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16 Feb

Why thinking in systems remains underrated

Writing a strategy or process document is one thing. Getting everyone in the company aligned on said strategy or process, quite another.

Many such "insightful" strategy docs sound good but do not work because they're sorely lacking a systems view of problems.

A strategy might be easy to preach, but unless the systems within which people are working and their emergent incentives are aligned with the strategy, it will never stick.

In the book The Fifth Discipline, author Peter Senge cites two powerful examples of why understanding systems is so important for organizational decision-making:

"When a large American steel company began closing plants in the early 1980s, it offered to train the displaced steelworkers for new jobs. But the training never "took"; the workers drifted into unemployment and odd jobs instead.

Psychologists came in to find out why, and found the steelworkers suffering from acute identity crises.

"How could I do anything else?" asked the workers. "I am a lathe operator."

When asked what they do for a living, most people describe the tasks they perform every day, not the purpose of the greater enterprise in which they take part. Most see themselves within a "system" over which they have little or no influence. They "do their job," put in their time, and try to cope with the forces outside of their control. Consequently, they tend to see their responsibilities as limited to the boundaries of their position."

Many insights and organizational practices fail to get put into practice because they conflict with powerful, tacit mental models that people within those systems hold.

These are deeply ingrained assumptions, generalizations, or even pictures or images that influence how we understand the world and how we take action. Often, we are not consciously aware of our mental models or the effects they have on our behavior.

A mission and vision without systems thinking ends up painting highfalutin pictures of the future, aiming to get everyone inspired. But when people go back to their desks after applauding your charismatic and powerful delivery at the company all-hands, they're more or less back to square one. They find themselves shackled within the larger systems and structures set by the company.

Without a thorough understanding of the systems and incentives that govern behaviour in the company, even the best of visions are like seeds sown in infertile soil. They will never take root.

We may have all the optimism and hope in the world that we will achieve our glorious vision, but our tacit view of the current reality —a set of conditions created by somebody else — betrays us.

For instance, Peter writes:

"Recently, managers from a Detroit auto maker told me of stripping down a Japanese import to understand why the Japanese were able to achieve extraordinary precision and reliability at lower cost on a particular assembly process.

They found the same standard type of bolt used three times on the engine block. Each time it mounted a different type of component.

On the American car, the same assembly required three different bolts, which required three different wrenches and three different inventories of bolts—making the car much slower and more costly to assemble.

Why did the Americans use three separate bolts?

Because the design organization in Detroit had three groups of engineers, each responsible for "their component only." The Japanese had one designer responsible for the entire engine mounting, and probably much more.

The irony is that each of the three groups of American engineers considered their work successful because their bolt and assembly worked just fine."

I remember reading about a case some time ago of a leading technology company whose forecasting team used the same decision-support tool regardless of where a product was in its life cycle.

This made no sense at all. Upon investigation, they found out that the business unit heads demanded simple forecasts because they didn’t understand how to interpret or use complex ones!

Like this, there are hundreds of perverse and conflicting incentives that guide systems. Unless you understand these systems, their interrelationships, and the emergent behaviours they incentivize before crafting that strategy document, any document, however good it is, will probably fall on deaf ears.

In future editions, we are going to be delving deeper into how systems impose their own behaviors on the people working within, and how problems in such systems cannot be blamed on any specific individual or their actions but on the larger system itself.

Stay tuned.

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