THE EFFECTIVE PROBLEMSOLVER #075
I received a great question in response to my last newsletter about aligning your strategy to a tight budget.
"How can I determine if a policy solution is 'worth it' in terms of potential impact? I tend to dislike reducing everything to dollars and cents, but the alternative - choosing solutions without regard to cost - is equally ridiculous."
It’s a good question and observation. Money isn’t everything, but it does matter.
There’s a natural way to weigh these trade-offs, and that’s what I want to show you today.
When you’re looking at potential solutions to any problem, especially in policy-making or business strategy, it’s crucial to balance impact and cost effectively.
Let’s dive into this with the example of reducing crime in a city.
Here are three key questions to guide us:
1. How much does it cost?
First things first, let’s talk about the money. Understanding the financial requirements of a solution is the starting point.
Don’t make the common mistake of picking the solution and beginning to implement it with no clear budget estimate. Only ideologues do that. If you don’t have a clear budget, you’re not serious about being effective.
Now imagine you’re considering increasing the number of police officers on the streets. This involves not just their salaries but also the costs of training, equipment, and ongoing support.
Alternatively, what if you focused on community policing initiatives? These might have different financial implications but could potentially offer long-term benefits. Both options need a thorough budget analysis to uncover the full scope of costs, including any hidden ones like overtime or potential lawsuits.
Here’s how you can think about it:
- Initial Costs: What’s the upfront investment? For example, hiring new police officers might require a significant outlay for recruitment, training, and equipping them. Community policing might also need initial funds for training and setting up community programs.
- Ongoing Costs: What are the recurring expenses? Police salaries, maintenance of equipment, and continuous training are ongoing costs. Community policing might involve regular community events, ongoing training, and possibly new hires over time.
- Hidden Costs: Are there costs that aren’t immediately obvious? Think about overtime pay, potential lawsuits, or public relations campaigns that might be needed to support the initiative.
2. How much impact do you get for every dollar spent?
Next up, let’s think about bang for your buck.
It’s all about efficiency and effectiveness.
Too often I see leaders bragging about the big price tag of their policy ambitions. “We’re gonna lobby for a billion dollars!” Somehow they start to conflate the size of the investment with the policy’s efficacy.
But big money doesn’t necessarily mean big impact.
What you want to do instead is weigh estimated investment against expected impact.
For example: increasing police presence might deter crime quickly, but what if it doesn’t sustain in the long run? In that case, costs may start to eclipse return on investment.
Now, consider community policing. It might show a higher impact per dollar spent by fostering trust and cooperation, leading to more sustainable crime reduction. Or maybe not. It all depends on your assumptions, which you should clearly lay out in a spreadsheet comparing the costs and benefits of each policy option.
Metrics and data are your friends here. They provide the evidence needed to make informed decisions and see the true value of your investment.
Here’s how you can break it down:
- Immediate Outcomes: What are the short-term results? For police presence, this might mean a reduction in crime rates in specific areas. For community policing, it could mean improved relationships and immediate trust-building with community members.
- Long-Term Benefits: Look at the bigger picture. Increased police presence might not have long-lasting effects if trust isn’t built. Community policing could result in a sustained decrease in crime as trust and cooperation grow over time.
- Ripple Effects: Consider the secondary benefits. For instance, better community relations can lead to more community cooperation in solving crimes, which might not be immediately measurable but has significant long-term value.
- Data and Metrics: Use data to measure these impacts. Track crime rates, community surveys, and other relevant metrics to see how each dollar is translating into tangible results.
3. Could investment elsewhere result in more impact on the problem?
Now, let’s think outside the box with opportunity cost.
Sometimes the best solution isn’t the obvious one.
Instead of just focusing on law enforcement, what if you invested in social programs that tackle more fundamental causes of crime, like poverty, lack of education, and unemployment?
By comparing different solutions, you can pinpoint where your resources can make the biggest difference. It’s about finding the options that maximize impact (with the least amount of bad side effects), even if they weren’t part of the original plan.
Here’s how to evaluate this:
- Comparative Impact: Look at other areas where you could invest. For instance, improving education or job training programs might address the root causes of crime more effectively than increasing police presence.
- Cost-Benefit Analysis: Compare the potential benefits of these alternative investments. How much would improving education reduce crime over the long term compared to the immediate but potentially short-lived impact of more police?
- Holistic View: Consider the broader social benefits. Investments in education and social programs might also improve overall community well-being, reduce poverty, and increase employment, creating a more resilient community.
- Prioritization: Identify which investments align best with your broader goals and where they might intersect. For example, a combined approach of community policing and social programs could provide immediate crime reduction and address long-term causes.
Avoiding Binary Decisions: Combining Solutions for Greater Impact
And here’s the effective problemsolver’s game-changer: you don’t have to pick just one solution. Often, combining multiple approaches can create a synergistic effect that yields greater results than any single solution alone.
For example, rather than choosing between increasing police presence and implementing community policing, why not do both?
This can enhance overall public safety more effectively, as the increased presence deters crime while community policing builds trust and cooperation.
Similarly, addressing the more fundamental drivers of crime through social programs while improving law enforcement strategies can lead to a more comprehensive solution. Investing in education, job training, and community development programs can reduce the factors that contribute to crime, while effective policing addresses immediate concerns.
This dual approach can create a more resilient and safe community.
TLDR
So, get serious about the cost and impact of every solution.
Create a comparative spreadsheet and do the math.
Be sure to consider outside-of-the-box ideas.
Always consider a balanced portfolio of solutions as a way to maximize outcomes across multiple objectives, rather than optimizing one metric to the detriment of other things important to the community.
See you in two weeks.
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Whenever you’re ready, there are two ways I can help you:
→ I’m a strategic advisor for the toughest societal problems like poverty, crime and homelessness. People come to me when they want to stop spinning their wheels and get transformative, systems-level change.
→ I’m a coach for emerging and executive leaders in the social and public sectors who want to make progress on their biggest goals and challenges.
Let’s find out how I can help you become transformational.