Thinking in Systems

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It is no accident that that is so.

Purposes are deduced from behavior, not from rhetoric or stated goals.

Meadows, Donella H. The Global Citizen. (Washington, DC: Island Press, 1991).

An important function of almost every system is to ensure its own perpetuation.

Democracy works better without the brainwashing power of centralized mass communications.

Here are just few of the questions that were prompted by our insights into how systems work.

The behavior of a system cannot be known just by knowing the elements of which the system is made.

A feedback loop is formed when changes in a stock affect the flows into or out of that same stock.

through which we perceive our world.… The language and information systems of an organization are not an

Keeping sub-purposes and overall system purposes in harmony is an essential function of successful systems.

A change in purpose changes a system profoundly, even if every element and interconnection remains the same.

There always will be limits to growth. They can be self-imposed. If they aren’t, they will be system-imposed.

Rule beating means evasive action to get around the intent of a system’s rules—abiding by the letter, but not the spirit, of the law.

Systems thinking goes back and forth constantly between structure (diagrams of stocks, flows, and feedback) and behavior (time graphs).

A stock can be increased by decreasing its outflow rate as well as by increasing its inflow rate. There’s more than one way to fill a bathtub!

A system is more than the sum of its parts. It may exhibit adaptive, dynamic, goal-seeking, self-preserving, and sometimes evolutionary behavior.

by weakening the inflow. Growth in a constrained environment is very common, so common that systems thinkers call it the “limits-to-growth” archetype.

Stocks generally change slowly, even when the flows into or out of them change suddenly. Therefore, stocks act as delays or buffers or shock absorbers in systems.

Many of the interconnections in systems operate through the flow of information. Information holds systems together and plays a great role in determining how they operate.

However, because of the epidemic of HIV/AIDS, the UN now assumes the trend of increasing life expectancy over the next fifty years will slow in regions affected by HIV/AIDS.

Sweeney, Linda B. and Dennis Meadows. The Systems Thinking Playbook. (2001). A collection of 30 short gaming exercises that illustrate lessons about systems thinking and mental models.

The information delivered by a feedback loop—even nonphysical feedback—can only affect future behavior; it can’t deliver a signal fast enough to correct behavior that drove the current feedback

Reinforcing feedback loops are self-enhancing, leading to exponential growth or to runaway collapses over time. They are found whenever a stock has the capacity to reinforce or reproduce itself.

Systems need to be managed not only for productivity or stability, they also need to be managed for resilience—the ability to recover from perturbation, the ability to restore or repair themselves.

The just-in-time model also has made the production system more vulnerable, however, to perturbations in fuel supply, traffic flow, computer breakdown, labor availability, and other possible glitches.

Because resilience may not be obvious without a whole-system view, people often sacrifice resilience for stability, or for productivity, or for some other more immediately recognizable system property.

Although there is every reason to want a thriving economy, there is no particular reason to want the GNP to go up. But governments around the world respond to a signal of faltering GNP by taking numerous actions to keep it growing.

To paraphrase a common prayer: God grant us the serenity to exercise our bounded rationality freely in the systems that are structured appropriately, the courage to restructure the systems that aren’t, and the wisdom to know the difference!

A system* is an interconnected set of elements that is coherently organized in a way that achieves something. If you look at that definition closely for a minute, you can see that a system must consist of three kinds of things: elements, interconnections, and a function or purpose.

Senge, Peter. The Fifth Discipline: The Art and Practice of the Learning Organization. (New York: Doubleday, 1990). Systems thinking in a business environment, and also the broader philosophical tools that arise from and complement systems thinking, such as mental-model flexibility and visioning.

Everything we think we know about the world is a model. Every word and every language is a model. All maps and statistics, books and databases, equations and computer programs are models. So are the ways I picture the world in my head—my mental models. None of these is or ever will be the real world.

But there it was, the message emerging from every computer model we made. Living successfully in a world of systems requires more of us than our ability to calculate. It requires our full humanity—our rationality, our ability to sort out truth from falsehood, our intuition, our compassion, our vision, and our morality.

Consider a huge bathtub with slow in- and outflows. Now think about a small one with very fast flows. That’s the difference between a lake and a river. You hear about catastrophic river floods much more often than catastrophic lake floods, because stocks that are big, relative to their flows, are more stable than small ones.

Are the driving factors likely to unfold this way? (What are birth rate and death rate likely to do?) If they did, would the system react this way? (Do birth and death rates really cause the population stock to behave as we think it will?) What is driving the driving factors? (What affects birth rate? What affects death rate?)

Second, and more seriously, in trying to find statistical links that relate flows to each other, econometricians are searching for something that does not exist. There’s no reason to expect any flow to bear a stable relationship to any other flow. Flows go up and down, on and off, in all sorts of combinations, in response to stocks, not to other flows.

If the desired system state is good education, measuring that goal by the amount of money spent per student will ensure money spent per student. If the quality of education is measured by performance on standardized tests, the system will produce performance on standardized tests. Whether either of these measures is correlated with good education is at least worth thinking about.

The genetic code within the DNA that is the basis of all biological evolution contains just four different letters, combined into words of three letters each. That pattern, and the rules for replicating and rearranging it, has been constant for something like three billion years, during which it has spewed out an unimaginable variety of failed and successful self-evolved creatures.

If you think that the reasoning of an exploiter of the commons is hard to understand, ask yourself how willing you are to carpool in order to reduce air pollution, or to clean up after yourself whenever you make a mess. The structure of a commons system makes selfish behavior much more convenient and profitable than behavior that is responsible to the whole community and to the future.

The language and information systems of an organization are not an objective means of describing an outside reality—they fundamentally structure the perceptions and actions of its members. To reshape the measurement and communication systems of a [society] is to reshape all potential interactions at the most fundamental level. Language … as articulation of reality is more primordial than strategy, structure, or … culture.

When we think in terms of systems, we see that a fundamental misconception is embedded in the popular term “side-effects.”… This phrase means roughly “effects which I hadn’t foreseen or don’t want to think about.”… Side-effects no more deserve the adjective “side” than does the “principal” effect. It is hard to think in terms of systems, and we eagerly warp our language to protect ourselves from the necessity of doing so.

If a factory is torn down but the rationality which produced it is left standing, then that rationality will simply produce another factory. If a revolution destroys a government, but the systematic patterns of thought that produced that government are left intact, then those patterns will repeat themselves.… There’s so much talk about the system. And so little understanding. —ROBERT PIRSIG, Zen and the Art of Motorcycle Maintenance

Another of Forrester’s classics was his study of urban dynamics, published in 1969, which demonstrated that subsidized low-income housing is a leverage point.3 The less of it there is, the better off the city is—even the low-income folks in the city. This model came out at a time when national policy dictated massive low-income housing projects, and Forrester was derided. Since then, many of those projects have been torn down in city after city.

When the theory of bounded rationality challenged two hundred years of economics based on the teachings of political economist Adam Smith, you can imagine the controversy that resulted—one that is far from over. Economic theory as derived from Adam Smith assumes first that homo economicus acts with perfect optimality on complete information, and second that when many of the species homo economicus do that, their actions add up to the best possible outcome for everybody.

HINT ON REINFORCING LOOPS AND DOUBLING TIME Because we bump into reinforcing loops so often, it is handy to know this shortcut: The time it takes for an exponentially growing stock to double in size, the “doubling time,” equals approximately 70 divided by the growth rate (expressed as a percentage). Example: If you put $100 in the bank at 7% interest per year, you will double your money in 10 years (70 ÷ 7 = 10). If you get only 5% interest, your money will take 14 years to double.

Only a part of us, a part that has emerged recently, designs buildings as boxes with uncompromising straight lines and flat surfaces. Another part of us recognizes instinctively that nature designs in fractals, with intriguing detail on every scale from the microscopic to the macroscopic. That part of us makes Gothic cathedrals and Persian carpets, symphonies and novels, Mardi Gras costumes and artificial intelligence programs, all with embellishments almost as complex as the ones we find in the world around us.

You can often stabilize a system by increasing the capacity of a buffer.5 But if a buffer is too big, the system gets inflexible. It reacts too slowly. And big buffers of some sorts, such as water reservoirs or inventories, cost a lot to build or maintain. Businesses invented just-in-time inventories, because occasional vulnerability to fluctuations or screw-ups is cheaper (for them, anyway) than certain, constant inventory costs—and because small-to-vanishing inventories allow more flexible response to shifting demand.

Resilience has many definitions, depending on the branch of engineering, ecology, or system science doing the defining. For our purposes, the normal dictionary meaning will do: “the ability to bounce or spring back into shape, position, etc., after being pressed or stretched. Elasticity. The ability to recover strength, spirits, good humor, or any other aspect quickly.” Resilience is a measure of a system’s ability to survive and persist within a variable environment. The opposite of resilience is brittleness or rigidity. Resilience arises from a

When you understand the power of system self-organization, you begin to understand why biologists worship biodiversity even more than economists worship technology. The wildly varied stock of DNA, evolved and accumulated over billions of years, is the source of evolutionary potential, just as science libraries and labs and universities where scientists are trained are the source of technological potential. Allowing species to go extinct is a systems crime, just as randomly eliminating all copies of particular science journals or particular kinds of scientists would be.

Expose Your Mental Models to the Light of Day When we draw structural diagrams and then write equations, we are forced to make our assumptions visible and to express them with rigor. We have to put every one of our assumptions about the system out where others (and we ourselves) can see them. Our models have to be complete, and they have to add up, and they have to be consistent. Our assumptions can no longer slide around (mental models are very slippery), assuming one thing for purposes of one discussion and something else contradictory for purposes of the next discussion.

As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of greatest value… he generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it.… He intends his own security; … he intends only his own gain and he is in this … led by an invisible hand to promote an end which was no part of his intention. By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it.

For example, in 1986, new federal legislation, the Toxic Release Inventory, required U.S. companies to report all hazardous air pollutants emitted from each of their factories each year. Through the Freedom of Information Act (from a systems point of view, one of the most important laws in the nation), that information became a matter of public record. In July 1988, the first data on chemical emissions became available. The reported emissions were not illegal, but they didn’t look very good when they were published in local papers by enterprising reporters, who had a tendency to make lists of “the top ten local polluters.”

Defy the Disciplines In spite of what you majored in, or what the textbooks say, or what you think you’re an expert at, follow a system wherever it leads. It will be sure to lead across traditional disciplinary lines. To understand that system, you will have to be able to learn from—while not being limited by—economists and chemists and psychologists and theologians. You will have to penetrate their jargons, integrate what they tell you, recognize what they can honestly see through their particular lenses, and discard the distortions that come from the narrowness and incompleteness of their lenses. They won’t make it easy for you.

A society that talks incessantly about “productivity” but that hardly understands, much less uses, the word “resilience” is going to become productive and not resilient. A society that doesn’t understand or use the term “carrying capacity” will exceed its carrying capacity. A society that talks about “creating jobs” as if that’s something only companies can do will not inspire the great majority of its people to create jobs, for themselves or anyone else. Nor will it appreciate its workers for their role in “creating profits.” And of course a society that talks about a “Peacekeeper” missile or “collateral damage,” a “Final Solution” or “ethnic cleansing,” is speaking what Wendell Berry calls “tyrannese.”

There are three ways to avoid the tragedy of the commons. Educate and exhort. Help people to see the consequences of unrestrained use of the commons. Appeal to their morality. Persuade them to be temperate. Threaten transgressors with social disapproval or eternal hellfire. Privatize the commons. Divide it up, so that each person reaps the consequences of his or her own actions. If some people lack the self-control to stay below the carrying capacity of their own private resource, those people will harm only themselves and not others. Regulate the commons. Garrett Hardin calls this option, bluntly, “mutual coercion, mutually agreed upon.” Regulation can take many forms, from outright bans on certain behaviors to quotas, permits, taxes, incentives. To be effective, regulation must be enforced by policing and penalties.

Picture a pasture open to all. It is to be expected that each herdsman will try to keep as many cattle as possible on the commons.… Explicitly or implicitly, more or less consciously, he asks, “What is the utility to me of adding one more animal to my herd?”… Since the herdsman receives all the proceeds from the sale of the additional animal, the positive utility is nearly +1.… Since, however, the effects of overgrazing are shared by all, … the negative utility for any particular decision-making herdsman is only a fraction of –1.… The rational herdsman concludes that the only sensible course for him to pursue is to add another animal to his herd. And another; and another.… But this is the conclusion reached by each and every rational herdsman sharing a commons. Therein is the tragedy. Each … is locked into a system that compels him to increase his herd without limit—in a world that is limited. Ruin is the destination toward which all … rush, each pursuing his own best interest.

Take markets, for example, the balancing feedback systems that are all but worshipped by many economists. They can indeed be marvels of self-correction, as prices vary to moderate supply and demand and keep them in balance. Price is the central piece of information signaling both producers and consumers. The more the price is kept clear, unambiguous, timely, and truthful, the more smoothly markets will operate. Prices that reflect full costs will tell consumers how much they can actually afford and will reward efficient producers. Companies and governments are fatally attracted to the price leverage point, but too often determinedly push it in the wrong direction with subsidies, taxes, and other forms of confusion. These modifications weaken the feedback power of market signals by twisting information in their favor. The real leverage here is to keep them from doing it. Hence, the necessity of antitrust laws, truth-in-advertising laws, attempts to internalize costs (such as pollution fees), the removal of perverse subsidies, and other ways of leveling market playing fields.

These examples confuse effort with result, one of the most common mistakes in designing systems around the wrong goal. Maybe the worst mistake of this kind has been the adoption of the GNP as the measure of national economic success. The GNP is the gross national product, the money value of the final goods and services produced by the economy. As a measure of human welfare, it has been criticized almost from the moment it was invented: The gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.16 We have a system of national accounting that bears no resemblance to the national economy whatsoever, for it is not the record of our life at home but the fever chart of our consumption.