Paulo Savaget Explains How the World's Scrappiest Organizations Tackle Complex Challenges

By Scott S. Smith | Thursday, 23 March 2023 | Feature

Paulo Savaget has studied all kinds of organizations that succeeded despite very limited resources, from Airbnb when it started out to a nonprofit that distributes medicine to underserved areas, and discovered their key "workaround" strategies.

University of Oxford associate professor Paulo Savaget experienced his first "workaround" when he was 10 months old, and he developed life-threatening diarrhea because he could not absorb water or food. His family lived in Brazil, and his mother could no longer breastfeed him, but formula was not available.

"Through word of mouth, they heard about young mothers who were poor and were willing to nurse me alongside their own babies," he told Startup Savant. "There was, of course, a chance of HIV or other diseases being transmitted, but my parents had to make a choice, and it worked. This kind of imperfect or unconventional option is what we call a workaround or a hack, which scrappy individuals and organizations resort to when traditional solutions are not available."

In his new book, “The Four Workarounds: Strategies for Tackling the World's Scrappiest Organizations for Tackling Complex Problems,” Savaget says these fall into categories:

• The Roundabouts: These are ways of disturbing an undesirable self-reinforcing behavior that can alleviate an urgent problem while building momentum to pivot in a different direction.
• The Loopholes: Industries often have what they think are inviolable rules about the ways things should be done, but these are often full of ambiguities and issues that are not addressed, which give upstarts opportunities.
• The Piggybacks: These capitalize on existing approaches in other fields that can be applied to a new type of challenge.
• The Next Best: These are often patches when the preferred choice is not available but have the potential to become the new norm.

Savaget received his B.A. in economics at a Brazilian university in 2009 and his Master's in public policies in 2012, but he is more than an academic. He was a hands-on consultant working on projects in various settings, including for the OECD, many large companies in Latin America, and nonprofits. But by 2015, when he became a Ph.D. candidate in the engineering department at the UK’s University of Cambridge, he had become disillusioned with standard corporate management practices.

"I knew that consultants tended to ignore groups that were not paying them while preaching to nonprofits that they needed to become more business-like in their practices," he recalled. "But my work with nonprofits had taught me there was a lot that corporations could learn from small organizations that make outsize impacts. I call these scrappy because they're feisty, resourceful, and have to think quickly, able to persist because of their unconventional methods."

Hacking Roundabouts

He had studied some criminal hackers who had managed to crack computer systems and steal 170 million credit card and ATM numbers, despite a lack of training. No one in academia seemed interested in the way they improvised solutions, so he received approval to discover techniques that might have applications to solve high-stakes social and environmental problems. 

"It's human nature to tackle obstacles head-on, but this often results in banging our heads against the wall," he wrote. "The secret of hackers is they weave through uncharted territory and, instead of confronting the bottlenecks that lie in their way, they work around them. Wherever there are systems, there is the potential for hacking."

Savaget knew that conventional wisdom is usually the guide to getting things done because it streamlines the process of solving challenges. But he also noticed that even large companies tolerated and sometimes encouraged unorthodox approaches to seemingly intractable problems. 

"Bootlegging, as innovation scholars called it, is prolific in the electronics industry and has had a profound effect on the development of some of our most common gadgets and appliances," he explained. "In the 1960s, Chuck House, a Hewlett-Packard engineer, designed a large screen display monitor despite direct orders from co-founder David Packard to abort the project. The device is now in more than half of the company's products. Other bootlegged creations include the first laptop computer at Toshiba and the original laser printer at Xerox."

H-P and 3M, among many other tech giants, now formally allow employees to devote 10%–15% of their time to pursue their own interests, recognizing that positive results may come out of a "roundabout." The use of masks and social distancing were roundabouts until vaccines could be developed.

"Roundabouts don't so much tackle systemic challenges as interrupt self-reinforcing behaviors and buy time to mobilize, negotiate, and develop alternatives, alleviating an urgent problem, while building momentum to pivot in a different direction," Savaget wrote. 

The Pandemic Panic to Use Loopholes

When the COVID-19 virus hit the Brazilian state of Maranhão in early 2020, its governor, Flavio Dino, faced multiple dilemmas. Half its population lived on less than the equivalent of $5.50 a day, and providing the afflicted with healthcare was critical. The state's estimated cost to fight the virus was $160 million, but the federal government had only given it $10 million.

The most urgent need was for ventilators, but the federal government (controlled by the opposing party), was distributing according to their central plan, which left far too few for Maranhão. Local businesses offered $3 million to buy them from China, but there was no direct flight between the two countries, and during a refueling stopover in the US, the government seized the shipment and bought the ventilators at a higher price. The same thing happened with an attempt to go through Germany.

But Governor Dino, a former federal judge, knew the legal loopholes that could be exploited, working with the state's largest supermarket chain and a mining company to come up with a series of workarounds that could be stacked together to save lives. 

Instead of donating the money to the government, businesses gave it to the supermarket, which arranged to have the ventilators manufactured and flown on a rented plane to Ethiopia, where inspection of cargo was unlikely. The next stopover was in São Paulo, Brazil, but the cargo was kept secret and arrived in Maranhão at night, when no federal inspectors were around. A state inspector signed a document saying he would return the next day to "fulfill all the legal requirements of customs," which he did. 

But before he returned, state government employees had taken the ventilators to hospitals to intubate patients. They knew that when the inspector found out they were being used to save lives, they would not be confiscated. The federal government opened a case against the ones involved for disobeying laws of international trade and customs, but since they were not trying to smuggle prohibited goods, a court found them not guilty. It was an extreme example of being asked for forgiveness rather than permission.

Positive Piggybacking

The strategy of piggybacking capitalizes on seemingly unrelated systems or relationships. Savaget cites the evolution of advertising on TV. In the 1950s, each commercial had to be a full minute long, but as the number of people who owned televisions grew from 9% to 87%, the audience became so much larger that ads became unaffordable for many companies.

Regulators at the National Association of Broadcasters refused to offer shorter spots because they felt this would lead to clutter and viewers would be overwhelmed with ads. But it did allow "integrated" ones where two companies had related but non-competitive products. Gradually, the rules were relaxed to allow any company to buy shorter or longer ads.

Likewise, in the early days of the Internet, companies with complementary products would promote each other through their media channels. Then as more data became available, groups could be targeted by the most relevant ads, while now individual searches are documented by digital "cookies." These can bring restrictions that can be overcome by piggybacking, synchronizing their cookies to work around these limitations. 

Savaget cites the piggyback case of M-Pesa, a Kenyan money transfer service launched in 2007, backed by UK-based voice and data giant Vodafone and Safaricom, a mobile service in which it had a 40% stake. A Vodafone executive knew that banks charged high transfer fees and 80% of Kenyans did not have accounts, though many had mobile phones. He secured a grant that allowed a pilot program to demonstrate that phones could be safely used topay bills at a very low charge. Within two years, Safaricom had 8.6 million Kenyans using the service, with a cash transaction volume of $328 million per month.

The Next Best Patch

"Don't undervalue the power of a patch, especially where time is short, information is limited, and the need is urgent," Savaget wrote. "In highly complex circumstances, we have to aim for a patchwork of multiple decentralized, fragmented responses rather than a single solution."

The pandemic again provides an example. There was a desperate need for N95 face masks in March 2020, but 3M, despite revenues of $32 billion, would only commit to doubling their production. Governments and international organizations turned to manufacturers outside the healthcare sector to produce hand sanitizer, engineering companies built ventilators, and individuals were encouraged to make masks.

"Next-best workarounds often emerge and gain traction as alternatives to mainstream ways of doing things," wrote Savaget. "We tend to think of disruptions as heavy blows that quickly change everything, but the reality is they often result from a series of workarounds that gradually challenge the status quo, making new possibilities more visible and accessible."

The Workaround Mindset

Savaget notes that "rules give us cognitive shortcuts, rule of thumb tactics that help us make decisions quickly without stopping to think much about our course of action." We don't think that we are conforming to social rules, but "conformity can be very harmful, and deviation is cognitively emancipating … Workarounds are attainable, lower-risk options for deviance and can produce potentially outsized payoffs."

When he worked as a consultant for large companies, he realized how often supposedly expert studies were used by managers to impose a dominant story on those involved. Consultants usually don't want to challenge clients' assumptions, even when they know they are wrong, and reports try to accommodate the conflicting views.

"The expert's problem is they rely too much on what they know, numb to different ways of interpreting things in situations all too familiar to them," he wrote. "The upside is that insiders are rarely surprised, but the downside is that they are rarely surprised."

Outsiders who lack the same expertise feel free to rethink everything, giving them more creativity, flexibility, and the ability to challenge the status quo. Savaget advises learning to become an "inner outsider" in your organization using lateral thinking, applying knowledge from a domain we specialize in to others where we are not experts. Bringing in people with diverse backgrounds is also essential to get input from a fresh point of view.

Since most problems are complex, workaround solutions need to be created by building block experiments that may be messy. One starting point can be to analyze where and why the default answer is not working.

"My pet peeve is when people say you must think outside the box, and then they follow a one-size-fits-all brainstorming approach," Savaget wrote. "Not every creative activity needs Post-it notes and flip charts. Sketch, draw, jot down bullet points, start a Google spreadsheet, find mind map software online, engage with others (or don't)."

He faults large companies especially for too much long-term planning, as if a comprehensive evaluation can anticipate every complicated challenge over the horizon. "Overplanning explains why stand-alone projects often overpromise, overspend, or drag on interminably. We also pay a price by missing new or evolving opportunities."

Better, he advised, is to create a culture of pragmatism that cultivates workarounds that solve immediate problems, experimenting on the way to something more sophisticated and permanent. 

About the Author

Scott S. Smith

Scott S. Smith has had over 2,000 articles and interviews published in nearly 200 media, including Los Angeles Magazine, American Airlines’ American Way, and Investor’s Business Daily. His interview subjects have included Bill Gates, Richard Branson, Meg Whitman, Reed Hastings, Howard Schultz, Larry Ellison, Kathy Ireland, and Quincy Jones.