Systems Thinking Primer

www.plays-in-business.com
www.Plays-in-Business.com
Systems
Thinking
Primer.
Introduction to
Systems Thinking
Michael Tarnowski
Plays-in-Business.com
https://commons.wikimedia.org

Michael Tarnowski, Plays-in-Business.com
Cert. Scrum Master (Scrum Alliance)
Cert. Large Scale Scrum (LeSS) Practitioner
Cert. Management 3.0 Facilitator
Supporter of Happy Melly movement

Introduction
https://www.linkedin.com/pulse/capturing-business-process-3-tips-discovery-workshops-joel-
evans
“Systems thinking is a conceptual
framework, a body of knowledge
and tools that has been developed
over the last 50 years, to make full
patterns clearer, and help see how
to change them effectively.”
– Peter Senge, The Fifth Discipline

Drawing Conventions for System Modeling 1/6
There are several iconic symbols sets used
in System Thinking.
You will find them widely in VSM textbooks
or presentations on Slideshare and similar
platforms.
Since we are interested in this Primer as
well in the Flow of Value as in the System
Dynamics, we use the so called Causal
Loop and, System Archetype diagrams
to show the dynamics, and use those icons
to depict the system variables / entities in
more detail via annotated notes (Post-Its).
Examples:
• https://www.slideshare.net/subhra2jyoti/value-stream-mapping-the-concept, or
• https://www.slideshare.net/mohiuddinshojib/waste-identification-trough-vsmvalue-
stream-mapping-pptx-final

9/3/2017
System Archetypes Causal Loops
Balancing feedback will stabilize
a system’s behavior.
The B in the middle identifies the
loop as balancing.
Reinforcing feedback will
amplify a system’s behavior.
The R in the middle identifies the
loop as Reinforcing.
burn-down rate effects defects directly: the
higher the burn-down, the more (potential
defects);
However, defects decrease burn-down rate
(due to immediate bug fixes). – The letter “O”
depicts “opposite effect”.
burndown_rate
#defects
O
Use the VSM icon set to annotate diagrams where necessary.
A
B
C B
A
B
C R
R

Variables
Causal
Links
Opposite
Effects
Constraints
burndown_rate
#defects
burndown_rate
#defects
O
burndown_rate
#defects
O
#developers
budget_$
C
?
if A goes up, B goes down, e.g.:
A constraints B. Constraints are not causal
links!
quantifiable entity
at first glance unknown causality with same
effect: if A goes up, B goes up, and vice
versa.
Caution: be aware of Weinberg-Brooke’s
Law and Causation Fallacy.
??
Defects decrease burn-down_rate
Budget constraints Nbr of developers
burndown_rate, #defects

Goals &
Reactions
Quick-fix
reactions
Goals and reactions often generate pressure to
the system
Often it leads to a local optimization, i.e. focusing
on one property may have unintended effect on the
system as a whole.
burndown_rate
#defects
O
#developers
budget_$
C
belief
Goal: higher
burndown_rate
pressure to try actions
for higher
burndown_rate
QF
hire_rate
A Quick-fix is a reaction hoping to achieve the goal.
Goals and Reactions are supplemental notes
aligned to the picture.
burndown_rate
#defects
O
#developers
budget_$
C
?
pressure to try actions for
higher burndown_rate
Goal: higher
burndown_rate

Quick-fix
reactions
(cont.d)
Extreme
effects
burndown_rate
#defects
O
# low_skill
_developers
budget_$
C
belief
Goal: higher
burndown_ra
te
for higher
burndown_rate
QF
hire_rate_common
hire_rate_cheap
QF
O
burndown_rate
#defects
O
#developers budget_$
C
belief
Goal: higher
burndown_ra
te
for higher
burndown_rate
QF
hire_rate_common
hire_rate_cheap
QF
O
Extreme effect have a significantly greater impact
than average. Denote them with a thick line.

Delay
Goal: higher
burndown_rate
pressure to try actions for
higher burndown_rate
With a certain delay the code quality
becomes poor when hiring low skilled
developers.
The effect will not show up immediately.
burndown_rate
#defects
O
# low_skill
_developers
budget_$
C
belief
QF
hire_rate_common
hire_rate_cheap
QF
O
code_quality
O
O
Delay

Short Introduction to System Thinking
Content-Links
• System Thinking
• Brooke’s Law
• Parkinson’s Law of Triviality
• Weinberg-Brooke’s Law
• Postel‘s Law – The Robustness Principle
• Convay‘s Law
• Parkinson’s Law
• Causation Fallacy
• Effectiveness & Efficiency
• Hawthorne Effect
• Campbell’s Law
• Goodhart’s Law
• Limit Work in Progress – WiP limits
• “Stop Finishing, Start Doing!”
• Variation in Demand / Work
• Little’s Law
• How to Fix 90% of Problems at Work
• Pull & Push Systems
• Local Optimization
• Sub-optimization Principle
• Tragedy of the Commons – Using Shared Resources
• Shifting The Burden / Additiction
• Limits to Success
• Drifting Goals
• Escalation
• Fixes That Fail
• Growth and Underinvestment
• Success to the Successful
• Further Reading
https://pixabay.com/de/mann-beobachten-denken-uhr-zeit-372006/

95% of variation in the performance
of a system (organization) is caused
by the system itself and only 5%
caused by the people.
- W. Edwards Deming
System Thinking

Misconception easily turns into
common sense.
- Taiichi Ohno
System Thinking

“Today’s Problems
come from Yesterday
Solutions”
– Peter Senge, The Fifth Discipline
System Thinking

“In general difficulties of an organization arise not
from outside influences […] rather than what we
do ourselves”
– Jay Forrester, Sloan School of
Management
System Thinking

“Adding manpower to a late software
project makes it later.”
– Frederick P. Brooks: The Mythical Man-Month. 1975
Brooke’s Law

Parkinson’s Law of Triviality
aka “Bikeshedding” – aka “Proxies” (Jeff Bezos)
“The human tendency to devote a
great deal of time to unimportant
details while crucial matters go
unattended.”
– C. Northcote Parkinson

“More software projects have gone awry from
management’s taking action based on incorrect
system models than for all other causes
combined.”
– Gerald Weinberg, Quality Software Management: System Thinking. 1992
Weinberg-Brooke’s Law

Postel‘s Law – The Robustness Principle
“Be conservative in what you do, be
liberal in what you accept from others.”
– Jon Postel, Internet pioneer
“An implementation should be conservative in its sending behavior, and liberal in its receiving behavior.”
“Be liberal in what you accept, and conservative in what you send.”
“Be contravariant in your inputs and covariant in your outputs.”

Convay‘s Law
“Organizations which design systems […] are constrained to
produce designs which are copies of the communication
structures of these organizations.”
– Mel Conway
The inverse might be helpful as well:
Look at complexity of your product design and you will know the complexity of your
organization.

Parkinson’s Law
Organizations tend
to get bigger

Correlation does not
imply causation
A Correlation between variables, does
not automatically mean that the change in
one variable is the cause of the change in
the values of the other variable.
Causation indicates that one event is the
result of the occurrence of the other event.
There is a causal relationship between the
two events.
Causation Fallacy

Efficiency thinking is setting the
quality level as “good enough” we don’t
need to strive for perfection.
Efficiency refers to how well something
is done and increases productivity.
Effectiveness thinking is thinking
about the lifetime of a product (and the
effects on the whole organization
“system”) which in the long run will cost
less. If we do it right first time (which
might be more costly at the outset), it
actually saves our organization money in
the long run).
Effectiveness refers to how useful
something is.
Effectiveness & Efficiency 1/4
– Keivan Zokaei, Lean Enterprise Research Centre
https://modularmanagement.com/us/wp-content/uploads/2016/09/Modular-
Product-Architecture-and-Lean-Effectiveness-and-Capacity.pd
The things rightEfficient
The right thingEffective
Input Output

Efficiency Thinking (traditional) Effectiveness Thinking (TPS)
Focus on output from given input Focus on delivering fast, responsive flow of
service which will in-turn reduce your Work
in Progress (WIP) and improve profitability
At a given input level (given capacity)
maximize utilization to increase output
Focus on “right first time”
You have to have “spare” capacity
Anders Leine, https://modularmanagement.com/us/wp-content/uploads/2016/09/Modular-Product-Architecture-and-Lean-Effectiveness-and-Capacity.pdf

Efficiency Effectiveness
Effort
oriented
Yes No
Process
oriented
Yes No
Goal
oriented
Yes Yes
Time
oriented
Yes No
Value
oriented
No Yes
https://youtu.be/B4QQZvqRtzA

Hawthorne Effect
Individuals modify
their behavior in
response to their
awareness of being
observed.
The term was coined in 1958 by Henry A. Landsberger, when analyzing earlier experiments from 1924–32 at the Hawthorne
Works (a Western Electric factory outside Chicago).

Campbell’s Law
Once a metric has been
identified as a primary
indicator for success, its
ability to accurately
measure success tends to
be compromised.
- Donald T. Campbell, American social
scientist

Goodhart’s Law
“When a measure
becomes a target,
it ceases to be a
good measure."
- Charles Goodhart, British economist
“Goodhart’s law […] states that when a feature of the economy is picked as an indicator of the economy,
then it inexorably ceases to function as that indicator because people start to game it.”
Mario Biagioli, (12 July 2016). "Watch out for cheats in citation game". Nature. 535 (7611): 201. doi:10.1038/435201a. PMID 27411599.
http://collider.com/austin-powers-does-it-hold-up/

If you’re not limiting your
WIP, then there is no flow.
Your Input area is no more than a
to-do list.
Pick 1 item – You achieve 1 item.
Pick 2 items – You achieve 2 items.
Pick 10 items – You achieve 2
items.
Limit Work in Progress – WiP limits 1/2
https://www.whitesmith.co/blog/limit-wip/

Why limiting work in progress?
WIP exhausts us mentally. Anything
started but not finished occupies some
part of the available mental capacity.
The more WIP, the more mental energy
is consumed with trying to keep track of it all.
Excessive WIP leads us to distract
accomplishment. When we have a near
infinite stream of things to work on and the
task at hand bogs down, needs help from
elsewhere, becomes unclear, or otherwise
becomes “blocked”, we can easily set it
aside and pick up something else to work on.
Excessing WIP hides process problems and other wastes lurking in
our system.
Limit Work in Progress – WiP limits 2/2
https://www.whitesmith.co/blog/limit-wip/

„Searching for the magic
bullet is a distracting waste of
resources.
Adapting is a game of singles,
not home runs.“
John S. McCallum
http://iveybusinessjournal.com/publication/adapt-or-die/
“Stop Finishing, Start Doing!”
– Don‘t Wait for The Ultimate Solution!

Value Demand
Value Demand is product and service delivery that
satisfies customer wants and needs.
Failure Demand
Failure demand is the work originated caused by in the
product mistakes, misshapes, and misunderstanding.
People come back because they didn't get their problem
solved the first time.
Some symptoms of administrative and process Failure
Demand are:
■ Rework
■ Recalls
■ Warranty Work
■ Workarounds to complete tasks
■ Unbalanced work flow
■ Status meetings
■ Complicated work processes known only by selected SMEs
■ Excessive time to deliver
■ Repeated monitoring, inspections and audits
■ Repeated inbound and outbound calls for the same issue
■ Enquires due to inadequate information/unclear instructions
■ Large buffers of time and materials, "just in case"
Variation in Demand / Work
http://www.quickmeme.com/p/3vsy21

Little’s Law
http://www.software-kanban.de/2012/09/playing-with-littles-law.html
45 000 transmissions
1000 per day
45 days =
Flow time
Assumption: Steady-state stochastic processes.
The contexts are stable, and on-going.

Visualize Your Work
At first glance you will become demotivated
by the amount of work. But then you will
identify certain patters in your work:
smooth flowing and blocking items.
Limit Your Work in Progress
When you limit the amount of things you’re
working on, you force yourselves to focus on finishing. With limits in place
you’re not allowed to start new work before finishing something first. –
We limit work in progress to finish things faster.
How to Fix 90% of Problems at Work 1/2
Credits Sami Honkonen, https://blog.samihonkonen.com/how-to-fix-90-of-problems-at-work-93318a7cb317

Manage Flow – not departments & work units!
Optimize the whole – not the parts!
Fixing work
The Pareto principle says that by focusing on key areas we can fix the
majority of problems.
How to Fix 90% of Problems at Work 2/2
Credits Sami Honkonen, https://blog.samihonkonen.com/how-to-fix-90-of-problems-at-work-93318a7cb317

Pull & Push Systems
Push Pull
Make a plan Have a queue of work
and a goal
Track % completion of
plan
Measure throughput and
work done
Buffer plan for
contingencies
Small, frequent tasks to
manage variety
Plan decides what to do
next
People decide what to
do next
Long feedback delay Continuous short
feedback loops
Demand exceeds
capacity
Demand limited to
capacity
Fixed scope and time Fixed work in progress
(WIP)
Forecast based on
estimates
Forecast based on data
Push systems overwhelm capacity,
creating turbulence, rework, waste and
delay
Push
Pull systems have a steady flow that provides
predictability
Pull

Focusing on one
property (only)
may have
unintended effect
on the system as
a whole.
Local Optimization
https://www.otosia.com/tag/kendaraan-niaga/index6.html

If each subsystem, regarded
separately, is made to
operate with maximum
efficiency, the system as a
whole will not operate with
utmost efficiency.
General Systems Theory (Lars Skyttner)
Sub-optimization Principle
http://www.waspbarcode.com/buzz/5-lean-inventory-principles/

Tragedy of the Commons – Using Shared Resources
Typical Behavior in Problem Solving:
Breaking problems down into constituent
parts and optimize each individual piece.
This is Sub-optimization leading
to the “Tragedy of the Commons”.
https://www.pexels.com/photo/beach-crowd-sun-world-269944/

Tragedy of the Commons – Using Shared Resources
The beach is the common good of all people – it’s a
“shared resource”. – Shared usage depletes or
spoils that resource due to collective action of all.
https://www.pexels.com/photo/beach-crowd-sun-world-269944/
“Everyone wants to be at the beach on sunny days.”
Consequences:
• Waiting at ice cream booth
• Waiting at hot dog selling guy
• Very limited space for my towel and me
In “Tragedy of the Commons”, A and B
pursues actions which are individually
beneficial (R1, R2). If the amount of activity
grows too large for the system to support,
however the “commons” becomes
experiences diminishing (B1, B2).
Daniel H. Kim, 1992, 2000: TheSystemThinker.com,
https://thesystemsthinker.com/systems-archetypes-i-
diagnosing-systemic-issues-and-designing-
interventions/
Net Gain
for A
Net Gain
for B
A’s activity
B’s activity
Total
activity
Gain per
individual
activity
Resource
Limit
C
R1
O
R3
R4
R2
O
B6
B5
O
Delay

Shifting The Burden / Additiction
Shifting The Burden – a pseudo solution “solves” the problem
and diverts attention from the fundamental problem resp. solution.
https://www.pinterest.com/becca6531/stupid-shift-work/
In “Shifting the Burden/Addiction”, a problem is “solved” symptomatically by applying a
pseudo solution (B1) which diverts attention away from the more fundamental solutions (R3). In
an “Addiction” structure, a “Shifting the Burden” degrades into an addictive pattern in which the
side-effect gets so entrenched that it overwhelms the original problem symptom.
Daniel H. Kim, 1992, 2000: TheSystemThinker.com, https://thesystemsthinker.com/systems-archetypes-i-diagnosing-systemic-issues-and-
designing-interventions/
“Waking up each morning always tired.”
Pseudo-Solution: Have a Coffee
Fundamental Solution: Have more sleep!
Pseudo
Solution
Problem
Symptom
Fundamental
Solution
B1
O
R3
Side
Effects
O
B1
O

Limits to Success
Limiting
Action
PerformanceEffort B2
O
R1
Limiting
Condition
C
In a “Limits of Success” archetype, continued efforts initially lead to improved performance. Over time, however, the system
encounters a limit which causes the performance to slow down or even decline (B2), even as efforts continue to rise.
Daniel H. Kim, 1992, 2000: TheSystemThinker.com, https://thesystemsthinker.com/systems-archetypes-i-diagnosing-systemic-issues-
and-designing-interventions/
https://www.flickr.com/photos/xxxxs/7327844310/
In the Limits to Success – efforts to increase
performance lead to successful results in the short
term, but are limited in the long term by a constraint
on the system.
If we don’t plan for limits, we are planning for failure.

Drifting Goals
Pressure to
Lower Goal
Goal O
B2
Gap
Actual
Corrective
Action
B1
O
In a “Drifting Goal” archetype, a gap between the goal and current reality can be resolved by taking corrective action (B1)
or lowering the goal (B2). The critical difference is that lowering the goal immediately closes the gap, whereas corrective
actions usually take time.
https://www.flickr.com/photos/dabofthebrake/10889911323/
Drifting Goals – each time goals are adjusted
downward in the organization, a reinforcing dynamic
occurs which anchors a lax orientation to goal setting
in the culture of the organization.
After some period of time, the organization finds itself
aiming lower and lower to ensure that its goals are
always met.

Escalation
In an “Escalation” archetype, party A takes actions that are perceived by party B as a thread. B responds in a similar
manner, increasing the thread to A and resulting in more threatening actions by A.
O
Activity
by A
A’s result
Thread
to A
Activity
by B
B’s result
Thread
to B
Quality of A’s Position
relative to B’s
O
B1 B2
Escalation – a commonly held belief of competition is mounting an
appropriate response to the actions of competitors (a) to sustain
one’s own competitive advantage, (b) to maintain momentum toward
gaining competitive advantage, or (c) because that’s what managers
are supposed to do.

Fixes That Fail
Unintended
Consequence
O
B1Problem
Symptom
Fix
R2
In a “Fixes that Fail” archetype, a problem symptom needs a resolution. A solution is quickly implemented that alleviates the
symptom (B1), but the unintended consequences of the fix exacerbate the problem (R2). Over time, the problem symptom
returns to its previous symptom level or becomes worse.
Daniel H. Kim, 1992, 2000: TheSystemThinker.com, https://thesystemsthinker.com/systems-archetypes-i-diagnosing-systemic-issues-and-
designing-interventions/
https://revpart.com/tips-to-prevent-your-injection-molding-part-from-failing/
Fixes That Fail – states that a quick-fix solution can have
unintended consequences that worsen the problem.
The problem symptom will diminish for a short while and then return
to its previous level, or become even worse over time.

Growth and Underinvestment
In a “Growth and Underinvestment” archetype, growth approaches a limit that can be eliminated or pushed into the future
if capacity investments are made. Instead, performance standards are lowered to justify underinvestment, leading to lower
performance which further justifies underinvestment.
B3
B2
Performance
O
O
Growth
Effort
DemandR1
Perceived Need
to Invest
Performance
Standard
Investment
Capacity
Capacity
http://www.ifpri.org/blog/piecing-together-puzzle-underinvestment-agriculture
Growth and Underinvestment brings special attention
to planning for limits. In this case, it is the capabilities
and core competencies that give firms their competitive
advantage.

In a “Success to the Successful” archetype, if one person or group A is given more resources, it has a higher likelihood of
succeeding than B (assuming they are equally capable).
The initial success justifies devoting more resources, its success diminishes, further justifying more resource allocations to
A. (R2)
Success to the Successful
Resources
of B
Success
of A
Resources
of B
Success
of B
Allocation to A
instead of B
O
R1
R2
O
https://www.flickr.com/photos/bs/88228306/
Success to the Successful – describes the common practice
of rewarding good performance with more resources in the
expectation that performance will continue to improve.
There is a belief that the successful [people, departments,
products, etc.] have “earned” their increasing share of
resources through past performance.
In managerial terms this archetype is often the basis for citing
the “80/20” rule.

• Donald G. Reinertsen 2009: The Principles of Product Development Flow. Second Generation Lean Product
Development. Celeritas Publishing, 2009.
• Daniel S. Vacanti 2015: Actionable Agile Metrics for Predictability: An Introduction. Leanpub, 2015.
• Donella H. Meadows 2008: Thinking in Systems: A Primer. Chelsea Green Publishing Co, 2008.
• Peter Senge 2006: The Fifth Discipline. Crown Business, 2006.
• Peter Senge 1994: The Fifth Discipline Fieldbook: Strategies for Building a Learning Organization. Nicholas Brealey
Publishing, 1994.
• Peter Kline, Bernard Saunders 1993: 10 Steps to a Learning Organization. Pfeiffer Wiley, 1993.
• Linda Booth Sweeney, Dennis Meadows 2010: The Systems Thinking Playbook. Chelsea Green Publishing Co,
2010.
• John Bicheno 2015: The Lean Games and Simulation Book. Picsie Books, 2015
• www.beyondconnectingthedots.com
• www.cognitive-edge.com
• www.systemdynamics.org
• https://thesystemsthinker.com/
Further Reading

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All images used are – if not stated otherwise – taken from flickr.com under Common Creative License.
Julien GONG Min, https://www.flickr.com/photos/bfishadow/3634884928/

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