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Competitors rarely cause a company to lose market share. They may be there to scoop up the advantage, but the losing company creates its losses at least in part through its own business policies.
A system isn’t just any old collection of things. A system* is an interconnected set of elements that is coherently organized in a way that achieves something.
three kinds of things: elements, interconnections, and a function or purpose.
When a living creature dies, it loses its “system-ness.”
Many of the interconnections in systems operate through the flow of information. Information holds systems together and plays a great role in determining how they operate.
Purposes are deduced from behavior, not from rhetoric or stated goals.
An important function of almost every system is to ensure its own perpetuation.
Systems can be nested within systems. Therefore, there can be purposes within purposes.
Keeping sub-purposes and overall system purposes in harmony is an essential function of successful systems.
A system generally goes on being itself, changing only slowly if at all, even with complete substitutions of its elements—as long as its interconnections and purposes remain intact.
A change in purpose changes a system profoundly, even if every element and interconnection remains the same.
A stock is the memory of the history of changing flows within the system.
A stock takes time to change, because flows take time to flow.
The time lags imposed by stocks allow room to maneuver, to experiment, and to revise policies that aren’t working.
Systems thinkers see the world as a collection of stocks along with the mechanisms for regulating the levels in the stocks by manipulating flows.
A feedback loop is formed when changes in a stock affect the flows into or out of that same stock.
One of the central insights of systems theory, as central as the observation that systems largely cause their own behavior, is that systems with similar feedback structures produce similar dynamic behaviors, even if the outward appearance of these systems is completely dissimilar.
resilience, self-organization, or hierarchy.
Resilience is a measure of a system’s ability to survive and persist within a variable environment.
Ultimately, the choice is not to grow forever but to decide what limits to live within.
There always will be limits to growth.
If company managers, city governments, the human population do not choose and enforce their own limits to keep growth within the capacity of the supporting environment, then the environment will choose and enforce limits.
We are not omniscient, rational optimizers, says Simon. Rather, we are blundering “satisficers,” attempting to meet (satisfy) our needs well enough (sufficiently) before moving on to the next decision.
We don’t let in at all news we don’t like, or information that doesn’t fit our mental models.
Taking out one individual from a position of bounded rationality and putting in another person is not likely to make much difference. Blaming the individual rarely helps create a more desirable outcome.
It’s amazing how quickly and easily behavior changes can come, with even slight enlargement of bounded rationality, by providing better, more complete, timelier information.
To paraphrase a common prayer: God grant us the serenity to exercise our bounded rationality freely in the systems that are structured appropriately, the courage to restructure the systems that aren’t, and the wisdom to know the difference!
Understanding archetypal problem-generating structures is not enough. Putting up with them is impossible. They need to be changed. The destruction they cause is often blamed on particular actors or events, although it is actually a consequence of system structure.
Such resistance to change arises when goals of subsystems are different from and inconsistent with each other.
Harmonization of goals in a system is not always possible, but it’s an option worth looking for. It can be found only by letting go of more narrow goals and considering the long-term welfare of the entire system.
THE TRAP: POLICY RESISTANCE When various actors try to pull a system stock toward various goals, the result can be policy resistance. Any new policy, especially if it’s effective, just pulls the stock farther from the goals of other actors and produces additional resistance, with a result that no one likes, but that everyone expends considerable effort in maintaining. THE WAY OUT Let go. Bring in all the actors and use the energy formerly expended on resistance to seek out mutually satisfactory ways for all goals to be realized
or redefinitions of larger and more important goals that everyone can pull toward together.
The tragedy of the commons arises from missing (or too long delayed) feedback from
the resource to the growth of the users of that resource.
The structure of a commons system makes selfish behavior much more convenient and profitable than behavior that is responsible to the whole community and to the future.
Privatization works more reliably than exhortation, if society is willing to let some individuals learn the hard way. But many resources, such as the atmosphere and the fish of the sea, simply cannot be privatized. That leaves only the option of “mutual coercion, mutually agreed upon.”
THE TRAP: TRAGEDY OF THE COMMONS When there is a commonly shared resource, every user benefits directly from its use, but shares the costs of its abuse with everyone else. Therefore, there is very weak feedback from the condition of the resource to the decisions of the resource users. The consequence is overuse of the resource, eroding it until it becomes unavailable to anyone. THE WAY OUT
Educate and exhort the users, so they understand the consequences of abusing the resource. And also restore or strengthen the missing feedback link, either by privatizing the resource so each user feels the direct consequences of its abuse or (since many resources cannot be privatized) by regulating the access of all users to the resource.
archetype is “drift to low performance.”
The actor tends to believe bad news more than good news.
As actual performance varies, the best results are dismissed as aberrations, the worst results stay in the memory. The actor thinks things are worse than they really are.
And to complete this tragic archetype, the desired state of the system is influence...
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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 “e...
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It is also called the “boiled fro...
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There are two antidotes to eroding goals. One is to keep standards absolute, regardless of performance.
Another is to make goals sensitive to the best performances of the past, instead of the worst.
THE TRAP: DRIFT TO LOW PERFORMANCE
Allowing performance standards to be influenced by past performance, especially if there is a negative bias in perceiving past performance, sets up a reinforcing feedback loop of eroding goals that sets a system drifting toward low performance. THE WAY OUT Keep performance standards absolute. Even better, let standards be enhanced by the best actual performances instead of being discouraged by the worst. Use the same structure to set up a drift toward high performance!
