Introduction to Systems Thinking and Causal Loops

1. Introduction to Systems Thinking and Causal Loops Todd Little

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

3. 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)

4. MECHANISTIC EXTRAPOLATION

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

6. WHAT IS A SYSTEM? • A collection of people and/or parts which interact with each other to function as a whole

7. SYSTEM INTEGRITY Dividing a cow in half does not give you two smaller cows

8. WHY A SYSTEMS PERSPECTIVE? • Facilitates leadership by leveraged action • integrating competing priorities • acknowledging and handling unintended consequences • Problems facing us are more complexdue to increase in • information flow • interdependencies • rate of change

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

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

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

12. EVENTS, PATTERNS, AND STRUCTURE

13. 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

14. Behavior Over Time Supportive Behavior Perf. Level Unsupportive Behavior Time REINFORCING LOOP Structure Employee Performance Employee Performance S S Supervisor’s Supportive Behavior Supervisor’s Supportive Behavior Your Software Sucks! Your Software Really Sucks!

15. Behavior Over Time Actual Inventory 100 ++ Desired Inventory 100 100 - - Time BALANCING LOOP Structure Desired Inventory S Discrepancy O S Actual Inventory Inventory Adjustment S

16. SYSTEMSARCHETYPES • 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

17. 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

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

19. Dilbert Learns Causal Loops

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

21. 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”

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

23. 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

24. Time THE BOILED FROG S Warning Do not try this at home! Perceived Desired Temperature Tolerance for Temperature O Temp S Temperature Gap S O Hop Out

25. 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

26. A B Time Time Success to the Successful Success of B Success of A S S S S Allocation to AInstead of B Resources to B S S Resources to A

27. 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

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

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

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

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

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

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

39. Tragedy of the Commons

40. Net Gains for A S A A’s Activity S B S B’s Activity Time Time Net Gains for B S Tragedy of the Commons Resource Limit S S S Gain per Individual Activity O Total Activity S S

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

42. 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

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

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