Nine Inch Nails - Ruiner
How do you solve a problem? Probably depends on the problem, right?
If it’s a math problem, you just do the math. If something is broken, you fix it. But what if you don’t know the math formula or you’re not entirely sure if something is actually broken? What if there’s nothing to fix because the thing doesn’t exist yet and that itself is the problem? How do we even know we have a problem to begin with?
This is where frameworks come in. For example, the Scientific Method is a framework. The Scientific Method is typically applied in hard sciences (biology, chemistry, physics, etc.) but there are all kinds of useful applications of it outside of science. For example, Lean Startup is a methodology for starting businesses that is based on the Scientific Method. Science looks at the world around us and asks why things happen and tries to predict future results. Business looks at the world around us and asks why things happens and tries to predict future results (e.g., “you will buy our product.”) Thus, in the abstract business problems are similar to scientific problems and can be identified with the same framework: the Scientific Method. So, “frameworks” are methods for solving particular kinds of problems.
Make an observation.
Ask a question.
Form a hypothesis, or testable explanation.
Make a prediction based on the hypothesis.
Test the prediction.
Iterate: use the results to make new hypotheses or predictions.
But the Scientific Method isn’t the only framework available to us. Indeed, sometimes it’s just not a very good framework. For example, it doesn’t handle complexity very well. It’s very good at exploring a single or isolated problems with definite answers. But complex problems can often just turn into a bunch of little hypotheses and experiments instead of one thing that tests multiple predicted outcomes based on more than one input variable.1
Another framework that I like is called “Systems Thinking.” Systems Thinking recognizes that business systems in particular engage with a lot of other “unpredictable” systems (systems outside of our control) making testing predictions (a key part of the scientific method) a particularly tricky endeavor. Systems Thinking is less concerned about the absolute value of an answer, and more interested in understanding the interrelatedness of interactions.
“Behavior of a system whose parts display a choice cannot be explained by mechanical or biological models.” ― Jamshid Gharajedaghi, Systems Thinking: Managing Chaos and Complexity
Systems Thinking is less concerned with predicting an outcome and more concerned with trying to identify and align multiple systems that each have their own choice to all want a particular outcome.
Just like there are multiple flavors of the Scientific Method, there are multiple flavors of Systems Thinking. One Systems Thinking approach, applied to community economic development is the Community Capitals Framework.
“The Community Capitals Framework (CCF) offers a way to analyze community and economic development efforts from a systems perspective by identifying the assets in each capital (stock), the types of capital invested (flow), the interaction among the capitals, and the resulting impacts across capitals. The … analysis includes indicators of seven different components of community capital: natural, cultural, human, social, political, financial, and built capitals. [They] chose this approach because of its emphasis on assets (rather than needs or deficits) and its focus on investments.”
Or, stated differently, CCF looks at the things a community has (its assets) and tries to maximize investment in those assets.
Traditionally, community economic development has taken more of a SWOT (Strengths Weaknesses Opportunities and Threats) analysis approach.
Admittedly, this is a tried-and-true approach. But if you’ve ever used a SWOT Analysis for strategic planning, you know that the “weaknesses” category can be a trap. Threats look much more threatening than they usually are and the opportunities tend to look more opportunistic than they usually are because we are afraid of our weaknesses. Or, as Erin pointed out in her article “You, immunized:” “We tend to think that the good stuff that happens will make us happier for much longer than it does … [and] the bad things will have a worse impact for longer than they actually will.” That’s right, we tend to overestimate both how great the opportunities are and how big our weaknesses are. So, exactly how confident are you in that “Opportunity-Weakness Strategy” now?
Moreover, overcoming weakness is way harder than building a strength. This makes logical sense. Overcoming weakness requires recognizing the weakness2, knowing the right approach to take, practicing to get better, achieving competency, continuing to practice, and then achieving mastery - all just for the weakness to catch up to the starting point of a strength! And, there are lots of points of failure where the weakness never gets stronger - for example, you picked the wrong weakness, or you didn’t take the right approach to getting better, or your practice just takes longer than you want it to.
Thus, while there is sometimes an opportunity to improve a weakness,3 my preferred approach is to not worry so much about weaknesses, but to build on strengths. Indeed, it probably doesn’t make much sense to look for weaknesses at all. We’re all bad at things. Instead of looking for weaknesses and the risks (and associated costs) inherent in improving them, it makes more sense to look at strengths - the things that we already know work! - and invest in those.
SWOT is better seen as a tool, not a framework. It’s something we use to inform our decision-making, not really a way to improve the system itself. Indeed, the tool itself starts to fall apart when we try to draw too many conclusions with it. As we’ve discussed, as an analytical tool it’s almost 50% useless since we’re going to ignore most of the “weakness”-aligned analysis! Not to besmirch the SWOT Analysis, I just wanted to highlight where and how the current tools and frameworks are failing.
CCF on the other hand separates the resource mapping from the analysis. Like with SWOT, you first map resources. But instead of categorizing them as “strengths” or “weaknesses” you categorize them by the more objective property of “asset type” - is this a financial asset (money), a human asset (trained workforce), is it a natural asset (large freshwater lakes), etc. CCF calls this your “stock.”
Then you look at how these assets are used across other assets; the CCF calls this “flow.” It turns out that flow, the engagement of stock across asset types, can effect what is called “cumulative causation.” For example, a large employer leaves a community. This decreases financial capital of the community through loss of tax base, but it also decreases the human capital (workers in the community), and political capital. The loss of human capital further decreases the financial capital, which may then negatively impact the ability to support natural resources which then fall into disrepair. This is a downward spiral of cumulative causation.4
CCF is premised on the theory that if “cumulative causation” can cause a downward spiral, it can also cause an upward spiral:
“Gunnar Myrdal (1957) formulated this theory that states: “The place that loses assets, for whatever reason, will continue to lose them through system effects.” … Spiraling-up reverses declines in assets through a similar cumulative causation process in which asset growth becomes a self-reinforcing cycle of increasing opportunity and community well being.”
CCF posits that if you invest in assets that maximize positive flow, then you create an upward spiral.
Inertia - a thing in motion tends to stay in motion - is a powerful force.
I know science nerds will argue with me that the Scientific Method can solve all problems! It solved gravity! But big problems are often handled as nested individual experiments - which is fine, but can get overly complicated. Moreover, this kind of experimentation-based framework doesn’t always handle uncontrollable variables very well.
“We fail more often not because we fail to solve the problem we face but because we fail to face the right problem.” R.L. Ackoff.
I’m a big fan of “cheap wins” - things that can cause immediate (even if small) improvements. Weaknesses are sometimes places where we can find cheap wins. Sometimes by investing a little (or even nothing) we can make a small improvement, but a proportionately larger investment will not give us a proportionally higher return.