#thinking-in-systems

Summary courtesy of Conscious Capitalism. 

Characteristics of systems that work well:

1.   Resilience – ability for a system to adjust. The opposite of resilience – fragility, causes the system to be unresponsive to change, and exposes the system to potential of collapse. The argument the book makes is that many modern “innovation” such as monoculture crops and “just in time inventory” make the system vulnerable, to disease or supply chain interruption, respectfully.

2.   Self Organization – ability of system to adjust to new demands and circumstances. Ability of the system to orient itself and build complex structures from simple building blocks (snow flake from simple pattern, DNA & RNA as building blocks of life) is viewed as key characteristic.

3. Hierarchy – describe how complex system can be broken into smaller, simpler organization that can function autonomously. The opposite of hierarchy is a one complex organism that cannot be productive of parts of it is not performing at the level required for the smooth operation of the system.

Concepts that cause systems to “misbehave”:

1.  Beguiling Events - focusing too much on events, rather than system flows. This trap causes overreaction, and complacencies resulting in system oscillations and system failure. Focusing on events causes the observer to lose ability to predict the future. A classic example of focusing in GNP as a measure of nation’s wealth rather than the overall capital – physical plants, people, knowledge, is described.

2.   Liner Minds in a Nonlinear World - Many theorist envision a world where thing occur in liner fashion, Cause and effect, etc. However the world is too often non-linear. Small incremental changes, over time, can cause huge swings in the affected system. Sometime a notion that if a little of something is good, more of the same is much better.

3. Nonexistent Boundaries – making models with boundaries, for sake of simplicity, that do not reflect real life.

4.  Layers of Limits – notion that any individual layer might be limited by some other layer in the model. 

5.  Ubiquitous Delays – The notion that things “it takes what it takes”. System delays are inherent in the physical and social systems. A great example of this is described by Vaclav Havel whose description of why democracy can’t be imposed is illustrative of this concept.

6. Bounded Rationality – describes the fact that if a system is limited, people do things in a rational self interest. These actions, while understandable at the low level, cause overall system failure. There are many examples of this in recent times (mortgage crisis, environmental damage, etc). This concept flies in the face of the notions of Adam Smith’s that invisible hand will guide the world to a better place.  

System traps and opportunities how to fix them:

1.  Policy Resistance – THE inherent resistance of the establishment to allow changes to affect the system. People would rather live with a flawed system that is familiar then to allow changes that might cause uncertainty and instability. Such resistance can cause inevitable collapse to be more dramatic, sometime even catastrophic.

2.   The tragedy of commons – This is a classic economic theory, described in terms of system thinking. The common, defined as community space – such as a town common, is a shared resource. This resource can be governed by community standards, privatization or effective regulation. Each approach has tradeoffs and benefits. It’s the conclusion of the author that only regulation is affective since the community standards are usually not enough and privatization causes the property owner act in self interest and disregard the abutter’s welfare.

3.   Drift to low performance – the notion that prolonged failures causes acceptance of the new state of things, “New normal” – has become a popular term in recent times.

4.   Success to Successful – notion that success will give advantage to those that have already succeeded, thus limiting the “losers” ability to win in the future. “The rich get richer!”

5.   Shifting the burden – notion that risk is shifted to someone else, while success is reaped by the actor. 

6.   Rule beating – the notion that rules, or laws, are ignored, broken or skirted. The cause of rule breaking is usually related to the fact that these rules are perceived as unjust or not flexible or response enough to real life issues. Also, following the letter of the law and not it spirit is described.