A New Epistemology of Solving Complex Problems

I’m in India, spending the week with the Acumen team and with the Acumen India Fellows for their fourth seminar. Last night, at the end of the first day of seminar, we were joined by Vijay Mahajan, one of the most esteemed social sector leaders in India. Vijay is the founder of Pradan, which he ran from 1983 to 1993, and was then the founder of BASIX which grew to be one of the largest microfinance organizations in India prior to the microfinance crash in 2010.

Vijay is a truth-teller, who speaks plainly and without adornment about his experiences. Our conversation was an intimate one – just us (20 India Fellows, me, Jacqui Papineau and Bavidra Mohan, together with Vijay and his colleague, documentary film-maker Girish Godbole), with Bavidra interviewing Vijay before an open Q&A.

Upon hearing Bavidra’s first question, around lessons about leadership, Vijay paused and thought hard for what must have been 20 seconds before responding. Just watching such an esteemed individual, who must have been asked a similar question hundreds of times, really stop and think before giving an honest answer was a display of humility and respect for our group that itself spoke volumes.

From that moment on, everyone in the room was silently hanging on Vijay’s every word, with most scribbling furious notes of Vijay’s pithy insights. My single biggest takeaway stemmed from a comment Vijay made early on in the discussion, when he said:

Anything that could be solved with single variable maximization was solved in the 20th century…we need to create a new epistemology of complex problems for the 21st century.

I’ve always felt that impact investing and social enterprise are something brand new. If this work is going to realize its true potential, we are going to need to think about two-variable approaches – or, better stated, leadership that embraces opposable mind thinking and sees potential where others see only contradiction.

I must admit, until last night I had not aspired to creating a “new epistemology” but I think Vijay is on to something. Ultimately we need a strong theoretical and analytical grounding to explain what it would mean to take truly new approaches to solving centuries-old problems, problems that are based as much on caste, social exclusion, geographic marginalization, and politics as they are on simple microeconomics. And, as Vijay reminded us, such a theoretical underpinning is not entirely new. Indeed, in 1956 economist Herbert Simon developed the notion of “satisficing” rather than “maximizing” behavior as being a more accurate description of how individuals and firm managers behave. Perhaps we need more satisficing firms of we are to solve this new batch of problems.

Indeed, the more I think about it, the more it strikes me that Vijay’s statement summarizes the core fault line within impact investing and social enterprise: is impact investing just about extending the market, a chance to extent single-variable (profit) maximization to areas where it hasn’t yet reached? Or is single-minded profit maximization (versus profit achievement), as a binding constraint, anathema to the real task of tackling social issues?

There’s no doubt that there is work to be done on both sides of this fault line. It is an overstatement to say that all single variable maximization problems were solved in the 20th century, and there are huge emerging swaths of the population – hundreds of millions of people – who are optimally situated to benefit from the extension of 20th century approaches to them. However, I believe that impact investing will fall far short of its potential if it limits itself to this approach (indeed, isn’t it just “investing” to find businesses that fit age-old criteria and invest to help them grow)? What I am seeing after nearly eight years doing this work is that that, outside of narrow verticals (e.g. financial services on mobile platforms), the social sector leaders who are working to reach marginalized populations do not act as if single-variable maximization is enough.

By the way, it bears mention (lest anyone jump to conclusions) that just because one agrees that a narrow profit-maximization mindset is not enough does not predetermine anything about what business models need to look like, what form an organization should take (for-profit, non-profit, or some other form), or even about financial returns. Rather, this is a conversation around what sort of problem one believes one is working on, and an assessment up-front of whether the tools that we created in the 20th century are up to the task of tackling the problems of the 21st century.

Vijay’s closing thought, with which I heartily agree, was that “we cannot build great theory if we keep on reporting practice wrong.” Our challenge, from the outset, is to have the audacity to imagine the world as it could be, and the humility to share the real lessons of what it takes to create large-scale social change. Vijay certainly shared his real lessons with us, and I know that I and the Acumen India Fellows will follow his lead in continuing to take problems head-on, and honestly share what we are learning with other practitioners, so we can all build a better future.

(And maybe, just maybe, we will eventually find a way to develop a PhD 21st in the Epistemology of Solving Complex Social Problems…)

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Strong ideas, loosely held

One of the best pieces of advice I got about five years ago was that I should have “strong ideas, loosely held.”

The feedback I was getting was on the “loosely held” part. At the time people experienced me as having “strong ideas, strongly held.” I think I’ve made some good progress on that.

Five years hence, as I come back to the central paradox inherent in this notion, I’m understanding that the suggestion isn’t to have any less conviction around my ideas. Indeed nearly all of the time we need more conviction, more passion, greater commitment, and greater follow-through.

The real point here is that the passion we have for our own ideas must be coupled with a core, deep-seeded belief that most ideas, most of the time, get better when they interact with, and are changed by, other ideas.

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Why I (like everyone) gave to ALS while on vacation

A friend and colleague asked me.

It was personal and I didn’t want to let him down.

It was (a little bit of) a challenge to how macho and bold I could be.

It was public.

Turning something like this down, given who I am and my values, would be just a little bit shameful.

Everyone was doing it.

It was fun.

I could talk to my kids about it and get them involved in it.

It was easy and quick to do.

I could share it with friends in a way that felt totally positive – without putting them out. In fact, many friends said “Thank you! I was hoping to be challenged.”

It incorporated video, and allowed me, in 30 seconds, to create a video I was happy to post and that I knew would be entertaining (no edits, no storyboards, no nothing).

Did I mention how fun it was?

That’s a pretty good list to choose from for how you fundraise. I’m positive you won’t hit all of these, but if you’re hitting none of them then you’re pushing a rope uphill.

And the really tricky bits that I can’t stop thinking about are:

I did give to ALS, but most people won’t. That’s totally fine as long as what you create is huge.

The specifics of the organization I was giving to, and the cause, didn’t matter. This would have worked for any cause.

I talked to my kids about ice water not about ALS.

Pretty quickly my head starts to swirl about ends and means, whether (some? all?) philanthropy should be fun and what is lost when it is fun (and what doesn’t happen when it’s not).

When giving is more like eating dessert than it’s like eating your vegetables, is that a problem? Certainly not, today, for the folks suffering from Amyotrophic Lateral Sclerosis.

(and for those keeping track, the ALS Association has now raised nearly $100 million from 3 million donors…versus about $23 million last year).

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What we need from you

What we need from you isn’t better thinking, more analysis and caveats, the low-probability risks you’ve explored, and how you’ve smoothed the edges.

What we need from you is the fearlessness to put your best ideas out in the open,

unadorned

for everyone to see.

Not more smarts, more courage.

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Your questions grow up with you

Do I want to be a superhero or drive a firetruck?

Do I want to be a teacher, a doctor, a lawyer or a veterinarian?

Do I want to be a salesperson, an entrepreneur, an investment banker or a professor?

Goldman or Morgan? TFA or Robin Hood? Charter school or public school? Facebook or Google?

Until, eventually:

What kinds of problems do I want to solve?

How much direction do I need?

And how much do I want those around me to need?

What kind of approval do I seek?

Do I like creating new things or polishing others’ great ideas?

Do I work best with people who are highly structured or more free form?

Do I thrive or crack under pressure?

Do I want a workspace that is quiet or loud?  Open or closed?

What happens when I’m in the spotlight? What should?

How do I manage my time to be most effective?

How hard can I work in a sustained way?

Am I a starter or a finisher?

Do I process information best alone or in groups?   In conversation or in writing?

How important is culture to me?   Values?

What does leadership mean to me?

How do I make others shine?

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Solving big thorny problems

I like to divide big thorny problems (aka “the fun ones”) into three parts:

  1. The easy bits
  2. Parts that will be hard to get done, that will take a lot of work, but where directionally I have a pretty good hunch about what the answer is
  3. Parts where I truly do not know the answer

I often find that the trick to making progress on these sorts of problems is to think about them as if everything in the first two buckets is solved.

For example, imagine you (as I am) are trying to transform your organization into one that systematically produces insights worth sharing, in order to transform your own work and the work of your peers.  Clearly, this is a big, thorny problem.  And there are limitless things you can do to work on this problem.  That’s your first challenge: where to start, and how to spend your time.

This is an idea we’re working on at Acumen – in order to “change the way the world tackles poverty” we need to push on our own ability, globally, to synthesize what we’re seeing on the front lines; turn what we are seeing into insights that drive how we make and manage investments, the types of funds we raise and deploy, how we invest in leaders, etc.; and share what we are learning with the world.

The core, hard parts of this problem that are staring us in the face are: how we go about creating the process and the ongoing culture change required to make everyone a more integral part of producing insights?  How do we take the amazing experiences and observations that are living in people’s heads, globally, and help get these ideas out more regularly in a more synthesized, formed way that can drive our own strategy and influence how we share what we are learning with the world?

When I was talking to my colleague Venu about taking this all on, we agreed, counter-intuitively, that all of that important work feels like a “bucket 2” problem.  Meaning, we don’t know exactly how to do it, it’s a lot to do and a long road ahead, but on some basic level we know how it will be solved, what the solution will feel like, and what the result will be if successful.

The part where we really didn’t know the answer was: imagine if we had, at our fingertips, a deep reservoir of our best insights – on everything from how cold chains could be improved in rural, developing markets to how to build business models with cross-subsidies that drive inclusiveness and reach to the poor – what would we do with those insights to drive large-scale improvements both in how we do our own work at Acumen and how the world at large addresses issues of poverty?  Yes, we know that we would share more of what we are learning, in blogs and articles and op eds, at conferences and the like, but that really doesn’t mean much.

If what we’re talking about is driving real change through insights, then the big questions are far beyond whether it will be valuable to have stronger, more codified insights on what we are learning on the front lines of the fight on poverty – of course it will.  But, before we start, we must be clear on how we will drive change once we have this deeper well of insights.  Will we drive big new initiatives like creating an Acumen publishing imprint akin to the McKinsey quarterly; will we start a large-scale global consulting practice to share insights with peers and those interested in getting into the space; will we create a filtering and voting process whereby the best ideas that bubble up are shared with a group of potential funders who will be given the opportunity to put capital behind the opportunities that have been surfaced?

None of those ideas is real, yet, not even a little bit.  But I’m sure we’d never get to thinking about them if we didn’t give ourselves and our team the piece of mind of knowing that we will pull off the hard bits, and it’s the unknown bits that we have to wrestle with from the outset.

If we put off the work on figuring out these sorts of truly big, truly hard questions in deference to the big but sort-of-known questions, that on some level we are putting off the hardest, most important work for later.

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That’s not what I’d do

You have two options when you hear this from someone you like and respect.

Either you decide that their wisdom, experience and perspective bring something to the decision that you didn’t see, and they are right.

Or you decide that there are things you know that they don’t know, things you can see that they cannot, and that even though it feels like 9 times out 10 you’d want to follow their advice, this time you won’t.

Either way, your job at this point is to hear the advice, process it, make adjustments, and take action with conviction. Getting stuck in between what both of you thought is almost never right, and moving forward tepidly is the worst outcome of all.

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