Summary BAFRO 2022
MAN-BPRO363
All information in this summary is based on the following book:
Thinking in Systems: A Primer
By Donella H. Meadows
ISBN: 9781603580557
Images are either copied from the book or from lecture slides.
Blue texts and blue-lined images are additional information from the lectures.
Table of Content
Summary BAFRO 2022............................................................................................................................1
1. The Basics...........................................................................................................................................2
2. A Brief Visit to the Systems Zoo..........................................................................................................4
3. Why Systems Work So Well................................................................................................................7
4. Why Systems Surprise us....................................................................................................................8
5. System Traps... and Opportunities......................................................................................................9
6. Leverage Points - Places to Intervene in a System............................................................................14
7. Living in a World of Systems.............................................................................................................18
Information on VENSIM........................................................................................................................22
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,1. The Basics
Stakeholder Theory is a view of capitalism that stresses the interconnected relationships between a
business and its customers, suppliers, employees, investors, communities, and others who have a stake
in the organization. The theory argues that a firm should create value for all stakeholders, not just
shareholders.
An integrated report aims to provide insight about the resources and relationships used and affected
by an organization. It also seeks to explain how the organization interacts with the external environ-
ment and the capitals to create value over the short, medium, and long term.
System: a set of elements or parts that is coherently organised and interconnected in a pattern or
structure that produces a characteristic set of behaviours, often classified as its 'function' or 'purpose'.
A system must consist of three things:
Elements (tangible or intangible)
Interconnections (relationship that holds elements together)
Function/purpose (not always clear)
According to the lecture slides, a system also consists of:
Non-linearities (delays)
Feedback (closed chains of causal connections)
A system is more than the sum of its parts. It may exhibit adaptive, dynamic, goal-seeking, self-
preserving, and sometimes evolutionary behaviour.
The least obvious part of the system, its function or purpose, is often the most crucial determinant of
the system's behaviour.
Changing elements has the least effect on the system (change football players, team is still a
team).
Changing interconnections can greatly alter the system (change rules, football becomes
basketball).
Changing function/purpose can also be drastic (instead of winning, losing becomes the main
goal).
Stock: an accumulation of material or information that has built up in a system over time. It's the
foundation of any system. A stock is the memory of the history of changing flows within the system.
Stocks change over time through the actions of a flow.
The capitals are stocks of value that are increased, decreased, or transformed through the activities
and outputs of the organization. They are categorized in this Framework as financial, manufactured,
intellectual, human, social and relationship, and natural capital.
Flow: material or information that enters or leaves a stock over a period of time.
If you understand the dynamics of stocks and flows, you understand a good deal about the behaviour
of complex systems.
Dynamics: the behaviour over time of a system or any of its components.
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, Dynamic equilibrium: the condition in which the state of a stock (its level/size) is steady and
unchanging, despite inflows and outflows. This is possible only when all inflows equal all outflows.
When inflow > outflow, the level of the stock will rise.
When inflow < outflow, the level of the stock will fall.
When inflow = outflow, 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 equal.
Sometimes, we focus too much on the inflows, while the outflows can also affect the stock.
Stocks change slowly, even when the flows in or out of them change suddenly. Therefore, stocks
function as delays or buffers or shock absorbers in systems.
Stocks allow inflows and outflows to be decoupled and to be independent and temporarily out of
balance with each other.
Feedback loop:
The mechanism (rule or information flow or signal) that allows a change in a stock to affect a
flow into or out of that same stock.
A closed chain of causal connections from a stock, through a set of decisions and actions
dependent on the level of the stock, and back again through a flow to change the stock.
Balancing feedback loop: a stabilising, goal-seeking, regulating feedback loop, also known as
negative feedback loop, because it opposes, or reverses, whatever direction of change is imposed on
the system.
Goal-seeking behaviour
Reinforcing feedback loop: an amplifying or enhancing feedback loop, also known as positive
feedback loop, because it reinforces the direction of change. These are vicious cycles and virtuous
cycles.
Exponential growth/decline
A system can cause its own behaviour.
Responsible organising is about creating multiple types of value simultaneously.
Multiple value creation is complex.
System approaches help to understand and manage complexity.
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