We need to revisit old frameworks to cope with the 2020s
15.57, Wednesday 18 Aug 2021 Link to this post
Frameworks help us structure our thinking but it turns out that frameworks from only 15 years ago have blind spots to current concerns. I have two examples, one personal and one from business strategy.
What happened first is I cricked my neck putting together Ikea furniture and couldn’t look left. (This is many years ago.) Then I picked up the first in a string of running injuries. Around the same time I got a sort of perpetual ringing in my ears. Oh there was a bunch. Bad luck.
I ran across the Holmes-Rahe stress scale (that’s its Wikipedia page). This is a scoring system for life events over the past 12 months. For example:
- At the top: “Death of a spouse” is 100 life change units
- Near the bottom: “Major holiday” is 12 life change units (not all life events are bad)
- In the middle: “Change in responsibilities at work” is 29
You go down the list, thinking about the last year. You add up your score. There are 43 life events listed.
If you score 300+ then you have
80% chance of health breakdown within the next 2 years.
It turns out I was right up there. Like, not one massive thing. But just a series of middling-to-major life changes, one after another, month after month. No wonder I was sick.
It was a comfort to know. I could look at my tally and say, hey you know, this is not normal.
This relates to Covid-19.
- The health issues I was getting weren’t, on the face of it, typical stress issues. A running injury? But yeah, if you’re holding yourself too tight, of course you’re more likely to get injured. Stress issues do not always look like stress issues.
- As a society, we are wholly unprepared for what 18 months of pandemic is doing to us. We’ve lost family, lost jobs, turned our lives upside down. Not only are you and I hitting the top of the Holmes-Rahe scale, but everyone we know is too, and besides we’ve barely been able to see them. So no support system. This isn’t just mental health, it’s niggles, sicknesses, and injuries that we won’t even recognise as being a result of pandemic stress. I don’t know what we do about that. I’d like to think that there’s a group in the Department of Health dedicated to figuring out what to do.
Global pandemics aren’t represented on the Holmes-Rahe stress scale. No shit. It was made in 1970. It’s not a scale made for globalisation and the entropocene.
It has “Change in living conditions” but it doesn’t have “I can’t make plans because we might be in lockdown next week or we might not.” Or even: “When I watch the news I’m concerned that democracy may collapse.” Or: “I can’t relax because technology is always watching me.” How many life change units do those deserve?
Business models are similarly blind to the 2020s
This is corporate, not individual, but it’s similar.
There’s something called the Business Model Canvas (invented 2005). It’s a way to describe a company on a single piece of paper. Here’s the framework so you can see.
Briefly, how it works…
- You describe the company by filling in nine boxes. You write, in one box, a list of customer segments. In another box you list value propositions: that is, what’s valuable about the company’s product or service to the various customers. The “channels” box is about how to market and sell to those customers; the “customer relationships” box is how to serve them.
- These boxes link up, conceptually. The various value propositions for a product need to link up to the customer segments – there’s no point demonstrating value for a customer segment that you aren’t targeting. The customer segments link up to channels: it’s no good having a business that is entirely door-to-door, say, if the customers don’t buy that way.
- You look out for impedance mismatches. “Cost structure” and “revenue streams” are connected too. Imagine each as cash-per-unit-something and how it scales. If your revenue scales with product sales, but the cost is monthly and scales based on cumulative number of customers, there’s a sheering which will hurt the business.
A good business will connect together like circuit wiring, or fine clockwork. Chains of causation and rhythms will align.
But sometimes even an attractive business will have something that doesn’t quite connect, and it’s only possible to see when you put all the moving parts down on paper like this.
The canvas looked like a toy when I first encountered it, but it has become something I’ll sketch pretty frequently, and I run through mentally whenever I listen to a startup pitch. (Have a look at Guy Kawasaki’s 10 slide pitch deck for early stage startups. Pitch decks are a narrativised Business Model Canvas.)
What the Business Model Canvas doesn’t have is externalities. Like carbon, or like paying people properly so they don’t need food banks.
If I were updating the Business Model Canvas today, I would draw two rings around the entire canvas. The inner ring would be labelled “The state” and the outer ring would be labelled “The planet.” On the left of each: “Taken out.” On the right: “Put back.”
If employees (like drivers or warehouse workers) are only able to be listed in the “Key Resources” box because they’re classified as independent contractors, then list the welfare system on the left in the “State” ring. And balance it by put something on the right: taxes.
And for the planet ring… Digging up non-renewables, manufacturing new plastic, being responsible for emitting carbon; list these on the left. How to provide a balance on the right? Well it’s hard, best to aspire to being part of the non-extractive economy instead.
(Business Model Canvas is just one business school tool. It would be interesting to re-write course material for an entire MBA to take a full system approach to externalities.)
So here are these two tools that need to be updated for the 2020s and beyond. And I think both for the same reason: more than ever the world is dense and quick with nonlinear feedback loops.
I’m not sure I would have felt so strongly that the Holmes-Rahe stress scale and Business Model Canvas were both outdated, even 5 years ago. But it’s clear they are, and who knows how much more.
Old assumptions about a steady state world are baked into everything from Excel spreadsheets to psychology. That’s going to be some significant friction in changing out ways. Learning how to live in the future means updating the tools we have to think and talk about it.