Systems Thinking and

Causal Loops

m nurman helmi
Program Pascasarjana
Universitas Pasundan
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

500
Revenue

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

Designing Structure

Unwritten Rules

Reward Systems Peoples Mental Models

EVENTS, PATTERNS, AND STRUCTURE
Action Time Way of Questions to
Mode Orientation Perceiving Ask

Events React! Present Witness What's the

event fastest way to
react?
Patterns Adapt! Measure What trends
or track seem to be
patterns recurring?
of events
Structure Create Future Systems What
Change! Thinking 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
 COMPONENTS OF A
CAUSAL LOOP DIAGRAM
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
 REINFORCING LOOP

Structure Behavior Over Time

Employee
Supportive
Performance Perf. Behavior
S Level

Unsupportive
Supervisors
Behavior
Supportive
Behavior Time
 BALANCING LOOP

Structure Behavior Over Time

Desired S
Discrepancy
Inventory
O Actual Inventory

100 ++
S
Desired Inventory
Actual Inventory 100

Inventory Adjustment 100 - -

S

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 Fix
Symptom

O
Delay

S
S
Time

Unintended
Consequences
Dilbert Learns Causal Loops
THE SOFTWARE BUG FIX
S

Number of Reward for Fixing

Bugs in Software Software Bugs

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 dont 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 peoples 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

S
S Goal

Gap
Time
S
O

Actual Corrective Action

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

Perceived Desired Tolerance for

Temperature Temperature

O
S Temp
Temperature
Gap
Time
S
O

Hop Out
 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

Success of A Success of B
S S
A
S
S

Allocation to A Time
Instead of B

Resources S S
Resources B
to A to 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
 Success to the Successful
NIH Syndrome
Confidence in Success of reuse

Redo
Ability to redo S S
S
S

Desire to redo Time

vs. desire to reuse

Reuse
S
Amount of S Amount of
redo reuse

Time
 Limits to Success
Structure Behavior Over Time

Burnout
S
Energy Employee Perf.
Level Performance
Level
S Diminishing
O
Returns
S
Hours Supervisors Positive
Worked Supportive Reinforcement
S Behavior
Time
 Limits to Sales Success

Market Exposure
S
to Potential
Market Customers
Size
S
S
Potential S
Customers

O Sales
 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
 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
non customer customer contacts
contacts
SALES FRACTION customer
prevalence
CONTACT RATE
Potential Customers
Customers
sales
INITIAL CUSTOMERS
total market

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

Net Gains
S for A
S Resource A
As Activity S Limit
S S
O
Gain per Time
Total Activity Individual
S Activity
S B
Bs Activity
S
Net Gains
S Time
for B
 Tragedy of Integration
Fixed S Investment
Budget in features
S

O Success from
Product
Investment O A
Investment S
in Integration
S Perceived Time
DELAY Success from
Integration
Investment
in Integration S B
Success from
Product O
O Investment
Time
S
Fixed Investment
S
Budget in features
 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 Landmark
S Marketing
Vision
O Customer demand
for Integration
S

S
S

ISG Interest
in Integration

S
ISG push
S of Integration IPG Interest
Level of
in Integration
Integration
S Investment in
S
Integration
 Software Integration
Interest in
Integration

S
O S
Investment
Limits to Growth
in Integration
Success to the
O
Success from Successful
Integration
S

Frustration O
with Dependencies
and Legacy Integration
Investment
in features
Success from S
Features