Business Analysis for Responsible Organizations (MANBPRO363)
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Radboud Universiteit Nijmegen (RU)
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Thinking in Systems
Thinking in Systems, written by Donella H. Meadows. Published in 2008. Extensive Summary of all chapters of the book. Includes all study material for the course Business Analysis for Responsible Organizations (BAFRO) at the Radboud University.
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Pre-master Business Administration
Business Analysis for Responsible Organizations (MANBPRO363)
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Thinking in Systems
Written by: Donella H. Meadows
Introduction: The System Lens
Systems thinking will help manage, adapt and see the wide range of choices we have before
us.
- It is a way of thinking that gives us the freedom to identify root causes of problems
and see new opportunities.
A system is a set of things, interconnected in such a way that they produce their own pattern
of behaviour over time.
- The system may be buffeted (beated), constricted, triggered or driven by outside
forces. But the system’s response to these forces is characteristic of itself the
system causes its own behaviour.
o An outside event may unleash that behaviour, but the same outside event
applied to a different system is likely to produce a different result.
Psychologically and politically we would rather assume that the cause of a problem is ‘’out
there,’’ rather than ‘’in here’’.
- While often, the system is actually the source of its own problems and we need to
restructure this.
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,Part one: System Structure and Behaviour
1. The basics
More Than The Sum of Its Parts
A system is an interconnected set of elements that is coherently organized in a way that
achieves something. A system must consist of three kinds of things:
1. Elements: e.g. football team has elements such as players, coach, field and ball.
2. Interconnection: e.g. football team is interconnected through the rules of the game,
the coach its strategy, the players its communication and the laws of physics that
govern the motions of ball and players.
3. Function / purpose: e.g. football team its purpose is to win games, or have fun.
A conglomeration (cluster) without any particular interconnections or function is not a system
(e.g. sand scattered on a road by happenstance is not, itself, a system you can add or
remove sand and you still have just sand on the road).
A system is more than the sum of its parts. It may exhibit adaptive, dynamic, goal-seeking,
self-preserving and sometimes evolutionary behaviour.
Look Beyond the Players to the Rules of the Game
The elements of a system are often the easiest parts to notice, because many of them are
visible, tangible things (i.e. University: buildings, professors, students), however there are also
intangible elements (i.e. University: school pride).
- Once you start listing the elements of a system, there is almost no end to the
process.
The interconnections are the relationships that hold the elements together: the signals that
allow one part to respond to what is happening in another parts (i.e. University: standards for
admission, examinations and grades etc.)
- Many interconnections are flows of information: signals that go to decision points or
action points within a system (e.g. Students may use informal information about the
probability of getting a good grade to decide what courses to take).
- These interconnections are often hard to see.
A system’s function (used for nonhuman system) or purpose (used for human system) is not
necessarily spoken, written, or expressed explicitly, except through the operation of the
system.
- The best way to deduce the system’s purpose is to watch for a while to see how the
system behaves.
- One of the most frustrating aspects of systems is that the purposes of subunits may
add up to an overall behaviour that no one wants systems can be nested within
systems, which means there can be purposes within purposes.
o Example: purpose of University is to discover and preserve knowledge and
pass it on to new generations, while the purpose of the student may be to get
good grades and the purpose of the professor may be to get tenure etc.
Keeping sub-purposes and overall system purposes in harmony is an
essential function of successful systems.
Changing elements usually has the least effect on the system. A system generally goes on
being itself, changing only slowly if at all, even with complete substitutions of its elements, as
long as its interconnections and purposes remain intact.
- If the interconnections change, the system may be greatly altered (e.g. change the
rules from those of football to those of basketball and you have got a new ball game).
- If the purpose or function changes, the system may also be greatly altered (e.g. if you
change the purpose from winning to losing).
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,The least obvious part of the system, its function or purpose, is often the most crucial
determinant of the system’s behaviour.
- The elements are often least important in defining the unique characteristics of the
system, unless changing an element also results in changing relationship or purpose.
Bathtubs 101 – Understanding System Behaviour over Time
A stock is the foundation of any system. Stocks are the elements of the system that you can
see, feel, count or measure at any given time (e.g. water in a bathtub, population).
- Stocks change over time through the actions of a flow. Flows are filling, and draining,
births and deaths, purchases and sales.
o Stock is the present memory of the history of changing flows within the
system.
If you understand the dynamics of stocks and flows and their behaviour over time, you
understand a good deal about the behaviour of complex systems.
Example: The structure of a bathtub system – one stock with one inflow and one outflow.
Imagine a bathtub filled with water, with its drain plugged up and its faucets turned off – an
unchanging, undynamic, boring system.
1. Now mentally pull the plug, the water runs out. The level of water in the tub
goes down until the tub is empty. Like this:
2. Starting again with a full tub and open the drain, but this time, when the tub is
about half empty, turn on the inflow faucet so the rate of water flowing in is just
equal to that flowing out.
Then the amount of water in the tub stays constant at whatever level it
had reached when the inflow became equal to the outflow dynamic
equilibrium.
3. Imagine turning the inflow on somewhat harder while keeping the outflow constant.
The level of water in the tub slowly rises. If you then turn the inflow faucet down again
to match the outflow exactly, the water in the tub will stop rising. Turn it down
somewhat more and the water level will fall slowly.
All models whether mental models or mathematical models are simplifications of the real
world. Several important principles can be deduced from this simplistic example.
3
, - As long as the sum of all inflows exceeds the sum of all outflows, the level of the
stock will rise.
- As long as the sum of all outflows exceeds the sum of all inflows, the level of the
stock will fall.
- If the sum of all outflows equals the sum of all inflows, the stock level will not change:
it will be held in dynamic equilibrium at whatever level it happened to be when the two
sets of flows became more equal.
A stock can be increased by decreasing its outflow rate as well as by increasing its inflow rate
there is more than one way to fill a bathtub.
A stock takes time to change, because flows take time to flow (e.g. water can’t run out the
drain instantly, even if you open the drain all the way. The tub can’t fill up immediately, even
with the inflow faucet on full blast).
- Stocks generally change slowly, even when the flows into or out of them change
suddenly. Therefore stocks act as delays or buffers or shock absorbers in systems.
- Changes in stocks sets the pace of the dynamics of systems (e.g. industrialization
cannot proceed faster than the rate at which factories and machines can be
constructed).
o The time lags imposed by stocks allow room to manoeuvre, to experiment
and to revise policies that aren’t working.
The presence of stocks allows inflows and outflows to be independent of each other and
temporarily out of balance with each other (e.g. banks enable you temporarily to earn money
at a rate different from how you spend).
- Most individual and institutional decisions are designed to regulate the levels in
stocks if inventories rise too high, then prices are for example cut to lower the
inventories.
o People monitor stocks constantly and make decisions and take actions
designed to raise or lower stocks or to keep them within acceptable ranges.
Those decisions add up to successes and problems of all sorts of systems.
System thinkers see the world as a collection of ‘’feedback
processes’’.
How the System Runs Itself – Feedback
If you see behaviour that persists over time, there is likely a mechanism creating that
consistent behaviour.
- That mechanism operates through a feedback loop. A feedback loop is formed when
changes in a stock affect the flows into or out of that same stock. It is a closed chain
of causal connections from a stock, through a set of decisions or rules or physical
laws or actions that are dependent on the level of the stock, and back again through a
flow to change the stock.
o Example: Interest-bearing savings account in a bank. The total amount of
money in the account (the stock) affects how money comes into the account
as interest. That is because the bank has a rule that the account earns a
certain percent interest each year, which varies with the size of the total in
the account.
- Feedback loops can cause stocks to maintain their level within a range, or grow, or
decline. In any case, the flows into or out of the stock are adjusted because of
changes in the size of the stock itself.
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