How a Theory of Change Helps You Test, Iterate, and Improve

A Systems Perspective

A theory of change maps the steps and assumptions needed to achieve impact—but it must be tested, refined, and adapted to ensure it remains effective and responsive to evolving conditions.

Let’s apply this approach to workforce training in a rapidly changing economy.

• Identify the Desired Impact – Build a workforce that can advance, adapt and thrive with the skills needed in the economy.
• Map the Preconditions for Success – The system must ensure that skills align with employer needs, training cycles remain fast and responsive, and learning design fosters access, inclusion, and learner-centred delivery.
• Establish Causal Pathways – Create a more adaptable system by designing modular learning programs, stackable credentials that evolve with industry needs, and responsive employer partnerships.
• Identify Assumptions – As an example, assuming an academic approach alone builds practical skills ignores the need for real-world context and hands-on experience to ensure workplace readiness.
• Define Key Indicators and Metrics – Track job retention in field of study, wage growth, and industry productivity.
• Test and Refine the Approach – Pilot, collect data for learners and employers, and adapt in rapid cycles based on outcomes.

Execution Is Everything

Finland’s participatory budgeting (PB) initiative in Lahti demonstrates how a theory of change approach can refine and improve outcomes.

The program aimed to strengthen civic engagement and trust by shifting decision-making power to residents, allowing them to propose and vote on community projects. Launched in 2020 with a €100,000 budget, its initial success led to a budget increase to €200,000 in 2021.

However, challenges emerged during implementation. By identifying faulty assumptions and adjusting accordingly—a key principle in the Theory of Change—they were able to course-correct effectively. Here’s one example.

• The Assumption: Simply offering residents decision-making power would lead to high participation.
• The Reality: Initial engagement was lower than expected, with many residents unaware of the initiative or unsure how to participate.
• The Adaptation: Lahti expanded its digital engagement efforts, launched targeted outreach campaigns, and built volunteer networks to boost awareness and participation—especially among younger residents.

This iterative approach helped the program grow and better achieve its goal of fostering community-driven decision-making.

For more on how inclusive decision-making can help overcome public opposition to housing and infrastructure projects, read our latest piece on NIMBYism and policy design, Beyond NIMBYism: How Inclusive Policy Design Builds Stronger Communities.

Questions to Consider

At Opus Group, we believe better systems start with better questions:

• Are we building a theory of change based on real-world conditions or outdated assumptions?
• What mechanisms do we have for rapid testing, continuous refinement, and short-cycle adaptation of our approach over time?
• When should we refine a theory of change—and when should we replace it entirely?

Quote of the Week

"The greatest danger in times of turbulence is not the turbulence—it is to act with yesterday’s logic."
– Peter Drucker

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A well-crafted and applied theory of change is a tool to test assumptions, iterate, validate and build an applied understanding of what works, for whom and under what conditions.