duction to Systems Thinking and Causal Loops LEARNING ORGANIZATIONS THE FIVE DISCIPLINES Personal Mastery Shared Systems Mental Vision Thinking Models Team Learning MECHANISTIC VIEW Universe is a machine Analytic method leads to reductionism Very effective when change is slow CAUSE EFFECT Management intervention for Cause-Effect Mitigate the Effect (Fire-Fight) Eliminate the Cause (Better not happen again) Run Away (and hide) MECHANISTIC EXTRAPOLATION 700 600 Revenue 500 400 300 200 100 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 SYSTEMS VIEW Focusing on principle of organization, particularly interdependent relationships Dealing with detail complexity and dynamic complexity Seeing processes of change rather than snapshots WHAT IS A SYSTEM? A collection of people and/or parts which interact with each other to function as a whole SYSTEM INTEGRITY Dividing a cow in half does not give you two smaller cows WHY A SYSTEMS PERSPECTIVE? Facilitates leadership by leveraged action integrating competing priorities acknowledging and handling unintended consequences Problems facing us are more complex due to increase in information flow interdependencies rate of change \"The significant problems we face today cannot be solved at the same level of thinking at which they were created.\" - Albert Einstein WHAT IS SYSTEMS THINKING? Examining how WE CREATE OUR OWN PROBLEMS Seeing the BIG PICTURE Recognizing that STRUCTURE INFLUENCES PERFORMANCE ASPECTS OF STRUCTURE Fire-fighting Crises Events Tasks Anticipating Trends Patterns d an es lu fs Va lie Be Mater ials Flows s on Habi i t o Ex ts, m N p \"Hot Buttons\" E Pe ecta orm s rce tio Structure Designing ptio ns, , k ns r les Wo esses ten Ru t i r W c Pro isms n a h c Unwritten Rules Me l o r t n Co olicies P / s e r u Reward Systems Proced People's Mental Models EVENTS, PATTERNS, AND STRUCTURE Action Mode Time Way of Orientation Perceiving Questions to Ask Events React! Present Patterns Adapt! What's the fastest way to react? What trends seem to be recurring? Structure Create Future Change! Witness event Measure or track patterns of events Systems Thinking What structures are in place causing these patterns? SYSTEMS THINKING TOOLS Causal Loop Diagrams - a useful way to represent dynamic interrelationships Provide a visual representation with which to communicate that understanding Make explicit one's understanding of a system structure - Capture the mental model REINFORCING LOOP Behavior Over Time Structure Employee Performance Perf. Level S Supportive Behavior S Supervisor's Supportive Behavior Unsupportive Behavior Time BALANCING LOOP Structure Desired Inventory S Behavior Over Time Discrepancy O Actual Inventory S Actual Inventory S Inventory Adjustment 100 ++ Desired Inventory 100 100 - - Time SYSTEMS ARCHETYPES A class of tools that capture the "common stories\" in systems thinking Powerful tools for diagnosing problems and identifying high leverage interventions that creates fundamental change SYSTEMS ARCHETYPES Drifting Goals Escalation Fixes that Fail / Backfire Growth and Underinvestment Limits to Success Shifting the Burden / Addiction Success to the Successful Tragedy of the Commons FIXES THAT FAIL / BACKFIRE S Behavior Over Time Problem Symptom Fix O S Delay S Time Unintended Consequences Dilbert Learns Causal Loops THE SOFTWARE BUG FIX S Number of Bugs in Software Reward for Fixing Software Bugs O S S Incentive to Write Software with Bugs Fixes that Fail Breaking a \"Fixes that Fail\" cycle usually requires two actions: acknowledging that the fix is merely alleviating a symptom, and making a commitment to solve the real problem now. A two pronged attack of applying the fix and planning out the fundamental solution will help ensure that you don't get caught in a perpetual cycle of solving yesterdays \"solutions\" Drifting Goals O Goal Pressure to Lower Goal S Goal S Gap Time S O Actual Corrective Action S Delay THE BOILED FROG If you put a frog in boiling water, it will hop out immediately If you put a frog in cold water and slowly bring the water to boil, the frog will unwittingly enjoy its last blissful warm bath THE BOILED FROG S Perceived Desired Temperature Tolerance for Temperature O Temp S Temperature Gap Time S O Hop Out Drifting Goals Drifting performance figures are indicators that the \"Drifting Goals\" archetype is at work and that real corrective actions are not being taken. Understand how goals are set Success to the Successful Success of B Success of A S S A S S Allocation to A Instead of B Resources to A S Time S Resources to B B Time Success to the Successful Look for reasons why the system was set up to create just one \"winner\" Find ways to make teams collaborators rather than competitors Confidence in Ability to redo Success of reuse S S Redo Success to the Successful NIH Syndrome S S Desire to redo vs. desire to reuse S Amount of reuse Reuse Amount of redo S Time Time Limits to Success Behavior Over Time Structure Energy Level \"Burnout\" S Employee Performance S Perf. Level Diminishing Returns O S Hours Worked S Supervisor's Supportive Behavior Positive Reinforcement Time Limits to Sales Success Market Exposure to Potential Customers S Market Size S S Potential Customers S O Sales Systems Dynamics Models customer with non customer contacts non customer contacts SALES FRACTION customer prevalence CONTACT RATE Potential Customers Customers sales total market INITIAL CUSTOMERS Legal Disclaimer The following is fiction. Any resemblance to any leading oil & gas software development company is purely coincidental. New Sales 1980 1985 1990 1995 2000 2005 2010 Total Customers 1980 1985 1990 1995 2000 2005 2010 Revenue 1980 1985 1990 1995 2000 2005 2010 Systems Dynamics Models customer with non customer contacts non customer contacts SALES FRACTION customer prevalence CONTACT RATE Potential Customers Customers sales total market INITIAL CUSTOMERS Ex-Customers #Customers #Active Customers 1980 1985 1990 1995 2000 2005 2010 Total Pot Rev Actual Revenue #Customers #Active Customers 1980 1985 1990 1995 2000 2005 2010 Tragedy of the Commons Tragedy of the Commons S A's Activity Net Gains for A S S S Total Activity O S Gain per Individual Activity Resource Limit A S Time B S B's Activity S Net Gains for B S Time Tragedy of Integration Fixed Budget S Investment in features S O Investment in Integration Success from Product Investment S Investment in Integration Fixed Budget S A S DELAY O O B S Success from Product Investment Investment in features S Time Perceived Success from Integration O Time Tragedy of the Commons Solutions for a \"Tragedy of the Commons\" never lie at the individual level (The Libertarian Nightmare) What are the incentives for individuals to persist in their actions? Can the long-term collective loss be made more real? Find ways to reconcile short-term individual rewards with long-term cumulative consequences Software Integration S Customer demand for Integration O Landmark Marketing Vision S S S ISG Interest in Integration Level of Integration ISG push of Integration S S Investment in Integration S IPG Interest in Integration S Software Integration Interest in Integration S S O Investment in Integration O Success from Integration S Frustration with Dependencies and Legacy Integration Success from Features S O Investment in features Limits to Growth Success to the Successful