Economics and Irregular Warfare

[Cavguy]

Wish I had more time to write.

This is what I have concluded about economic development from my personal experiences and two years at the COIN center, which doesn't all agree with theory. The key is to realize that all aid "takes a side" as you alter the power balances between communities, governments, families, and tribes. That well you just built may fundamentally alter a centuries old power dynamic.

You'll never get to the bottom of the 2d and 3d order effects in a society you are not a part of. Therefore, it is my opinion that $$ employed by tactical commanders must be transactional. Our temptation is to do good works. As some others have indicated, that's nice but not what a tactical commander should be doing. He should use it to gain influence with targeted groups and individuals critical to defeating the insurgency in that AO. The key part is that for such assistance you MUST get something tangible in return. That can take many forms - security force recruits, safe passage, governance participation, etc. But don't ever do a project HOPING it will "buy" goodwill. Analyze your AO, determine what populations or people you find most critical, and use your limited funds accordingly.

If you click on my sig and read about my experiences, you will see that money was employed tactically at those who were cooperating by providing security, information, and cooperation. Bottom line, good behavior rewarded, bad behavior - no $$ to your AO.

A good example was in Ramadi - instead of just doing good works and providing security with our forces, BG MacFarland made it transactional. In exchange for protection and aid they provided police recruits - half guarded the local area, and half were used elsewhere in the city as we needed. We also received guarantees of safe passage. Read the articles linked in my sig for more. Granted, this example was from Iraq, but I think that is one of the few non-location specific messages out of Ramadi. As Kilcullen says, giving the locals something without a return only gains their contempt, not cooperation. Some may sneer at it as bribery, but that's what CERP really is for anyway, no? Disguised as civil works, but at its essence a bribe to keep the population content? I guarantee it costs much less than an MRAP, Stryker, or the SGLI/medical care of dead soldiers. It may even have positive long term effects on the region and nation, if done right.

Bonus win if you can employ the $$ through local or national security forces. It doesn't matter so much what the Afghans think of you, only what they think of their own government.

Just random Sat night musings. I'll be more coherent tomorrow.

[Bill Moore]

Posted by Cavguy,

If you click on my sig and read about my experiences, you will see that money was employed tactically at those who were cooperating by providing security, information, and cooperation. Bottom line, good behavior rewarded, bad behavior - no $$ to your AO.

Although you're just touching the issue, you are looking at from the right perspective.

Posted sy Slapout,

IMO the real 800 pound Guerrilla in A'stan is the Economy. Without a stable Economy no country can survive.......Including the USA.

The insurgency is based on a lot of things, but very little has to do with the economy. What is really different with the economy today (other than the occupiers Russian and U.S. who provide a temporary foreign economy) than say 1975? There are several countries with very weak economies that continue to survive year after year. My argument is you're supporting a major effort that isn't solving the problem that we need to solve. Putting it simply, even if our efforts to establish a better economy are effective, the insurgency would still exist.

We can use economic development at the micro level to influence behavior if we're skillful enough (read not politically correct), but I quote Kilcullen from his book "Accidental Guerrillas" on p67,

Governance and development, tied to a security and information strategy that gives the population incenttives to support the government, are thus extremely powerful COIN tools

break

There is also a belief, unfounded in reality, that deveopmental assistance generates gratitude, or "hope", in the population and encourages them to support the government. Field experience in both Afghanistan and Iraq, however, has shown that insurgent intimidation easily overcomes any residual gratitude effect, while historical studies have shown that in civil wars and insurgencies, popular support tends to accrue to locally powerful actors rather than those actors the population sees as more congenial: the more organized, locally present, and better armed a group is, the more likely they'll be able to enforce a consisttent system of rules and sanctions, giving the population the order and predictability it craves in the deeply threatening , uncertain environment of insurgency.

We (the coalition) should be most powerful force in that village making the rules, not diverting efforts building the economy unless it is relevant to influencing the population. After we suppress the insurgency, then we can do some real economic development for the long term win like we did in Germany and Japan.

[Surferbeetle]

Bill,

A policeman's understanding of the proverbial three blocks in his AO is decidedly different than a Soldier's/Marine's understanding of those same three blocks. That hard won knowledge is based upon a significant difference in time on station (years vs. 12 months or less), use of different TTP's, and I, for one, do not lightly dismiss a policeman's considered opinion concerning the human animal.

Soldiers and Marines insights are just as valuable as a policeman's, and I do not dismiss those either. There was a SF WO who's insights proved to be invaluable to me just outside of Iskandariyah and those of his Marine tanker brothers were just as important...

Let's check a couple of your stated assumptions:

The insurgency is based on a lot of things, but very little has to do with the economy

Selected Histories of Economic targeting

Islamic Charities

This alleged support for acts of violence and terrorism in the Islamic charitable sector—and a seeming toleration of such activities—raises serious questions. Is a significant portion of this charitable sector a front for terrorist activities? Or is a small minority tainting the good deeds of the majority?

Iraq Embargo

The Iraq sanctions were a near-total financial and trade embargo imposed by the United Nations Security Council against the nation of Iraq. They began August 6, 1990, four days after Iraq's invasion of Kuwait,[1] and continued until May 22, 2003, after the fall of the Saddam Hussein government in the US-led invasion earlier that year. Their stated purpose was at first to compel Iraq's military to withdraw from Kuwait and after that to compel Iraq to pay reparations, and to disclose and eliminate any weapons of mass destruction, and to do certain other things.

Soviet Union

The Soviet Union's collapse into independent nations began early in 1985.[dubious – discuss] After years of Soviet military buildup at the expense of domestic development, economic growth was at a standstill. Failed attempts at reform, a stagnant economy, and war in Afghanistan led to a general feeling of discontent, especially[citation needed] in the Baltic republics and Eastern Europe.

1973 Oil Embargo

The 1973 oil crisis started in October 1973, when the members of Organization of Arab Petroleum Exporting Countries or the OAPEC (consisting of the Arab members of OPEC, plus Egypt and Syria) proclaimed an oil embargo "in response to the U.S. decision to re-supply the Israeli military" during the Yom Kippur war; it lasted until March 1974.[1] OAPEC declared it would limit or stop oil shipments to the United States and other countries if they supported Israel in the conflict. With the US actions seen as initiating the oil embargo, the long-term possibility of embargo-related high oil prices, disrupted supply and recession, created a strong rift within NATO; both European nations and Japan sought to disassociate themselves from the US Middle East policy.

After we suppress the insurgency, then we can do some real economic development for the long term win like we did in Germany and Japan.

Simultaneous execution of multiple LOO's

Varying levels of development work are historically undertaken during preconflict, humanitarian/criminal crises, wartime, and post conflict periods.

For example, CA-bubbas have worked WWI, WWII, Vietnam, Iraq and Afghanistan.

CA Bubbas are not the only people who work during hostilities...ICRC, MSF, and others do what they can...

Best,

Steve

[Bill Moore]

Steve,

I normally learn a lot from your posts, but your last one to me appears to be have completely missed the mark. You're bringing up examples of economic warfare that have nothing to do with economic development as it relates to COIN.

CA Bubbas are not the only people who work during hostilities...ICRC, MSF, and others do what they can...

This is exactly what I'm taking issue with, we do what we can instead of doing of the right thing. I'm sure ICRC and others "feel good" when they hand out school books and medicine, but during a COIN effort if it doesn't specifically target a select populace with the objective of separating them from the insurgency and pulling them into a closer relationship with the government then you're just doing humanitarian work to simply make yourself feel better, it doesn't contribute to a strategy. I ensure the enemy doesn't just do what it can, but has an agenda when they hand out aid.

As for police officers looking at it differently, could it be they're looking at a different problem set altogether? The elderly in the U.S. may be involved in the Meth trade now because they can't make it on social security, so that is an economic issue that must be resolved, because ultimately in this case that is the underlying issue.

Kids in depressed areas may join gangs and get involved in illegal activities because that is the accepted economic model. If you improve the job aspects you only address one underlying issue. Normally there is another underlying issue that is seldom considered, and that is the security/social norm influence. If the strongest tribe in the neighborhood is the gang and you offered a fair paying job to a kid that is a gang member (without moving him out of that neighborhood/influence), do you think he would take it? More importantly do you think he would leave the gang and place his family and him/herself at risk?

This alleged support for acts of violence and terrorism in the Islamic charitable sector—and a seeming toleration of such activities—raises serious questions. Is a significant portion of this charitable sector a front for terrorist activities? Or is a small minority tainting the good deeds of the majority?

No one said insurgencies didn't require economic activity, I said the root cause wasn't about economics. By all means we need to target their economic engines, but you don't necessarily do that through economic development. It may or may not play a role.

The Soviet Union's collapse into independent nations began early in 1985.[dubious – discuss] After years of Soviet military buildup at the expense of domestic development, economic growth was at a standstill. Failed attempts at reform, a stagnant economy, and war in Afghanistan led to a general feeling of discontent, especially[citation needed] in the Baltic republics and Eastern Europe.

Not germane, we're talking about insurgency and furthermore as you know were many factors that came together to create the perfect storm for the USSR. I suspect they spent far less on their military than we did, but they spent a greater proportion of their GDP. Still that was only one reason the wall came down.

The 1973 oil crisis started in October 1973

State versus State, not an insurgency

Simultaneous execution of multiple LOO's

I call this the illusion of a plan, and it is the lazy man's way out of doing the real work that a real plan involves. Amazingly now how we can address any problem by making up four or five LOOs, put them on a power point slide, then we're done. If the simultaneous efforts aren't synchronized toward common objectives, then they lines to no where. Read Killcullen's example of building a road in Afghanistan as a form of political maneuvering, it wasn't simply doing what they could, but they built it with specific objectives in mind that had little to do with the road itself.

We're forgetting the basics.

[Surferbeetle]

Bill,

Your analysis, as always, covers interesting points and I appreciate the opportunities to consider what you have to say. You have been some places and seen some things and it shows in your words.

You're bringing up examples of economic warfare that have nothing to do with economic development as it relates to COIN.

The general point I was/am attempting to make is that economics are an inseparable component of human wars. From this it follows that victors of wars understand how to use economics to further their aims, and that the use of economics has both destructive and constructive components which need to be trained upon.

By walking the land and studying it I have come to the understanding that all living things are designed to find/use/excrete resources, reproduce, and rest. Finding/using/excreting resources leads to competition/fighting/wars (and capitalism is one such manifestation of this design but I digress ). Plants fight for existing space/sunlight/water/nutrients/breeding rights, and animals fight for existing area/water/nutrients/breeding rights. Neither fights all day/night long everyday however, and it is obvious to me that more skills than just fighting are required in order to live life.

This is exactly what I'm taking issue with, we do what we can instead of doing of the right thing. I'm sure ICRC and others "feel good" when they hand out school books and medicine, but during a COIN effort if it doesn't specifically target a select populace with the objective of separating them from the insurgency and pulling them into a closer relationship with the government then you're just doing humanitarian work to simply make yourself feel better, it doesn't contribute to a strategy. I ensure the enemy doesn't just do what it can, but has an agenda when they hand out aid.

My friend, we follow FM's for many things however FM's are just individual trees in the proverbial forest. How about the 'strategy' of the Bible, Torah, and Koran?

As for police officers looking at it differently, could it be they're looking at a different problem set altogether? The elderly in the U.S. may be involved in the Meth trade now because they can't make it on social security, so that is an economic issue that must be resolved, because ultimately in this case that is the underlying issue.

Kids in depressed areas may join gangs and get involved in illegal activities because that is the accepted economic model. If you improve the job aspects you only address one underlying issue. Normally there is another underlying issue that is seldom considered, and that is the security/social norm influence. If the strongest tribe in the neighborhood is the gang and you offered a fair paying job to a kid that is a gang member (without moving him out of that neighborhood/influence), do you think he would take it? More importantly do you think he would leave the gang and place his family and him/herself at risk?

The human condition encompasses the spectrum from all out war to peace. Reductionist thinking/analysis (i.e. problem sets, control volumes, and free bodies) can be very powerful, but at the end of the analysis procedure we must reincorporate the resulting answers into an analysis of the particular system being studied in order to check for accuracy.

I am of the opinion that much of the security LOO, in fact two out of the three blocks in the three block war, can and should be handled by police forces/rule-of-law-forces working in concert with the military. Like you I have been reading about policing, speaking with police friends, and I am also trying to understand our problem set (Iraq and Afghanistan) from this particular viewpoint. At the end of the day however I am a soldier and not a policeman/lawyer/judge and so I am still thinking about it.

No one said insurgencies didn't require economic activity, I said the root cause wasn't about economics. By all means we need to target their economic engines, but you don't necessarily do that through economic development. It may or may not play a role.

I believe that economics are an inseparable component of human wars.

Not germane, we're talking about insurgency and furthermore as you know were many factors that came together to create the perfect storm for the USSR. I suspect they spent far less on their military than we did, but they spent a greater proportion of their GDP. Still that was only one reason the wall came down.

State versus State, not an insurgency

You are correct here, to use Ken's word, I did indeed conflate some of the finer points that you have identified here while in pursuit of the larger point that victors of wars understand how to use economics...sloppy on my part.

I call this the illusion of a plan, and it is the lazy man's way out of doing the real work that a real plan involves. Amazingly now how we can address any problem by making up four or five LOOs, put them on a power point slide, then we're done. If the simultaneous efforts aren't synchronized toward common objectives, then they lines to no where. Read Killcullen's example of building a road in Afghanistan as a form of political maneuvering, it wasn't simply doing what they could, but they built it with specific objectives in mind that had little to do with the road itself.

Being able to successfully execute a campaign comprised of simultaneous efforts synchronized toward common objectives is the result of intensive training. How often does the GPF train on how to use economics as part of a campaign? How about SOF?

We're forgetting the basics.

True.

Our training process and content needs to be revamped...but that is for another thread

Regards,

Steve

[Bill Moore]

Posted by Surferbeetle

The general point I was/am attempting to make is that economics are an inseparable component of human wars. From this it follows that victors of wars understand how to use economics to further their aims, and that the use of economics has both destructive and constructive components which need to be trained upon.

In any social system there is an ecomonic system, just as in any biological organism there is an energy system to sustain life processes. Yet I stand firm, unless convinced with strong logical arguments, that is not the same as the USG blindly "attempting" to economic development to undermine an insurgent movement. If economic development is even required, then it needs to be focused on supporting the political objective. The other side gets that, Hezbollah are good at, LeT is good at it, and some communist insurgencies have had some success. The issue isn't whether it is important or not, in some cases it is, in others it isn't. Blanket statements and templated approaches are dangerous.

Being able to successfully execute a campaign comprised of simultaneous efforts synchronized toward common objectives is the result of intensive training. How often does the GPF train on how to use economics as part of a campaign? How about SOF?

This one is easy, we give classes on DIME (or DIMEFIL), then after class we complain about the lack of an integrated whole of government approach.

[slapout9]

This one is easy, we give classes on DIME (or DIMEFIL), then after class we complain about the lack of an integrated whole of government approach.

In the old days it was called Special Warfare which was why the old SF units had A-teams,CA-teams,PSYOP-teams combined as needed based upon the situation, now for some reason they don't do that anymore and things are not going so well I have read the Major Gant paper on tribes and how this is the mysterious all time whomper stomper strategy for A'stan. Except for a few exceptions that it exactly what I learned back in the 70's in NC because raising and training and advising indigenous forces on anything was what Green Berets did. Didn't have no DIMEFIL back then. We had the 7 steps of UW which doesn't seem any different now than then except we don't call it that. We are going back to the 70's Stagflation,Tribes and Cults oh boy! Guess we will have to start a Special Warfare Journal, Small Wars is becoming Obsolete

[slapout9]

What is really different with the economy today (other than the occupiers Russian and U.S. who provide a temporary foreign economy) than say 1975? .

Hi Bill, what is different is Opium production has skyrocketed SINCE we invaded. That needs to change and that is part of COIN IMO. I don't disagree with you across the board but I do think that a viable economy has to be there in order for the Local Government to provide basic services (tax base), if they can't do that and the drug dealers/Insurgents/Radicals/Guerrillas/whatever you want to call them can do it then I think you will end up loosing the population. Also a viable Economy does not have to be an expensive billion dollar proposition that takes 10 years either, there are a lot of options.

[M-A Lagrange]

Originally Posted by J Wolfsberger

1. What do these villagers produce? Of that, what do they consume locally, and what do they trade with other villages, towns or cities?

In 1 district, villagers produce only poppy. However they do not own the land. Land owners live in Kandahar City. In another district, villagers grow tobacco and wheat, tobacco to be sold in Pakistan. Wheat for consumption. Haven't really seen intra-village trade, but most goods go to KC or through Pakistan to Chaman.

2. What do they consume? How much of that is produced locally, and how much comes from other villages, towns or cities?

They consume what they grow. Insufficient data for other question. Which is really a point I'd like to highlight that it is the lack of data such as this which makes decisions hard.

3. How do they exchange value? How much of this local trade is based on currency, and what currency is it? How much local economic activity is based on barter?

Haven't seen anything based on barter yet, near KC, they use Afghani. Some contractors take dollars. Near the border, 50% they use rupees or whatever the currency Pakistan uses, and 50% afghani.

4. What do or could the locals produce that could go to a larger market? What do they need in the way of additional infrastructure to produce it?

In Arghandab, pomegranates. They need everything on the value chain for pomegranates in terms of infrastructure.

5. Are there any micro-loan programs in place to finance starting or increasing production of goods for local consumption or trade? Why not?

USAID has a program called WOCCU. CERP has $500 micro grants. We are not allowed to give micro grants at this point of time due to some people in the unit not liking that idea.

My advice would be:

1) Take the time to discuss with NGOs and humanitarian actors. They are active in the area since sometimes, they know a lot of what is going on. Most of the time, they do not have formalized knowledge. NGOs and UN agencies do not have institutional memories, they have human memories. So linking with the people is important. One good entry point is sharing information with NGOs through OCHA coordination meetings. You give them data about what you have observed as humanitarian problems in some specific villages and then try to encourage NGO to intervene in the targeted villages. No need to promise anything to villagers. Wait NGO have act. Also your actions have to come as a complement of what NGO, UN and USAID are doing. USAID is implementing a program: they must have an economical profile of the area. USAID must have a development plan for the area. Even if it is silly (what I doubt) it is better to coordinate with them.

2) do not get involved into landownership problematic. This will sunk you into the local conflicts between families. (Can be extremely interesting to know who owns what and rent it at what price).

The main problem concerning poppy production being there are very few agricultural products competing with it. Also, land access is influencing households' production choices. You should look at poppy producers' landownership: what surface they own and what is the annual price of land. Also, compare with non poppy producers.

Second point being: can those lands produce something else than poppy? The choice of poppy is rational. It is driven either by no other production possibility, either by financial obligations. People do not produce poppy just for the pleasure to produce poppy.

The only problem being: once you found the problematic, then it will be difficult to solve it. But this may give you the economical roots of the poppy production. And allow you to identify the root problematic restricting your capacity to support agro project in district one.

According to your post, producers do not move but contractors are at least coming. So there are exportations/movements of goods. Even if there is no population movement, there are goods movements. Non locally produced products as candles, matches, cooking oil… are coming from somewhere.

In agricultural household economy, main source of incomes is coming from production export/trade. In your case, it is clear this is tobacco and may be fruits. The other main source of incomes is dayly agricultural work. Also, what needs to be identified is the percentage of the harvest which is used for auto consumption, what is sold (and to purchase what) and what is saved for seeds. I would recommend to make focus groups separated with men and women (men on one side, women on the other). The women will give you accurate data on what is consumed and sold. Men will give you accurate data on seeds and what is sold. You may have difference for what is sold between men and women. Take the highest. This will give you a raw idea of household economical/food security. But USAID and NGO or FAO should be able to help you on those particular questions.

Also, the village economy is cyclical, based on harvest and seasonal access. You should observe price and availability variations of goods on local market. By establishing a local agricultural calendar, you will be able to identify which period of time is difficult for the households. You should also try to establish a revenue annual calendar of households sources of revenues. You may be surprise to identify annual migration or unidentified activities as firewood cutting or handicrafts confection... There again, FAO, UNICEF or OCHA should be able to help you.

Hope this helps.

[slapout9]

Some may sneer at it as bribery, but that's what CERP really is for anyway, no?

Bribery is very effective so I wouldn't be to concerned about it.........just think of it as a Campaign contribution, that's how most US Politicians look at it.

[MikeF]

The key is to realize that all aid "takes a side" as you alter the power balances between communities, governments, families, and tribes. That well you just built may fundamentally alter a centuries old power dynamic.

You'll never get to the bottom of the 2d and 3d order effects in a society you are not a part of. Therefore, it is my opinion that $$ employed by tactical commanders must be transactional. Bottom line, good behavior rewarded, bad behavior - no $$ to your AO.

Either transactional development or coercive civil affairs, we use money as a weapon. We're the military. We use everything as weapons. As Schmedlap noted, we finally fixed our process to get access to money and flood the community w/ short and simple projects; however, our output is still skewed. Niel talks to that issue. Many times, we just don't know how our actions effect the community. By flooding cash to certain leaders, our armed social work may disrupt the natural order of things that only stokes underlying tensions.

A commander must use discretion and discernment with all of his weapon systems. In my case, I would go in once a week to meet with the elders. I would flash $5000 and tell them there was more where that came from, but I refused to do any reconstruction until the level of violence diminished. To me, it didn't make sense to pave roads that would just get blown up again. Additionally, I was having to give the elders respect for others classes- "no, it's not okay to behead your neighbor and take his property." As we went back and forth, I learned something very disturbing. Their grievance was not about what they did not have. It was envy over what others had. In cases like that, there's not much we can do.

In the clearance and hold phase, money can be used effectively to achieve security and stabilization, but this short term effect does not equal long term development and prosperity. I'm not convinced that this type of work can be accomplished by those in uniform. As I studied others that are having success (Greg Mortensen and Mohommed Yunnis), their work is often ad-hoc and decentralized. I'm not sure how to incorporate their work into our centralized, bureaucratic processes.

[Cavguy]

Many times, we just don't know how our actions effect the community. By flooding cash to certain leaders, our armed social work may disrupt the natural order of things that only stokes underlying tensions.

Exactly! And furthermore, we are unlikely to understand the 2d and 3d order impacts, no matter how culturally aware we try and make ourselves.

A commander must use discretion and discernment with all of his weapon systems.

True. Including the money.

Their grievance was not about what they did not have. It was envy over what others had. In cases like that, there's not much we can do.

It seems we have both come to the same conclusions. Your development money profoundly affects the prestige and pecking order of societies. This is fine, as long as you understand you are doing so. I had heated arguments with a former co-worker over this - he insisted on "balanced development" across an AO, while I argued that development (CERP-level) should be employed as a reward/incentive for cooperation.

In the clearance and hold phase, money can be used effectively to achieve security and stabilization, but this short term effect does not equal long term development and prosperity. I'm not convinced that this type of work can be accomplished by those in uniform.

Agreed. The military cannot effectively perform this kind of work. Our goals are too short term and transitory. That's why I don't think CERP should be used with long term development in mind. As you indicated, its a weapon system to be employed as a useful part of a broader combined arms/full spectrum approach to COIN.

To address one of the original points though, I found paying 20 individuals $50 to fix their own small problems bought more goodwill/info/cooperation than spending $5000 on a contractor to do a larger project. We also liberally used the small and micro rewards programs to a variety of purposes. This worked great in Tal Afar, oddly, MNF-W banned it at unit level in Anbar. It was a useful way for commanders to hand out up to $100 at a time to those that helped us in some way.

[MikeF]

It seems we have both come to the same conclusions. Your development money profoundly affects the prestige and pecking order of societies. This is fine, as long as you understand you are doing so. I had heated arguments with a former co-worker over this - he insisted on "balanced development" across an AO, while I argued that development (CERP-level) should be employed as a reward/incentive for cooperation.

Agreed. The military cannot effectively perform this kind of work. Our goals are too short term and transitory. That's why I don't think CERP should be used with long term development in mind. As you indicated, its a weapon system to be employed as a useful part of a broader combined arms/full spectrum approach to COIN.

Mohommad Yunnis already solved this problem. We just asked the wrong questions. I don't want to say to much on this thread b/c it's part of my answer to the SWJ writing contest.

To address one of the original points though, I found paying 20 individuals $50 to fix their own small problems bought more goodwill/info/cooperation than spending $5000 on a contractor to do a larger project. We also liberally used the small and micro rewards programs to a variety of purposes. This worked great in Tal Afar, oddly, MNF-W banned it at unit level in Anbar. It was a useful way for commanders to hand out up to $100 at a time to those that helped us in some way.

Again, I agree. TBP from me I guess. I would suggest that everyone go back and read Niel's comments on this subject. I concur with his words.

[Surferbeetle]

LOO's, Lines of Action, and product lines. What are the similarities, if any, and what does this say about what can be simultaneously managed?

From The Economist: Nestlé

Investors are also worried that Nestlé has become too large and unwieldy. The firm has 30 product lines that each generate more than SFr1 billion in annual sales, from Nescafé coffee and Nesquik milk to Purina pet food and Pure Life, a bottled water that is sometimes made from stuff that comes out of taps, rather than out of the ground. Consumers have been trading down to cheaper, unbranded foods in recent years, a trend that accelerated in the recession, potentially undermining the value of owning big brands.

Richard Laube, the head of Nestlé’s nutrition business and a former pharmaceuticals executive, describes a “pipeline” of some 75 research projects. Borrowing terminology from the drugs industry seems appropriate, given the time required to develop these new products. Unlike the quick development cycles usually seen in fast-moving consumer goods, which typically take one to two years, products in Nestlé’s nutrition pipeline may take four to six years to develop.

Finally, there is a risk that Nestlé’s new strategy could damage the firm’s blockbuster brands, which have taken decades to establish. This could happen in several ways. If some of the firm’s functional foods fail to pass muster with the regulators or, worse, turn out to cause harm rather than do good, then consumers could turn against all its products, even those that make no health claims at all. That could hurt, because most of its revenues will still come from selling treats like chocolate, ice-cream, coffee and flavoured milk.

Marketing

The term marketing concept holds that achieving organisational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions.[2] It proposes that in order to satisfy its organizational objectives, an organization should anticipate the needs and wants of consumers and satisfy these more effectively than competitors.[2]

[slapout9]

This is what I have concluded about economic development from my personal experiences and two years at the COIN center, which doesn't all agree with theory. The key is to realize that all aid "takes a side" as you alter the power balances between communities, governments, families, and tribes. That well you just built may fundamentally alter a centuries old power dynamic.

Which goes right to the heart of the SBW mantra of the 3 F's to understanding a Human Organization System. IMO Family,Friends and Finances are all you really need to know about the Human Terrain. With the possible exception of the 4th F.....who is foolin around with who