Systems Thinking

F or every complex problem there is a solution that is simple, neat—and wrong. This maxim has been attributed at various times to Mark Twain, H.L. Mancken and Peter Drucker as a wake-up call to managers who mistakenly think that making a change in just one part of a complex problem will cure the ails of an entire system. Everyday management thinking too often looks for straightforward cause-and-effect relationships in problem solving that ignore the effect on, and feedback from, the entire system.

The realization that simple, neat and wrong short- term solutions use up precious organizational time, money and creativity is propelling managers to think differently—to think about the synergy of the entire system, not just the sum of its parts. This approach of "systems thinking" applies the theories and tools of systems modeling to the affairs of human conduct in business, industry, government, community and beyond.

If systems thinking sounds like something evolved from a heady academic base, it is. Applying systems dynamics theory and dynamic systems modeling to managing human organizations comes primarily from a lofty venue, the Massachusetts Institute of Technology (mit), and the work of engineering and management professor Jay Forester. He was the first to have the insight—and audacity—to apply the seemingly simple concepts of "systems" and "feedback" to human affairs and social systems, such as commercial operations, schools and governmental bodies.

A "system" as Forester uses the word, refers to a collection of parts working interdependently to create a specifiable outcome. Feedback is the information about the performance of the system, that when returned to the system, can modify the system's behavior. These ideas have been used successfully by systems theorists for some time. Ludwig von Bertallanfy used these ideas to describe the self-regulating behavior of living organisms. Forester's own engineering mentor, George Brown, applied them successfully to the concept of self-regulating machines.

In Forester's view, systems often behave in ways that require a new way of thinking. Therefore, systems thinking is more than the simple act of applying precise and obvious logic to organizational problems. When looked at through the systems-dynamics lens, the ways systems ought to work—compared to how they really work—can be enlightening, or counterintuitive, to management.

Peter Senge, author of best-selling The Fifth Discipline: The Art and Practice of the Learning Organization (Currency Doubleday, 1990) and a leading proponent of systems thinking as a management discipline, uses a simple story to illustrate the counterintuitive—and thus hard to master—nature of systems thinking:

"Jim Boswell, a friend of ours who grew up on a farm, points out that farm children learn naturally about the cycles of cause and effect that make up systems. They see the links among the milk the cow gives, the grass the cow eats, and the droppings which fertilize the fields. When a thunderstorm is on the horizon, even a small child knows to turn off the floodgate on a spring-water well, for fear that runoff carried downstream by the rains will foul it. They know that if they forget to turn off the floodgate, they'll have to boil their water, or carry it by bucket from far away. They easily accept a counterintuitive fact of life: The greatest floods represent the time when you must be most careful about conserving water." (The Fifth Discipline Field Book, Currency Doubleday, 1994)

Learning to think in terms of the nonobvious in relation to business processes is not necessarily an easy task for managers schooled only in linear or assembly line-like thinking.

A Simple But True Story

Counterintuitive results can plague any—if not most—problem solving efforts when managers don't think in whole system terms. Witness the seemingly simple case of controlling fan rowdiness at a sporting event. Embarrassed that inebriated fans had made spectacles of themselves during a nationally televised Monday night professional football game, the operators of a domed stadium came up with a straightforward, logical plan: stop serving alcoholic beverages at half-time. Then peace, rather than wholesale pandemonium and on-camera arrests, would reign.

To the planners' chagrin, the approach backfired: Drunken rowdiness simply commenced earlier. Stadium management, reluctant to exclude all in-stadium drinking because of the dire financial consequences, decided to step back and look more broadly at the situation. To their astonishment, they learned that it wasn't the consumption of alcohol on the premises that had led to the majority of the rowdiness problems. Rather, the high spirits could be traced to excessive drinking and partying at surrounding establishments and parking lot tailgate parties before the gates even opened. Once management instituted a policy of denying stadium access to those fans who were obviously over-the-limit, the level of mischief-making and overzealous merriment was reduced to an amount easily dealt with by normal stadium security.

The unexpected outcome of stadium management's efforts to control unruliness by limiting hours of alcohol consumption on the premises is, to a systems thinking expert, a wholly predictable result. Russell Ackoff, mit Professor Emeritus and one of the founders of the systems thinking movement, explains: "The typical way of managing is to take the whole and divide it into parts, then try to make each part perform as well as possible. But we have proven many times now that when you improve the performance of the parts you do not necessarily improve the performance of the whole. In fact, you can make it worse. Putting a Mercedes engine in a Volkswagen, for instance, doesn't make the Volkswagen a better car, even though it now has a superior engine. A system has properties that none of the parts have. You have to look at the entire system to understand what is truly happening."

If conventional, "logical" thinking just gets managers into trouble when they deal with complex situations, as systems thinking advocates imply, is there any hope that a manager—save through a brain transplant or an mit makeover—can master a broader way of thinking? Paul Stimson, director of the Strategic Consulting Group at Lexington, Mass.-based Linkage, Inc., assures us that there is. "I work with managers at all levels of organizations. Two or three hours with the basic tools, like causal-loop thinking, and they see that if it's not easy, it is something that makes sense and can be mastered. Most managers just haven't been exposed to the right tools."

Carter McNamara, a management development consultant and systems thinking instructor in St. Paul, Minn., agrees with Stimson, but he admits that systems thinking can, at first glance, have a daunting tone. "The language, the vocabulary can be a problem. And there are people who are very evangelical about systems thinking and delight in making it sound mystical and hard to master."

McNamara's approach is to simplify the language and the concepts and begin with a simple linear model. "I give people the basic 11 principles Senge talks about in The Fifth Discipline—'Everything is connected to everything else,' 'You can't divide your elephant in half,' and 'Things get better before they get worse.' (see sidebar, page 42). I then move on to breaking the participants' real life situations into simple input-process, output-feedback diagrams. Once they master that, you can go on to more complex relationships and concepts."

Linkage's Stimson sees that approach as a little too linear—or reinforcing of linear cause-and-effect thinking—and prefers a different approach emphasizing dynamic or complex casualty. To make the point that outcomes can be counterintuitive, he uses a popular simulation called The Beer Game, invented in the 1960s by another mit professor, John Sterman. "I teach the concept of causal loops and go right into simulation. Once people start to see how difficult it is to manage something as straightforward as keeping a retail supply chain full without order backlogs or excessive inventory charges, they realize that the best plans and intentions in a complex world can have unexpected outcomes.

"When I debrief the experience, I emphasize both the intellectual and emotional tolls of the exercise. And when I ask, 'Is this like your company,' I invariably hear, 'Duh, this isn't like our company, this is our company.' One of the important learnings right there is that the problems arise from the designed properties of the systems, not from the malice of other people in the organization. We far too often blame people when things go wrong, when in fact, it's just a faulty system doing nothing more or less than what it was designed to do."

Proof of the Pudding

When InFocus, Wilsonville, Ore., was looking for a way to improve cross-functional collaboration, their director of corporate quality, Rebecca Lynch-Wilmot, turned to systems thinking as a vehicle. "We needed to refresh our culture. We were maturing as a company and needed to stop fire fighting and start thinking longer term," she recalls.

Knowing well the pragmatism of high-technology companies, Lynch-Wilmot introduced systems thinking as an adjunct to the annual planning process, and she started at the top. "You have to pick the right time and the right audience," says Lynch-Wilmot. "Our executive team went through systems thinking training followed by an assessment of our strategic drivers. That assessment of what was working and what wasn't, looked at through the lens of systems thinking, made a significant difference in the quality of our planning." Once the executive team had seen the value of the systems thinking point of view, she rolled the combined systems thinking/strategic planning process into the organization.

Lynch-Wilmot has since introduced systems thinking to most of InFocus, including merger associates at Norway's Proxima Corp. and the company's independent Asian-Pacific partners. Along the way, she has learned a valuable lesson about the cultural support of something as effervescent as systems thinking. "Unlike a training program aimed at specific business results, supporting a culture change is a never-ending process. You constantly have to refresh and revitalize it. It is definitely an iterative process."

And that, in itself, may be the biggest lesson systems thinking has to teach: Making a department or a corporation, a city or a world a better place is a process that takes time, thought, and a mind open to the unexpected.