1. Date: 2015 Systems Thinking Presented by Anne-marie le Roux MMI

1

Date: 2015

Systems Thinking

Presented by Anne-marie le Roux

MMI

SESSION OUTCOMES

At the end of the Module, the participants will be able to: • Explain the concept ‘systems thinking’ and provide practical

examples of how the concept can be applied to benefit organisations.

• Distinguish between different types of problems (i.e. problems in social systems - people and engagement), in natural systems and in technological systems and identify the different problem solving methods associated with each.

• Apply problem analysis to solve problems within the context of a concrete organisational problem, focussing on People and Operations.

Content © Anne-marie le Roux

WHAT IS A SYSTEM?

“A set of interdependent elements defined by a working boundary.”

4

“We may tend to mistake data for wisdom, just as there has been a tendency to confuse logic with values and intelligence with insight.” The Dallas Morning News, Sept 1983

“[R]emember that life is not orderly. In many cases life is not logical. Both business and life are far more like a cobweb.” Ross Perot, EDS Booklet 1984

WHAT IS IT?

• Every system is purpose seeking• The component parts of a system can best be understood in

the context of relationships with each other, rather than in isolation – everything is connected

• It depicts multiple causality, rather than a linear cause and effect

• Systems thinking creates multiple perspectives• It is about awareness of patterns

So what does it mean for you?

TYPES OF SYSTEMS

As a system is a complex whole, the functioning of which depends on its parts and the interactions between these parts, examples of the types of systems include:

• ecological, such as food systems;• biological, such as the human body;• mechanical systems, such as automobiles;• abstract, such as philosophical systems;• social, such as drug use;• human activity, such as systems to ensure purposefulness


FROM ANALYSIS TO SYSTEMS

Content © Anne-marie le Roux 7

Analysis Systems ThinkingRoot cause Multiple causes

Blame Aim

What are the parts? Where are the relationships?

Down the line Up the networks

Bottom line One element

It starts at the top It starts anywhere, and has probably already started

What this all comes down to… One implication of this …

The reality is One reality may be

Either…or Both…and

The cause of this One of the causes of this

This will end when… This may reach a point when…

At the end of the day At some point in a process

SYSTEM EXAMPLE

MMI Group Structure

IT IS A MATTER OF PERSPECIVE & PURPOSE


System Type Parts Whole

Mechanistic

Ecological/Natural

Social/Organisational

SYSTEMS THINKING QUESTIONS

1. What system am I part of?/What are the containing systems?

2. What is the purpose of this containing system/s?

3. What is my role within this purpose?


WHY IS IT IMPORTANT?

“The more we study the major problems of our time, the more we come to realise that they cannot be understood in isolation. They are systemic problems, which means that they are interconnected andinterdependent.”

Capra (1996)



A CRISIS OF UNDERSTANDING?

Wisdom

Understanding

Knowledge

Information

Data

Ackoff, R.

VIABLE SYSTEMS MODEL (VSM)

The VSM can diagnose problems in organizations and put them right so that viability and purpose is secured.


VSM – Diagnosis Model

Organizations today face two major challenges• How to achieve functional decentralization • While gaining cohesion and synergy

The Viable Systems Model

Systems Thinking and Decision making

Diagnosing the organizationThe Viable Systems Model

The Viable System Model offers a way of gaining both functional decentralisation and cohesion of the whole. It is underpinned by fundamental principles of communication and control in complex organizations. These principles offer a way of providing true autonomy and empowerment within an integrated framework, together with the necessary supporting links between the individual parts.



• Primary activities. Those responsible for the core existence of the organization (complete work task)

• What are those in your system of interest?

Operational/ Implementation



• The activities that coordinate the core activities (value adding and support functions)


Co-ordination



• The activities that negotiate, source and allocate resources for the core activities.

• The activities that monitor the core activities


Control



• The activities that link the core activities to the relevant environment of the organization.

• Future focused concerned with adaptability • What are those in your system of interest?

Intelligence



• The activities that determine policy, governance and organizational identity.

• This function is selective-low variety determining values and purpose.


OrganizationalGovernance

VIABLE SYSTEMS MODEL (VSM)

• S1 = Implementation• S2 = Co-ordination • S3 = Control• S4 = Intelligence • S5 = Governance


“Let’s play…..”

INDICATORS OF A DYSFUNCTIONAL SYSTEM

1. Everything is fine. (I repeat…) 2. We are not allowed talk about whether everything is

fine or not. (For clarity on this rule, see Rule 1) 3. You are either with us or against us. 4. We are different. 5. The outside world is dangerous. 6. Now is not the time for change. 7. Power is centralised (and is none of your concern!). 8. Rules 1-7 do not exist. (It is all a conspiracy to

undermine us.)

OPEN/CLOSED SYSTEMS

• Open systems are characterised by the free flow of information & energy

• They allow multiple inputs from multiple sources • Closed systems inhibit this flow in the interest of self-

preservation & the reduction of anxiety • Open systems are dynamically energised • Closed systems suffer entropy from lack of energy

REFLECTION

• How open/closed is your system? • Where should it be more open?

- What else could/should we learn? - Who else does what I do? - From whom could we learn?

• Where should it be more closed? - How else could information flow in & out? - Against whom could we benchmark ourselves? - Where do we need more protection?

SYSTEMS NEED LOCATOR


PEOPLE PERFORMANCE AREAS

Operations & Process

Finance & Cost

Technology Engagement

Motivation & Action

Innovation, Change & Strategy

Learning, Skills & Growth

Self

Staff

Support

Teams

Clients

Suppliers/ser-vice providers

Senior Managers

A SYSTEMS VIEW ON RELATIONSHIPS

• What is the quality of the relationships between key components in your system?

• Where do we need to create relationships?• Which relationships should be contained or made

redundant?• Which relationships are often ignored, but could have

an impact on our success?


STRATEGY DESIGN USING SYSTEMS THINKING

• STP, MTP, LTP

• Project management

• Leadership• Culture

•Performance•Sustainability

•PLANET•PROFIT•PEOPLE

• Scenario’s• Selecting the best

option• Strategic positioning

• Where are we going?• Internal – Where are we?• External – What is

happening out there?• What is the concern?

Analyse Develop

ExecuteEvaluate

28

SYSTEMIC PROBLEM SOLVING


Scenario Planning Steps

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

• Define the PROBLEM

• Solution IDEATION

• Identify key THEMES

• Check the DRIVERS

• Plot a scenario MATRIX

• Check for RELEVANCE

29

Step 1 is to determine the problem. What is the concern? Use any recently raised issues as basis for starting point. For today do not choose more than 3 concerns.

Stakeholders: Any group in the organisation. Diversity improved the results.

Tool: • Brain storming

Questions:- Based on research, analysis or experience: What is the size of the concern? The

whole organisation or part/s of it? Products, markets, geographic areas, technologies – what are the symptoms within the company?


1. Define the PROBLEM

What is the problem?

ANALYSIS LEADS TO CONTEXT ON THE CONCERNS

Small win 1

Small win 2Small win 3

What is the VISION?

Current situation

Ideal, imagined

future

Projected futures

Projections of current situation and its trends

TimeCourtesy of Dostal, E. et al, 2003

(Adapted by Anne-marie le Roux)

Forecasting

Backcasting

STRATEGIC VISION – “Where is our North?”

To be the preferred lifetime financial wellness partner, with a reputation for innovation and trustworthiness

PURPOSE – “Why do we exist?” To enhance the lifetime financial wellness of people, their communities and their businesses

VALUES Accountability Excellence Integrity Diversity Innovation Teamwork

STRATEGIC OUTCOME – “What do we want to achieve for the next 5 years?” Create cumulative Embedded Value Earnings of R35 billion over the next five years to 2019

FINANCIAL ASPIRATION – “We will financially achieve …”

Maximise Shareholder Value

Growth in Earnings Growth in Embedded Value Financial Strength Efficiencies

STRATEGIC FOCUS AREAS – “The pillars that will determine our internal objectives, and the related strategic initiatives required to achieve our aspirations…”

Growth Client-Centricity Excellence

CLIENT ASPIRATION – “How our clients perceive us…”

“My Financial Wellness Partner”

1. “Understand my Needs”2. “Value for Money”

1. “Innovative Solutions”2. “Easy to use”

1. “Reliable and Trustworthy ”

2. “Community builders”

MMI Strategic Framework

33

Step 2 is where the team captures ideal outcomes related to the concerns – it can be a change in the macro, industry or micro environments as it relates to the concerns. The IDEATION process should consider the ideal state to the concern. For today work on about 5 opportunities per concern.

Stakeholders: All expert sources are helpful during this process.

Tools: • Ideation (solutions to concern)• Bulls-eye clustering (’ER Ideas, Sweet spot & Far Ideas)

Questions:₋ Do ‘ideation dumping’ - take post-its to come up with possible idealised design.₋ Put concern in the centre and first create ideas before discussing it in the group.


2. Solution IDEATION

34Content © Anne-marie le Roux

Innovation Example

FAR IDEAS

-ER IDEAS

RESOURCES

SWEET SPOT

Diverge Converge

‘ER Ideation

Ideation Process

1. Defer judgment

2. Encourage wild ideas

3. Be visual

4. Go for quantity

5. One conversation at a time

6. Stay focused on the topic

7. Build on the ideas of others

“Brainstorming with Structure”


36

This step is done to convert the ideation outputs into strong themes which represent a more manageable picture. Between 3-5 themes is a reasonable output for today.

Stakeholders: The whole team should participate

Tools: • Affinity diagrams to group ideas with following steps:

Record solutions from previous step on cards or notes.Look for ideas that seem to be related and sort into THEMES until all cards have been used.

Questions:Given the external environmental analysis, our strategic agenda should address:₋ What concerns you most about the future, i.e. What keeps you awake at night?₋ What critical decisions will have to be made in the future? What are the forks in the

road?


3. Identify the key THEMES


Affinity Diagram Example

38

Step 4 uses the themes and tries to find links between ideas and their relationships. Start the process with putting in front of your THEME the words “Level of…” to ensure the theme can be measured. Then determine how these themes impact each other, which one influences the other. Stakeholders: The whole team should participate. Include specialists with diverse knowledge of the concerns are needed.

Tools: • Interrelationship Diagram (ID) Questions:₋ Does this idea relate to others? Or cause or influence any other idea?₋ Count the arrows in and out for each idea.₋ Note which ideas have primarily outgoing (from) arrows. These are DRIVERS.₋ Note which ideas have primarily incoming (to) arrows. These are final effects that

also may be critical to address. Eliminate nonsensical options ending up with about 3-5 DRIVERS.


4. Determine the DRIVERS


Interrelationship Diagram Example


Rose/Bud/Thorn Example

Positive

Negative

Potential

Conduct a Rose-Thorn-Bud evaluation on the concept developed:

One idea, insight, or comment per sticky note

Be critical, but constructive

Build on ideas

Ask “What if…” questions

41

Using the strongest 3-5 DRIVERS, plot them in terms of IMPORTANCE in addressing the strategic concern and difficulty in executing the strategy. Highest OUT score usually determines strength.

Stakeholders: All expert sources are helpful during this process. Refine and change the content where necessary. This part should not be rushed – it allows participants to reflect on their best thinking.

Tools: • Importance/Difficulty Matrix

Questions:₋ Using the identified 5-8 drivers (identified in Step 4) as variables.₋ Refine ‘descriptions’ for each of the identified scenarios. ₋ Plot them on horizontal axis in terms of importance (low-high) in addressing the

concern.₋ Then move them up on the vertical axis based on difficulty in execution.₋ Divide matrix into 4 quadrants. Content © Anne-marie le Roux

5. Plot a scenario MATRIX

LOW HIGHIMPORTANCE(IMPACT)

Importance/Difficulty Matrix

LOW

HIG

H

LOW HIGH

DIF

FICU

LTY

IMPORTANCE(IMPACT)


LOW HIGHIMPORTANCE(IMPACT)

LO

WH

IGH

DIF

FIC

UL

TY

Quick return High return

Low return Next big return


Quadrant 2 - REACT

Vertical Integration

Outsource

Turnaround

Quadrant 1 –

DEVELOP

Disruptive Innovation

New Market/Product or

New Business Model

Quadrant 4 - DIVERSIFY

Horizontal Integration

Product/Market diversification

Joint Venture

Quadrant 3 - DEFEND

Divest

Specialize/Adjacencies

Exit

Difficulty (High)

Difficulty (Low)

Importance(Low)

Importance (High)

Hig

h re

turn

Nex

t big

retu

rn

Qui

ck re

turn

Low

retu

rn



46

DOING THE RIGHT THING & DOING THINGS RIGHT

Would you rather be Vaguely right

OrExactly WRONG?


Weak growth environment, intensive competition for growth

Abundant growth, less intensive competition for growth

Powerful, disruptive new business models emerge

Traditional life insurance business model remains intact

The MMI Scenarios: 2014 - 2024




Traditional insurance business model remains intact

Who Dares Wins

Snowball

Trench Warfare Glory Days

The MMI Scenarios: 2014 - 2024

Probability assessment




Traditional insurance business model remains intact

Who Dares Wins

Snowball

Trench Warfare Glory Days

ScenariosMMI Exco View

TYPES OF STRATEGIES

• Defend strategy: Low importance or potential and low difficulty or risk - reduce, divest or look for adjacencies• Diversify strategy: High importance or potential and low difficulty - acquire new products/markets, use surplus cash to acquire more of the same• Develop strategy: High importance or potential but high risk and difficulty - use design thinking and innovation to create new markets or products, idealised design• React strategy: Low importance but high difficulty or risk - involves interventions to turn around current trends, outsource non-core, creatively destroy current business model


51

This is the final step related to the content-creation phase in the scenario development process. During this step the content descriptions are evaluated critically for relevance and probability.

Stakeholders: The whole management team should participate - diverse and specialist knowledge of the issues impacting the concerns are needed.

Tools: • Desirable/Viable/Feasible

Questions:₋ To have impact, your scenarios should connect with the mental maps and concerns

of the users (e.g., senior executives, middle managers, etc.). ₋ Second, the scenarios should be tell a consistent story to be effective. ₋ Third, they should make sense and be able to stand up to scrutiny and debate. ₋ Fourth, each scenario ideally should describe a sustainable state in which the

system might exist for some length of time.₋ These are future scenario’s, but you should be able to sell it if you connect it to

idealised design.Content © Anne-marie le Roux

6. Check for RELEVANCE

SUSTAINABILITY

Desirability

Viability

Feasibility

Does it deal with the problem with EMPATHY?

Does is leaveimproved

PROFIT/PLANET/PEOPLE?

Is the RESOURCEallocation justifiable?


54

FOR NOW….

• Whatever you do has an impact on the system you operate in• Aim to enhance the relationships of various parts of your system• When checking or planning or doing (VSM1-5) realise that there is

no right or wrong, just the best option for now• Remember that you work towards the achievement of a shared

purpose• “Be the change you want to see in the world!”


55

Understanding and appreciating diversity in a team when innovating

• Different Preferences for Assertiveness

• Different Preferences for Thinking

THE FOURSIGHT MODEL

56

• Assertiveness

STAT

EAS

K

Decisive

Takes risks

Bold, fast paced

Expresses opinions

Directive

STATEASK

Likes to explore

Evaluates risks

Flexible, patient

Engages others

Speculative

57

• Thinking

CONVERGEDIVERGE

DIVERGE CONVERGE

Prefers generating options

Preference for experimenting

Favors unusual ideas

Enjoys analysis

Prefers evaluating & selecting

Prefers decision making

Favors critical thinking

Enjoys exploration and synthesis

58

• Preferences

ASK

STATE

DIVERGE CONVERGE

CLARIFY

IDEATE IMPLEMENT

DEVELOP

Sources: Professors G. Puccio and J. Cabra, International Center for Studies in Creativity, Buffalo State College; © Foursight LLC

• Due 19 June 2015• This is an individual assignment which requires the application of the Systems

Thinking Framework (6 Steps) to address a concern/s, which affect your business environment. You have to apply this model within any team context at work (not your USB-ED syndicate groups), where you at least have some influence or control.

• The process, as outlined above, must be captured in a short video or podcast (Smart Phone/Tablet /video camera etc.). Your role is that of the facilitator and narrator (telling the story). The product should show yourself, and/or your team, executing the steps and the results of your process.

ASSIGNMENT

60

REFERENCES

• Ackoff, R. (1999) A lifetime of systems thinking, The Systems Thinker, June/July, 1–4• Checkland, P. (1997) Systems, in: International encyclopedia of business and

management (London, International Thomson Business Press).• Hawken, P., Lovins, A. & Lovins, H. (1999) Natural capitalism: creating the next industrial

revolution (New York, Little, Brown).• King’s Fund (2005) The business of caring: King’s Fund inquiry into care services for older

people in London (London, King’s Fund).• Labovitz, G., Rosansky, V. & Chang, Y. S. (1993) Making quality work: a leadership guide

for the• results-driven manager (New York, Harper Business).• Ohno, T. (1978) Toyota production system: beyond large-scale production (New York,

Productivity Press). Pfeffer, J. & Sutton, R. (2006) Hard facts, dangerous half-truths and total nonsense: profiting from evidence-based management (Boston, MA, Harvard Business School Press).

• Seddon, J. (2003) Watch out for the toolheads, in: Freedom from command and control (Buckingham, Vanguard Press).

• Womack, J., Roos, D. & Jones, D. (1990) The machine that changed the world (New York, Rawson Associates).


Documents

1. Date: 2015 Systems Thinking Presented by Anne-marie le Roux MMI