Systems thinking

The secret code for operational excellence

and strategic coherence
Benjamin Taylor
RedQuadrant,
the Public Service
Transformation
Academy, and
the Operational
Excellence Society

Systems Thinking 1
Introducing myself

www.linkedin.com/in/antlerboy
@antlerboy

Systems Thinking 2
A lot of stuff out there is bullsh*t
• Most leadership is bullsh*t
• Most operational excellence is bullsh*t
• Most transformation is bullsh*t

But not everything… theory, method, prediction, failure

Systems Thinking 3
My promise Your job
• There are world-changing ideas • Listen critically
here – not all mine! • Apply
• Find one model / idea / story /
thing…
▪ …that you like
▪ …that you can build on
• Come up with your questions

Systems Thinking 4
Systems Thinking 5
Five elements of the ‘dark matter’ of organisation
• The Viable Systems Model – the hidden, underlying organisational logic
• power+systems – human dynamics eat partnership for breakfast
• Culture shaping – you’re doing it whether you like it or not
• Sense-and-respond and the de facto purpose of your organisation
• Structural coupling and why most strategy is meaningless

Five icebergs and how to avoid them

Systems Thinking 6
Excellence now and agility for the future via organisational coherence

THE VIABLE SYSTEMS MODEL

Systems Thinking 7
Systems 1,2 and 3: us and now

• Multiple System 1s: maximum

autonomy consistent with
coherence
• System 2 to prevent and deal with
conflicts of interest / overlap /
informal and day-to-day resources
• System 3 is for synergy, policy, and
resource negotiation
• Systems 2 and 3 are meta-systems
– they have an over-view of the
entire interacting cluster of
operational units, and their job is
to make sure the whole thing
works as effectively as possible.
• Balanced autonomy and cohesion.

Systems Thinking 8
Systems 3, 4 and 5: now / future / identity

• Information about the • The base brain deals

operations is held and with muscles and organs
used by System 3 • In the brain, information
• Information about the through eyes and ears
environment and future and registered by the
planning held and used mid brain
by System 4 • The cortex monitors and
• System 5 monitors and organises the brain’s
balances systems 3 and information about what
4 to maintain the is happening both inside
coherence and identity and outside
of the organisation

Organic – based on a model of human operating systems

Perspectivist – the brain makes sense (only) based on models of the world

Systems Thinking 9
The law of requisite variety
• In order to cope with its environment, the Operation needs to match its
variety to that of the Environment
• In order to manage the Operation, Management needs to match its
variety to that of the Operation

Ashby's law – requisite variety

• Control can be obtained only if the variety of the controller is at least as
great as the variety of the situation to be controlled

• Amplification and attenuation

Is the organisation capable to the complexity of the environment?

Systems Thinking 10
Four aspects of organisational maturity
• Capacity: are there adequate resources to perform this function?
• Connectivity: does this function have the relationships with other parties
that it needs to perform adequately?
• Balance: can both parties resolve their issues and achieve the outcomes
they need through their relationship? (conversational)
• Consciousness: does management know that all the other three levels are
performing adequately and why this is so?

Steve Brewis, chief research scientist, BT

Systems Thinking 11
http://scio.org.uk/organisational-maturity-model

Systems Thinking 12
Power+systems – how human dynamics shape organisational life

HOW HUMAN DYNAMICS SHAPE

ORGANISATIONAL LIFE
Power+Systems logo and works ©2008-2013 Power+Systems Inc. All Rights Reserved.

Systems Thinking 13
 Organ-
isations
are made
up of
people
RedQuadrant lean
for Bexley 14
 Some
times
it isn’t
comfor
table
RedQuadrant lean
for Bexley 15
Creating partnership
across boundaries
Customer Customer

Top

Middle

Bottom
Customer Customer
“Stuff” Happens!!!
How come it goes the way it goes?

Power+Systems logo and works ©2008-2013 Power+Systems Inc. All Rights Reserved.

RedQuadrant – why what we do

often fails and how to succeed 20
CULTURE SHAPING, FREEDOM
AND CONSTRAINTS

Systems Thinking 21
it isn’t The quality of what
you get depends on
the judgements your
team make about
you and their

about experience.

Therefore the quality

of what you get

you
depends on how
good you are at
sensing what’s in the
hearts and minds of
your team.

Systems Thinking 22
 Culture as a complex adaptive system

“culture”

• Leadership behaviour Emotional response Stories • Productivity • Psychological

• People systems ⚫ harm ⚫ betrayal • Willingness safety
⚫ unjust / disproportional
• Organisational ⚫ oppression / tyranny • Discretionary effort • Mission
symbolism ⚫ subversion ⚫ cowardice • Clarity
⚫ dishonesty ⚫ degradation

Not directly measurable Measurable but lagging Measurable but lagging

but critical to learn

Building two learning loops: understanding and intervention

Systems Thinking 23
Core human values

How judgements are made about whether people feel their

leaders/organisation:

Harm •Cares about them?

Unjust/not proportional •Treats them fairly?
Oppression/tyranny •Respects them as a human being?
Betrayal •Is loyal and trustworthy?
Subversion •Respects ‘the way things are done’?
Cowardice •Has the courage to deal with issues?
Dishonest •Is honest?
Degradation •Creates beauty?
Notice that different groups and individuals will evaluate the same situation in different ways against these criteria

Based on Haidt’s ‘moral emotions’:

http://faculty.virginia.edu/haidtlab/articles/alternate_versions/haidt.2003.the-moral-emotions.pub025-as-html.html
http://people.stern.nyu.edu/jhaidt/publications.html
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3083636/
https://en.wikipedia.org/wiki/Social_intuitionism
Systems Thinking 24
A leader’s process of learning and change
1. Understand this complex dynamic process
2. Learn about your system
▪ Predict what you have now (metrics and stories)
▪ Listen and learn to test your prediction
o Oh sh*t!
o Cognitive dissonance
o Need to learn
▪ Generate desired stories for the long-term future
3. Hypothesise about changes that will help
▪ Predict how the change will impact
4. Intervene
▪ Expect cognitive dissonance at first
▪ Be persistent and consistent
5. Learn!
Repeat…
Systems Thinking 25
SENSE-AND-RESPOND
THE MARKET LEADS TO SUCCESS

Systems Thinking 26
 Sense-and-respond organisational model
1. Capture data on customer needs
customer experience measurement

4. Deliver services 2. Understand how customer data

based on customer need shows how services should change
engagement and empowerment ‘Sense and respond’ strategy and governance for
of frontline staff
customer centricity delivering a consistent experience
across the organisation

3. plan to deliver what customers need

capacity to change how you work across the organisation

Design against demand for competitive advantage

* Acknowledgements to Stephen Parry,
www.seebusinessdifferently.com Leading Transformation 27
The purpose of a system is what it does (Beer, 2001)
For your service/project/area of interest, what is the:
• POSIWID
• Espoused purpose
• Deep, underlying purpose (temporarily)

Leading Transformation 28
Measure what matters… to the customer
True public
• Its easy to focus on value outcomes
the things which In live and communities –
outside organisations
matter less to the
customer. Most
Customer outcomes

End to end
organisations will Volume of
create performance completed Avoidable Zone of power!
transactions contact Customer effort
indicators which fall
‘Done in one'
into the bottom left
Customer
quadrant (red text) satisfaction
• But we need to Volume of score (done well)
Functional

Shift to self serve

develop indicators transactions
Service levels Customer effort
which also fall into Customer
No of calls
satisfaction score
the other quadrants Average handling times
(done badly)
as they matter more
to customers No Matter to the customer? Yes
Stephen Parry: https://goo.gl/YN9pRr

Leading Transformation 29
Patterns of Strategy

©RedQuadrant 2017 Benjamin Taylor 079 3131 7230 benjamin.taylor@redquadrant.com

Patterns of Strategy elements © Fractal Systems Thinking 30
A systems thinking approach to strategy
• Traditional approaches are linear, deterministic and hierarchical
• Hierarchy allows a small group to agree direction – large groups harder!
• Assumes and requires a stable environment
• Patterns of Strategy allows:
▪ Multiple perspectives – and appreciating them
(enriched and multiple models)
▪ Combined perspective – an enriched model
▪ A meta perspective – a higher-level model
• Systems thinking has something quite deep to say about how and why
strategy works and doesn’t work
• In fact, over 90% of all strategy doesn’t work
• And yet despite this, organisations and businesses are still changing…..

What is actually driving change?

Patterns of Strategy elements ©Fractal Consulting – the science of organisation

Systems Thinking 31
The dark matter of strategy
• Co-evolution
• Strategic direction evolves
through many micro-
adaptations to fit
environment (which are
reciprocated by the
environment)
• A lawn really requires
herds of animals!

Strategy evolves
Patterns of Strategy elements ©Fractal Consulting – the science of organisation

Systems Thinking 32
Structural coupling as strategy
• Structural coupling relationships
have a natural trajectory
• Each adaptation to local conditions
moves you forward
• Extends your boundary into new
territory, with new opportunities
and risks
• Taking those new opportunities,
reacting to those new risks moves
you forward again into new
territory
• It looks like conscious choice, but
mostly the choices are determined
by the situation
A relationship may manage you more than you manage it
Patterns of Strategy elements ©Fractal Consulting – the science of organisation

Systems Thinking 33
Structural coupling – ‘fit'
Key questions about structural couplings
• What structural coupling relationships are we in?
• Where does a relationship like this take us?
• Is that somewhere we want to go?
• What will this make us into?

Think about strategy as an evolving relationship

Patterns of Strategy elements ©Fractal Consulting – the science of organisation

Systems Thinking 34
Changing our fit by differential use of power and time
Fit
• Differentiation: herd / edge / individual
• Drive: shape / co-evolve / react
• Stretch: incremental / radical / disruptive / paradigm shift? / confound
Power
• Strength: stronger / balanced / weaker
• Concentration: single / multiple / diffuse
• Power enablers: critical mass / agility
Time
• Capability: faster / synchronised / slower?
• Enablers:
▪ foresight – ability to anticipate / create the future
▪ cycle time – operational, decision-action, research and development
▪ rate of change – scale of change that can be implemented in a given time

Traditional strategy doesn’t have good language for these dimensions

Patterns of Strategy elements ©Fractal Consulting – the science of organisation

Systems Thinking 35
Six stage approach
1. Decide key actors in strategic arena – which structural coupling
relationships to model, scope, what organisational level
2. Model value exchange
3. Model Fit (three elements)
4. Model Power and Time
(three elements, two levels – capabilities and enablers)
5. Model Patterns of Strategy – positions and possible manoeuvres
6. Plot each manoeuvre: changes and indicators

80 strategy ‘patterns’, in these groups: competitive, collaborative, strategies

for small organisations, supplier strategies, defensive strategies, growth
strategies, market changing strategies, herd management strategies, and
cunning plans!

Six stage approach

Patterns of Strategy elements ©Fractal Consulting – the science of organisation

Systems Thinking 36
Types of strategy
• Competitive strategies
• Collaborative strategies
• Strategies for small organisations
• Supplier strategies
• Defensive strategies
• Growth strategies
• Market changing strategies
• Herd management strategies
• Cunning plans

80 strategies

Systems Thinking 37
I welcome follow-up and conversation!
Benjamin P. Taylor
Managing Partner, RedQuadrant
&
Chief Executive, Public Service Transformation Academy
+44 (0)7931317230
@antlerboy
www.linkedin.com/in/antlerboy

We offer:
• The 24-module Leading Transformation ‘mini MBA’ (PSTA accredited)
• Workshops in all of these areas including Patterns of Strategy and
Scenario Planning
• Consultancy for transformational change

Systems Thinking 38