Thinking in Systems: A Primer

by Donella H. Meadows

Most individual and institutional decisions are designed to regulate the levels in stocks. If inventories rise too high, then prices are cut or advertising budgets are increased, so that sales will go up and inventories will fall. If the stock of food in your kitchen gets low, you go to the store. As the stock of growing grain rises or fails to rise in the fields, farmers decide whether to apply water or pesticide, grain companies decide how many barges to book for the harvest, speculators bid on future values of the harvest, cattle growers build up or cut down their herds. Water levels in reservoirs cause all sorts of corrective actions if they rise too high or fall too low. The same can be said for the stock of money in your wallet, the oil reserves owned by an oil company, the pile of woodchips feeding a paper mill, and the concentration of pollutants in a lake. 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 the ebbs and flows, successes and problems, of all sorts of systems. Systems thinkers see the world as a collection of stocks along with the mechanisms for regulating the levels in the stocks by manipulating flows. That means system thinkers see the world as a collection of “feedback processes.”

Instead of seeing only how A causes B, you’ll begin to wonder how B may also influence A—and how A might reinforce or reverse itself. When you hear in the nightly news that the Federal Reserve Bank has done something to control the economy, you’ll also see that the economy must have done something to affect the Federal Reserve Bank. When someone tells you that population growth causes poverty, you’ll ask yourself how poverty may cause population growth. THINK ABOUT THIS: If A causes B, is it possible that B also causes A? You’ll be thinking not in terms of a static world, but a dynamic one. You’ll stop looking for who’s to blame; instead you’ll start asking, “What’s the system?” The concept of feedback opens up the idea that a system can cause its own behavior.

Bounded rationality means that people make quite reasonable decisions based on the information they have. But they don’t have perfect information, especially about more distant parts of the system. Fishermen don’t know how many fish there are, much less how many fish will be caught by other fishermen that same day. Businessmen don’t know for sure what other businessmen are planning to invest, or what consumers will be willing to buy, or how their products will compete. They don’t know their current market share, and they don’t know the size of the market. Their information about these things is incomplete and delayed, and their own responses are delayed. So they systematically under- and overinvest.

We don’t even interpret perfectly the imperfect information that we do have, say behavioral scientists. We misperceive risk, assuming that some things are much more dangerous than they really are and others much less. We live in an exaggerated present—we pay too much attention to recent experience and too little attention to the past, focusing on current events rather than long-term behavior. We discount the future at rates that make no economic or ecological sense. We don’t give all incoming signals their appropriate weights. We don’t let in at all news we don’t like, or information that doesn’t fit our mental models. Which is to say, we don’t even make decisions that optimize our own individual good, much less the good of the system as a whole.

Change comes first from stepping outside the limited information that can be seen from any single place in the system and getting an overview. From a wider perspective, information flows, goals, incentives, and disincentives can be restructured so that separate, bounded, rational actions do add up to results that everyone desires.

The balancing feedback loop that should keep the system state at an acceptable level is overwhelmed by a reinforcing feedback loop heading downhill. The lower the perceived system state, the lower the desired state. The lower the desired state, the less discrepancy, and the less corrective action is taken. The less corrective action, the lower the system state. If this loop is allowed to run unchecked, it can lead to a continuous degradation in the system’s performance. Another name for this system trap is “eroding goals.” It is also called the “boiled frog syndrome,” from the old story (I don’t know whether it is true) that a frog put suddenly in hot water will jump right out, but if it is put into cold water that is gradually heated up, the frog will stay there happily until it boils. “Seems to be getting a little warm in here. Well, but then it’s not so much warmer than it was a while ago.” Drift to low performance is a gradual process. If the system state plunged quickly, there would be an agitated corrective process. But if it drifts down slowly enough to erase the memory of (or belief in) how much better things used to be, everyone is lulled into lower and lower expectations, lower effort, lower performance.

Escalation also could be about peacefulness, civility, efficiency, subtlety, quality. But even escalating in a good direction can be a problem, because it isn’t easy to stop. Each hospital trying to outdo the others in up-to-date, powerful, expensive diagnostic machines can lead to out-of-sight health care costs. Escalation in morality can lead to holier-than-thou sanctimoniousness. Escalation in art can lead from baroque to rococo to kitsch. Escalation in environmentally responsible lifestyles can lead to rigid and unnecessary puritanism. Escalation, being a reinforcing feedback loop, builds exponentially. Therefore, it can carry a competition to extremes faster than anyone would believe possible. If nothing is done to break the loop, the process usually ends with one or both of the competitors breaking down. One way out of the escalation trap is unilateral disarmament—deliberately reducing your own system state to induce reductions in your competitor’s state. Within the logic of the system, this option is almost unthinkable. But it actually can work, if one does it with determination, and if one can survive the short-term advantage of the competitor. The only other graceful way out of the escalation system is to negotiate a disarmament. That’s a structural change, an exercise in system design. It creates a new set of balancing controlling loops to keep the competition in bounds (parental pressure to stop the kids’ fight; regulations on the size and placement of advertise...

Another expression of this trap was part of the critique of capitalism by Karl Marx. Two firms competing in the same market will exhibit the same behavior as two species competing in a niche. One will gain a slight advantage, through greater efficiency or smarter investment or better technology or bigger bribes, or whatever. With that advantage, the firm will have more income to invest in productive facilities or newer technologies or advertising or bribes. Its reinforcing feedback loop of capital accumulation will be able to turn faster than that of the other firm, enabling it to produce still more and earn still more. If there is a finite market and no antitrust law to stop it, one firm will take over everything as long as it chooses to reinvest in and expand its production facilities. Some people think the fall of the communist Soviet Union has disproved the theories of Karl Marx, but this particular analysis of his—that market competition systematically eliminates market competition—is demonstrated wherever there is, or used to be, a competitive market. Because of the reinforcing feedback loop of success to the successful, the many automobile companies in the United States were reduced to three (not one, because of antitrust laws). In most major U.S. cities, there is only one newspaper left. In every market economy, we see long-term trends of declining numbers of farms, while the size of farms increases.

The gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.16 We have a system of national accounting that bears no resemblance to the national economy whatsoever, for it is not the record of our life at home but the fever chart of our consumption.

The GNP lumps together goods and bads. (If there are more car accidents and medical bills and repair bills, the GNP goes up.) It counts only marketed goods and services. (If all parents hired people to bring up their children, the GNP would go up.) It does not reflect distributional equity. (An expensive second home for a rich family makes the GNP go up more than an inexpensive basic home for a poor family.) It measures effort rather than achievement, gross production and consumption rather than efficiency. New light bulbs that give the same light with one-eighth the electricity and that last ten times as long make the GNP go down. GNP is a measure of throughput—flows of stuff made and purchased in a year—rather than capital stocks, the houses and cars and computers and stereos that are the source of real wealth and real pleasure. It could be argued that the best society would be one in which capital stocks can be maintained and used with the lowest possible throughput, rather than the highest.

I said a while back that changing the players in the system is a low-level intervention, as long as the players fit into the same old system. The exception to that rule is at the top, where a single player can have the power to change the system’s goal. I have watched in wonder as—only very occasionally—a new leader in an organization, from Dartmouth College to Nazi Germany, comes in, enunciates a new goal, and swings hundreds or thousands or millions of perfectly intelligent, rational people off in a new direction.

The ancient Egyptians built pyramids because they believed in an afterlife. We build skyscrapers because we believe that space in downtown cities is enormously valuable. Whether it was Copernicus and Kepler showing that the earth is not the center of the universe, or Einstein hypothesizing that matter and energy are interchangeable, or Adam Smith postulating that the selfish actions of individual players in markets wonderfully accumulate to the common good, people who have managed to intervene in systems at the level of paradigm have hit a leverage point that totally transforms systems.

A new information feedback loop at this point in this system will make it behave much better. But the decision makers are resistant to the information they need! They don’t pay attention to it, they don’t believe it, they don’t know how to interpret it. Why do people actively sort and screen information the way they do? How do they determine what to let in and what to let bounce off, what to reckon with and what to ignore or disparage? How is it that, exposed to the same information, different people absorb different messages, and draw different conclusions? If this feedback loop could just be oriented around that value, the system would produce a result that everyone wants. (Not more energy, but more energy services. Not GNP, but material sufficiency and security. Not growth, but progress.) We don’t have to change anyone’s values, we just have to get the system to operate around real values. What are values? Where do they come from? Are they universal, or culturally determined? What causes a person or a society to give up on attaining “real values” and to settle for cheap substitutes? How can you key a feedback loop to qualities you can’t measure, rather than to quantities you can? Here is a system that seems perverse on all counts. It produces inefficiency, ugliness, environmental degradation, and human misery. But if we sweep it away, we will have no system. Nothing is more frightening than that. (As I write, I have the former communist system of the Soviet Union in min...

Get the Beat of the System Before you disturb the system in any way, watch how it behaves. If it’s a piece of music or a whitewater rapid or a fluctuation in a commodity price, study its beat. If it’s a social system, watch it work. Learn its history. Ask people who’ve been around a long time to tell you what has happened. If possible, find or make a time graph of actual data from the system—peoples’ memories are not always reliable when it comes to timing.

Starting with the behavior of the system directs one’s thoughts to dynamic, not static, analysis—not only to “What’s wrong?” but also to “How did we get there?” “What other behavior modes are possible?” “If we don’t change direction, where are we going to end up?” And looking to the strengths of the system, one can ask “What’s working well here?”

starting with history discourages the common and distracting tendency we all have to define a problem not by the system’s actual behavior, but by the lack of our favorite solution. (The problem is, we need to find more oil. The problem is, we need to ban abortion. The problem is, we don’t have enough salesmen. The problem is, how can we attract more growth to this town?)

Expose Your Mental Models to the Light of Day When we draw structural diagrams and then write equations, we are forced to make our assumptions visible and to express them with rigor. We have to put every one of our assumptions about the system out where others (and we ourselves) can see them. Our models have to be complete, and they have to add up, and they have to be consistent. Our assumptions can no longer slide around (mental models are very slippery), assuming one thing for purposes of one discussion and something else contradictory for purposes of the next discussion.