Introduction to Systems Thinking and Causal Loops Todd Little

THE FIVE DISCIPLINES LEARNING ORGANIZATIONS Team Learning Personal Mastery Mental Models Shared Vision Systems Thinking

Management intervention for Cause-Effect Mitigate the Effect (Fire-Fight) Eliminate the Cause (Better not happen again) Run Away (and hide) Universe is a machine Analytic method leads to reductionism Very effective when change is slow MECHANISTIC VIEW CAUSEEFFECT

MECHANISTIC EXTRAPOLATION

Focusing on principle of organization, particularly interdependent relationships Dealing with detail complexity and dynamic complexity Seeing processes of change rather than snapshots SYSTEMS VIEW

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? Problems facing us are more complex due to increase in information flow interdependencies rate of change Facilitates leadership by leveraged action integrating competing priorities acknowledging and handling unintended consequences

“The significant problems we face today cannot be solved at the same level of thinking at which they were created.” - Albert Einstein

 Examining how WE CREATE OUR OWN PROBLEMS  Seeing the BIG PICTURE  Recognizing that STRUCTURE INFLUENCES PERFORMANCE WHAT IS SYSTEMS THINKING?

ASPECTS OF STRUCTURE Events Patterns Structure Crises Tasks Trends Reward Systems Unwritten Rules People’s Mental Models Values and Beliefs “Hot Buttons” Written Rules Materials Flows Habits, Norms, Expectations, Perceptions Emotions Work Processes Control Mechanisms Fire-fighting Anticipating Designing Procedures/Policies

EVENTS, PATTERNS, AND STRUCTURE

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 SYSTEMS THINKING TOOLS

Variables - an element in a situation which may act or be acted upon  Vary up or down over time (not an event)  Nouns or noun phrases (not action words) Links / Arrows - show the relationship and the direction of influence between variables S's and O's - show the way one variable moves or changes in relation to another  S stands for "same direction”  O stands for "opposite direction” or B - Balancing feedback loop that seeks equilibrium or R - Reinforcing feedback loop that amplifies change COMPONENTS OF A CAUSAL LOOP DIAGRAM

Employee Performance Supervisor’s Supportive Behavior Unsupportive Behavior Structure S S REINFORCING LOOP Perf. Level Time Behavior Over Time Supportive Behavior Employee Performance Supervisor’s Supportive Behavior

Discrepancy Inventory Adjustment Structure Actual Inventory Desired Inventory Desired Inventory Time Behavior Over Time Actual Inventory S S S O BALANCING LOOP

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 SYSTEMS ARCHETYPES

FIXES THAT FAIL / BACKFIRE Unintended Consequences Fix Problem Symptom Delay S S S O Time Behavior Over Time

Dilbert Learns Causal Loops

THE SOFTWARE BUG FIX Incentive to Write Software with Bugs Reward for Fixing Software Bugs Number of Bugs in Software S S S O

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”

CLASSIC INTERVENTIONS FOR A “FIX THAT FAILS” Increase awareness of the unintended consequences (i.e. open up people’s mental models) Reframe and address the root problem; give up the fix that only works the symptom Anticipate unintended consequences; select an intervention that produces the least harmful or most manageable consequences When you must address symptoms, manage or minimize the impact of the undesirable consequences

Drifting Goals Goal Pressure to Lower Goal Gap Corrective Action Actual S S O S O S Delay Time Goal

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 Perceived Desired Temperature Tolerance for Temperature Gap Hop Out Time Temp S S O S O

THE BOILED FROG If you put a frog in cold water and slowly bring the water to boil the frog will jump out when it gets uncomfortable. If you put a frog in boiling water, it will croak immediately.

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 Allocation to A Instead of B Success of A Resources to A Resources to B Success of B Time A B S S S S S S

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

Success to the Successful NIH Syndrome Desire to redo vs. desire to reuse Confidence in Ability to redo Amount of redo Amount of reuse Success of reuse Time Redo Time Reuse S S S S S S

Positive Reinforcement Structure Perf. Level Time Behavior Over Time Hours Worked Energy Level Diminishing Returns “Burnout” Employee Performance Supervisor’s Supportive Behavior S S S O S Limits to Success

Potential Customers Market Exposure to Potential Customers Sales S S O S Limits to Sales Success Market Size S

Systems Dynamics Models Potential Customers sales non customer contacts CONTACT RATE customer prevalence total market customer with non customer contacts SALES FRACTION INITIAL CUSTOMERS

Legal Disclaimer The following is fiction. Any resemblance to any leading oil & gas software development company is purely coincidental.

Systems Dynamics Models Potential Customers sales non customer contacts CONTACT RATE customer prevalence total market customer with non customer contacts SALES FRACTION INITIAL CUSTOMERS Ex-Customers

Tragedy of the Commons

Total Activity Gain per Individual Activity Resource Limit O S S S Time A B A’s Activity Net Gains for A S S B’s Activity Net Gains for B S S S S

Tragedy of Integration Investment in Integration Perceived Success from Integration S O O Time A B Investment in features S S S S O O Success from Product Investment Success from Product Investment in features Fixed Budget Fixed Budget Investment in Integration DELAY S S

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 Level of Integration Customer demand for Integration ISG push of Integration S S O S Landmark Marketing Vision S ISG Interest in Integration IPG Interest in Integration Investment in Integration S S S S

Software Integration Success from Features Interest in Integration Success from Integration S S O O S Investment in Integration Investment in features Frustration with Dependencies and Legacy Integration S O Limits to Growth Success to the Successful