Introduction to Systems Thinking and Causal Loops

Introduction to Systems Thinking and Causal Loops

Todd Little

THE FIVE DISCIPLINESLEARNING ORGANIZATIONS

TeamLearning

PersonalMastery

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

CAUSE EFFECT

MECHANISTIC EXTRAPOLATION

0

100

200

300

400

500

600

700

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Revenue

• 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 FlowsHabits, Norms,

Expectations,

Perceptions

Emotions

Work

Processes

Control Mechanisms

Fire-fighting

Anticipating

Designing

Procedures/Policies

ActionMode

TimeOrientation

Way ofPerceiving

Questions toAsk

Events React! Present Witnessevent

What's thefastest way toreact?

Patterns Adapt! Measureor trackpatternsof events

What trendsseem to berecurring?

Structure CreateChange!

Future SystemsThinking

Whatstructures arein placecausing thesepatterns?

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

EmployeePerformance

Supervisor’sSupportiveBehavior

UnsupportiveBehavior

Structure

S

S

REINFORCING LOOP

Perf.Level

Time

Behavior Over Time

Supportive Behavior

EmployeePerformance

Supervisor’sSupportiveBehavior

Discrepancy

InventoryAdjustment

Structure

ActualInventory

DesiredInventory

Desired Inventory

Time

Behavior Over Time

100

100 - -

100 ++

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

UnintendedConsequences

FixProblemSymptom

Delay

SS

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

SS

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”

Drifting Goals

Goal Pressure to Lower Goal

Gap

Corrective ActionActual

SS

O

SO

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 DesiredTemperature

Tolerance for Temperature

TemperatureGap

Hop Out

Time

TempS

S

O

S

O

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 AInstead of B

Success of A

Resources to A

Resources to B

Success of B

Time

A

Time

BS

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 SuccessfulNIH Syndrome

Desire to redovs. desire to reuse

Confidence inAbility to redo

Amount ofredo

Amount of reuse

Success of reuse

Time

Re

do

Time

Re

use

S

S

S S

S

S

PositiveReinforcement

Structure

Perf.Level

Time

Behavior Over Time

HoursWorked

EnergyLevel

DiminishingReturns

“Burnout”

EmployeePerformance

Supervisor’sSupportiveBehavior

S

S

S

O

S

Limits to Success

PotentialCustomers

Market Exposureto Potential Customers

Sales

S

S

O

S

Limits to Sales Success

MarketSize

S

Systems Dynamics Models

PotentialCustomers

Customers

sales

non customercontacts

CONTACT RATE

customer prevalence

total market

customer with noncustomer contacts

SALES FRACTION

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

PotentialCustomers

Customers

sales

non customercontacts

CONTACT RATE

customer prevalence

total market

customer with noncustomer contacts

SALES FRACTION

INITIAL CUSTOMERS

Ex-Customers

1980 1985 1990 1995 2000 2005 2010

#Customers

#Active Customers

1980 1985 1990 1995 2000 2005 2010

Total Pot Rev

Actual Revenue

#Customers

#Active Customers

Tragedy of the Commons

Tragedy of the Commons

Total ActivityGain perIndividualActivity

ResourceLimit

O

S

S

S Time

A

Time

B

A’s Activity

Net Gainsfor AS

S

B’s Activity

Net Gainsfor B

S

S

S

S

Tragedy of Integration

Investmentin Integration

PerceivedSuccess from

Integration

S

O

O

Time

A

Time

B

Investmentin features

S

S

S

S

O

O

Success fromProduct

Investment

Success fromProduct

Investment

Investmentin features

FixedBudget

FixedBudget

Investmentin 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 ofIntegration

Customer demandfor Integration

ISG pushof Integration

SS

O

S

LandmarkMarketing

VisionS

ISG Interestin Integration

IPG Interestin Integration

Investment inIntegration

S

SS

S

Software Integration

Success fromFeatures

Interest inIntegration

Success fromIntegration

SS

O

O

S

Investmentin Integration

Investmentin features

Frustrationwith Dependencies

and Legacy Integration

S

O

•Limits to Growth

•Success to the Successful