systems thinking for teams leaders and policy makers

Systems Thinkingfor Teams, Leaders & Policy-Makers

John Dubuc ROI Creations, LLC Scottsdale, AZ (480) 283-7014

Ever wonder …

• What causes the economy to cycle and crash?• Is global warming all bad?

• Would there be less crime if drugs were legal?• Why do profits rise and fall?

• What will healthcare reform or tax reform bring?• Why change programs fail?


Tough Questions!

• How would you begin to answer these questions?

• Would others agree?• How would you get other people TO AGREE?


Systems Thinking• Systems Thinking is any process of foreseeing how

local policies and actions influence the state of the universe

• We all have different views of how the world works (how this affects that – why events happen)

• To some degree we’re already Systems Thinkers


Systems Thinking


• But we didn’t start out as Systems Thinkers

• Our young INFINITE minds were wide open to accepting the way our teachers thought

What do children do with new objects?

New Object


Analytic Thinking

1. Take apart2. Try to understand what the parts do3. Assemble understanding of the parts into an

understanding of the whole

Whole = ΣParts


?

Analytic Thinking

• We use analytic thinking to try and understand people as well


President = George + Bush + Republican

Sales Service Quality R&D

Analytic Thinking

• We use analytic thinking when our business is not meeting its goals


Sales

• From a very early age we are taught to break apart problems; to fragment the world. This apparently makes complex tasks and subjects more manageable, but we pay an enormous hidden price. We can no longer see the consequences of our actions. We lose our intrinsic sense of connection to a larger whole.


• When we then try to see the big picture we try to reassemble the fragments in our minds, to list and organize the pieces, but the task is futile. It’s similar to trying to reassemble the fragments of a broken mirror to see a true reflection. So after a while we give up trying to see the whole all together.

Peter Senge

Analytic Thinking

• Formal education is based on analytic thinking


FinanceEconomics

Production

Personnel

Marketing

Management

Supply Chain

MBA

Analytic Thinking

• In many ways it’s like trying to understand life by studying the dead

Our entire culture is based on

Analytic Thinking


• Assumption:– If you know what the parts do you’ll be able to

integrate that knowledge into an understanding of the WHOLE

“Business” is the product of the

interactions between the parts

Analytic Thinking

Finance

Economics

Production

Personnel

Marketing

Management

Supply ChainJohn Dubuc ROI Creations, LLC Scottsdale, AZ (480) 283-7014

Analytic Thinking

• It’s not surprising that corporations, governments and organizations are created and managed by parts

ProductionSales

R&D HRCustomer

Service QualityIT

Corporate System


How is problem-solving approached in companies?

Analytic Thinking• Analytic Thinking can’t tell us why we’re getting the

results we’re getting because the parts lose their meaning when separated from the whole

• This sets up learning disorders in organizations because cause and effect are often separated in space and time

• System dynamics and delays make it impossible to judge or measure the effectiveness of our actions


Roll Video

Analytic vs. Systems Thinking

Analytic Thinking1. Take apart2. Try to understand

what the parts do3. Assemble your

understanding of the parts into an understanding of the whole

Systems Thinking1. Determine what it’s a

part of2. Try to understand the

behavior of the whole3. See the functional

interdependencies of the parts with respect to the whole




what the parts do3. Assemble






Whole = Sum of Parts

Whole = Product of Part

Interactions




what the parts do3. Assemble






How parts work & the role they

play

Why events occur


Why “Change Programs” Fail1. Focus is on getting people

to do things faster and better rather than improving the system they are part of

2. Many times the system that needs changing is our own beliefs or paradigms and habitual thought processes


Rx: Systems Thinking Rx: Thinking

Into Results

More later…

Systemic Problem-Solving

Non-Systems Thinking

SystemsThinking


Today’s solutionstomorrow’s problems

Tools for Systems Thinking

Measurement Material

ManMotherNature

Machine

Method

Problem

Cause-Effect Diagram


Analytic Thinking

Measurement

Material

ManMotherNature

Machine Method

Causal Loop DiagramSystems Thinking

Mostly Cause Theories All Causal Facts

Itching & Scratching


Itching Scratching++

-Connection Matrix

(Destination)

(Source)

Biological System



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No Scratching

Itching

No ScratchingPattern =

Voice of the System

Voice of the System• Answers are not in

terms of how much or when– X-Y scales are unit less

• Answers are system behavior patterns– Pattern = Vibration

(Voice of the System)• Experienced as

recurring or isolated events in space & time


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Itching

Scratching

Scratching

Voice of the System

• Vibration is a universal language– Hear, see, smell, taste,

touch is all vibrational energy

• System vibration also tells us what to expect


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Itching

Scratching

Scratching

Highway Accident Rate


2 Accident

Rate

3Patrol

Frequency

1 VehicleSpeed +

+

-+

-

Connection MatrixDestination

1 Speed 2 Accident Rate 3 Patrol Freq.1 Speed 0 1 1

Source 2 Accident Rate 0 0 13 Patrol Freq. -1 -1 0

Opinion of an Expert



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eAccident Rate

1 Speed

2 Accident Rate3 Patrol Freq.



5 Traffic

Congestion

6 Bad

Weather

4 Raise

Driver Age

7 Driver’s Risk

Aversion

2 Accident

Rate

3Patrol

Frequency

1 VehicleSpeed +

+-

-+

8 Driver’s

Education


2 AccidentRate

3 PatrolFrequency

1 VehicleSpeed +

+--

+

5 TrafficCongestion

4 Raise Driver

Age

7 Driver’s RiskAversion+

8 Driver’sEducation

+

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6 BadWeather

Policy not in our control

Policy in our control


Expert Opinion


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eAccident Rate (Raise Driver Age & Driver's Education are Active)

1 Speed2 Accident Rate

3 Patrol Freq.4 Raise Driver Age5 Traffic Congestion

6 Bad Weather7 Driver's Risk Aversion8 Driver's Education


VehicleSpeed

Driver’s RiskAversion

< AccidentRate

Product Line Profit


1 Production

2 Costs

3 InventoryGrowth

4 UnmetDemand

5 CompetitorSales

6 Sales7 Demand

8 Price

9 Revenue

10 Profit 11 Advertising

+

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Product Line Profit (Present State Policy)

1 Production

2 Costs

3 Inventory Growth

4 Unmet Demand

5 Competitor Sales

6 Sales

7 Demand

8 Price

9 Revenue

10 Profit

11 Advertising

Product Line Profit


Run 3 to 1 6 to 11 6 to 8 MScore(SS) VScore1 -1 -1 -1 4.3 4.282 -1 -1 0 -1.6 1.043 -1 -1 1 0 14 -1 0 -1 8.2 4.64 < Optimal5 -1 0 0 4 4.16 -1 0 1 -0.1 1.297 -1 1 -1 16.8 1.088 -1 1 0 6.8 3.339 -1 1 1 4 4.1

Target Variable = ProfitConnection Policy

Profit CLD Simulation Experiment

01234567

-20 -15 -10 -5 0 5 10 15 20

Vsco

re

Mscore

Profit Policy Scores

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ized

Scal

eProduct Line Profit (Future State Policy)

1 Production

2 Costs

3 Inventory Growth

4 Unmet Demand

5 Competitor Sales

6 Sales

7 Demand

8 Price

9 Revenue

10 Profit

11 Advertising

Sick Call-Ins


12 FamilyTime

1 EmployeesIn Training

2 Sick Call-Ins

3 Late Employees

4 Employees Temporarily Reassigned

5 Available Employees 6 Productivity

7 Perceived Training Rqmts.

8 Overtime Utilized

9 Employee Morale

10 Mgrs Doing Employee's Duties

11 Supervision Quality

+

- --

-

--+

-

+ +

-

-

13 Delay-

-

- +

14 Return Early if Possible

17 Evaluate ROI

15 Barrow EmployeesFrom Other Depts. 16 Remind Employees of

Proper Call-In Policy-

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-

Sick Call-Ins


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Sick Call-In Issue (Present State)

1 Employees In Training

2 Sick Call-Ins

3 Late Employees

4 Employees temporarily Reassigned

5 Available Employees

6 Productivity


8 Overtime Utilized

9 Employee Morale

10 Mgrs. Doing Employees Duties


12 Family Time

14 Return Early If Possible

15 Barrow Employees From Other Depts.

16 Remind Employees of Proper Call-In Policy

17 Evaluate ROI

Sick Call-Ins


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Sick Call-In Issue (Active Training ROI Evaluation)

1 Employees In Training

2 Sick Call-Ins

3 Late Employees

4 Employees temporarily Reassigned

5 Available Employees

6 Productivity


8 Overtime Utilized

9 Employee Morale

10 Mgrs. Doing Employees Duties


12 Family Time

14 Return Early If Possible

15 Barrow Employees From Other Depts.

16 Remind Employees of Proper Call-In Policy

17 Evaluate ROI

Sick Call-Ins

Employee Morale

Late Employees

Mgrs. DoingEmployees Duties

Cash for Clunkers


5 Fund Growth

6 Interest Income

8 DirtyCars

3 Buy Back Withdrawals

9 Car Emissions

11 Delay

12 Delay

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Cash for Clunkers

Clean Car Rebates

Dirty Car Sales Fees

Dirty Car Buy Back

1-Time Funding

Fund Growth

Interest Income

Clean Cars

Dirty Cars

Car Emissons

Cash for Clunkerswith FeeBate Structure


5 Fund Growth

6 Interest Income

7 CleanCars

8 DirtyCars

3 Buy Back Withdrawals

1 Clean CarRebates

2 Dirty CarSales Fees

9 Car Emissions

10 Delay

11 Delay

12 Delay

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anda

rdize

d Sc

ale

FeeBate Policy

Clean Car Rebates

Dirty Car Sales Fees

Dirty Car Buy Back

1-Time Funding

Fund Growth

Interest Income

Clean Cars

Dirty Cars

Car Emissons

Modeling Hierarchy


Time & Effort

Valu

e (U

tility

)

+ Causal Magnitude

+ Functional Form

+ Constraints

+ Learning new language & software

Seeking Structure Instead of Blame

ModelingHierarchy

+ Noise uncertainty with all the above

+ CLD (Key Variables, Causal Arrows & Signs)

VOS

Google CLDs



Alan Greenspan

1 Production

2 Costs

3 Inventory

4 UnmetDemand

5 CompetitorSales

6 Sales7 Demand

8 Price

9 Revenue


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-12 Family

Time

1 EmployeesIn Training

2 Sick Call-Ins

3 Late Employees

4 Employees Temporarily Reassigned

5 Available Employees 6 Productivity


8 Overtime Utilized

9 Employee Morale

10 Mgrs Doing Employee's Duties


+

- --

-

--+

-

+ +

-

-

Delay-

-

- +

CompanyPerformance

OrganizationPerformance

IndividualMorale

Thoughts& Emotions

Commitment& Action

TeamPerformance

+

+

+

+

+

+

+

GoalAlignment

Mgt.Support

Needs Met

++

+

2 Accident

Rate

3Patrol

Frequency

1 VehicleSpeed +

+-

-+

2 AccidentRate

3 PatrolFrequency

1 VehicleSpeed +

+--

+

5 TrafficCongestion

6 BadWeather

4 DriverAge

7 Driver’s RiskAversion+

8 DriverTraining

+

+

+

+

+

+

+

-

+ = Proportional

- = Inversely Proportional

Knowledge Networking(Linked Expert CLDs)

Expert CLD 1 Expert CLD 2

Expert CLD K

Expert CLD 4Expert CLD 3

TT

T

T

T

T

T

T = Target Variable



LV L

V

T

LV

$


Define•Create problem specification:

•Who (Who cares and why – VOC)• Extent (Scope, COPQ, ROI)•What, Where, When (Is and Is Not for each)

•Create team•Define target metrics

Measure•Gather baseline data for target metrics

Analyze•Research & development (operational thinking)

• See Six Sigma tools that facilitate creation of CLDs•Brainstorming system variables using 5-Whys•Organize using cause-effect (fishbone) diagram• Separate causal facts from theories•Create expert causal loop diagram (CLD)

• Expert mental model mixing• Simulate (event pattern inference)

•Determine leverage variables & policy types• Experiment & optimize target variable scores

Improve• Share with all stakeholders and adjust as needed• Execute policy design projects at optimal leverage points•Assess impact relative to baseline data

Control•Monitor target metrics, communicate and audit

Systemic Problem-Solving using DMAIC

Expert 1CLD

Expert 6CLD

Expert 3CLD

Expert 4CLD

Expert 5CLD

Expert 2CLD

Expert CLD

Expert KCLD

.

.

.

Knowledge Network

Systems vs. Statistical Thinking

• Statistical Thinking – Detect and react to

signals (not noise)– Prescribes appropriate

inaction

• Systems Thinking– How to react to signals– Prescribes appropriate

action


Skills leaders, policy-makers and change agents need to cure corporate arrhythmias

Summary

• PROBLEMS? Don’t just do something, SIT THERE!– Take time to seek VOS not blame

• It’s possible to agree on answers to tough questions• We can create and simulate our mental models and

use them to test policies• CLDs are true cause-effect diagrams• Expert opinion is better than opinion of an expert• Sustainability requires knowledge of the parts and

how they interact and function as a whole


I don’t worry about the future;I know what will happen…“…managers will either learn how to optimize the system or they will go

out of business.”

W. E

dwar

ds D

emin

g


Roll Video

Team Workshops• Create and simulate CLDs using CLD SIM• Call for group rates (includes CLD SIM)


1 Production

2 Costs

3 InventoryGrowth

4 UnmetDemand

5 CompetitorSales

6 Sales7 Demand

8 Price

9 Revenue


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CRC Press

Optimizing the Health of Your Company with Systems Thinking

Thinking Into Results


Leadership Program

LifeSuccessCorporate.com

Systems Thinking changes the way

organizations see and approach problems

Thinking Into Resultschanges the organization’s

paradigms and habitual thought process

Belief System

• Does our experience create our beliefs or do our beliefs create our experience?

• Yes, both!


+Vision

Results + Action

++

Belief Potential+

Websitehttp://sites.google.com/site/roicreationsllc


Systems Thinkingfor Teams, Leaders & Policy-Makers


systems thinking for teams leaders and policy makers

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