Making Systems Thinking More Than a Slogan

From climate change and deforestation to collapsing fisheries, species extinction and poisons in our food and water, our society is unsustainable and it is getting worse fast. Many advocate that overcoming these problems requires the development of systems thinking. We’ve long known that we live on a finite “spaceship Earth” in which “there is no away” and “everything is connected to everything else.” The challenge lies in moving from slogans about systems to meaningful methods to understand complexity, facilitate individual and organizational learning, and catalyze the changes we need to create a sustainable society in which all can thrive.

Here, I’ll describe how the world operates as a system — and how businesses can respond effectively to the challenges we face.

systems thinking map

Systems thinking is used in the World Economic Forum report (2011)

The World as a System

Systems thinking helps us understand the structure and dynamics of the complex systems in which we live, from organizational change to climate change, from physiology to financial markets.  The structure of systems must be understood broadly, including physical elements (such as the concentration of carbon dioxide in the atmosphere and the time delays in a supply chain), institutions (such as markets and governments), human behavior (such as the way we make decisions) and the mental models that shape how we perceive and interpret the world. These elements interact and coevolve to generate the world we experience.

All too often, however, we treat problems in isolation, ignoring the networks of feedback that bind us to one another and to nature. We often blame policy failure on “unanticipated events” and “side effects.” Political leaders blame recession on corporate fraud or terrorism. Managers blame bankruptcy on events outside their organizations and beyond their control.

But there are no side effects — just effects. Those we expected or that prove beneficial we call the main effects and claim credit. Those that undercut our policies and cause harm we claim to be side effects, hoping to excuse our failure.  But “side effects” are not a feature of reality; they are a sign that the boundaries of our mental models are too narrow, our time horizons too short.

For example, governments in many nations “solve” water shortages for irrigation by subsidizing electricity so farmers can install more powerful pumps. But the short-run success of that policy merely causes the water table to fall faster, requiring still larger pumps and still greater subsidies.

 

Avoiding such self-defeating interventions, in business and in sustainability, requires us to consider our actions in the context of the broader systems in which we are embedded.

 

Researchers have identified important characteristics of systems to help us manage them more effectively and sustainably. Complex systems, from an ant colony to a business to a society, are:

  • Governed by feedback: Our decisions alter the state of the world, causing changes in nature and in the behavior of others, which then feed back to change our own behavior. Cut prices to gain market share and your competitors may respond the same way, leading to a price war. Suppress forest fires and fuel accumulates in the forest, leading to more damaging fires.
  • Subject to delays: Feedback processes often involve long time delays and accumulations (stocks and flows). Carbon dioxide (CO2) emissions from fossil fuel combustion accumulate in the atmosphere, causing the world to warm and the climate to change. Emissions are far higher than the rate at which CO2 is removed from the atmosphere. Just as a bathtub continues to fill as long as the flow into the tub from the faucet exceeds the flow out through the drain, stabilizing emissions will not stabilize the climate. Limiting dangerous climate change before the end of this century requires emissions to fall dramatically, starting now.
  • Nonlinear: Effect is rarely proportional to cause. Complex systems can cross “tipping points” that cause dramatic and often irreversible changes in their behavior.  Take a few fish and fish stocks recover; take too many and the fish stock collapses. Warm the planet enough and greenhouse gas emissions will rise as bacteria convert carbon in melting permafrost into CO2 and methane, further warming the planet in a vicious cycle.
  • Characterized by trade-offs: Time delays in feedback processes mean that the long-run response of a system to an intervention often differs from its short-run response. Ineffective policies often generate transitory improvement before the problem grows worse, while policies that can create enduring value often cause worse-before-better behavior.
  • Counterintuitive and policy resistant: In complex systems, cause and effect are distant in time and space, while we tend to look for causes near the events we seek to explain. Our attention is drawn to the symptoms of difficulty rather than the underlying cause. As a result, many seemingly obvious solutions to problems fail or worsen the situation.

These and other principles have implications for the way businesses can become more successful — and sustainable.

 

How Business Can Respond

Systems thinking offers several key lessons for business.

1) Expand the boundaries of our mental models. Most of our current sustainability efforts target symptoms of unsustainability rather than the causes. Our vehicles burn too much oil and generate too much CO2, so we target that symptom with standards to raise the efficiency of new cars. But the resulting reduction in oil demand will lower oil prices, undermining the incentive for people to buy efficient vehicles or cut oil use in other industries.

By expanding the boundaries of our mental models, we can identify the potential for such “policy resistance” and design more effective policies. Raising the price of CO2 will encourage auto companies to design more efficient vehicles and encourage consumers to choose them without the need for complex regulations, while simultaneously offsetting the drop in world oil prices.

2) Recognize constraints. Many of us are overstressed and operate in overstressed organizations. Trying to do too much means we are often unable to marshal the resources we need to kick-start improvements in productivity, quality and sustainability. The result is a self-reinforcing trap of low performance, overstressed resources and failed improvement programs. Firms that succeed in quality and sustainability free up the resources needed to improve by slowing down and focusing on the long-term.

Similarly, we live on a finite world. Therefore, “sustainable growth” is an oxymoron. Striving for perpetual growth while we degrade the carrying capacity of our world is self-defeating.   Forward-thinking firms understand that destroying the environment also destroys the possibility of profitable enterprise.  They are working to provide products that last longer and offer greater value; to take responsibility for their operations and products over their full lifecycle, including takeback and recycling; and to provide services to support the wellbeing and fulfillment of their customers instead of simply selling more stuff at lower and lower margins.

3) Move beyond technical solutions. Technology offers hope that we can build a more sustainable world. But market failures limit the efficient allocation of capital and resources, including creativity and innovation. And there are long lags from problem recognition to innovation, commercial viability and scale up. Technology often generates unintended consequences: for example, taller smokestacks reduce local smog but increase distant acid rain.

Innovation in markets, institutions and governance is essential to realize the full potential of technology. Externalities must be priced. Market failures must be corrected. We can make technology more effective by improving market signals, through regulations that create level playing fields and prevent a race to the environmental bottom, and through monitoring to prevent free riding and unintended consequences.

4) Confront our values. Our guiding values offer the most important leverage point for enduring, sustainable change. Recently, I asked MBA students how much money they needed to be happy. The average response was $2 million per year, and about half said more is always better. Most would accept lower income — as long as they could make more than everyone else. But obviously endless material growth on a finite world is impossible, and everyone cannot be richer than everyone else, no matter how clever our technology.

Those who are currently affluent must confront the culture of consumption, the conflation of having with being, that is destroying both the environment and human well being, while supporting the legitimate aspirations of billions around the world to rise out of poverty.

5) Recognize that we can make a difference. People often feel powerless in the face of huge, complex systems. But understanding how systems work helps us to find the high leverage points that make a difference. People often recoil from climate science because they fear that what they do can’t possibly matter. But we’ve created more astonishing change before, from the fall of the Berlin Wall to the peaceful end of Apartheid.

The abolition of the slave trade and slavery in England can serve as a model for action on climate change and sustainability: a few committed individuals found the high leverage points and ended an institution that had existed from the dawn of history, one that nearly all assumed would always exist.

History shows we can do it. But will we? That depends on you.

 

Businesses Embracing Systems

More and more businesses are developing the systems thinking capabilities of their people, and realizing large benefits.  For example, using systems thinking,

  • A major oil company has generated documented savings of several billion dollars to date, while improving safety and environmental quality.
  • A shipyard went from cost overruns and project delays to an award-winning yard in great demand.
  • Businesses bootstrap steady improvement in quality, productivity and sustainability by reinvesting initial savings in further improvement.
  • A high-tech electronics firm redesigned its supply chain, improving customer service and delivery reliability while cutting inventory.
  • A global automaker built an entirely new service business and is now the market leader in that rapidly growing segment.
  • A major university implemented maintenance projects that boosted energy efficiency and sustainability while more than paying for themselves, creating resources for still more projects.

Systems thinking can be powerful, but too often remains an abstraction.

The challenge for us all is to develop our systems thinking skills, to help others develop their capabilities, and to bring systems thinking into our everyday lives: to move beyond slogans and on to action.

 

Editor’s Note: This blog originally appeared on the Network for Business Sustainability (NBS) website in their Thought Leader blog series. It has been reposted here with permission from the author. NBS Thought Leaders offer guidance on sustainable business models for the 21st century. Thought Leaders are leading academics and practitioners: world experts on sustainability issues.  Dr. John Sterman is a professor at the MIT Sloan School of Management, and has been widely honored for his research and innovative use of interactive simulations in management education and policymaking.

The Social Innovator’s Guide to Systems Thinking Part II: Rules for Innovators Leveraging Bigger Change

This is the second part of a blog series on systems thinking. In part I, Realizing the ultimate impact of community-based innovations,” I introduced the theory and core elements of systems thinking.

In Part II let’s begin with two questions: what can individuals and organizations do to be part of systemic change? And how can powerful institutions like governments be more part of the solution than the problem?

In Systems Innovation, Geoff Mulgan suggests two sets of answers.  The first: it is essential to ground individual change actions within the context of the “broader movement of change, and with a sense of the bigger picture.” For Mulgan “the ideal is to iterate between the big picture and small steps. Realism about power and knowledge can also help: if you have knowledge but not power then you need to find allies, and points of leverage. If you have power but lack knowledge you need to experiment and learn fast.”

The second: recognize and leverage the essential role of what I call the missing middle or what Mulgan calls intermediaries. In order to succeed, “the creation or mobilisation of intermediaries can be crucial, to articulate the direction of systemic change, and link big ideas to individual innovations. In retrospect this role was sometimes played by networks, clubs, think tanks and development agencies.”

The roles played by intermediaries can include: orchestrating advocacy campaigns; engaging critical stakeholders; demonstrating alternatives; and facilitating the required networks into power structures and changemaking communities. Some of these roles resemble those of “backbone” organizations in collective impact initiatives. Mulgan lays out a valuable chart for seeing the range of roles and their goals:

goal-actions_geoff

Joined-Up Innovation, Geoff Mulgan p. 21

Building the Enabling Systems-oriented Ecosystem

What would be elements of an ecosystem building approach for systems innovation that a government should focus on? Social Innovation Europe suggests seven:

1.    Developing a common vision around the need and potential for systems change
2.    Supporting greater experimentation
3.    Expanding rapid learning through open innovation platforms, greater transparency, and much more cross-sector collaboration
4.    Expanding incubation support systems and platforms to enable systems innovations
5.    Targeting capacity building focused on critical competencies
6.    Developing enabling conditions through funding instruments, regulation and legislation
7.    Growing networks connecting key stakeholders in order to spread and disseminate innovative practice and generally enable knowledge mobilization.

How imminent is a heightened focus on systems change? What conditions will prevail to shift us in that direction? Charles Leadbeater, in his essay in Systemic Innovation: A Discussion Series, says there are four main ingredients to the systems shifting process (that he calls “regime change”):

1.    Failure Stacks Up – The multiplying failures and frustrations with the current system
2.    Landscape Shifts – The landscape of the current regime shifts so much that it is left at odds with the world
3.    Alternatives Accumulate – Real alternatives start to grow, multiply in overlapping fashion
4.    New Technology Offers Accelerated Impact – “These new approaches are energized by the application of new technologies, which open up new possibilities for organizations, businesses and consumers. These rising new technologies add to the momentum and excitement for change.”

Alice Casey, from her vantage point in Nesta’s Public Service Innovation Lab, highlights two additional ingredients for people working on systems change at the community level. Her essay in the Discussion Series advocates for:

1.    Structures that value collaboration and that assist people escaping their narrow service silos to think and work together, and
2.   Relationships that enable power sharing by using an asset based approach and drawing on the tools of co-production that “help create collaborative and trusting relationships that give people the risk–friendly space they need to engage and behave in different ways.”

Systems Thinking Into the Water Supply

How do you see the issues you care about through a systems thinking lens? Does systems thinking have implications for how you imagine deepening your impact over the next decade? One of Canada’s social strategists extraordinaire, Al Etmanski, is fond of saying that we need to get “social innovation into the water supply”. For many years now he has applied his talents at the systems tilting end of the social innovation spectrum. How do we take Al’s lead to expand that essential “systems think and do”?

Related Links:

  • The indispensable desktop resource on systems thinking is the short book by Donnella Meadows, Thinking in Systems: A Primer (Chelsea Green Publishing, 2008). Donnella was a co-author of the 1972 watershed book Limits to Growth that was a catalyst for recognizing earth as a system with finite limits.
  • The SiG Knowledge Hub is replete with useful content including the sections on Systems Thinking (Dip into Systems Thinking, Dive in Systems Thinking)
  • The Social Enterprise World Forum, taking place in Calgary Oct 2 – 4, features an extensive line-up of systems thinkers and social innovators.
  • Nesta’s robust website contains two excellent 2013 PDFs on systems thinking: Systems Innovation and Systemic Innovation: A Discussion Series. The latter carries a contribution by Canadian Daniel Miller a St. John’s, NL-based independent researcher who has a web site Systemnovation dedicated to systems thinking.
  • The field of social innovation, design or change labs is developing across Canada. It offers a growing set of basic tools to assist organizations, businesses and governments in initiating practical multi-stakeholder processes to develop, prototype and scale systems-shifting innovations. SiG has just published a new map to those resources.

Editor’s note: this blog originally appeared in Tamarack’s Engage! newsletter on July 16, 2013. It has been cross-posted with permission.

The Social Innovator’s Guide to Systems Thinking: Realizing the Ultimate Impact of Community-based Innovations

Editor’s note: this blog originally appeared in Tamarack’s Engage! newsletter on July 16, 2013. It has been cross-posted with permission.

Early in my career I worked in international development in Central America supporting the pioneering community development efforts of organizations like a country’s first ever women’s movement, campesino co-operatives, and adult education NGOs.  As strong as any individual organization’s efforts were, they were effectively undone by the worsening human rights backdrop of authoritarian governments and military dictatorships. Within 4 years I found my focus had shifted to working in Canada to support peace efforts through what later became called “citizen track diplomacy.” These were informal efforts by non-state actors like NGOs who convened off-the-radar meetings that connected belligerents and international stakeholders in facilitated processes that helped build relationships, new thinking and thereby overcome barriers to more formal peace efforts. In other words, events forced me to appropriate systems thinking to first seek to understand and then try to create ways to influence the larger forces and dynamics destructively dominating the region.

Have you ever put a lot of hard work into achieving your big idea or successfully creating a reform only to realize there are many related issues that need to be addressed? And realize your achievement may stand alone, an orphan in danger of erosion if you don’t address them? Welcome to the world of systems.

c/o Artinaid

c/o Artinaid

 

“Systems loom large in our lives”, says Charlie Leadbeater, a leading writer on social innovation. Our planet of 7 billion inhabitants depends daily on a myriad of interlocking systems for clothing, food, and shelter as well as meeting health care and other needs.

 

 

Our primary man-made systems were born – or matured – in the immediate post-World War II era when the planet was far less populated and its needs less complex. Unfortunately, many of those systems are now reaching – or have passed – their “best by” date.

Which systems do you experience as wearing thin: Social welfare? Education? Food? Health? Democratic engagement? Global finance? Environmental protection? Management of the global commons?

Geoff Mulgan, the CEO of Nesta, and Charlie Leadbeater have co-published a pair of excellent articles in Systems Innovation, including Mulgan’s Joined–Up innovation: What is Systemic Innovation and How Can it be Done Effectively? and Leadbeater’s The Systems Innovator: Why Successful Innovation Goes Beyond Products. They explain what systems are, why they are so important, and how they should be a focus for change by people involved in building and scaling social innovations.

Systemic innovation is defined as “an interconnected set of innovations, where each influences the other, with innovation both in the parts of the system and in the ways in which they interconnect.” As Leadbeater predicts, “systems innovation will become the most important focus for companies and governments, cities and entire societies. In the last decade there has been a growing focus on innovation in products and services as a source of competitive advantage. In the next decades the focus will shift towards the innovation of new kinds of systems.”

As I wrote in Shifting From Scale to Reach, individual social innovators are making enormous strides in building valuable innovations that generate meaningful social change. However, in order for those individual initiatives to scale up to achieve deep, broad and durable impact, we need to shift gears to collaborate with others operating in the related system. In most cases individual social innovators begin their changemaker careers focused on specific symptoms of systemic malaise. As they engage their system, they deepen their knowledge of it and often shift, as Pathways to Education’s David Hughes would say, from an-organizationally-centred strategy of ameliorating symptoms to an issue-centred strategy of altering systems. For example, many social innovators in the environmental movement started their careers focused on local issues like pollution or local conservation. Their experience with the underlining forces that produce negative local impacts provided them with the insights to re-think their goals and strategies in a more systemic fashion. This description reminds me of the work of Nicole Rycroft, who cut her teeth as a passionate campaigner for the protection of Clayquot Sound.  Today she is an Ashoka Fellow who leads Canopy, working with the forest industry’s biggest customers to protect the world’s forest, species and climate by shifting markets.

Nicole Rycroft Ashoka Fellow

Federal Conservative Minister John Baird & Canopy’s Nicole Rycroft

In recent decades the world has seen the rise of numerous valuable fellowships supporting individual social entrepreneurs like Ashoka, Schwab Foundation Fellows, and Echoing Green. Their field building work, and that of their fellows, has helped to crystalize today’s extraordinarily exciting new era of entrepreneurship, experimentalism and innovation. Today however, we are preparing to enter the phase of connecting up the approach of individual innovations with the emerging systems innovation approach.

Core Elements of Systems Thinking

SiG’s Knowledge Hub, which has a section on Systems Thinking, lays out the following Principles in its resource Introduction to Systems Thinking:

  • Systems are a way of thinking about the world
  • Systems behave as a whole
  • Systems understanding is observer or perspective dependent
  • A systems approach requires multiple perspectives
  • Where WE draw systems boundaries affects the system
  • We need to be aware of what is going on inside the system but also outside
  • Systems are ‘nested’ – we should always think about the system we’re looking at as being made up of smaller systems and being part of larger systems

Introduction to Systems Thinking suggests three stages to employ in order to look at a problem using the lens of systems thinking:

1.    Frame the Situation – Begin by generating a systems description or map of what is involved and the important relationships that define the system
2.    Describe the Dynamics – Develop an understanding and description of the dynamics of the situation
3.    Synthesize the Understanding –Capture what was learned from the first two phases of analysis into narratives about how the situation might or could unfold in the future

How does system thinking inform the strategy of social innovation?  Introduction to Systems Thinking suggests three ways:

  • It’s critical to consider the purpose, function, goal, objective for examining a system
  • You cannot talk about a system without considering who is looking at it and why
  • Understanding how elements within a system are connected allows you to identify places for intervention and transformation

Social Innovation Europe (SIE) has written a useful introduction to the topic, entitled Systemic Innovation, which outlines some of the key elements for taking a systems approach:

  • Openings appear following a crisis or period of upheaval
  • New ideas, concepts and paradigms
  • New laws and/or regulations across a broad area
  • Coalitions for change of many actors and/or across more than one sector or scale
  • Changed market metrics or measurement tools
  • Changed power relationships and new types of power structures
  • Widespread diffusion of technology and technology development
  • New skills or roles across many actors
  • New institutions
  • Widespread changes in behaviour, structures and/or processes

SIE points out that complex challenges “cut across different policy domains, sectors and political and administrative jurisdictions. Coherent responses to these kinds of challenges cannot be driven by single institutions but will be reliant on numerous people, organisations, institutions and stakeholders working in a coordinated way. And as these social challenges become more pressing, a systemic approach becomes necessary. Individual social innovations may deliver certain benefits in a piecemeal way. But if we really want to address a major social challenge, we will need to look at problems in a holistic way.”

They highlight that systems change requires a whole series of complementary innovations – often introduced simultaneously – that will rely on all sectors: business, government, community as well as unorganized households. “In many cases,” they argue, “systemic innovation results from a confluence of forces: social movements, the creation of new markets, public policy (such as new rights or new legal, fiscal and regulatory frameworks) and behavioural change. While some systemic innovations are more challenging to effect than others (because of their scale, scope or complexity), systemic innovation in general is difficult to orchestrate or support (through the creation of enabling conditions, for example) and certainly more challenging than innovation at the level of a new project or a new venture.”

A timely opportunity to learn more about systems thinking in action is at this year’s Social Enterprise World Forum, taking place in Calgary this October 2 – 4. Hear from systems thinkers like Charmian Love of Volans (also speaking for our Inspiring Action for Social Impact series next week), Ros Tennyson of Partnership Brokers, and Vickie Cammack of Tyze Networks. Each of these individuals is currently collaborating with many partners to shift systems in new directions.

Part II — The Social Innovator’s Guide to Systems Thinking: Rules for Innovators Leveraging Bigger Change

What if we all thought like Charles Leadbeater?

Charles Leadbeater, a leading authority on innovation and creativity, visited MaRS in mid-September as part of his tour with Social Innovation Generation’s Inspiring Action for Social Impact Series, and delivered a public presentation on innovation in the public service as part of the MaRS Global Leadership Series.

Charles Leadbeater on Social Innovation – MaRS Global Leadership from MaRS Discovery District on Vimeo.

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