Chapter I

What Are Systems?

 Welcome to the world of systems  Understanding how these
and systems thinking! systems work lets us function
 You may be asking yourself, why more effectively and
is it important to explore proactively within them.
systems?  The more we build our
 One reason is that we live in and understanding of system
are influenced by systems all behavior, the more we can
around us, from the natural anticipate that behavior and
environment to healthcare, work with the system to shape
education, government, and the quality of our lives.
family and organizational life.
 A system is a group of interacting,  In an organizational setting, for example,
interrelated, or interdependent the R&D group is a system made up of
components that form a complex people, equipment, and processes that
and unified whole. create new products to be manufactured by
the production system and sold by the sales
 A system’s components can be system.
physical objects that you can
 The components of the R&D group have to
touch, such as the various parts
interact with one another to perform their
that make up a car. function and thus are interdependent. In
 The components can also be turn, the R&D group interacts and is
intangible, such as processes; interdependent with other systems within
relationships; company policies; the company.
information flows; interpersonal  A system such as the R&D group always
interactions; and internal states of has a specific purpose in relation to an even
mind such as feelings, values, and larger system—in this case, the entire
beliefs. organization
 Your body is another example. Within
it, your circulatory system delivers
oxygen, nutrients, hormones, and
antibodies produced by other systems
and carries waste to the excretory
system. The circulatory system is made
up of the heart, veins and arteries,
blood, and a host of supporting
elements. All of these components
interact to carry out their purpose
within the larger system—your entire
body.
 Both of these examples raise an
intriguing point about systems: We can
think of all systems as nodes embedded
in a giant network in which everything is
 And industry is interdependent with an
even larger system—the economy—
and so on. The more we widen our
view in this way, the more we see that
everything—from the tiniest sub-
atomic particle to the universe (and
maybe beyond!)—is intertwined.
 We can also distinguish between
natural systems and human-made,
nonliving systems.
 Natural systems—a living being’s body,
human societies, an ecosystem such as
a prairie—have an enormous number  They also have virtually an infinite
and complexity of components and number of connections to all the
interactions among those components. systems around them.
 Human-made systems—cars, for
example—can also be quite complex,
but these nonliving systems are not as
intricately linked to systems around
them.
 If a car breaks down, the impact of this
event is not nearly as far- reaching as if
a species were removed from a prairie
ecosystem (although you may disagree
if it’s your car that breaks down!).
 Put another way, human-made
nonliving systems are more self-
contained than natural systems, which
we can think of as more open in their
connections to surrounding systems.
Defining Characteristics of Systems” • Similarly, if you can add components
Systems have several essential to a collection without affecting its
characteristics: functioning and relationships, it’s still
1. A system’s parts must all be present just a collection. So, if you add
for the system to carry out its purpose pistachios to your bowl of mixed nuts,
optimally. you have more nuts and you have a
• If you can take components away different mix, but you still have just a
from something without affecting its collection of nuts.
functioning and its relationships,
then you have just a collection, not a
system. For example, if you remove
a cashew from a bowl of mixed nuts,
you have fewer nuts, but you have
not changed the nature of the
collection of components. Therefore,
a bowl of mixed nuts is not a system
• However, if you assign new tasks to
an R&D group or redefine the job
descriptions of its staff, you will
likely change the group’s
functioning and relationships—
whether for the better or worse. The
R&D group is not just an assortment
of people, equipment, and
processes; it is a system.
2. A system’s parts must be arranged
in a specific way for the system to
carry out its purpose. • For example, in a bowl of fruit, the
• If the components of a collection oranges can go at the bottom, in the
can be combined in any random middle, or on the top without
order, then they do not make up a changing the essential nature of the
system. collection of fruit.
However, in a system such as a
company, imagine what would happen
if the parts shifted around randomly—
if, for instance, the accounting
specialists suddenly decided to work
on the production line, and the
production specialists decided to write
marketing copy. Of course, people do
change jobs within their companies,
3. Systems have specific purposes
but only after training and much
within larger systems.
transition time. Most companies
function best when people are working All systems have a specific purpose in
in jobs that match their skills and relationship to the larger system in which
experience, and when the staff is they’re embedded, as we saw in the
examples of the R&D department and
organized according to a specific plan.
human circulatory system above.
4. Systems maintain their stability human bodies work to maintain a
through fluctuations and adjustments. temperature of about 98.6 degrees
Left to themselves, systems seek to Fahrenheit. If you examined your
maintain their stability. Your organization’s revenues against
organization does its best to maintain a expenditures every week or graphed
designated profit margin just as most your body temperature every five
minutes, you would probably draw a
wobbly, fluctuating line that
nevertheless holds steady overall.
Margins appear and disappear as a
company pays its suppliers and collects
checks from customers. Your body
temperature rises and falls depending
on your mood and your level of
physical exertion.
Systems achieve this stability through The accounts payable department
the interactions, feedback, and responds by paying the bills.
adjustments that continually circulate As the checks go out the door, the
among the system parts, and between accounting department, alarmed,
the system and its environment. Let’s compares revenue versus expenditures
say a corporation receives an unusually and gives feedback to management:
large stack of suppliers’ invoices Expenditures are up and revenues aren’t
(external stimuli) in the mail. covering them.
Management then adjusts the system by
reminding key customers to pay overdue
invoices. Similarly, if you go for a run,
your exertion warms your body. The
sensation of heat is fed back to your
sweat glands, which begin to work. Over
time, sweating readjusts your temperature
5. Systems have feedback. adjustment processes happen so quickly
Feedback is the transmission and return that it is relatively easy for an observer to
of information. follow. In other systems, it may take a long
For example, imagine that you are time before the feedback is returned, so an
steering your car into a curve. If you turn observer would have trouble identifying the
too sharply, you receive visual cues and action that prompted the feedback. For
internal sensations that inform you that example, if you sunbathed a lot in your
you are turning too much. You then teens, you may develop skin problems after
adjust correct the degree of your turn. age 40—but because so much time passed
The most important feature of feedback between the two events, you may not
is that it provides the catalyst for a recognize the connection between them.
change in behavior.
Because all systems are part of larger
systems, a system also has feedback
between itself and external systems. In
some systems, the feedback and
Finally, feedback is not necessarily financially and decides to lay off 20
transmitted and returned through the percent of the work force. That quarter,
same system component—or even the layoff does indeed improve the
through the same system. It may travel looks of the financial bottom line. On
through several intervening components this basis, the upper management might
within the system first, or return from decide that layoffs are a reliable way to
an external system, before finally improve the financial picture.
arriving again at the component where
However, let’s say you survived the
it started. For instance, imagine that the
layoff; how would you describe your
company you work for is suffering
state of mind and that of your other
remaining colleagues? Besides cutting
costs, layoffs are also famous for
damaging morale and driving people to
“jump ship” in search of more secure
waters.
Eventually, as low morale persists, you
and your colleagues might start coming
to work late and leaving early, and caring
less and less about the quality of your
work.
Productivity could drop. In addition, management to think about having even
everyone who leaves—whether more layoffs to cut costs.
voluntarily or by being laid off—takes In this example, the feedback that made
valuable skills and experience with them, layoffs look like good policy was
so the over- all capability of the work returned quickly—probably within one
force goes down, further hurting quarter. The feedback about the long-
productivity. term costs of layoffs went through more
Lowered productivity leads to expensive steps and took a lot longer to return.
mistakes and lost sales from disgruntled Yet this information was essential for the
customers. All these eats away even management team to see the full impact
more at the company’s revenue, tempting of their decisions.
EVENTS, PATTERNS,STRUCTURE and not the parts themselves, structure is
 In reading all this information, you may invisible.
be wondering what actually gives rise  Why is it important to understand a
to systems. system’s structure? Because it’s
 Systems are built on structures that system structure that gives rise to—
leave evidence of their presence, like that explains—all the events and
fingerprints or tire marks, even if you trends that we see happening in the
can’t see them. world around us. Perhaps the best way
 But what is structure, exactly? The to grasp the role of structure is to
concept is difficult to describe. In explore the Events / Patterns /
simplest terms, structure is the overall Structure pyramid, shown in Figure
way in which the system components 1.2.
are interrelated—the organization of a
system.
 Because structure is defined by the
interrelationships of a system’s parts,
Events new event rather than anticipate and
We live in an event-focused society shape them.
(Figure 1.3, “The Tip of the Pyramid”). What’s more, solutions designed at the
A fire breaks out in the neighborhood; event level tend to be short lived. Most
a project misses a deadline; a machine important, they do nothing to alter the
breaks down. fundamental structure that caused that
We tend to focus on events rather than event.
think about their causes or how they fit
into a larger pattern. This isn’t
surprising; in our evolutionary
development as a species, this ability to
respond to immediate events ensured
our very survival.
But focusing on events is like wearing
blinders: You can only react to each
Patterns them in the last six months—you’re
Whereas events are like a snapshot, a getting one step closer to grasping the
picture of a single moment in time, systemic structure driving that pattern.
patterns let us understand reality at a
deeper level (Figure 1.4, “Moving from
Events to Patterns”).
Patterns are trends, or changes in
events over time. Whenever you see a
pattern of events—for example, sales
have been declining over the past few
years, or two-thirds of the department’s
projects have gone over budget in the
last year, or several senior engineers
have left the company recently, most of
 The spotlight is then taken off the
specific event, and you can focus on
exploring how the series of events are
related and begin thinking about what
In each of the above examples, caused them. In the end, to anticipate
you could draw a simple graph events and ultimately change a pattern,
to represent the trend (Figure you need to shift your thinking one
1.5, “Graphs of Patterns”). more time: to the level of structure
(Figure 1.6, “The Complete
What is the advantage of Pyramid”).
thinking at the pattern level, as
opposed to the event level?
Detecting a pattern helps you put
the most recent event in the
context of other, similar events.
Structure
To move to this deeper level of
understanding, let’s reconsider the
above example of the senior engineers’
exodus.
You might begin digging for the
structure behind this pattern by asking,
“What’s causing more and more senior
engineers to leave?” In this case,
suppose a change in corporate policy
has cut both the budget and the number
of administrative assistants for the Worse yet, as some of them leave, those
engineering group. left behind get even more upset as their
workloads expand further. It’s a vicious
The engineers’ workloads have
cycle that you might sketch as shown in
ballooned, and they’ve begun
Figure 1.7.
Whenever we ask questions like, “Why How would you fight fires at the pattern
is this pattern happening?” or “What’s level? You would begin anticipating
causing these events?” where other fires are most likely to occur.
We are probing at structure. Thinking at You may notice that certain
the structural level means thinking in neighborhoods seem to suffer more fires
terms of causal connections. It is the than others. You might locate more fire
structural level that holds the key to stations in those areas, and staff them
lasting, high-leverage change. based on past patterns of usage. By doing
Let’s return to our example about a these things, you would be able to fight
house catching fire, to see how this fires more effectively by adapting to the
works. To fight fires at the event level, patterns you have observed.
you would simply react to quell the fire
as soon as possible after it broke out.
You would probably then repair any
smoke and water damage, and put the
incident out of your mind.
However, your actions haven’t done anything Here’s where the real power of structural-level
to reduce the actual occurrence of fires. To thinking comes in: Actions taken at this level
address the problem at this level, you need to are creative, because they help you to shape a
think about the structure that gives rise to the different future, the future that you want. Does
pattern of fires. At the systemic structure this mean that high-leverage actions can be
level, you would ask questions like, “Are found only at the structural level? No—
smoke detectors being used? What kinds of leverage is a relative concept, not an absolute.
building materials are least flammable? What Our ability to influence the future increases as
we move from event level to pattern-level to
safety features reduce fatalities?”
structural-level thinking, but sometimes the
Actions that you take at this deep level can best action we can take must remain focused
actually cut down the number and severity of on the present, at the event level—for example,
fires. when a building is aflame, the highest leverage
Establishing fire codes with requirements action in the moment is to react by putting out
such as automatic sprinkler systems, fire- the fire. Any other action would be downright
proof materials, fire walls, and fire alarm inappropriate. But, if that’s all we did, the
systems saves lives by preventing or actions would be considered low leverage from
containing fires. a long-term perspective.
The art of thinking at the systemic structure level comes with knowing when to
address a problem at the event, pattern, or structural level, and when to use an
approach that combines the three.
The Five Basic Disciplines of the
Learning Organization
Peter Senge’s Fifth Discipline precepts
boil down to these assertions that people
should put aside their old ways
of thinking (mental models), learn to be
open with others (personal mastery),
understand how their company really
works (systems thinking), form a plan
1. Mental Models
everyone can agree on (shared vision),
and then work together to achieve that “Mental models” are deeply ingrained
vision (team learning). Let us describe assumptions, generalizations, or even
each discipline. pictures or images that influence how
we understand the world and how we
take action …
2. Personal Mastery
“Personal mastery is the discipline of
continually clarifying and deepening
our [the members of the organization’s]
personal vision, of focusing our
energies, of developing patience, and of
seeing reality objectively.”

3. Shared Vision
The practice of shared vision involves
the skills of unearthing shared
“pictures of the future” that foster
genuine commitment and enrollment
rather than compliance. ”
4. Team Learning
The discipline of team learning starts with
“dialogue,” the capacity of members of a
team to suspend assumptions and enter
into a genuine “thinking together.” The
discipline of dialogue also involves
learning how to recognize the patterns of 5. Systems Thinking
interaction in teams that undermine
Senge (1994) describes systems thinking
learning. The patterns of defensiveness are
as a “discipline that involves approaching
often deeply engrained in how a team
problem solving and addressing issues,
operates. If unrecognized, they undermine
not by focusing on isolated events or
learning. If recognized and surfaced
parts of the whole but rather by looking
creatively, they can actually accelerate
at the patterns and events as interrelated
learning.
parts that effect and are affected by each
other and that collectively make up a
unified and inseparable whole.
To build an organization that can truly learn, that can continually expand its
capacity to create its future, we/you need to master these five disciplines.
Table 1. The Five Discipline of the Learning Organization
1.2. Principles of systems thinking According to Kinshau Rogers, there are
(Concepts & Laws) six foundational principles that drive
Systems thinking is a discipline used to systems thinking methods, such as:
understand systems to provide a
desired effect; the system for 1. Wholeness and Interaction. The
thinking about systems. It provides whole is greater than the sum of its parts
methods for “seeing wholes and a (the property of the whole, not the
framework for seeing interrelationships property of the parts; The product of
rather than things, for seeing patterns interactions, not the sum of actions of
of change rather than static snapshots.” the parts)
The intent is to increase
understanding and determine the point
of “highest leverage”, the places in the
system where a small change can
make a big impact.
 5.Multidimensiona
2. Openness.
lity. To see
Living systems can
complementary
only be understood
relations in
in the context of
opposing tendencies
its environment.
and to create
3. Patterns. To feasible wholes with
identify uniformity or infeasible parts.
similarity that exists in
multiple entities or at 6.Counterintuit
multiple times. ive. That actions
4. Purposefulness. What intended to
you know about how they do produce a
what they do leads to desired outcome
understanding WHY they do may generate
opposite result.
1.3. The Systems Thinking View of
Simple, Complicated, Chaotic, and
Complex
Understanding the challenges present in
changing behavior is important. There are
many models about complexity in the
world of software development and what
that means. simple, complicated, chaos
and complex events.
While discussed by many, some of these
discussions ignore three salient points: • Chaos is a result. We should be
discussing ‘chaotic events.’
• The relationships are often not
inherently the way they are but are that • All of this needs to be taken from a
way because of limited understanding system thinking point of view.
Some quick definitions Chaotic event is an event that is
There are different types of relationships unpredictable even if there is an underlying
between different entities. These science. The “straw that broke the camel’s
relationships are more or less easy to back” and the “butterfly effect” where a
understand. butterfly flapping it’s wings in Asia can
Simple means there is a well-defined theoretically cause a typhoon on the west
relationship between an event and the coast of the US.
resulting action from that. Dropping Complicated systems are when there are
a pen and seeing that it will fall is a several well-defined relationships between
simple relationship.. cause and effect. If all of these
Chaos is a result, not an event. Its relationships are known then we can
definition is “complete disorder and predict the outcome of the actions.
confusion” as in “snow caused chaos in Launching a rocket is an example of
the region.” It can result from behavior complicated.
so unpredictable as to appear random, Complexity means that the exact
owing to great sensitivity to small relationships between things are neither
changes in conditions.” known and possibly unknowable.
Difference between inherent nature and
what we understand
Many things that appear complex in the
past were really just events for which we
had no understanding. For example of
what appeared to be complex, was solved
by someone, but couldn’t get it adopted
because of the lack of understanding.
1. The system affects the behavior
of the people in it in a very
Taking a Systems Thinking point of
significant manner.
view Systems Thinking provides us with What this means is that a system
two main tenets: likely exhibits all 4 types of events:
1. We must recognize that all of the parts simple, complicated,
of a system are interrelated and that chaotic, and complex. And definitely
changing part of the system affects it all four if people are present in it as
How to manage chaos and complexity
The negative impact of these
Chaos from chaotic events and
unplanned actions can thereby be
complexity
mitigated. Reducing delays between
While chaotic events and behavior of
the incident and its mitigation is
complex systems, by their very
critical.
definition, can’t be predicted, they can be
controlled. Particularly in knowledge work and
software development where a delay
In the case of business development
in detecting an error can cause a great
where a goal is intended, feedback is
amount of additional unplanned
essential.
work.
This enables the unplanned for actions
This is the driving force for quick
that occur, such as misunderstandings
feedback. We can always introduce
and creating errors, to be attended too
errors into our system. If we can find
quickly.
them quickly, we can eliminate most
of the impact of the error.
Chaos from simple and complicated
systems

Chaos can result from simple and

complicated systems as well.
When systems are overloaded, that is,
they have more work in process (WIP)
than they should, this will introduce
delays in workflow, feedback and using
information.
This alone will cause problems (new
unplanned work) as well as exacerbate Two related articles are:
any challenges from the chaotic and
• Manage Work-in-Process
complexity described above. Managing
WIP is therefore very important. • Controlling Work-in-Process
Predictability vs. repeatability in complex systems
There is a difference between While complex systems are inherently
predictability and repeatability. But before unpredictable, it is possible to constrain
discussing those, let’s look at two types of them so as to increase predictability of an
predictability – micro and macro. aspect of the system. This can result in
Micro-predictability refers to a particular repeatable results. For example,
event while macro-predictability refers to automated testing and lowering technical
the result over time. Consider that one debt can greatly increase the
can’t accurately predict the result of a coin predictability of changing code.
flip but can predict that over time a fair Repeatability of results in complex
coin will come up heads as often as tails. systems requires:
If the coin isn’t fair, it’d be a good bet that • explicit workflow
the results of the second thousand flips • full visibility of work
will match the results of the first thousand • managing work-in-process
flips – hence macro predictability. • alignment across the value stream
• attending to feedback
It is important to understand that achieving When a transition to new methods is
repeatability is one thing and maintaining it is attempted, the actions being attempted become
another. It is easy to fall back into past habits part of the system. This is why one should
before predictability was achieved. This is consider the effect of following a particular
why management and teams must work approach will have on your organization. That
together with regular retrospectives to ensure is, include people’s reaction to Scrum, Kanban,
the continued predictability. As Kanban Method, SAFe, FLEX, DAD, LeSS,
understandings change so must systems. etc. The method you are using becomes part of
These retrospectives must be geared toward your system. This should be accounted for in
continued improvement – systems are either the design of your approach. Many approaches
improving or decaying, there is no stasis. take a different attitude about how they
It is also important to remember that will/should affect the system. For example,
achieving repeatability does not mean the Scrum suggests that impediments to doing
system is predictable when new changes are Scrum should be removed. This works in some
attempted. Complex systems by their nature contexts, but not so well in others. Lean
are not predictable. We can work with them, suggests taking a systems thinking point of
but when people are involved, complexity view so that any adjustments to your workflow
will always be present. must consider the value streams being
ACTIVITY1 Instructions: Identify three systems in
IDENTIFYING your organization, including at least one
SYSTEMS that includes some important but
Purpose: To identify systems intangible components.
and their components To ExampleInformal information system
recognize interrelatedsystems Purpose: To supplement the “official”
Outcome: Recognition of information system so people feel they
systems within your can make more informed decisions. The
organization, their informal system may also help defuse
interrelationships, and their tension by offering an avenue for chatting
purposes Insights about or gossiping.
intangible and possibly Components: People, the electronic mail
powerful components of system
systems that affect what hap Intangible components: Information or
pens in your organization. “gossip,” time to communicate,
motivation to share information
Larger system: The overall information system, which also has
a formal communication system
1. List your three systems below:
2. In the spaces provided below, fill in the following
information:
• The name of your system
• The purpose that your system fulfills within the larger system
• The components that make up your system
• The intangible components of your system
• The larger system of which your system is a part