Systems Thinking NDIA SYSTEMS ENGINEERING CONFERENCE October 2003

Systems Thinking NDIA SYSTEMS ENGINEERING CONFERENCE October, 2003 Patrick Murray Naval Undersea Warfare Center Division Keyport pmurray@kpt. nuwc. navy. mil 360 -315 -7513 For Official Use Only

What is a system? • A definition as offered by Gregory Watson in his book, Business Systems Engineering: “System means a grouping of parts that operate together for a common purpose. ” (Watson, 1994). For Official Use Only

What is a System? (Cont’d) • Definition as adapted from Random House Dictionary: A system is an assemblage or combination of elements or parts forming a complex or unitary whole, such as a river system or a transportation system; any assemblage or set of correlated members, such as a system of currency; an ordered and comprehensive assemblage of facts, principles, or doctrines in a particular field of knowledge or thought, such as a system of philosophy; a coordinated body of methods or a complex scheme or plan of procedure, such as a system of organization and management; any regular or special method of plan or procedure, such as a system of marking, numbering, or measuring (Blanchard & Fabrychy, 1998). For Official Use Only

What is Thinking? • What, precisely, is thinking? When at the reception of sense impressions, memory pictures emerge, this is not yet thinking. And when such pictures form a series, each member of which calls forth another, this too is not yet thinking. When, however, a certain picture turns up in many such series, then—precisely through such return— it becomes an ordering element for such series…Such an element becomes an instrument, a concept. I think the transition from free association of dreaming to thinking is characterized by the more or less dominating role which the concept plays in it (Einstein, in Schilpp, 1949). For Official Use Only

Connectedness • “If you wish to understand a system, and so be in a position to predict its behavior, it is necessary to study the system as a whole. Cutting it up into bits for study is likely to destroy the system’s connectedness, and hence the system itself. ” (Sherwood, 2002) For Official Use Only

Connectedness • “If you wish to influence or control the behavior of a system, you must act on the system as a whole. Tweaking it in one place in the hope that nothing will happen in another is doomed to failure—that’s what connectedness is all about. ” (Sherwood, 2002). For Official Use Only

Systems Theory • General Systems Theory • Chaos Theory • Quantum Theory • Ecological Theory For Official Use Only

Systems Principles • Openness • Purposefulness • Multidimensionality • Emergent property • Counterintuitivess For Official Use Only

Systems Thinking • • • Problem Solving Tool Pioneered By Biologists Looks At The Whole View Reduces Complexity Controls System Behavior For Official Use Only

Systems Thinking Methodologies • Soft Systems Methodologies • Hard Systems Thinking • The Fifth Discipline For Official Use Only

Systems Thinking Tools • Archetypes • Causal Loop Diagrams • Stocks and Flows • Simple Structure Dynamics For Official Use Only

Systems Thinking Models • Archetypes • Causal Loop Diagrams • Stocks and Flows For Official Use Only

Archetype: Fixes That Backfire Problem Symptom balance Sl ipp Original threshold of tolerance er ys Fix lop e Unintended consequences delay The problem symptom alternately improves. It goes down, then comes Back up again and usually comes back worse than before (Senge, 1994). For Official Use Only

Archetype: Limits to Growth Gr Problem Symptom ow th pro ces s Actual performance Limiting pro cess Corrective action Growth occurs and sometimes dramatic but levels off and/or falls into decline (Senge, 1994). For Official Use Only

Archetype: Shifting the Burden Quick fixes Limiting pro cess Side effects Problem Symptom Limiting pro cess delay Corrective Actions Root cause Three patterns exist side by side. The reliance on short-term fixes grows stronger, while efforts to fundamentally correct the real problems grow weaker, and the problem symptom alternately improves and deteriorates (Senge, 1994). For Official Use Only

Archetype: Tragedy of Commons limits or constraints A’s growth process A’s growing action actual performance that A measures A’s limiting process gain per individual activity total growing action B’s limiting process B’s growth process B’s growing action TRAGIC DEGRADATION PROCESS actual performance that B measures delay Total activity grows, but the gains from individual activities are dropping off. Parts of the organization are suffering for the whole (Senge, 1994). For Official Use Only

Archetype: Accidental Adversaries A’s activity with B (actions in B’s favor) A’s unintended obstruction of B’s success A’s fixes to Improve A’s own results B’s success B’s unintended obstruction of A’s success B’s activity with A (actions in A’s favor) B’s fixes to improve B’s own results Each sides performance either declines or stays level and low, while competitiveness Increases over time (Senge, 1994). For Official Use Only

Causal Loop Diagrams For Official Use Only

O Pressure from Contractor for More Dollars Quality of the Government-Industry relationship Pressure on the Government to stay Within cost S Risk of cost overruns O S Pressure on the Government to deliver A workable system Pressure on the Government to control The contractor S Pressure on the Government to control Costs and quality S S Requirement for high Technical and service Quality standards Risk to the Government of Cost escalation S Government Cost Model Adapted From Sherwood’s Causal Loop Diagrams S S Dependency of the Government on the contractor S S Policy of outsourcing For Official Use Only Pressure on the Government To satisfy the taxpayers S

Causal Loop Diagram Total Work Capacity My Goals Your Goals My Consumption of Dollars Your Consumption of Dollars + + + - - + My Need for Work + My fear that you will Not leave enough work me + Work Available Your Need for Work + - - - Your fear that I will Not leave enough work you Number of activities competing For work + Conflict + Option 1: Two reinforcing loops (Sherwood, 2002) For Official Use Only

Causal Loop Diagram Total Work Capacity My Goals Your Goals My Consumption of Dollars Your Consumption of Dollars + + - - + My Need for Work + - - Work Available + + + My fear that you will Not leave enough work me - + Your Need for Work - Your fear that I will Not leave enough work you Police the Work allocation + + Appeal to A higher authority + Option 2: Limit consumption—before turf war (Sherwood, 2002) For Official Use Only

Causal Loop Diagram Total Work Capacity My Goals Your Goals My Consumption of Dollars - Your Consumption of Dollars + + - + Work Available My Need for Work - Your Need for Work + + My fear that you will Not leave enough work me My willingness to Participate in a cooperative Goal-setting process - + - Recognition of The need for cooperation + + Your fear that I will Not leave enough work you My willingness to Participate in a cooperative Goal-setting process + Option 3: Players See the Sense in Cooperation (Sherwood, 2002) For Official Use Only

Causal Loop Diagram Total Work Capacity My Goals Your Goals My Consumption of Dollars - Your Consumption of Dollars + + - + My Need for Work - + - Work Available Your Need for Work + + My fear that you will Not leave enough work me My willingness to Participate in a cooperative Goal-setting process + + - Recognition of The need for cooperation + + Your fear that I will Not leave enough work you My willingness to Participate in a cooperative Goal-setting process + Mutual Trust Best Solution: Goals Match—Combined Benefit! For Official Use Only +

System Dynamics: Growth and Goal Seeking Structure and Behavior Goal state of the system Time + Goal (desired state of the system) state of the system + Net Increase Rate R State of The System discrepancy B + Corrective action For Official Use Only + +

Stocks and Flows Valves represent the flow of inventory into and out of the warehouse Stock Inventory source sink Production (inflow) Shipments (outflows) Sources and sinks are outside the model boundary. Stocks and Flows are used in Causal Loop Diagrams to cover some of their limitations of not being able to capture stocks and flows within systems (Sterman, 2000). For Official Use Only

Some Models from Soft Systems Methodology--Checkland For Official Use Only

The inquiring/learning cycle of SSM (Checkland, 1999) perceived real-world problem or situation action to improve leads to selection of ‘comparison’ (question problem situation using models) models of relevant purposeful activity systems each based on a declared world-view find accommodations which enable a structured debate about desirable and feasible change Principles • real world: a complexity of relationships. • relationships exploded via models of purposeful activity based on explicit world visions. • inquiry structured by questioning perceived situation using the models as a source of questions. • ‘action to improve’ based on finding accommodations (versions of the situation which conflicting interests can live with) • inquiry in principle never-ending; best conducted with wide range of interested parties; give the process away to people in the situation. For Official Use Only

Method for Unstructured Problems 1. the problem situation: unstructured 7. action to improve the problem situation 2. the problem situation: expressed. 6. feasible, desirable changes 5. comparison of 4 with 2 Real world Systems thinking 4. conceptual models 3. root definitions of systems 4. a. formal systems concept Checkland, 1999 For Official Use Only 4. b. other systems thinking

An area of reality containing: Concerns Issues Problems Aspirations Other sources Gives rise to IDEAS from which may be formulated provide which support criticism of THEORIES: Substantive Methodologies which present CASE RECORDS PROBLEMS documented in which may be analyzed using to be used in action (intervention, influence, observation) in which yield MODELS METHODOLOGY which may be manipulated using TECHNIQUES A developing subject which may be used in ANY DEVELOPING SUBJECT (Checkland, 1999) For Official Use Only

Laws of Systems Thinking • Today’s problems come from yesterday’s solutions. – Moving the problem around. • The harder you push, the harder the system pushes back. – Compensating feedback. • • • Behavior grows better before it grows worse. The easy way out usually leads back in. The cure can be worse than the disease. Faster is many times slower. Cause and effect are not closely related in time and space. Small changes can produce big results—but the areas of highest leverage are often the least obvious. • You can have your cake and eat it too, but not at the same time. • Dividing the elephant in half does not produce two small elephants. • There is no blame. Senge, 1990 For Official Use Only

Questions? For Official Use Only

References/Bibliography • • • • • • Barnett, W. P. , & Sorenson, O. (2002). The red queen in organizational creation and development. Industrial and Corporate Change, 11, 289 -305. Retrieved on October 13, 2003 from the Pro. Quest database at www. apollolibrary. com. Bertalanffy, L. (1968). General system theory: Foundations, development, applications. New York: George Braziller. Capra, F. (1996). The web of life. New York: Anchor Books - Doubleday. Checkland, P. (1999). Systems thinking, systems practice. New York: John Wiley & Sons, Ltd. Checkland, P. , & Scholes, J. (1999). Soft systems methodology in action. New York: John Wiley & Sons, LTD. Chen, Y. , & Smith, R. (2001). Equilibrium cost overruns. Annals of Economics and Finance, 2, 401 -414. Retrieved May 8, 2003 from http: //www. aeconf. net Flood, R. L. , & Romm, N. R. A. (1996). Critical systems thinking: Current research and practice. New York: Plenum Press. Gharajedaghi, J. (1999). Systems thinking: Managing chaos and complexity: A platform for designing business architecture Boston: . Butterworth-Heinman. Hellman, C. (2003). F/A-22 further in the red. Weekly Defense Monitor, 7, 2 -4. Holbrook, M. B. (2003). Adventures in complexity: An essay on dynamic open complex adaptive systems, butterfly effects, self-organizing order, co evolution, and ecological perspective, fitness landscapes, market spaces, emergent beauty at the edge of chaos, and all that jazz. Academy of Marketing Science Review, 2003, 1. Retrieved on October 13, 2003 from the Pro. Quest database at www. apollolibrary. com. Hudson, C. G. (2000). At the edge of chaos: A new paradigm for social work. Journal of Social Work Education, 36, 215 -230. Retrieved October 2, 2003 from the EBSCOhost premier database at www. apollolibrary. com. Maertens, J. W. (2003). Chaos theory, Asimov's foundations and robots, and Herbert's Dune: The fractal Aesthetic of epic science fiction (book). Utopian Studies, 1, 244 -246. Retrieved on October 13, 2003 from the Pro. Quest database at www. apollolibrary. com. Pesic, P. (2002). Quantum identity. American Scientist, 90, 262 -264. Retrieved on October 13, 2003 from the Pro. Quest database at www. apollolibrary. com. Senge, P. M. (1990). The fifth discipline: The art & practice of the learning organization. New York: Doubleday. Senge, P. M. , Kleiner, A. , Roberts, C. , Ross, R. B. , & Smith, B. J. (1994). The fifth discipline fieldbook: Strategies and tools for building a learning organization. New York: Doubleday. Sherwood, D. (2002). Seeing the forest for the trees: A manager's guide to applying systems thinking London: Nicholas Brealy Publishing. . Sterman, J. D. (2000). Business dynamics: Systems thinking and modeling for a complex world. New York: Mc. Graw-Hill. Weinberg, G. M. (2001). An introduction to general systems thinking (Silver Anniversary Edition ed. ). New York: Dorset House. Williams Jr. , A. O. (2002). Quantum Theory. Encyclopedia Americana-Grolier Online Retrieved October 13, 2003 from Grolier Online at www. apollolibrary. com. Watson, G. H. (1994). Business systems engineering: Managing breakthrough changes for productivity and profit New York, John Wiley. & Sons, Inc. Blanchard, Benjamin S. and Fabrycky, Wolter, J. (1998). Systems engineering and analysis (3 rd Ed. ), Upper Saddle River, New Jersey, Prentice Hall. For Official Use Only