We need to talk about systems

As you probably know, before I started Sockmonkey I worked in a ‘big four’ audit and consultancy practice. And I remember clearly the day I got promoted into my first managerial position. One of the more senior managers took me aside and said “Remember, Simon, management is about dealing with sh*t.”

This was clearly not the company’s official position.

There is, however, considerable theoretical and empirical evidence to support my colleague’s assertion. Operations theorist Russell Ackoff puts it slightly more politely, though:

“Managers are not confronted with problems that are independent of each other, but with dynamic situations that consist of complex systems of changing problems that interact with each other. I call such situations messes… Managers do not solve problems, they manage messes.”

Systems are funny things. They’re essentially sets of something or other – people, teams, organisations – that interact with each other in a way that generates a particular pattern of behaviour. But the nature of this behaviour depends on many things, such as the way the system is structured and the forces impacting on it.

The late Donella Meadows was a bit of a guru in the field of system theory, which at the time of her work in the 1980s and 90s was still very much a dark art. She wrote the pioneering book Thinking in systems, which should be required reading for pretty much everyone.

Donella says you can’t just lump a load of things together and call them a system. A system, she says, needs three things: it needs elements, it needs interconnections and it needs some kind of function or purpose. So the various elements of my digestive system form a system. The random contents of my desk drawer do not.

The foundation of any system is a stock. This is an element of the system that you can measure. It might be money, people or some other commodity. The level of different stocks within the system changes over time due to flows. Inflows into and outflows from the system replenish or drain its stocks respectively.

Donella describes the example of a bathtub. The stock in this basic system is the water in the bathtub. We can create an inflow by turning on the tap. This increases the stock of water in the tub. And we can create an outflow by pulling out the plug, which reduces the stock of water. We could also do both, which depending on the relative strength of the inflow and outflow could increase the water level in the tub, reduce it or keep it the same.

An interesting thing here is that if we want to increase the level of water in the bathtub, we don’t necessarily have to increase the inflow of water coming out of the tap. We can achieve the same effect by reducing the outflow of water from the plughole. Similarly, you can keep your house warm by insulating it and blocking draughts rather than simply turning up the thermostat.

Another interesting thing is that stock levels tend to change slowly, even when their in- and outflows change quite quickly. They act, therefore, as a buffer or shock absorber in the system. Systems theorists, you may be unsurprised to learn, are not fans of just-in-time inventory management.

The key to understanding systems’ behaviour, though, is feedback loops. A feedback loop is created when the level of a stock has an effect on the flows into or out of that stock. Like the ball valve in a toilet cistern turning off the water inflow when the cistern is full.

But there are two kinds of feedback loops: stabilising feedback loops, which (as the name suggests) stabilise the level of the stock, and reinforcing feedback loops, which create more inflow into a stock as the level of that stock rises. The cistern example above demonstrates a stabilising feedback loop. For an example of a reinforcing feedback loop, think about a bank account, where the more money there is in the account, the more interest it earns at any given rate.

This might all sound quite simple. But in reality, the combination of stocks, flows and feedback loops can lead to a dizzying array of systems, from industrial factories and multinational corporations to the water cycle and our planet’s climate.

The main thing, though, is that systems are everywhere. And if we’re to understand their behaviour, we need to understand how they are structured and how they work. This comes down to their elements, their interconnections and their underlying function or purpose. And it comes down to their stocks, their flows and their feedback loops. Everything else is simply a matter of degree.

So next time you’re faced with a mess to manage, look first for the underlying system. It may not be obvious, but it’s there. Oh, and get hold of a copy of Donella’s book. It’ll change your life.

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