Over the years, I’ve homeschooled my kids in math. In the process of learning teaching methods for math, I came across the term “scaffolding.” 

In construction, “scaffold” refers to the temporary metal frame with large wood planks that surrounds a construction site.

The scaffold gives construction workers a place to stand while working on the exterior of a building. It’s a much more stable platform on which to work, when compared to standing on a ladder that’s a few hundred feet or meters high in the air.

In the world of teaching, I’ve since learned that “scaffolding” refers to the concept of sequencing what is taught to a student such that new material is always taught in terms of previously understood concepts.

For example, in math, you teach children how to count (1, 2, 3…) before you teach them how to add (2 + 2 = 4).

That’s because addition is a slightly more complex form of counting.

If you ask a young child who’s learning how to do addition, “What’s 2 + 2,” you’ll see them count on their fingers (“1, 2… another 1, 2… oh, that’s 4!”).

Math taught well can be scaffolded from counting numbers up to calculus and beyond.

Any academic subject can be scaffolded from the most elemental concept to the most advanced.

Any physical skill (learning to ride a bicycle, to cook a steak, to repair a light switch) can be scaffolded in such a way that someone who knows nothing can establish competence by learning a properly sequenced set of concepts and sub-skills.

I’ve since realized that good scaffolding is what differentiates how I teach the case interview, write books, and mentor CEOs.

When I write a book, I can spend years thinking through the table of contents and the specific sequence I want to use to convey my idea.

In other words, getting the scaffolding of concepts right is the most time- and thought-intensive part of the process.

The actual typing of the book usually takes me just a month or two.

I mention the term “scaffolding” to you to add a word, concept, and tool to your vocabulary.

When you’re in a lecture and you can’t follow the speaker’s train of thought, that’s often due to poor scaffolding.

When a complex concept is explained in simple terms, that’s often due to good scaffolding.

When you teach a highly-talented direct report a new skill but they perform poorly, consider the possibility that the problem isn’t in their innate talent but perhaps in how you scaffolded (or didn’t scaffold) the progression of concepts and sub-skills. The most common mistake is presuming prior knowledge (that you personally know so well that you take it for granted) where none exists.

The most common example of this is the use of jargon or abbreviations.

If you’re trying to teach someone corporate finance, don’t be surprised if they stare at you blankly when you say, “It’s inappropriate to compare a levered ROE with an un-levered ROE.”

Such a statement has one jargon term, one acronym and two concepts that must be grasped before the sentence can be understood.

If the other person doesn’t “get it,” it means you didn’t scaffold well.

Let me demonstrate how I’d scaffold the prerequisite concepts needed to grasp the original sentence.

Levered/Un-levered is a shorthand abbreviation for leverage/non-leverage.

Leverage = Debt

A company that is “levered” or has a lot of “leverage” is a company with a lot of debt.

A company that is “un-levered” has little to no “leverage” or debt.

ROE is an acronym that stands for “Return on Equity.”

“Return” generally means some measure of profit. 

“Equity” refers to the money put into a company by the stockholders or owners.

To oversimplify a bit, return on equity equals profit divided by the money the owners put into a business.

So, if I start a company with a $100 investment and, in the first year, I make $10 profit, it is said that my “ROE” (or return on equity) is 10%.

(Let’s call this scenario 1.)

Whew… that’s a lot of scaffolding just to understand a single sentence.

Now that I’ve defined specific terms, let’s combine terms to understand a new concept.

The return on equity that the owners of a business receive can vary quite significantly, depending on if the company has a lot of debt.

From a finance perspective, the debt level has a profound significance in understanding a business as a whole, and, in particular, the ROE.

Here’s why.

Let’s say I start my business with $100. Let’s assume I take out a $100,000 loan and my first year’s profit is $1,000.

My ROE is an astronomical 1,000%.

(Let’s call this scenario 2.)

The original statement makes the argument that it’s not appropriate to compare the return on equity of a company with no debt (scenario 1) with the return on equity of a company with a lot of debt (scenario 2).

The implication is that the two situations are too complex and nuanced than to simply say scenario 2 (the one with a lot of debt) is “better” or a better run business.

[The reason is that debt has some drawbacks, such as future repayment of loan and risk of not being able to make payments, that negatively impact the business but don’t appear in the return on equity percentage.]

Now at this point, I seriously wonder if anybody is still reading this longer-than-typical article.

If you are, notice how much explanation is required to scaffold a set of concepts needed to understand a seemingly simple sentence: “It’s inappropriate to compare a levered ROE with an un-levered ROE.”

You can see why many people don’t scaffold well when teaching, training, or managing others. It takes a lot of time and work!

This has several implications for your career.

If you’re hiring people, you need to decide when to hire the skills you need and when to train the people you hire.

Do you want someone else (e.g., a prior employer, graduate school institution) to have done the scaffolding needed, or are you willing to do that?

If you’re looking at joining different firms, which firm expects you to already know everything needed to do the job on Day 1 and which is willing to train you via good scaffolding?

Neither is inherently right or wrong, but either can be incompatible with your situation. It’s important to recognize what’s a good fit for you.

Firms that train you tend to pay less, as part of the non-financial compensation is the training you receive.

Firms that don’t train you tend to pay more, but if you don’t perform well, they’re more likely to fire you rather than teach you how to improve.

The same concept applies in reverse when you’re the employer.

Notice how grasping a concept like scaffolding can give you the means to see, understand, and make decisions at a more nuanced and sophisticated level.

This is representative of the major difference between individual contributors, managers, department heads, C-level officers (e.g., CEO, CFO) and board members.

Board members have a more sophisticated understanding of a company’s problems than an entry-level employee does.

If you aspire to progress to higher levels of responsibility, it’s important that you can see a situation at work through multiple points of view and lenses.

It’s something to keep in mind as you plan your career.

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