The Power of One: Systems Thinking – P. II

“Most people already know about the interconnections that make moral and practical rules turn out to be the same rules. They just have to bring themselves to believe that which they know.” - Donella Meadows, Dancing with Systems

In business the acronym KISS (keep it simple stupid) reigns supreme, but is this really the most effective or desirable route to wherever it is we are trying to get to?

Think about it, which would you rather drink - a raspberry wine cooler or a vintage cabernet-syrah cuvee aged in French oak with hints of raspberry & dark chocolate? Which is more inviting – the neighborhood park with its newly planted trees, manicured lawn, brick pathways and jungle gyms? Or the meadow which opens up in the midst of the a wood, where local grasses mix with wild flowers, a different butterfly appears each week from April to November, the wind blows off the ridges of the nearby mountain range on the other side of the river, and on occasion, early in the morning, you can catch a fox sneaking along his favorite path?

In her article “Dancing with systems” Donnella Meadows urges us to celebrate complexity. “Let’s face it, the universe is messy. It is nonlinear, turbulent and chaotic. It is dynamic.” To understand systems it is important to see them as a series of “self-organizing, non-linear, feedback loops which are unpredictable. They are not controllable. They are understandable only in the most general way.” To this end a systems perspective in a sense helps us to simplify by seeing the big picture – by taking the complicated out of the complex.

Complicated is surely bad. Complicating things is often what we do when we attempt to fix a system without taking the time to understand it in the first place. A great example of this is US forests and forest fires. Read the news and every year forest fires get worse and worse. This is partly due the suburban sprawl and the depletion of natural systems’ ability to preserve themselves. But it is also a result of a syndrome described in systems thinking called “Fixes that Fail”. US forest policy – typified by Smokey the Bear - is to do everything possible to prevent forest fires - period.

This of course is completely unnatural. The landscape actually needs fire. For example many species of trees, including the famed sequoia, need fire to open their seeds and cones for new growth. Suppressing fire simultaneously chokes growth and diversity and creates a powder keg of dry timber. This means that when fires ultimately do catch they rage at much more dangerous levels destroying entire forests. Fires at regular intervals, on the other hand, clean the forest, open it up to new species so that new healthy growth can emerge, and are naturally contained. Sadly, George Bush has used some of these very arguments to support increased logging in US forests - a discouraging bit of subterfuge which just goes to show how society so easily fails to see the “forest from the trees”, as it were.

The concept of systems thinking was popularized several decades ago by author Peter Senge in his acclaimed bestseller, “The Fifth Discipline”. Prior to Senge, however, was a guy named Forester who founded a field of study called systems dynamics. A great example of this is found in a simulation called “the beer game” which he developed at MIT in the 1960s. It is a great game (if you take my supply chain management class you can play it – with real beer!), showing how a small effect at one end of a system can have a big effect at the other end. As these effects ripple through the system, slowly over time, they can be very difficult to identify.

In the field of supply chain management the beer game shows how small changes in demand ripple through the system exaggerating they way new supplies are ordered at each stage in the chain. This eventually causes retailers and wholesalers to manage their supply in large batches. This in turn causes high levels of inventory and simultaneously makes it difficult to get those products customers actually want at the right place at the right time. And this means they are losing the chance to make a sale.

Two companies who learned from this are Proctor and Gamble and Wal-mart. Once, about 20 years ago, the venerable Sam Walton called P&G to congratulate them for being vendor of the year. After being put on hold six times poor Sam gave up and gave the award to someone else. This was a wake up call to P&G. Realizing the value of the relationship while recognizing that many problems that existed, the two firms got together and completely reorganized the system. Instead of filtering information through a narrow channel - the P& G salesman and the Wal-Mart purchasing agent - they redesigned the system. They created a cross-functional team of Finance, Logistics, Marketing and IT people and created a way to let decision making and information flows start from the bottom-up, rather than the top-down.

This reorganization resulted in sustained revenue growth between the two companies of over 20% a year and a significant increase in profit margins. Successfully achieving this was difficult and required new ways of communicating - in effect, creating new feedback loops – that better balanced supply and demand. This was achieved by reinforcing the availability and frequency for products customers wanted, and eliminating products they didn’t want.

So what is the current state of Systems Thinking? While all the rage back in the 80s, it seems Peter Senge and “systems thinking” have somewhat been confined to the dustbin of Academia. While Toyota’s famed JIT and the customer collaboration systems created by P&G and Wal-Mart remain widely recognized and oft-copied they seem to be isolated phenomena. Companies want to get the benefits without taking the time to step back and examine what’s really going on. Unfortunately, understanding the system often requires moving at a different speed than our every day lives seem to be pushing us.

Nevertheless, systems thinking, systems dynamics and there cousin, chaos theory, all seem to be making their own headway. If there is irony in this I think it goes back to the philosophies and way of life for many native peoples all over the world. Many of these cultures have a sacred belief in the power of “oneness”. Oneness is simply the explicit recognition that all things are connected and a set of values and behavior that are true to this. When a so-called native takes something from the natural world he does so fully recognizing there is in impact on the system. If things are taken with care and thoughtfulness the system is going to be improved. If things are taken carelessly without concern for cause and effect over time and distance things are going to change and very possibly for the worse. In effect humans have always understood systems thinking. Now we just have a fancy name for it, but with only an inkling of the understanding we once had.

A great example of this is the Thanksgiving address performed by many Native American tribes. Many would call this a prayer but it is actually a survival tool. By constantly reminding themselves of the value of their natural endowment they developed a better appreciation and a systematic approach and set of behaviors for preserving it. It is said that those traditions that help people survive stand the test of time. The Thanksgiving address is one of these.

The irony of course is the modern day Thanksgiving celebration in the US. A once a year event rather than a daily remembrance – it seems to have little relevance to preserving the ecosystem. Turkey farming is not exactly a sustainable industry and I imagine all that driving and flying (Thanksgiving is the biggest annual travel day in the US) isn’t either. Well, as a big fan of Thanksgiving in the good ‘ol US of A, perhaps I should start looking for ways to have my Turkey and eat it too . . .