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Systems thinking - a new approach for decision making


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Systems thinking helps us to understand why people behave like they do. It is a tool for modern decision making and suits well the Agile mindset. Originally presented at Mini Italian Agile day 05/2018

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Systems thinking - a new approach for decision making

  1. 1. Systems Thinking - a new approach for decision making
  2. 2. Juhana Huotarinen • Gofore Plc • Current: Advisor in Agile transformations and a Product Owner • Previously: Software developer, project manager, project director & executive committee • Twitter: @juhanaOne • Blogs: huotarinen-16ab301 @JuhanaOne
  3. 3. Today’s menu @JuhanaOne Menu - Theory part - Practical session
  4. 4. A hot topic in the Agile world @JuhanaOne • Second principle ”Apply Systems Thinking”? • 8th principle ”Systems Thinking”? • First principle ”Adopt a systems thinking view of organizational transformation”? • Thinking tools for Software development are: “Lean, Agile, Queuing Theory and Systems Thinking”?
  5. 5. Origins @JuhanaOne • Based on Systems Theory • In 1958, Harvard Business Review published “Industrial Dynamics: A Major Breakthrough for Decision Makers” • In 1990, Peter Senge popularized systems thinking in his book The Fifth Discipline • Amazon listed 572 items related to ”Systems Thinking” 5/2018
  6. 6. What is a system @JuhanaOne Meadows DH (2008) Thinking in Systems. White River Junction, VT: Chelsea Green Publishing ” A system is a set of elements or parts that is coherently organized and interconnected in a pattern or structure that produces a characteristic set of behaviors, often classified as its “function” or “purpose.” A system is more than the sum of its parts. It may exhibit adaptive, dynamic, goal-seeking, self- preserving and sometime evolutionary behavior ”
  7. 7. Components @JuhanaOne Purpose Inter connections Elements
  8. 8. Soccer game @JuhanaOne
  9. 9. ELEMENTS •Players •Coach •Field •Ball •Referee INTERCONNECTIONS •Rules •Strategies •Players’ communication •Referee’s communication PURPOSE •Win game •Have fun •Have exercise
  10. 10. What is systems thinking @JuhanaOne ”Systems thinking is a way to view systems from a broad perspective that includes seeing overall structures, patterns and cycles in systems, rather than seeing only specific events in the system”
  11. 11. System in action @JuhanaOne INFLOW OUTFLOW STOCK FEEDBACK
  12. 12. System in action @JuhanaOne CREDIT DEBIT R EARNING BANK ACCOUNT (Paycheck) (Spending) (Interest)
  13. 13. ELEMENTS •Players •Coach •Field •Ball •Referee INTERCONNECTIONS •Rules •Strategies •Players’ communication •Referee’s communication PURPOSE •Win game •Have fun •Have exercise More powerful, usually more hidden
  14. 14. @JuhanaOne 1. Today's problems come from yesterday's solutions 2. The harder you push, the harder the system pushes back. 3. The easy way out leads back in 4. The cure can be worse than the disease. 5. Faster is slower. 6. Cause and effect are not always closely related in time and space 7. Small changes can produce big results 8. You can have your cake and eat it too -- but not all at once. 9. Dividing an elephant in half does not produce two small elephants. 10.There is no blame
  15. 15. Traditional thinking vs systems thinking @JuhanaOne The team works 30% longer –what will happen?
  16. 16. Traditional thinking vs systems thinking @JuhanaOne The team is not performing well – what is wrong?
  17. 17. @JuhanaOne Why Agile frameworks lean on Systems Thinking?
  18. 18. ”80% of the systems performance potential is found in the interactions among the system’s parts while 20% of the total performance of a typical system is found in the parts themselves” - Richard Koch @JuhanaOne
  19. 19. ”96% of organization performance is a function of the organization’s structure. Only about 4% of an organization’s performance is attributable to the people - W. Edwards Deming ” @JuhanaOne
  20. 20. 60/30/10 Rule The team’s structure The way you launch the team The quality and level of team coaching A Theory of Team Coaching Author(s): J. Richard Hackman and Ruth Wageman
  21. 21. 60/30/10 Rule 60 The team’s structure 30 The way you launch the team 10 The quality and level of team coaching A Theory of Team Coaching Author(s): J. Richard Hackman and Ruth Wageman
  22. 22. @JuhanaOne Behaviour over time diagrams Root cause analysis Cause-and-effect diagrams System archetypes Causal loop diagrams
  23. 23. When to apply? • To gain understanding of a complex situation • To gain sufficient understanding to make predictions of future system behaviour • To solve a problem • To create a new system @JuhanaOne nts/What-is-Systems-Thinking.pdf
  24. 24. @JuhanaOne ”The point is not merely to understand the world, but to change it” - Karl Marx
  25. 25. @JuhanaOne ”The point is to understand the world, and then change it”
  26. 26. Practical session
  27. 27. Causal loop diagrams • Designed to visualise the ongoing dynamic interaction between elements in a system • Consist of variables connected by causal links with polarities and delays • Together, these create feedback loops @JuhanaOne
  28. 28. Goals • People, organisations, departments, and systems have goals • Goals often generate pressure for people to react (or act), with the intent of achieving the goal @JuhanaOne 20% more social media interactions To get 200 website referrals and 25 leads from LinkedIn To make 5 referral sales totalling 500,000 e Increased website visits and leads
  29. 29. Variables • The key elements that are closely related to the system • Are things, actions or feelings (nouns) • Can be measured • Quantities can vary over time @JuhanaOne HEALTHCARE DELIVERY Waiting list Waiting time Admission rate Patients in the hospital Hospital capacity Capacity utilization Duration of treatment Medical opinion New referrals
  30. 30. Causal links • Represent a connection or a relation between the two variables • Variable must has an effect on another • Positive polarity • Two variables move in the same direction • Births  population • Negative polarity • Two variables move in the opposite direction • Deaths  population • Sometimes there is a delay in the connection @JuhanaOne
  31. 31. Feedback loops • When one variable leads to a change in another variable that eventually leads to a change in the original variable • Positive feedback loop • Changes reinforces the initial change • Rapid growth or collapse • Bank account and interest earned • Negative feedback loop • Changes balances the initial change • The harder the push, the harder the system pushes back • Goal-seeking • Body temperature and sweating @JuhanaOne + + +
  32. 32. Before we start • Use nouns (as elements) • Correlation vs causal • If there are too many variables, try to bundle them • If a link between two variables is not clear, modify variables or add an intermediate variable • Long-term and short-term consequences almost always differs • Keep the model as simple as possible @JuhanaOne
  33. 33. Exercise 1. Your software project has reached the halfway milestone 2. A new program lead just started last week 3. He has lot of new ideas 4. New ideas are attached on the wall 5. The group will select one idea ( 3-4 members in one group) 6. The group design a causal loop diagram  Goal is to understand consequences with help of System Thinking @JuhanaOne
  34. 34. • Decision: team members work in multiple projects at the same time (shared recourse) • Decision: Story points are used as performance metric • Decision: a specialized testing team is created • Decision: Retrospectives are skipped because of the tight schedule • Decision: The Project is late. More team members are added to the project • Decision: Critical bugs are not fixed right away, instead bugs added to the backlog @JuhanaOne