Take Off the Handcuffs: A Simple Prescription for Fixing the World Bank

"The World Bank," a colleague once told me, "is less than the sum of its parts." And other colleagues always grinned and agreed when I cited him during my seventeen years at the Bank. They all immediately recognized what no one officially admits: the Bank underperforms because it constantly degrades its most precious resources -- the energy, skills and creativity of the people who work there. And the cost of this degradation is borne by the world’s poor, who deserve much better projects and programs than the Bank’s harassed, hamstrung staff can provide.

Part of the problem undeniably stems from a process-driven, bureaucratic culture. But this culture cannot be understood in isolation from its international political roots. Despite the rhetoric about participation and transparency, the Bank is a structured hierarchy governed by the political needs of its major shareholders -- the US, the EU and Japan. Their disagreements are legion and constantly changing, as their governments pass through political cycles. And none of these cycles is in sync with the rhythms or complex realities of development. To lubricate never-ending frictions among the powerful, the Bank’s Board of Directors emits a steady stream of lending instructions, rules and regulations with scant regard for internal consistency or realities in developing countries. As power shifts the chain of instructions only grows, because few links are ever eliminated. The left and right are equally complicit in this, because both seek to mobilize the Bank's command hierarchy for their own ends.

At the end of the chain, the Bank's staff members struggle on. Their situation evokes the plight of motorists in a long traffic jam: perturbations at the front amplify as they pass through the chain, leading to a chaotic succession of stalls and accelerations at the end of the queue. Under such stresses, things naturally tend to fall apart. It's convenient to ignore the true causes and blame the staff when this happens, so the Bank's external critics (left and right) continually rail about bureaucrats who are non-accountable, isolated, incompetent, arrogant, cosseted, jaded -- whatever adjective suits the ideological needs of the moment.

Of course, the critics always sound plausible because some staff members do surrender to frustration by becoming process junkies or cynical time-servers. But most do not, so the basic prescription for improving the Bank's performance is very simple: Just take the handcuffs off the staff and let them show the world what they can do. Here’s what this means, how to do it, and why it will work.

What this means

Let's begin by dropping the pretence that the World Bank is or should be the financier of development. It can't be -- it's just not big enough -- and it's a mistake to judge it as if it were. As the staff and management all recognize, at least privately, the Bank is really in the social venture capital business. Its true vocation lies in generating and testing ideas and models for development under the complex conditions that prevail in the countries where it works. Its operational teams should comprise its entrepreneurial core, whose leading-edge projects are inherently risky but potentially high-impact. Many projects will fail at the leading edge, just as many private-sector venture projects fail. The Bank's senior management should expect this, and view Bank projects from a portfolio perspective.

How to do it

Attempting to transform the entire Bank overnight is a guaranteed recipe for failure. Rather, the Bank should apply a learning paradigm to its own operations. Senior management should establish a pilot unit within the Bank that tests the venture model under realistic field conditions. The model includes three elements that would have to operate simultaneously for the approach to win broad acceptance.

• Establishment of a competitive venture fund, with binding, ex-ante resource commitments to teams based on their business plans. At least some funds would be open to competitive bids from groups outside the Bank.

• Autonomy in client identification, marketing, design and implementation: no overrides or second-guessing from higher management; no formal regulatory requirements; no formal review or project phasing requirements; no restriction on potential clients.

• Complete operational transparency, subject to common-sense confidentiality for certain client interactions; open monitoring and reporting on financial, economic, social, environmental and other technical components by a parallel team, supported by completely independent funds, that would be present at all points in design and implementation. This team would be charged with understanding the project in its full complexity, reporting and commenting on developments, and evaluating project outcomes using ex-ante and ex-post observations.

Pilot operations should continue for 3-5 years. The model should be tested through comparative assessment, by assigning parallel monitoring teams to standard Bank projects, with the same reporting and evaluation requirements. If the model works, it should begin expanding rapidly to displace conventional operations.

Why it will work

This model provides an organizational learning vehicle that will marginalize process junkies and time-servers, while unleashing the thousands of smart, highly-skilled, well-informed, dedicated Bank professionals who know how to operate under rough-and-tumble conditions in developing countries. The model is designed to mobilize their intelligence and energy in a flexible operating mode, under transparent conditions that ensure respect for international financial, social and environmental norms. Given the opportunity, the Bank's best people will line up to participate in such a venture. The pilot itself will provide a novel view of the Bank as a non-bureaucratic, nimble, transparent social venture institution that fosters leading-edge project designs as learning vehicles in an environment that rewards risk-taking and expects a significant number of failures. In the same vein, senior pilot managers will view themselves as steering a venture portfolio under complex conditions, not as myopic judges of success or failure in individual cases.