Applying Systems Thinking and
Common Archetypes to Organizational Issues
Module 1: Why the Systems View?
Overview of the Steps in Systems Thinking
In taking a systems view of Acme Inc., we have covered the fundamental steps of Systems Thinking. These steps will be covered in more detail in Modules 2 and 7. There are three basic questions that can help you think more systemically:
- What happened and what's been happening?
- Why has this been happening?
- How can we improve the performance of this system?
When faced with a problem, we're often tempted to start with the last question - what are we going to do to fix this situation? This is clearly an important question, and it's OK to start with it, as long as you list the ideas you generate and put them off to the side until you've answered the first two.
WHAT's Been Happening?
In the case of Acme, we don't know what event finally prompted the Board and managers to look at the overall performance trends. You can imagine a few scenarios: a large, long-standing account moves to a competitor, the company stock price drops dramatically, a customer (and friend of the Chair of the Board) calls him directly to complain about repeated billing errors, or a key division manager is replaced. From a systems view, we look for patterns in events over time.
What's particularly interesting about Acme's situation is that sales have been declining despite increased effort to bring in new accounts. This pattern is the most puzzling, and leads us to the second question.
WHY
Has This Been Happening?
In the first presentation of the Acme case, we become aware that customers are experiencing various types of service problems. This is clearly part of the answer to "Why are customers leaving?", but it doesn't help us understand the puzzling pattern of sales decline despite the efforts to remedy the situation. By continuing to ask "Why?", we are able to explain how service problems could be caused by the very strategies to improve things. We looked at a simple cause and effect diagram to link together the consecutive answers to: "Why has this been happening?"
This particular loop is actually an example of a fairly common phenomenon that we will refer to as "Fixes that Backfire." This is important because while the top loop explains how performance could continue to deteriorate, it certainly doesn't explain how things were supposed to work.
Specifically, "Pledges & Promises" were not intended to increase the "Burden on Service;" they were intended to decrease "Lost Customers." (See link added in the middle of the loop.) Unfortunately, the larger loop, the "backfire," dominates the situation. This language of links, loops, and archetypes (e.g., "fixes that backfire") will be developed in detail in Modules 3 and 6.
HOW Can We Improve the Performance of This System?
When we have an idea about what's causing the problem, we have a better idea about how to actually stop the problem from recurring. In Module 5, we'll look at how the structure of our thinking and decision-making can be an area of leverage for improving system performance.
What are some of the key mental models and assumptions driving system performance now at Acme? There seems to be more attention on getting new customers than keeping old ones. Why is that? If it's a good strategy, is there some change needed to maintain good relationships with existing customers?
Using our systems view of Acme, we can return to the original recommendations and consider the impact they are likely to have on lost customers and sales.
- Rewrite billing manuals.
- Install automated delivery routing system.
- Create new account policies.
- Develop new systems and documentation.
From the diagram, we know that the only solution that will produce real change is an end to pledges and promises as exceptions to normal policy, and to reconsider the relative amount of attention paid to existing and potential customers. Rewriting billing manuals, improving the delivery system, and further improving all systems should result in an improvement of service, and may ultimately improve customer retention. This loop argues that service improvement would lead to fewer pledges and promises - until the next sales slump or increase in the sales target. Then the problem would return.
It's possible that new account policies could actually eliminate pledges and promises, but the proposed change seems to be geared toward simply reducing the time spent on a sales call. It's not clear that this would have the desired effect. In Module 4, we'll review how you can plan interventions more effectively from a systems view.
In Module 7, we'll review and practice all the steps in Systems Thinking.