The third cohort of the Academy for Municipal Innovation kicked off in October 2015. This is a blog series written by participants about their experiences in the program. Today’s author is Nick Jann, Manager of Special Projects in the Office of Economic Development.
In our recent session at the Academy of Municipal Innovation at Philadelphia University, conducted by Jeff Klemens and Chris Pastore, we discussed “systems thinking.” This was very appealing to me. I went to school for economics, and although I did not opt to enter a technical field, I still tend to think of things in economic terms (a brilliant way to make friends, by the by; everyone loves when someone begins a sentence with “Well, if you consider it in economic terms…”). In both macro and microeconomics, the real world is essentially a collection of complex systems, and we spend most of our time attempting to safely navigate those systems and anticipate their results.
Chris and Jeff presented eight “systems traps” that identify just about every issue an organization’s system might encounter. My favorite of the bunch is the notion of “seeking the wrong goal,” more interestingly known as the Cobra Effect. Regrettably, this is not a GI Joe reference, but refers to the period of British colonial rule in Delhi, India. The local viceroy was concerned about the large Indian cobra population in the area. He decided to offer a bounty for each cobra killed. This gave the mostly impoverished people of the region a source of income; and it didn’t take long before they realized that raising cobras was far easier than hunting them. As a result, cobra farms sprung up, and the colonial subjects would kill their own cobras and turn them in for cash. Eventually the viceroy caught wind of this unintended consequence and ordered all of the farms to shut down. This led to the proprietors of the farms to let their cobras loose and, as a result, the region was home to an exponentially larger cobra population than had existed when the viceroy had first developed the plan.
Government regulation is fraught with such unintended consequences. Every decision, regulation, and action has a reaction and it is important to game-out what these could potentially be. I work for the Office of Economic Opportunity (OEO). We assist public and private-sector projects involving minority and women-owned firms that require some level of government action to proceed. As these projects deal large sums of money, OEO’s decisions can have serious financial consequences for a given project’s stakeholders. These problems are circumvented by a simple set of rules and thorough follow-up. We place requirements on projects (e.g. that a certain percentage of the dollars on a given project go to minority and women-owned firms.) We then follow up to ensure that the money went to the right place. We also confirm that the minority and women-owned firms on the project are actually doing the work that they are getting paid for, and not simply functioning as “pass-through” (where a minority or women-owned firm is used only to meet the regulation but not to do any meaningful work). This process, if executed correctly, virtually guarantees that the consequences that result will be the desired ones, and provides for contingencies if any firms try to circumvent the requirements.
It is important not only to seek the correct goal and to game out all the possible consequences, but to be nimble and adaptive if the system develops problems. OEO’s system of oversight provides options for multiple possibilities if things do not go exactly as they should. In the case of the cobras, rather than shutting down the farms and releasing the cobras into the wild, the British government could have rewarded municipalities for the average number of snakes found in the wild – the lower the number, the higher the reward. Rather, the viceroy made two bad decisions, which made the situation worse for both the colonial subjects and the colonists. Had something like this happened, the Cobra Effect might refer to an elegant solution instead of a clumsy attempt at control. It still would not, unfortunately, have anything to do with GI Joe.