Systems Thinking

There are two big implications;

  • as a way of changing something we can alter the way we think about it,
  • for this to happen systems thinking itself has to become more widely appreciated.

Change the mindset

Firstly as Donella Meadows observed the most powerful way to change systems is to alter the way we see it, our mindset and the paradigms that support it. Only then, in a deliberate way can we look to the way we develop institutions and processes that allow feedback, learning and look to create virtuous circles and encourage self reinforcing change that goes in the direction we want. And since regulation (Meadows calls it setting parameters) is the least effective lever unless we do it this way round we are almost certainly doomed to fail.

It follows that we need to bring this level of sophistication into our politics. Since we know collaboration and cooperation drive evolution should we not expect to see much more cross party working? Should we not expect to see non-ideological action to design changes that actually work? As an example of a small change with large repercussions - think of the Open University. As an example of lasting change think of the NHS – created out of a powerful cross party consensus or the reforms of Margaret Thatcher backed up with a paradigm shift in the support for free market economics. Our politics is full of things that stop the application of feedback and learning such as the use of public commissions which postpone action or the outsource contracts which specify service compliance.

Vested interests do very well by crying freedom –whose freedom to do what? This just obfuscates the need for a process by which we negotiate the future – which needs to be inclusive of the people it is for. If I were to put this in the terms of the last consulting company I worked for we need a politics where politicians do it with us not to us; we need facilitators as leaders, we need the manager as the servant of the team.

In conventional economics we don’t see much evidence of joined up systems thinking.

  • Interest rates have been driven down to the point at which savers returns are meagre and raising them will significantly depress the economy by increasing debt repayment charges for all people – whose spending power is needed to maintain the consumer economy.
  • Businesses regularly incur costs for society, which don’t register on their cost/benefit assessments. They make decisions, which work for them but which don’t make any logical sense - like freezing fish, sending it to china for filleting, refreezing it and sending it back. There has to be a more rigorous recognition of true costs outside it boundaries (i.e. the externalities and extent of free riding that is already recognised in economics).

The mindset change that is needed here is towards fair return for creating value – it should never have been acceptable to argue that the objective of business is simply to maximize return for the shareholders.

This is not a good place to be and a lot of people are looking at changing economics, but this new thinking does not seem to be making headway in business or government. There may be one or two signs that things are changing. The Economic implication of systems thinking is; recognising that all business exit within a wider system (society itself). “Laurence D. Fink, the founder and chief executive of investment firm Black Rock informed leaders of the worlds largest corporation last week that they need to contribute to society if they want to receive the company's support. The message was publicised as Black Rock push for social responsibility. But we should bear in mind that this is an exhortation by one person, it does not address systemic issues with corporate governance, nor does it address the trade off that may be made; giving to charity can be a smoke screen against aggressive tax avoidance and as such is a way of maximising returns to investors. Here is the other side of the case Tax is minimised for many by the Charity of a few

Spreading systems thinking 

Secondly Systems and Holistic thinking itself needs to be more widely appreciated. We need many more people to get it. In common parlance we say "the whole is greater than the sum of its part" without really getting what it means. We need more and more people to consider the complexity and interconnectedness of the world and in particular understand emergent properties, feedback, and unintended consequences. We also know that the best way to change a system is to change the way we think about it (see above).

Simple regulation will never work (or at best it will have a small effect) unless there is a change in the way we think - a paradigm shift. Regulation is always open to being gamed, examples of the mindset changes that are needed are these;

  • maximise profit must change to get a fair return
  • avoid tax must change to pay ones dues
  • need to know must change to right to know,
  • and being done to must change to being involved (as a right)
  • benefit scrounger must change to citizen in need

Social ties and the responsibilities that lies outside the realm of commerce cannot be regulated for. We must give power to the adage that, if overdone commercial interests "know the price of everything and the value of nothing". In effect we have to create a climate of opinion that puts the social considerations alongside the desire of business to make a profit and give this at least equal weight.  

It will also help to elevate the level of debate to include more factors and look for workable solutions rather than point scoring arguments. It is necessary to see through the special pleading of vested interests and recognise that nothing is likely to be as simple as it is made to look by someone who wants to make a fact buck out of it.