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Topic 5
A Systems
Approach
to Business
Ethics

Agenda

• Systems and systems thinking

• The characteristics of a system
• Systems thinking in understanding business
ethics

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Key Concepts
Systems thinking

Stocks and flows

Feedback loops

Balancing feedback loop

Reinforcing feedback loop

The Iceberg model

The six steps of systems analysis

Systems thinking Systems thinking can be

System is a discipline for seeing seen as a problem-solving
thinking wholes. It is a framework
for seeing
tool to solve complex
problems. It analyses how
interrelationships rather systems are
than things, for seeing interconnected and help
patterns of change rather finding better solutions.
than static ‘snapshots’.
The Fifth Discipline, The Art and Practice of
the Learning Organisation, Senge,
(Doubleday: 1990)

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What are examples of

traditional wisdom that
reflecting system thinking?

What are examples

of traditional
wisdom that
reflecting system
thinking?

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What are real-

life examples
reflecting
system thinking?

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System Thinking/Approach and Business Ethics

• A systems approach encourages the

exploration of the relationships
between individual and
organizational factors and their
interactions Ethical issue
Opportunities
• In the context of any ethical issues intensity
such as corruptions, insider training,
consumer fraud, encouraging a
diversity of views can lead to a new
understanding of the situation and
the identification of opportunities Organizational Individual
for action that may not have factors factors
otherwise occurred

Understanding causality and

interrelatedness in a system
• In 2020, Robert was sitting in a traffic jam in Jakarta..
• How do you think these could be related?
• Rising price of soybeans
• Malnourished children
• Clearing of rainforests in Brazil
• Increased demand for ethanol
• Biofuels
• Tempeh and tofu
• Food protests

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One potential
solution – what
do you take away
from this?
Where can you
intervene to
‘solve’ the
problem?

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Feedback Loops
Feedback loops are a part of systems thinking
Cause and effect of
Bank account
variables on the
earning interest
stock
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Helps you see the
interrelationships
between variables

interest rate

• A Feedback loop is formed when changes in stock affect the flows into or out
of that same stock. Example: Total amount of money in an account (stock)
affects how much money comes into the account as interest.
• Feedback loops can cause stocks to maintain their level within a range or
grow or decline.

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Feedback Loops
1. Stabilizing Loops – Balancing Feedback
Energy Level of a Coffee Drinker
Balancing loops will
encourage the system to
stay in balance

The balancing feedback loop

can correct an oversupply or
an undersupply

• This kind of feedback loop stabilizes the stock level. It is stabilizing,

goal seeking, regulating and is called a Balancing Feedback Loop.
• The stock level may not remain completely fixed, but it does stay within
an similar range.

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Feedback Loops An inflow variable increases the stock.

As a result, this increases the inflow
2. Runaway Loops – Reinforcing Feedback variable.
Which again, increases the stock…
Constantly being added to/ constantly
Bank account
earning interest being reinforced.

5 Population
interest rate births 5

Remember how fast covid virus spread? birth rate

Reinforcing loops are found wherever a system element has the ability
to reproduce itself or to grow as a constant fraction of itself. Those
elements include populations and economies.

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 Be aware of elements leading up to current

Iceberg Model situation
 Looking at the whole picture. Looking at the
whole system. Identify relationships – what led
up to ‘Events’?

Events What just happened?

Patterns, Trends What’s been happening over time?

Systemic Structures What other forces contribute to these patterns?

What part of our thinking allows this situation to

Mental Models persist?
What existing thoughts led us to this situation?

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Leverage
Leverage points: points within a system, where you can
intervene, and trigger systemic change.

Events

Stronger Leverage
Patterns, Trends
The deeper to the root of the problem
you intervene, the stronger the leverage
Systemic Structures (influence of change) which you have on
the event

Mental Models

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The six steps of systems analysis

1. Tell the story (event, purpose, what happened? Situation you see)

2. Name the variables (For example: number of trees planted, what can
be measured?)
• What are the things that affect the event? (consider the 3
Pillars)
3. Determine the system boundaries (what are systems appropriate for
our solutions?)
• What is the scope of your analysis? How broadly are you
thinking?
• What variables and systemic structures are most applicable
for our analysis?
• Which variables and systemic structures have the largest
affect on the event?
(which may help us identify more effective solutions)

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The six steps of systems analysis

4. Sketch the trends

• Behavior over time graphs
• What element (stock) are you looking at?
• What has happened to the element over time?
5. Make the system visible
• Stock/ flow diagrams
• Feedback loop diagrams
• Helps identify the relationship/s between variables.
• What effects does this have on the stock?
6. Look for leverage
• ‘Leverage points: points within a system, where you can
intervene, and trigger systemic change.’ What can we
change to create more sustainable solutions?

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Iceberg Model Six Steps of Systems Analysis

1. Tell the story of the event

Events

2. Name the variables

3. Sketch the trends

Behavior over time graphs
Patterns, Trends 4. Make the system visible
Stock/ flow diagrams
Feedback loop diagrams

Systemic Structures
5. Determine the system boundaries

Mental Models 6. Look for leverage for sustainable

solutions

INNOVATIVE | RESPONSIBLE | ENGAGED

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Iceberg Model – Whale extinction

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Systems Thinking -
Summary
Both the “Iceberg Model” and the “Six Steps of Systems Analysis”

• Are theoretical models which provide a method to help you

achieve systems thinking.

• Help you think about different things which are connected to that
issue (or event) that you see now, right in front of you.

• Help you think about the relationships between the different

things which are connected to that issue (or event).

• Therefore, they help you think about different ways to create,

change and resolve that issue (or event).

• ST helps to change the cause of the complex problem not

the symptoms

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