribution has been to provide a reliable platform every year for textile and apparel industry stakeholders across Southern Africa to gather and take care of business. Some people go to strengthen existing sourcing relationships. Some go to build new ones. Some go to offer technical assistance, or to sell fabric, or buttons. Some go to sell services. Some go just to check it all out because it’s in Cape Town, and because there’s a lot of interesting creative people hanging around. Some probably go because they have to check the box. The point is that a ton of people are going, more each year, and a lot of them every year.

Five years worth of data also provides the opporunity to look back and evaluate some of the team’s original instincts. In particular, I found it interesting to see if the data validated the team's decision to select, and focus on, the regional market instead of the US market given the prevailing circumstances at the time.  As the exhibit below demonstrates the gains that SADC producers achieved in the South African market are about the same as all countries of Sub Saharan Africa combined were able to achieve in the US market under AGOA (click to expand).

Neither of these performances compare to the kind of apparel volumes that Asian manufacturers have been exporting to the world the last 10 years. But, when you look at African apparel manufacturing in the context of these two export markets the regional opportunities afforded by the South African market become undeniably clear.  For Southern Africa, this is all a pretty big deal and it validates the Trade Hub's decision when they put the program together.

And the best part of it all is that Source Africa is already financially self-sustaining ... and it only took three years. I’m still shocked. In the 20 years that I’ve been doing this work I’ve never seen anything like it happen. 

- Drew Schneider

House Upon A Hill

About a year and a half ago I was driving with my family from our home in Gaborone, Botswana to Cape Town, South Africa. We were headed down to Cape Town because the maternal and child health services there are highly regarded, and my wife was about to give birth to our son. She was already 8 months pregnant when we started the trip to Cape Town, and we had our three-year old daughter, our nanny, and a 70-pound Labrador packed in the car with us, so we decided to split the 18-hour drive into small, manageable segments over four days. We took our time ... there was no rush.

The leisurely pace of the drive was cool for many reasons, but one of the coolest happened as we drove into Worcester on the final day of our trip. Worcester, South Africa is a small town that is surrounded by tall mountains on all sides.  As you make your way down the mountain pass, approaching the town from the Northwest, the first thing you see is a white office building perched above the rest of the town, just sitting there all by itself.  As you get closer you discover that the striking white building perched up on the hill, against a backdrop of tall mountains, is a practice office for the firm PwC. 

As we drove past the building a wave of nostalgia hit me. Powerful feelings associated with the decade I'd spent working for the firm at the beginning of my career ... Representing PwC was always a great source of pride for me. I was so moved by what I was seeing out the window that I pulled the car over so I could get out and walk around and try to capture it all with some photos. I grabbed the camera and jumped out.  My wife could tell it was important to me so she slid over into the driver’s seat and took the rest of the crew down the road to find some lunch, let the dog out to do her thing, and fill the car up with gas. A half hour later she was back. I’d gotten a bunch of good shots (like the one below) while soaking it all in so I jumped back into the car and drove off for the final stretch to Cape Town. I tried to keep one eye on the view of that iconic “house on the hill” in the rearview mirror ... but after a few minutes it was gone.

Offices of PwC in Worcester, South Africa

I had forgotten about that whole trip down memory lane in Worcester until I read an article on LinkedIn a couple weeks ago written by an old colleague of mine from those days at PwC. His post explores the virtue of “Doing the Right Thing” and concludes that it takes a lot of courage to do the right thing, but courageous leaders do it anyway. That is a sentiment I’ve always shared and tried to practice, and have written about before, which is probably why reading that piece on LinkedIn once again summoned up those feelings of nostalgia and pride that I’d felt when I encountered that "house on the hill” in Worcester eighteen months ago. Once again the sentiment was so strong that I decided I should probably try to figure out what was driving it.  I’ve spent the last few weeks reflecting on it, and for today’s blog post I’ve decided to share the story.

In order to figure out what was driving all the sentiment about PwC I realized that I had to take a step back so that I could look at it in a broader context.  I needed a framework to help put it into perspective. I finally found one in Dan Ariely’s latest book entitled “The (Honest) Truth about Dishonesty”.  For those that don’t know him Dan Ariely is a behavioral economist that became famous for his empirical research on irrational behavior, which has been blowing massive holes in the field of economics for the last ten years. This new work of his on dishonesty is really just an extension of his original theories. It is similarly rooted in creative empirical research and seems equally poised to disrupt many of our conventional ways of thinking.

The premise of Ariely’s work on dishonesty is based on a fairly straightforward construct:

• As human beings we are constantly torn by a fundamental conflict. On the one hand, we each have a strong desire to see ourselves as good and honest people. On the other hand, we each have a deeply ingrained - some would even argue biologically necessary - propensity to lie to ourselves and others.  
• In order to reconcile these competing forces we have to be able to justify any dishonest behavior by telling ourselves stories about why our actions are acceptable. This complex process of justification is called rationalization. 
• Therefore, any individual’s capacity for dishonesty essentially becomes a function of their capacity to rationalize dishonest behavior.  

Ariely’s empirical work on dishonesty has involved a bunch of creative experiments that he conducted on about 50,000 people to examine/measure the effects of various forces that are believed to influence any individual’s capacity to rationalize dishonest behavior. For example, his research confirms that creative people have a higher capacity to rationalize. It also shows that observing other people behaving dishonestly enables individuals to rationalize more dishonest behavior of their own. How about this one ... his research demonstrates that collaboration actually leads to higher levels of dishonesty!

What about the forces that decrease dishonest behavior, or have no observable impact? Well, Ariely found that people behave less dishonestly when they are given moral reminders before taking action, or when they are required to first take a pledge - or sign a statement - to behave honestly. And, while counterintuitive, it turns out that increasing the amount of money to be gained, or increasing the chances of being caught, doesn't actually have much of an effect on dishonest behavior.

Ariely provides a good summary of what he concluded about all these forces that shape dishonesty in an exhibit at the end of Chapter 10 of his book, which I’ve recreated for your convenience below.

Summary of the Forces that Shape Dishonesty from Chapter 10 of Dan Ariely’s book

Enough about the details of Ariely's empirical research and methodology for now. Hopefully your appetite has been whetted for more. If it’s a topic that interests you I highly recommend reading the whole book yourself; it’s a pretty quick and easy read with lots of good stuff! What I want to focus on now are the implications of Ariely’s research ... i.e. what does it all mean?

One of Ariely’s biggest findings is confirmation of the notion that just about everyone in this world cheats (yes ... even you and even me).  While that may be a little disheartening, it isn’t his most important discovery because his data also make it clear that most people, when left to their own devices, actually cheat less than a theoretically "rational” person would. This is because most people have fairly tight limits on what they can rationalize or justify as honest behavior. In other words, most of us often don’t even realize when we’re being dishonest because for the most part we’re actually pretty honest ... and because we set up nice little narratives for ourselves to rationalize our behavior when we aren’t.

The real problem that Ariely's research points to is the discovery that dishonesty is infectious, like a virus, and it becomes worse and worse in an organizational context when it goes untreated over time. This is the finding that really interests me because it has significant implications in terms of how organizations manage professional conduct, and ultimately, the connections between professional conduct and program outcomes. Which brings me back to the whole point of this blog post ... explaining the unusually strong, nostalgic feelings that I have about the decade that I spent working for PwC at the beginning of my career.  And here’s what has become clear to me over the past few weeks as I've reflected on it in the context of Ariely’s research ... PwC had already figured out 20 years ago most of what Ariely’s new research demonstrates empirically. In fact, PwC was the most ethical, courageous, and results-oriented place that I’ve ever worked, and that’s what made it such a memorable experience.

I realize that this is a pretty strong statement, so to help illustrate the point I thought it might be useful to share a few examples of what I remember PwC did to work against the forces that Ariely found to increase dishonest behavior, as well as what the Firm did to harness the forces that Ariely has found decrease dishonest behavior.

First, we had a clear code of professional conduct, and we took it seriously. And all of the Firm’s professional staff were required to re-read it every year and re-sign a pledge to abide by it. And we did. The important thing about our code was that it went a lot further than just a commitment to comply with laws and regulations. It actually codified the professional values that were important to the firm and enabled us to hold each other accountable to those higher standards of professional ethics. Because of the code it usually didn’t take a lot of effort to figure out the right thing to do.

We also had a methodical and selective process for screening/selecting new business opportunities, and then for managing the business we won. The methodology eventually became known as the Seven Keys To Success. These seven keys distilled the Firm’s important values into salient points and became a lens for management to use across the program lifecycle - a constant reminder of the Firm’s values and objectives at all key decision points.

There was always a strong organizational commitment to - and process for - identifying and managing actual and potential conflicts of interest. Potential conflicts were constantly surveyed and identified as part of the Seven Keys. When regulators started to become concerned about the rapid growth of consulting revenues, the Firm developed a formal, rigorous process for confirming independence on an annual basis.

The Firm wasn’t perfect. As is the case everywhere, mistakes were made. What I always respected was PwC's instinct to disclose, and take responsibility for, mistakes when they were discovered -  regardless of what kind of mistakes were made. All of the ethics training and behavioral conditioning that professional staff went through was structured to help you realize that while there were always going to be some consequences for making mistakes, it was nothing compared to what would happen if someone ever tried to cover something up.

I don’t think it’s a coincidence that two of the up-and-coming partners that I worked for and watched model the highest professional standards of ethical conduct all those years ago, Tom Craren and Tim Ryan, ended up serving in senior leadership positions in the Chairman’s office years later in their careers. In fact, Tim Ryan - who wrote the Linkedin article that I referred to earlier - has just been made the US Chairman of PwC. It’s hard not to respect an organization that fills its highest office with a young leader that you watched first hand walk the Firm’s talk through some tough situations.

On an individual level you were expected to tell the truth - or suffer the consequences. I remember during my second year with the Firm I got called into one of the partner’s offices because he wanted my opinion about a delicate situation that had come up with one of our clients. When he asked me the question I responded with, “Jim, can I be honest with you?” I’ll never forget his response: “Only if you want to keep your job Drew.” Pretty clear message, eh?

In fact, it’s really tough to find an element of Ariely's dishonesty framework that PwC hadn’t already figured out 20 years ago. When you look at it all from a big picture perspective you see that the Firm pretty much had it all nailed. I’ve updated the Ariely exhibit from before to illustrate the point (below).

Based on what I remember about my time with PwC: 1993 to 2002

It’s important to emphasize that the approach and culture around conduct wasn’t built for the purpose of moral dogma. It wasn’t ethics for ethics' sake ... it was a business strategy. It was always clear to me that the Firm’s standards for professional conduct, and the institutional structures that had built to encourage and enforce those standards, were designed to protect the interests of the Firm AND to provide real value for its clients.

Naturally, integrity was always one of the key products that PwC sold. And not just in the form of audit opinions. All of the analytical work we did for our clients had to be balanced - that was our niche. Our advisory engagements were structured to be objective. It was not our job to be persuasive - we weren’t advocates. But it went even deeper than just the basic notion of selling integrity. The attitudes went down into all the management consulting work that we did on systems development, process improvement, change management ... and yes, even into our work implementing development programs for USAID.

I still recall several occasions where our USAID consulting practice had to make some tough calls on whether or not to go in a certain direction with a program that a Mission was leaning towards. If we believed that proposed modifications to a scope or a new activity would undermine USAID’s long run development interests, we always took the time to lay out the concerns and outline some other options that we felt could satisfy everyone’s interests. Whenever we couldn’t resolve those kinds of sticky issues at the project level, the Firm’s leadership got involved to try and help facilitate a solution. On those very few occasions where there was no clear path to resolve differences of opinion on the best way forward, the Firm had no objection to quickly winding down its program so that USAID could engage another contractor that could support the approach. I know it was never easy for the Firm’s leadership to volunteer to walk away from revenue in the short term, but they were able to make those tough decisions when it became clear that the client’s preferred way forward was going to undermine the Mission’s objectives and/or threaten the Firm’s strong reputation within the industry.

Ironically, the USAID Missions we worked with almost always held a higher opinion of the Firm after we had to draw the line on something. This is because it usually turned out that differences of opinion around a proposed approach were driven by inter-agency issues i.e. they were most often cases where USAID was being pushed to do something by the Department of State, the Department of Treasury, etc. that it didn’t necessarily agree with from a development perspective, but felt that it had to go along with for political reasons. In a lot of these cases, the fact that PwC’s leadership drew the line often caused whatever agency was really driving the agenda to soften their position, which ultimately created some space for us to work together with the Mission at the project level to develop a way forward that made sense from a development perspective. In other words, USAID was often able to leverage PwC’s courage and reputation for integrity to keep more of its funding focused on development impact.

The key point of all this - a point I don’t think I can emphasize enough - is that at the core of the Firm there was a deep institutional commitment across all of our service lines to create long term value for our clients. That was always clear to me while I worked there; that’s largely what inspired me to work as hard as I did, and it’s what I credit most of the success to that I had in my decade with the Firm.

I’m sure this is why I also think the most important discovery that Ariely has teed up for us is the idea that there is a clear link between how a professional services organization approaches professional conduct and that organization's ability to help its clients focus on long term goals and long run value creation. Ariely explicitly made this connection in an interview at Wharton where he emphasized that his research clearly demonstrates that “the human brain [is] a rationalization machine that is going to rationalize what is good for us in the short term – not what is good for us in the long term, and not what is good for the organization.”

The implications of this are profound. What it means is that if you are a provider of professional services, and your goal as an organization is to help your clients create long-term value, you have to establish and maintain very clear and high standards of professional conduct. Tim Ryan probably said it best in his LinkedIn post when he wrote: "I feel very fortunate to work at an organization where integrity and courage are highly valued. That doesn’t mean that it’s always easy to go against the grain, but it sure helps.” 

By now I’m sure you’re asking the question: “So what does this all mean for the international development industry?

Granted, PwC is always going to be an outlier because it, along with the rest of the Big Four, represent "the shining city upon the hill" in terms of professional conduct. It may not be reasonable to expect all of USAID’s development contractors to bring the same level of rigor, discipline, and integrity to their engagements and their client relationships. I know ... because I've spent the better part of the last 10 years trying!

I can accept that there are probably some inherent limits on how our industry manages professional conduct given the nature of development assistance, the institutional power arrangements currently in place to deliver that assistance, and the political context shaping it. However, I remain absolutely convinced that there is a tremendous amount that our industry can learn and apply from a PwC-type approach to setting expectations around conduct and managing conduct against those expectations. In fact, I’ve come to strongly believe that a coordinated focus on professional conduct may ultimately be the best thing we can do to enable our industry to make significant leaps towards more powerful and more sustained development impact.

- DS