Lecture 1. Principles of Systems ThinkingIntroduction to Systems Thinking: System Structures and Behavior

What is a system? A system is a set of things interconnected in such a way that they produce

their own pattern of behavior over time Systems mostly cause their own behavior; outside events unleash that

behavior A system is more than the sum of its parts

Systems consists of three things1. Elements2. Interconnections3. Function (non-human system) or Purpose (human system)

“Every system is perfectly designed to achieve the results it gets.” - Dr. Don BerwickDescribe your situation as a system● What are the elements?● What are the interconnections between the elements?● What is the purpose of the system?

Stocks are the elements you can see, feel, count, or measure at any given timeExamples of Stocks● Water in a bathtub● A population● Books in a book store● Wood in a tree● Money in a bank

Stocks change over time via Flows● Work flow● Information flow● Both inflow and outflow

Stocks provide a memory of flows. Stocks act as “shock absorbers”. Stocks introduce delay. It takes time for flows to affect stocks. Delays decouple inflow and outflowExamples of stocks decoupling flows● Gasoline storage tanks● Wood in a forest● Water reservoir“Stocks are pretty much queues”

Systems run themselves via feedback loopsBalancing feedback loops● Thermostat● Guided missile● Iterative, incremental software developmentA stock with two competing balancing loopsHow feedback fails?● Late, lost, unclear, incomplete, hard to interpret information● Weak, delayed, resource-constrained, ineffective response

Two competing balancing loops with delays

A delay in a balancing feedback loop makes a system likely to oscillate

Systems are consists of three things:1. Elements2. Interconnections3. Function (non-human system) or Purpose (human system)Changing elements usually has the least effect; changing interconnections or purpose is usually more dramatic

Examples● Change all members of a sports team vs change rules of the game or the definition of winning● Change people in the organization vs change the way of working or the definition of organizational success

Focus more on interconnections and interactions than elements● Interaction flow / sequence over class structure● Work flow / value stream over org structure

System interactions operate through information flow

Address incongruent purposes

System purposes do not necessarily match the intention of the designers or actors within it

Systems Thinking

A Disciplined Approach

Systems thinking is an approach for developing models to promote our understanding of events, patterns of behavior resulting in the events, and even more importantly, the underlying structure responsible for the patterns of behavior. If we are interested in addressing a particular situation it is only through our understanding of the underlying structure that we will be able to identify the most appropriate leverage points to effect change within the system.

A disciplined approach to systems thinking is perceived to consist of the following steps.

Define the Situation Is Systems Thinking Appropriate? Develop Patterns of Behavior Evolve the Underlying Structure Simulate the Underlying Structure Identify the Leverage Points Develop an Alternate Structure Simulate the Alternate Structure Develop an Adoption Approach

Define the Situation. Develop a description of the situation as it is currently perceived. Ensure that the description doesn't attempt to describe the situation from the perspective of possible solutions. If there are multiple perspectives on the situation describe those also. "Formulating Questions" may be of some assistance in understanding how to describe the situation.

Is Systems Thinking Appropriate? While systems thinking is an approach that can provide a very rational view of the situation, as well as the identification of approaches that are highly likely to produce the desired result, it is an approach that requires a substantial investment of effort. The following are some of the signs that indicate a systems thinking approach is most likely warranted.

There are multiple perspectives on just what the situation is, and how to deal with it.

Things seem to oscillate endlessly. A previously applied fix seems to overshoot the goal A previously applied fix has created problems elsewhere Over time there is a tendency to settle for less After a fix is applied the problem returns in time

The same fix is used repeatedly There is a tendency to allow an established standard to slip Growth slows over time Partners for growth become adversaries Limitations experienced are believed to result from insufficient capacity There is more than one limit to growth Limited resources are shared by others Growth leads to decline elsewhere

These are the most often experienced situations indicating a systems thinking approach is appropriate. These indicators are actually an interrelated set of systems archetypes, which are described in "the Way of Systems".

A systems thinking approach is unwarranted whenever the situation contains no balancing or reinforcing feedback. That is, when the action and the result has no affect on the actors, which is actually very seldom the case.

Develop Patterns of Behavior. To really understand the evolution of the situation it is appropriate to collect historical data and plot the patterns of behavior over time. While this may be a tedious step in the process it is essential to have patterns to use as a reference for validating the following steps.

Evolve the Underlying Structure. Before attempting to deal with a situation it is appropriate to develop an understanding of why the system is behaving the way it is. The underlying structure provides a view of the interactions between the elements of the system which are responsible for producing the patterns of behavior. "Change Management: The Columbo Approach" depicts the difficulty associated with the dynamic equilibrium in existing systems. If there are multiple perspectives on what structure is responsible for producing the patterns of behavior each of them must be documented as they may all be appropriate. Be sure to include only the relevant relationships so the model doesn't become overly complicated. Also note that once the underlying structure is developed is may become apparent that additional data should be collected to complete the historical patterns of behavior.

Simulate the Underlying Structure. As far as I can tell the only way to ensure that the structure developed adequately describes the situation is to simulate it. The problem with systems that contain more than a couple elements is that the behavior of resources which accumulate or decline over time is often beyond our ability to intuit. The intent of simulation is to verify that the structure developed actually produces the behavior over time trends that were produced from the historical data. If it does then there is value in the structure developed. If the simulation doesn't produce the historical patterns of behavior it is most likely that there is a problem with the assumptions embedded in the structure or the structure itself.

Identify the Leverage Points. Leverage points are those influences within a system where small changes can effect a substantial change in the system itself. At times the leverage points may be obvious, though at times they only become apparent though sensitivity analysis. Sensitivity analysis being a process where specific changes are made to certain influences within the model with all other components held constant to determine the impact on other elements of the structure. It is this study of the system that promotes the development of our understanding which is so critical to the following steps.

Develop an Alternate Structure. If I desire the patterns of behavior to be different than they are then I have to alter the structure such that it will produce the desired patterns of behavior in the future. What is most appropriate is to look for are the leverage points within the structure where the least amount of effort will produce the greatest desired result.

If the current underlying structure happens to be one of the well defined systems archetypes then the leverage points are already defined and there are well defined strategies for dealing with each of them, which can save you the effort of attempting to develop a strategy. The strategies for dealing with defined archetypes may be found in "the Way of Systems."

Simulate the Alternate Structure. Once the alternative structure is developed it must be simulated to determine if it will in fact produce the desired behaviors over time. The simulation also provides an identification of all the touch points that should be monitored over time to ensure the system is on track to produce the desired results.

Develop an Adoption Approach. The next step is to develop a plan for the transition from the current structure to the new structure. This is essentially a project management task, though my preference is to perform the transition in the area(s) that will provide the greatest benefits most quickly. This will tend to encourage and reassure those involved that the transition is going to produce the desired result. Note that the alternate structure actually identifies the appropriate points to monitor during the transition to ensure that the transition is on plan.