The importance of outliers

When you do an analysis to promote local economies and innovation, who is your target group? We at Mesopartner have always emphasized that it is of key importance to understand the system in which a business acts. This involves the informal and formal relations in which businesses interact with others (e.g. in clusters, buyer-supplier networks, value chains and innovation systems), the perspective of businesses, including their perception about themselves, their markets and their business strategies, and finally the market forces that are in place in related subsectors.

Getting a preliminary feeling for the reality does not always require lengthy analysis. Rapid appraisals and direct interaction can be a starting point and provide a first insight into the system. However, it also requires a good selection of interviewees from businesses and supporting institutions. How would you select the target group for such an analysis? Many analysis frameworks take the following approach: businesses are first selected from a sector, cluster or value chain, followed by important institutions in the environment (technology stations or centres, knowledge providers, R&D organisations, training institutes, etc.). They are interviewed, conclusions are drawn and interventions designed.

For some time Mesopartner has been reflecting on how to improve the way in which we do analyses to better understand the complexity of the environment in which we work and promote interventions.

One important aspect for gaining a better understanding of patterns in complex systems is to ask yourself once the overall analysis has been done, What is really going on here? What patterns of behaviour can we identify? An important aspect which we now stress is to look at outliers, which behave and act very differently from the majority.

In economic development promotion, this outlier perspective is often not much taken into consideration, and often businesses and institutions with similar patterns of behaviour and ways of thinking are visited. What is needed far more is the identification, already at the preparation stage of the analysis, of outliers as an important aspect; not only as an add-on, but as a key perspective. Which outstanding businesses and supporting knowledge institutions are behaving differently from the usual way of doing things? What is driving them? What are their patterns of positive and negative behaviour? How do they deal differently with the reality and the system around them?

In our work in Mesopartner we firmly believe that you have to start working with what you have rather than building parallel structures. Just few weeks ago in a Mesopartner meeting I was introduced to a methodology called “Positive Deviance” (Thanks Sonja!, @sonjabl) and the insight greatly aroused my interest. It assumes that in every community there are positive deviants that have specific attitudes, cognitive processes and behavioural patterns that differentiate them from the majority. They generally find different and new solutions, they follow new paths – they can be very small and typically not show up on the radar screen. Instead of making heroes of these businesses or people, it is rather the objective of the approach to demonstrate that in a specific community, cluster or sector there are uncommon behaviours which have proven to be successful and which can be adopted by all because they are already being practiced by a few within the network.

While the positive deviance approach looks very much at positive examples, it is my understanding that it is as important to look at outliers in order identify negative behaviour patterns that are in place. Both perspectives are important and necessary to gain a better sense of the dynamics of the system.

In his commendable book “Outliers”, Malcolm Gladwell especially tries to overcome the argument that the success or failure of outliers is related only to individual experience, (lack of) talent and motivation. He places much emphasis on the role of the system that shapes the development of outliers:

The tallest oak in the forest is the tallest not just because it grew from the hardiest acorn, it is the tallest also because no other trees blocked its sunlight before it matured. We all know that successful people come from hardy seeds. But do we know enough about the sunlight that warmed them…?

An intensive search for outliers in our daily work can provide us with deeper insight into how the social system, innovation system or cluster works and where to test interventions to promote interrelations.