The document discusses the importance of system thinking in operational excellence and decision-making, highlighting the pitfalls of traditional problem-solving methods that fail to address root causes. It emphasizes that actions in one department can have unintended consequences on others, illustrating this with examples such as client attraction and drug policy enforcement. The text encourages a deeper analysis of underlying structures and asks critical questions to reevaluate existing mental models and incentives.

1. Operational Excellence
Consulting
Business fundamentals &
Insights for better decision-making
The
Method

2. System thinking

4. Iceberg metaphor :

5. Iceberg metaphor :

6. E.g. if sales drop => we need to attract new clients would be the first reaction unfortunately
make plans for a future problem or recurrent problems by recognizing patterns.
However there are external factors involved such as the market, technology, etc.

7. Company case example :

8. The “old problem solving method” suggest that for each visible problem, we can take action against
it. This is however not always the case. A company is like a system where different departments are
interconnected and depend on each other. A solution or an intervention in one department has also
a side effect on another department. The lack of system thinking is the reason why companies keep
facing recurrent problems without tackling the root cause of it.
Old problem solving method would look like this :
However what actually happens is …

9.  Suddenly, due to special conditions in order to attract new clients, the quality of services was low
which makes that our initial action of more clients has lost its effect due to system dynamics.
Undesired side effects arise from our solutions (or intervention) in the system, due to the fact that
different elements are linked and depend on each other (underlying forces and interactions), the
outcome from our action is different from what we expected.

10.  In order to stop the drug problem, the government introduces a strict policy of repression,
because this will solve the problem for once and for all.
However what actually happens is …

11.  Suddenly, drug prices increases, leading to more supply of drugs, also due to the high price, the
crime is increasing which makes that the initial solution (or action) of strict policy of repression has
lost its effect due to system dynamics.
Undesired side effects arise from our actions in the system, due to underlying forces, the outcome is
different from what we expected.

12. Case example of how it should be done : Work safety
By keep bringing ‘work safety’ as a subject of matter :


13. Benefits of understanding system dynamics :

16. Theory of the mental model = “our eyeglasses through which we see the world” :

18. Short term vs long run dilemmas : (where benefits of the short term is chosen instead of long run)

20. System thinking is the analysis of the ‘hidden structures’ :
• E.g. if a team is rewarded for their great performance, tensions arise with other teams within the
same organisation that will feel less motivated.
• Be skeptical and question the patterns that you have in your ‘mental model’
• Ask questions like : Who benefits ? What are the incentives ? What are the conflict of interests
(subconscious interest) ?