2 June 2021, 08:14

on systems thinking


The behavior of a thing is latent in its structure.

e.g: A Slinky toy rests in a person’s palm and another hand grasps the top of the slinky several coils down. Removing the hand results in the Slinky dropping and then bouncing up and down. The hand did not make the Slinky bounce. The Slinky itself possessed the necessary properties for that specific behavior. Understanding the relationship between behavior helps us understand how poor outcomes happen and how to generate better ones.

“It is a way of thinking that gives us the freedom to identify root causes of problems and see new opportunities.”

A system is an interconnected set of things (people, cells, molecules, components, etc.) that produces a specific outcome over time.

  • A system can be triggered or influenced by external forces.
  • The system’s response to external forces is a characteristic of the system itself (see slinky example).
  • An external force that triggers a system response will likely result in a different outcome when applied to a different system

“The behavior of a system cannot be known just by knowing the elements of which the system is made.”

System Structure

A system consists of three things:

  • Elements
  • Interconnections
  • A function or purpose

e.g: The digestive system

Elements: Teeth, enzymes, stomach, intestines. Interconnections: The physical flow of food, chemical signals to regulate the process. Function: To separate nutrients from food (to maintain and provide energy to the body) and to collect and discard unusable waste.

Systems don’t exist in isolation.

  • Systems can be interconnected with other systems.
  • Systems can be embedded within other systems

Conglomeration: A collection of things that LACK interconnections or function. Example: Sand scattered on a road is not a system

“When a living creature dies, it loses its ‘systemness.’ The multiple interrelations that held it together no longer function, and it dissipates, although its material remains part of a larger food-web system.”

“A system is more than the sum of its parts. It may exhibit adaptive, dynamic, goal-seeking, self-preserving, and sometimes evolutionary behavior.”

The flow of information, from one part to another, is a common way that system interconnections are manifest.

“The best way to deduce the system’s purpose is to watch for a while to see how the system behaves.”

  • Watch what the system does not what is says or advertises itself to be doing.
  • e.g: “If a government proclaims its interest in protecting the environment but allocates little money or effort toward that goal, environmental protection is not, in fact, the government’s purpose.”

Self-perpetuation is an important function for almost every system.

System purposes need not be human purposes nor need they be the intended purpose. It is common for a well-meaning system to result in unintended outcomes and behaviors.

Successful systems keep “sub-purposes and overall system purposes in harmony.”

Changing elements in a system often has the least impact on the overall system behavior. Modifying the interconnections and purpose often results in dramatic or fundamental changes.

“The least obvious part of the system, its function or purpose, is often the most crucial determinant of the system’s behavior.”

System Basics

A stock: This is an element in the system that is accumulated, depleted or stored over time.

e.g: water in a bath, the population of a city, books in a bookstore, money in a bank.

“A stock is the memory of the history of changing flows within the system.”

A stock changes over time based on flow. A flow represents elements entering the system stock as well as elements leaving or being depleted from a system stock.

e.g: For a population, an inflow might be represented by births (these ADD to the population stock). Outflows might be represented by deaths (these result in a reduction in the population stock).

Stock-and-flow diagram: A visual representation of a system that shows inflows, outflows, reinforcing and balancing loops, stocks and interconnections with other systems.

  xxx              ┌────────┐
 x   xxxx          │        │                xxxx
xx      xxx        │ stock  │         xxxx x x  xx
x         x──────► │        │ ──────► xx         x
 xxxxxxxxxx        │        │           xx       x
                   └────────┘            xxxx    xx
           inflow             outflow        x xxxx

System diagrams are simplified representations of the real world “The map is not the territory.”

"If you understand the dynamics of stocks and flows—their behavior over time—you understand a good deal about the behavior of complex systems."

Dynamic equilibrium: A state in which inflows and outflows are equal resulting in an unchanged stock.

“A stock takes time to change because flows take time to flow.”

This is important because people underestimate the time needed to change large or complex systems.

"Stocks allow inflows and outflows to be decoupled and to be independent and temporarily out of balance with each other."

e.g: A water reservoir allows us to maintain stability in the availability of water. People can receive steady flow of water whether there is a temporary drought or if it’s the rainy season.

“Systems thinkers see the world as a collection of stocks along with the mechanisms for regulating the levels in the stocks by manipulating flows

Feedback loops

Feedback loop: A mechanism for regulating a system’s behavior. Feedback loops occur when a change in stock affects the inflow or outflow of that same stock.

Feedback loops can affect stocks in several ways:

  • Maintain the level of a stock within a narrow range.
  • Cause a stock to grow.
  • Cause a stock to decline.

Balancing feedback loops are loops that aim to stabilize a stock within a desired target or range.

The discrepancy or gap between actual and desired levels in a stock causes a decision to increase or decrease additional inflows into said stock.

Feedback loops can work in both directions (inflows/outflows) and can regulate increased or decreased flow rates.

e.g: A coffee drinker might drink a cup when their energy is running low (in this example, the stock is energy). The drinker notices their energy level is ebbing and opts to drink a cup of coffee. The inflow of caffeine results in an increased stock of energy.

“Balancing feedback loops are goal-seeking or stability-seeking....a balancing feedback loop opposes whatever direction of change is imposed on the system.”

Remember: the mere presence of a feedback loop isn’t sufficient to ensure that a system is working well (the loop may be insufficient or too weak to maintain the desired result).

Reinforcing feedback loops are loops that amplify or reinforce growth or destruction within a system.

“A reinforcing feedback loop enhances whatever direction of change is imposed on it.”

e.g: Inflationary pressures. As prices for goods increase, wages increase. As wages increase, prices also must increase to maintain profits. e.g: Compound interest. Money is saved and as interest in earned, the interest is added to the stock of savings which increases the overall stock that is earning interest.

“Reinforcing loops are found wherever a system element has the ability to reproduce itself or to grow as a constant fraction of itself. Those elements include populations and economies.”

Reinforcing loops can lead to exponential growth but that can also result in runaway collapse.

Consider: If A causes B, is it possible that B also causes A?

e.g: If someone says that population growth causes poverty, ask yourself if poverty causes population growth.

“The concept of feedback opens up the idea that a system can cause it's own behaviour.”

A Brief Visit to the Systems Zoo

One-Stock Systems:

A Stock with Two Competing Balancing Loops

e.g: A thermostat

  • Stock is the temperature of the room which is influenced by inflows and outflows.

  • Inflow comes from heat from the furnace.

  • Outflow results from temperature outside (which is presumably colder).

  • One balancing feedback loop regulates the inflow: A desired temperature compared against the real temperature of the system stock. The delta between desired and actual influences the subsequent flow of more heat (or reduced inflow).

  • One balancing feedback loop regulates the outflow: The outside temperature influences the inside temperature based on the delta between outside temp and inside temp. A higher delta (e.g. between high room temp and low outdoor temp) results in increased outflow of indoor heat.

  • The two balancing loops compete.

Note that owing to the flow of information and time needed to impact the stock, there are inherent delays to rebalancing the stock. Any actions taken (e.g. to increase inflow of heat) can only affect future behavior and stock.Because of the competing outflow, the thermostat inflow needs to be set HIGHER than the target or desired temperature.

  • Because of the competing outflow, the thermostat inflow needs to be set HIGHER than the target or desired temperature.
A Stock with One Reinforcing Loop and One Balancing Loop

e.g Population and industrial economies

  • Stock is the population (city, nation, world).

  • Systems have key driving variables. For a population these are fertility and mortality.

  • Inflow is the result of births which add to the population stock.

  • Inflow is governed by a reinforcing loop. As births increase (fertility levels), the population stock increases which drives more births and adds more rapidly to the population stock.

  • Outflow is the result of deaths which reduces the population stock.

  • Outflow is regulated by a balancing loop—mortality rate.

  • Population grows when the birth rate outpaces the mortality rate. Population declines when the reverse is true.

  • Changes in the flows change the (over time) the behavior of the stock.

  • Shifting dominance refers to situations where one feedback loop dominates the system. The loop that dominates the system determines its behavior.

“A stock governed by linked reinforcing and balancing loops will grow exponentially if the reinforcing loop dominates the balancing one. It will die off if the balancing loop dominates the reinforcing one. It will level off if the two loops are of equal strength.”

  • In reality, loop dominance will shift back and forth in sequence over time.

fertility and mortality are governed by their own feedback loops (they can be modeled as discrete systems that interconnect with the population system).

  • An economy bears similar behavior to the population loop.

    • Stock = capital
    • Inflow = investment
    • Reinforcing feedback loop: increased capital stock leads to reinvestment and increasing capital over time.
    • Outflow = depreciation
    • Balancing loop: lifetime of the capital affects depreciation. The longer the lifetime, the smaller fraction of capital needs to be retired/replaced annually.

“Systems with similar feedback structures produce similar dynamic behaviors.”

A System with Delays — Business Inventory
  • Stock is the product inventory itself — vehicles for sale.

  • Inflows are the deliveries from factories.

  • Balancing feedback loop regulates the inflow to ensure that there are 10 days of vehicle inventory in stock.

  • Outflows are the sale of new cars to consumers.

  • Balancing feedback loop regulates the outflow (customer demand). Dealer can monitor sales and sales trends. If forecast is higher, the dealer can modify the inflow of new vehicles accordingly.

  • Delays are inherent to the system. The response to each balancing loop is not immediate or always accurate.

  • Perception delay: The dealer bases their ordering decisions on a 5-day average to smooth the temporary spikes and dips in demand.

  • Response delay: The dealer doesn’t adjust inflows in a single order. They make up a fraction of any shortfall with each subsequent order. Changes in inflows occur over several days (rather than as a one-time, immediate response).

  • Delays in balancing feedback loops result in system oscillations (fluctuations over time of inventory levels). Other delays: production delays, delivery delays, construction delays.


Mental Pivot

← on being anti-fragile
on service design →