Hidden lessons from the mini budget

The insights for all charities who work within complex systems…

Last week’s mini-budget, or “special monetary operation” as it has been wryly dubbed, while garnering plenty of justified backlash, also offers a lesson relevant to most charities: when you try to change a complex system with simple interventions you rarely get the outcome you want, and you often get a bunch of unintended consequences.

In this case, an intervention ostensibly intended to alleviate the cost-of-living crisis and return the economy to growth, triggered a run on the pound that would drive-up import prices, including for energy, and almost certainly hike mortgage repayments, thereby exacerbating the crisis, flattening the economy, and ramping up the UK deficit in one fell swoop.

Within three days the Bank of England added around a third to the budget’s price tag with its own intervention trying to stem the damage of the government’s one, and within a week, parts of the mini budget were already being pulled.

There’s an old adage that if you ask three economists the same question, you’ll get at least four different answers.

The reason being that rates of inflation, like those of unemployment or of economic growth, are emergent outcomes of a complex system where many different factors and actors all interact dynamically with each other, sometimes in broadly predictable ways but just as often not.

This lesson is so relevant because more and more charities are beginning to recognise the importance of complex systems to their own work, and that’s because when you look at most of their vision statements, what they describe are invariably the emergent outcomes of one.

Whether it’s a life free from suffering or persecution, or for one group of people to simply have the same opportunities as any other, most of these worthy aims can only be sustainably achieved by tackling a wide range of factors, many of which are hard for a single charity to even influence, let alone control.

Put simply, to bring most charity visions into reality requires us to fundamentally alter the outcomes of a complex and evolving system that will, quite probably, fight back – one common feature of all complex systems is that a single intervention rarely changes the outcome in the way that we intend. As the government has just demonstrated. And not for the first time.

Take obesity for example. In 2007 the UK Government’s Foresight Programme released the “Tackling Obesities: Future Choices” report, to answer the question: “How we can implement a sustainable response to obesity in the UK over the next 40 years.”

Simplistically, obesity happens when an individual consistently eats more calories than they burn, but at a societal level the report found the trend to be an emergent outcome of a complex system of over a hundred inter-related factors, ranging from global food production to popular culture, from local amenities to workplace environments, and so forth.

The Department for Health lauded the report but failed to genuinely grasp the implications, and instead merely passed the challenge to Strategic Health Authorities and Clinical Commissioning Groups who, with neither the reach nor remit to influence the wider system, unsurprisingly opted for the simplistic intervention approach.

And so, up and down the country they commissioned weight loss programmes for the most obese people in their communities, which duly hit their targets and helped thousands of people lose dozens of kilos each. And all the time, at the societal level, overall obesity levels continued to increase, as fifteen years on they still do today, inexorably driven by the underlying system.

But the good news, and one of the most encouraging things I’ve seen over the past five years, is the number of charities who have been prepared to properly grasp those same implications, rethinking their strategies, missions, and sometimes their entire philosophy in recognition of the complex systems within which they work.

Systems thinking, just like place-based and asset-based thinking, is relatively new on the strategy scene, but what’s evident is that it shifts organisations into a much more open and collaborative space, towards the pooling of resources, and proactively working together for a common goal.

Considering the increasing likelihood of an Austerity 2.0 budget in November, I suspect these are the types of strategy that all of us will need to embrace, probably sooner rather than later.

If you want to learn more about strategies for complex systems, you can get a free whitepaper here, or come to my free seminar in November – just drop me a line.

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