A window of opportunity: a practical model for systems-led design in tax


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If you saw my last post where I talked about fire-fighting in California, you’ll know that as the new head of ATO Design, I’m introducing a new design approach to the tax office. Today, I wanted to share our new design model, and the four steps that are ensuring we embrace a holistic, goal oriented design that keeps the user at the centre.

But before I get stuck into the detail, I wanted to “open” your eyes to an example of how poor design affected an entire industry for 300 years — and it begins with a window.

Letting the sunshine in: why systems thinking matters when we talk about tax

Have you ever heard of the UK’s historic window tax? It’s a clear example (literally) of how a systems approach can be used to improve tax design. In effect for nearly three centuries until it was repealed in the Victorian era, the window tax did what it said on the tin: it taxed English citizens who had more than a certain number of windows on their house. The intention, of course, was to target wealthy owners of large properties while avoiding a tax burden on the working classes.

In practice, however, there were unexpected consequences. England’s urban working classes usually lived in homes or tenements large enough to attract the tax, and so landlords simply passed the additional cost on to their tenants or boarded up the windows altogether. This led to stagnation in the glass industry and turned the UK — a country not known for sunshine — into a notoriously gloomy location, which didn’t help the precarious health of Britain’s working classes.

Image from Punch Volume XVIIIPage 165, Wellcome Library, London CC by 4.0

What can we learn from this glass gaffe?

The problem with this law was that its makers didn’t understand the complex interplay of social factors that would determine its success.

Where you make a new rule, people will change their behaviour to get around it.

All over the world people are starting to understand the importance of systems-led design approaches in creating effective, sustainable solutions. At the ATO we’ve drawn on the best of this global movement (including our friends Toby LoweNESTA, and the Observatory for Public Sector Innovation) to create a new design model that ensures our systems are client-centred and fit for purpose – our ‘four key steps’.

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The steps in action

Before you start: know your purpose. This is crucial. You cannot create a solution if you don’t understand the problem.

For example, why are we implementing a window tax? Is it to generate more revenue from the wealthy? Curb glass production? Minimise electricity usage with better insulated homes? The answers to these questions will highlight the factors we need to explore to make our design functional and effective.

Once your purpose is established, we move through the first of the four steps.

1.    Understand the system

The first step is about taking an in-depth look at the system we’re operating in, and consulting with stakeholders and experts to explore the key forces and the patterns driving behaviour. It’s about looking at the problem from all angles — so if we’re implementing a window tax, we don’t just talk to the tax collectors. We talk to the homeowners. The glassmakers. The health experts who understand the impact of sunlight. We get a sense of how these factors interplay and how our solution could impact them.

2.    Design the change

This is the fun part. Using the information we’ve gathered in step 1, we design and prioritise change. We put on a range of different hats and take a human perspective to help us consider all the viable alternatives and leverage points, and learn what behaviours we need to change to achieve our objectives. We do this so that when we write our window tax, we include caveats and specifications based on feedback from our expert stakeholders.

3.    Experiment and iterate

Prototype, experiment, adjust, and iterate until the solution works. As they say, the proof of the pudding is in the eating, and we can’t know how our solutions will work in practice until we give it a go and use metrics to identify how we can improve. After all, this is the part of the process where we find out whether or not our well-intentioned window tax is going to give people rickets.

4.    Embed and influence

The roll-out phase. We deliver and embed change, creating awareness to help the people impacted transition. We get rid of any processes that are now redundant and get to watch our work in action.

Following our example, we’d roll out the window tax, and run a media campaign to let people know. But more than that, we leverage our expert stakeholders to embed change in all elements of the system. We help glass manufacturers find alternative streams of income, and with urban planners to create more green spaces to overcome the lack of sunshine.

We make our solution work for everybody.

The window tax is a light-hearted example, but its real world origins prove how a whole-of-system approach is important in making sure our solutions are fit-for-purpose and achieve our aims. ATO Design’s model allows us to better serve the community by ensuring we look at all aspects of an issue and address each factor at play.

It’s a ripple effect: interacting or influencing a system will have unexpected or indirect consequences. While this may seem daunting, it’s actually how we create meaningful and wide-reaching change. It’s like sculpting a clay pot — the nature of shaping clay means a ceramist can’t create the pot without the resistance of the wheel’s movement against the force of their hands. Change can only occur where there’s interplay between the forces activating the change and the forces resisting it.

By taking an approach to innovation that incorporate resistance and forward motion, one that truly understands all elements at play, we achieve real creative potential.

This article first appeared on LinkedIn.

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