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Systems Thinking Primer

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Introduction to Systems Thinking: (1) Notation for system modeling, (2) Causal loops & systems archetypes.

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Systems Thinking Primer

  1. 1. www.plays-in-business.com www.Plays-in-Business.com Systems Thinking Primer. Introduction to Systems Thinking Michael Tarnowski Plays-in-Business.com https://commons.wikimedia.org
  2. 2. www.plays-in-business.com www.Plays-in-Business.com Michael Tarnowski, Plays-in-Business.com Cert. Scrum Master (Scrum Alliance) Cert. Large Scale Scrum (LeSS) Practitioner Cert. Management 3.0 Facilitator Supporter of Happy Melly movement
  3. 3. www.plays-in-business.com www.Plays-in-Business.com Introduction https://www.linkedin.com/pulse/capturing-business-process-3-tips-discovery-workshops-joel- evans “Systems thinking is a conceptual framework, a body of knowledge and tools that has been developed over the last 50 years, to make full patterns clearer, and help see how to change them effectively.” – Peter Senge, The Fifth Discipline
  4. 4. www.plays-in-business.com www.Plays-in-Business.com Drawing Conventions for System Modeling 1/6 There are several iconic symbols sets used in System Thinking. You will find them widely in VSM textbooks or presentations on Slideshare and similar platforms. Since we are interested in this Primer as well in the Flow of Value as in the System Dynamics, we use the so called Causal Loop and, System Archetype diagrams to show the dynamics, and use those icons to depict the system variables / entities in more detail via annotated notes (Post-Its). Examples: • https://www.slideshare.net/subhra2jyoti/value-stream-mapping-the-concept, or • https://www.slideshare.net/mohiuddinshojib/waste-identification-trough-vsmvalue- stream-mapping-pptx-final
  5. 5. www.plays-in-business.com www.Plays-in-Business.com 9/3/2017 Drawing Conventions for System Modeling 2/6 System Archetypes Causal Loops Balancing feedback will stabilize a system’s behavior. The B in the middle identifies the loop as balancing. Reinforcing feedback will amplify a system’s behavior. The R in the middle identifies the loop as Reinforcing. burn-down rate effects defects directly: the higher the burn-down, the more (potential defects); However, defects decrease burn-down rate (due to immediate bug fixes). – The letter “O” depicts “opposite effect”. burndown_rate #defects O Use the VSM icon set to annotate diagrams where necessary. A B C B A B C R R
  6. 6. www.plays-in-business.com www.Plays-in-Business.com Variables Causal Links Opposite Effects Constraints Drawing Conventions for System Modeling 3/6 burndown_rate #defects burndown_rate #defects O burndown_rate #defects O #developers budget_$ C ? if A goes up, B goes down, e.g.: A constraints B. Constraints are not causal links! quantifiable entity at first glance unknown causality with same effect: if A goes up, B goes up, and vice versa. Caution: be aware of Weinberg-Brooke’s Law and Causation Fallacy. ?? Defects decrease burn-down_rate Budget constraints Nbr of developers burndown_rate, #defects
  7. 7. www.plays-in-business.com www.Plays-in-Business.com Goals & Reactions Quick-fix reactions Drawing Conventions for System Modeling 4/6 Goals and reactions often generate pressure to the system Often it leads to a local optimization, i.e. focusing on one property may have unintended effect on the system as a whole. burndown_rate #defects O #developers budget_$ C belief Goal: higher burndown_rate pressure to try actions for higher burndown_rate QF hire_rate A Quick-fix is a reaction hoping to achieve the goal. Goals and Reactions are supplemental notes aligned to the picture. burndown_rate #defects O #developers budget_$ C ? pressure to try actions for higher burndown_rate Goal: higher burndown_rate
  8. 8. www.plays-in-business.com www.Plays-in-Business.com Quick-fix reactions (cont.d) Extreme effects Drawing Conventions for System Modeling 5/6 burndown_rate #defects O # low_skill _developers budget_$ C belief Goal: higher burndown_ra te pressure to try actions for higher burndown_rate QF hire_rate_common hire_rate_cheap QF O burndown_rate #defects O #developers budget_$ C belief Goal: higher burndown_ra te pressure to try actions for higher burndown_rate QF hire_rate_common hire_rate_cheap QF O Extreme effect have a significantly greater impact than average. Denote them with a thick line.
  9. 9. www.plays-in-business.com www.Plays-in-Business.com Delay Drawing Conventions for System Modeling 6/6 Goal: higher burndown_rate pressure to try actions for higher burndown_rate With a certain delay the code quality becomes poor when hiring low skilled developers. The effect will not show up immediately. burndown_rate #defects O # low_skill _developers budget_$ C belief QF hire_rate_common hire_rate_cheap QF O code_quality O O Delay
  10. 10. www.plays-in-business.com www.Plays-in-Business.com Short Introduction to System Thinking Content-Links • System Thinking • Brooke’s Law • Parkinson’s Law of Triviality • Weinberg-Brooke’s Law • Postel‘s Law – The Robustness Principle • Convay‘s Law • Parkinson’s Law • Causation Fallacy • Effectiveness & Efficiency • Hawthorne Effect • Campbell’s Law • Goodhart’s Law • Limit Work in Progress – WiP limits • “Stop Finishing, Start Doing!” • Variation in Demand / Work • Little’s Law • How to Fix 90% of Problems at Work • Pull & Push Systems • Local Optimization • Sub-optimization Principle • Tragedy of the Commons – Using Shared Resources • Shifting The Burden / Additiction • Limits to Success • Drifting Goals • Escalation • Fixes That Fail • Growth and Underinvestment • Success to the Successful • Further Reading https://pixabay.com/de/mann-beobachten-denken-uhr-zeit-372006/
  11. 11. www.plays-in-business.com www.Plays-in-Business.com 95% of variation in the performance of a system (organization) is caused by the system itself and only 5% caused by the people. - W. Edwards Deming System Thinking
  12. 12. www.plays-in-business.com www.Plays-in-Business.com Misconception easily turns into common sense. - Taiichi Ohno System Thinking
  13. 13. www.plays-in-business.com www.Plays-in-Business.com “Today’s Problems come from Yesterday Solutions” – Peter Senge, The Fifth Discipline System Thinking
  14. 14. www.plays-in-business.com www.Plays-in-Business.com “In general difficulties of an organization arise not from outside influences […] rather than what we do ourselves” – Jay Forrester, Sloan School of Management System Thinking
  15. 15. www.plays-in-business.com www.Plays-in-Business.com “Adding manpower to a late software project makes it later.” – Frederick P. Brooks: The Mythical Man-Month. 1975 Brooke’s Law
  16. 16. www.plays-in-business.com www.Plays-in-Business.com Parkinson’s Law of Triviality aka “Bikeshedding” – aka “Proxies” (Jeff Bezos) “The human tendency to devote a great deal of time to unimportant details while crucial matters go unattended.” – C. Northcote Parkinson
  17. 17. www.plays-in-business.com www.Plays-in-Business.com “More software projects have gone awry from management’s taking action based on incorrect system models than for all other causes combined.” – Gerald Weinberg, Quality Software Management: System Thinking. 1992 Weinberg-Brooke’s Law
  18. 18. www.plays-in-business.com www.Plays-in-Business.com Postel‘s Law – The Robustness Principle “Be conservative in what you do, be liberal in what you accept from others.” – Jon Postel, Internet pioneer “An implementation should be conservative in its sending behavior, and liberal in its receiving behavior.” “Be liberal in what you accept, and conservative in what you send.” “Be contravariant in your inputs and covariant in your outputs.”
  19. 19. www.plays-in-business.com www.Plays-in-Business.com Convay‘s Law “Organizations which design systems […] are constrained to produce designs which are copies of the communication structures of these organizations.” – Mel Conway The inverse might be helpful as well: Look at complexity of your product design and you will know the complexity of your organization.
  20. 20. www.plays-in-business.com www.Plays-in-Business.com Parkinson’s Law Organizations tend to get bigger
  21. 21. www.plays-in-business.com www.Plays-in-Business.com Correlation does not imply causation A Correlation between variables, does not automatically mean that the change in one variable is the cause of the change in the values of the other variable. Causation indicates that one event is the result of the occurrence of the other event. There is a causal relationship between the two events. Causation Fallacy
  22. 22. www.plays-in-business.com www.Plays-in-Business.com Efficiency thinking is setting the quality level as “good enough” we don’t need to strive for perfection. Efficiency refers to how well something is done and increases productivity. Effectiveness thinking is thinking about the lifetime of a product (and the effects on the whole organization “system”) which in the long run will cost less. If we do it right first time (which might be more costly at the outset), it actually saves our organization money in the long run). Effectiveness refers to how useful something is. Effectiveness & Efficiency 1/4 – Keivan Zokaei, Lean Enterprise Research Centre https://modularmanagement.com/us/wp-content/uploads/2016/09/Modular- Product-Architecture-and-Lean-Effectiveness-and-Capacity.pd The things rightEfficient The right thingEffective Input Output
  23. 23. www.plays-in-business.com www.Plays-in-Business.com Efficiency Thinking (traditional) Effectiveness Thinking (TPS) Focus on output from given input Focus on delivering fast, responsive flow of service which will in-turn reduce your Work in Progress (WIP) and improve profitability At a given input level (given capacity) maximize utilization to increase output Focus on “right first time” You have to have “spare” capacity Effectiveness & Efficiency 2/4 Anders Leine, https://modularmanagement.com/us/wp-content/uploads/2016/09/Modular-Product-Architecture-and-Lean-Effectiveness-and-Capacity.pdf
  24. 24. www.plays-in-business.com www.Plays-in-Business.com Efficiency Effectiveness Effort oriented Yes No Process oriented Yes No Goal oriented Yes Yes Time oriented Yes No Value oriented No Yes Effectiveness & Efficiency 3/4 https://youtu.be/B4QQZvqRtzA
  25. 25. www.plays-in-business.com www.Plays-in-Business.com Effectiveness & Efficiency 4/4
  26. 26. www.plays-in-business.com www.Plays-in-Business.com Hawthorne Effect Individuals modify their behavior in response to their awareness of being observed. The term was coined in 1958 by Henry A. Landsberger, when analyzing earlier experiments from 1924–32 at the Hawthorne Works (a Western Electric factory outside Chicago).
  27. 27. www.plays-in-business.com www.Plays-in-Business.com Campbell’s Law Once a metric has been identified as a primary indicator for success, its ability to accurately measure success tends to be compromised. - Donald T. Campbell, American social scientist
  28. 28. www.plays-in-business.com www.Plays-in-Business.com Goodhart’s Law “When a measure becomes a target, it ceases to be a good measure." - Charles Goodhart, British economist “Goodhart’s law […] states that when a feature of the economy is picked as an indicator of the economy, then it inexorably ceases to function as that indicator because people start to game it.” Mario Biagioli, (12 July 2016). "Watch out for cheats in citation game". Nature. 535 (7611): 201. doi:10.1038/435201a. PMID 27411599. http://collider.com/austin-powers-does-it-hold-up/
  29. 29. www.plays-in-business.com www.Plays-in-Business.com If you’re not limiting your WIP, then there is no flow. Your Input area is no more than a to-do list. Pick 1 item – You achieve 1 item. Pick 2 items – You achieve 2 items. Pick 10 items – You achieve 2 items. Limit Work in Progress – WiP limits 1/2 https://www.whitesmith.co/blog/limit-wip/
  30. 30. www.plays-in-business.com www.Plays-in-Business.com Why limiting work in progress? WIP exhausts us mentally. Anything started but not finished occupies some part of the available mental capacity. The more WIP, the more mental energy is consumed with trying to keep track of it all. Excessive WIP leads us to distract accomplishment. When we have a near infinite stream of things to work on and the task at hand bogs down, needs help from elsewhere, becomes unclear, or otherwise becomes “blocked”, we can easily set it aside and pick up something else to work on. Excessing WIP hides process problems and other wastes lurking in our system. Limit Work in Progress – WiP limits 2/2 https://www.whitesmith.co/blog/limit-wip/
  31. 31. www.plays-in-business.com www.Plays-in-Business.com „Searching for the magic bullet is a distracting waste of resources. Adapting is a game of singles, not home runs.“ John S. McCallum http://iveybusinessjournal.com/publication/adapt-or-die/ “Stop Finishing, Start Doing!” – Don‘t Wait for The Ultimate Solution!
  32. 32. www.plays-in-business.com www.Plays-in-Business.com Value Demand Value Demand is product and service delivery that satisfies customer wants and needs. Failure Demand Failure demand is the work originated caused by in the product mistakes, misshapes, and misunderstanding. People come back because they didn't get their problem solved the first time. Some symptoms of administrative and process Failure Demand are: ■ Rework ■ Recalls ■ Warranty Work ■ Workarounds to complete tasks ■ Unbalanced work flow ■ Status meetings ■ Complicated work processes known only by selected SMEs ■ Excessive time to deliver ■ Repeated monitoring, inspections and audits ■ Repeated inbound and outbound calls for the same issue ■ Enquires due to inadequate information/unclear instructions ■ Large buffers of time and materials, "just in case" Variation in Demand / Work http://www.quickmeme.com/p/3vsy21
  33. 33. www.plays-in-business.com www.Plays-in-Business.com Little’s Law http://www.software-kanban.de/2012/09/playing-with-littles-law.html 45 000 transmissions 1000 per day 45 days = Flow time Assumption: Steady-state stochastic processes. The contexts are stable, and on-going.
  34. 34. www.plays-in-business.com www.Plays-in-Business.com Visualize Your Work At first glance you will become demotivated by the amount of work. But then you will identify certain patters in your work: smooth flowing and blocking items. Limit Your Work in Progress When you limit the amount of things you’re working on, you force yourselves to focus on finishing. With limits in place you’re not allowed to start new work before finishing something first. – We limit work in progress to finish things faster. How to Fix 90% of Problems at Work 1/2 Credits Sami Honkonen, https://blog.samihonkonen.com/how-to-fix-90-of-problems-at-work-93318a7cb317
  35. 35. www.plays-in-business.com www.Plays-in-Business.com Manage Flow – not departments & work units! Optimize the whole – not the parts! Fixing work The Pareto principle says that by focusing on key areas we can fix the majority of problems. How to Fix 90% of Problems at Work 2/2 Credits Sami Honkonen, https://blog.samihonkonen.com/how-to-fix-90-of-problems-at-work-93318a7cb317
  36. 36. www.plays-in-business.com www.Plays-in-Business.com Pull & Push Systems Push Pull Make a plan Have a queue of work and a goal Track % completion of plan Measure throughput and work done Buffer plan for contingencies Small, frequent tasks to manage variety Plan decides what to do next People decide what to do next Long feedback delay Continuous short feedback loops Demand exceeds capacity Demand limited to capacity Fixed scope and time Fixed work in progress (WIP) Forecast based on estimates Forecast based on data Push systems overwhelm capacity, creating turbulence, rework, waste and delay Push Pull systems have a steady flow that provides predictability Pull
  37. 37. www.plays-in-business.com www.Plays-in-Business.com Focusing on one property (only) may have unintended effect on the system as a whole. Local Optimization https://www.otosia.com/tag/kendaraan-niaga/index6.html
  38. 38. www.plays-in-business.com www.Plays-in-Business.com If each subsystem, regarded separately, is made to operate with maximum efficiency, the system as a whole will not operate with utmost efficiency. General Systems Theory (Lars Skyttner) Sub-optimization Principle http://www.waspbarcode.com/buzz/5-lean-inventory-principles/
  39. 39. www.plays-in-business.com www.Plays-in-Business.com Tragedy of the Commons – Using Shared Resources Typical Behavior in Problem Solving: Breaking problems down into constituent parts and optimize each individual piece. This is Sub-optimization leading to the “Tragedy of the Commons”. https://www.pexels.com/photo/beach-crowd-sun-world-269944/
  40. 40. www.plays-in-business.com www.Plays-in-Business.com Tragedy of the Commons – Using Shared Resources The beach is the common good of all people – it’s a “shared resource”. – Shared usage depletes or spoils that resource due to collective action of all. https://www.pexels.com/photo/beach-crowd-sun-world-269944/ “Everyone wants to be at the beach on sunny days.” Consequences: • Waiting at ice cream booth • Waiting at hot dog selling guy • Very limited space for my towel and me In “Tragedy of the Commons”, A and B pursues actions which are individually beneficial (R1, R2). If the amount of activity grows too large for the system to support, however the “commons” becomes experiences diminishing (B1, B2). Daniel H. Kim, 1992, 2000: TheSystemThinker.com, https://thesystemsthinker.com/systems-archetypes-i- diagnosing-systemic-issues-and-designing- interventions/ Net Gain for A Net Gain for B A’s activity B’s activity Total activity Gain per individual activity Resource Limit C R1 O R3 R4 R2 O B6 B5 O Delay
  41. 41. www.plays-in-business.com www.Plays-in-Business.com Shifting The Burden / Additiction Shifting The Burden – a pseudo solution “solves” the problem and diverts attention from the fundamental problem resp. solution. https://www.pinterest.com/becca6531/stupid-shift-work/ In “Shifting the Burden/Addiction”, a problem is “solved” symptomatically by applying a pseudo solution (B1) which diverts attention away from the more fundamental solutions (R3). In an “Addiction” structure, a “Shifting the Burden” degrades into an addictive pattern in which the side-effect gets so entrenched that it overwhelms the original problem symptom. Daniel H. Kim, 1992, 2000: TheSystemThinker.com, https://thesystemsthinker.com/systems-archetypes-i-diagnosing-systemic-issues-and- designing-interventions/ “Waking up each morning always tired.” Pseudo-Solution: Have a Coffee Fundamental Solution: Have more sleep! Pseudo Solution Problem Symptom Fundamental Solution B1 O R3 Side Effects O B1 O
  42. 42. www.plays-in-business.com www.Plays-in-Business.com Limits to Success Limiting Action PerformanceEffort B2 O R1 Limiting Condition C In a “Limits of Success” archetype, continued efforts initially lead to improved performance. Over time, however, the system encounters a limit which causes the performance to slow down or even decline (B2), even as efforts continue to rise. Daniel H. Kim, 1992, 2000: TheSystemThinker.com, https://thesystemsthinker.com/systems-archetypes-i-diagnosing-systemic-issues- and-designing-interventions/ https://www.flickr.com/photos/xxxxs/7327844310/ In the Limits to Success – efforts to increase performance lead to successful results in the short term, but are limited in the long term by a constraint on the system. If we don’t plan for limits, we are planning for failure.
  43. 43. www.plays-in-business.com www.Plays-in-Business.com Drifting Goals Pressure to Lower Goal Goal O B2 Gap Actual Corrective Action B1 O In a “Drifting Goal” archetype, a gap between the goal and current reality can be resolved by taking corrective action (B1) or lowering the goal (B2). The critical difference is that lowering the goal immediately closes the gap, whereas corrective actions usually take time. Daniel H. Kim, 1992, 2000: TheSystemThinker.com, https://thesystemsthinker.com/systems-archetypes-i-diagnosing-systemic-issues- and-designing-interventions/ https://www.flickr.com/photos/dabofthebrake/10889911323/ Drifting Goals – each time goals are adjusted downward in the organization, a reinforcing dynamic occurs which anchors a lax orientation to goal setting in the culture of the organization. After some period of time, the organization finds itself aiming lower and lower to ensure that its goals are always met.
  44. 44. www.plays-in-business.com www.Plays-in-Business.com Escalation In an “Escalation” archetype, party A takes actions that are perceived by party B as a thread. B responds in a similar manner, increasing the thread to A and resulting in more threatening actions by A. Daniel H. Kim, 1992, 2000: TheSystemThinker.com, https://thesystemsthinker.com/systems-archetypes-i-diagnosing-systemic-issues- and-designing-interventions/ O Activity by A A’s result Thread to A Activity by B B’s result Thread to B Quality of A’s Position relative to B’s O B1 B2 Escalation – a commonly held belief of competition is mounting an appropriate response to the actions of competitors (a) to sustain one’s own competitive advantage, (b) to maintain momentum toward gaining competitive advantage, or (c) because that’s what managers are supposed to do.
  45. 45. www.plays-in-business.com www.Plays-in-Business.com Fixes That Fail Unintended Consequence O B1Problem Symptom Fix R2 In a “Fixes that Fail” archetype, a problem symptom needs a resolution. A solution is quickly implemented that alleviates the symptom (B1), but the unintended consequences of the fix exacerbate the problem (R2). Over time, the problem symptom returns to its previous symptom level or becomes worse. Daniel H. Kim, 1992, 2000: TheSystemThinker.com, https://thesystemsthinker.com/systems-archetypes-i-diagnosing-systemic-issues-and- designing-interventions/ https://revpart.com/tips-to-prevent-your-injection-molding-part-from-failing/ Fixes That Fail – states that a quick-fix solution can have unintended consequences that worsen the problem. The problem symptom will diminish for a short while and then return to its previous level, or become even worse over time.
  46. 46. www.plays-in-business.com www.Plays-in-Business.com Growth and Underinvestment In a “Growth and Underinvestment” archetype, growth approaches a limit that can be eliminated or pushed into the future if capacity investments are made. Instead, performance standards are lowered to justify underinvestment, leading to lower performance which further justifies underinvestment. Daniel H. Kim, 1992, 2000: TheSystemThinker.com, https://thesystemsthinker.com/systems-archetypes-i-diagnosing-systemic-issues- and-designing-interventions/ B3 B2 Performance O O Growth Effort DemandR1 Perceived Need to Invest Performance Standard Investment Capacity Capacity http://www.ifpri.org/blog/piecing-together-puzzle-underinvestment-agriculture Growth and Underinvestment brings special attention to planning for limits. In this case, it is the capabilities and core competencies that give firms their competitive advantage.
  47. 47. www.plays-in-business.com www.Plays-in-Business.com In a “Success to the Successful” archetype, if one person or group A is given more resources, it has a higher likelihood of succeeding than B (assuming they are equally capable). The initial success justifies devoting more resources, its success diminishes, further justifying more resource allocations to A. (R2) Daniel H. Kim, 1992, 2000: TheSystemThinker.com, https://thesystemsthinker.com/systems-archetypes-i-diagnosing-systemic-issues- and-designing-interventions/ Success to the Successful Resources of B Success of A Resources of B Success of B Allocation to A instead of B O R1 R2 O https://www.flickr.com/photos/bs/88228306/ Success to the Successful – describes the common practice of rewarding good performance with more resources in the expectation that performance will continue to improve. There is a belief that the successful [people, departments, products, etc.] have “earned” their increasing share of resources through past performance. In managerial terms this archetype is often the basis for citing the “80/20” rule.
  48. 48. www.plays-in-business.com www.Plays-in-Business.com • Donald G. Reinertsen 2009: The Principles of Product Development Flow. Second Generation Lean Product Development. Celeritas Publishing, 2009. • Daniel S. Vacanti 2015: Actionable Agile Metrics for Predictability: An Introduction. Leanpub, 2015. • Donella H. Meadows 2008: Thinking in Systems: A Primer. Chelsea Green Publishing Co, 2008. • Peter Senge 2006: The Fifth Discipline. Crown Business, 2006. • Peter Senge 1994: The Fifth Discipline Fieldbook: Strategies for Building a Learning Organization. Nicholas Brealey Publishing, 1994. • Peter Kline, Bernard Saunders 1993: 10 Steps to a Learning Organization. Pfeiffer Wiley, 1993. • Linda Booth Sweeney, Dennis Meadows 2010: The Systems Thinking Playbook. Chelsea Green Publishing Co, 2010. • John Bicheno 2015: The Lean Games and Simulation Book. Picsie Books, 2015 • www.beyondconnectingthedots.com • www.cognitive-edge.com • www.systemdynamics.org • https://thesystemsthinker.com/ Further Reading
  49. 49. www.plays-in-business.com www.Plays-in-Business.com Twitter: @M_Tarnowski, @PlaysInBusiness Facebook: http://bit.ly/PiB-FB LinkedIn: http://bit.ly/MT-LinkdIn Xing: http://bit.ly/MT-Xing SlideShare: http://bit.ly/MT-SShare Or call me: +49-172-69 152 61 You Enjoyed It? – Drop me a note: info@plays-in-business.com This document may be further distributed free-of-charge in its original, complete form only. Please credit Plays-in-Business.com. All images used are – if not stated otherwise – taken from flickr.com under Common Creative License. Julien GONG Min, https://www.flickr.com/photos/bfishadow/3634884928/