SYSTEMS THINKING – art and science of linking structure to
performance, and performance to structure.
PURPOSE – improve performance
CHAPTER 1: What Are Systems?
SYSTEM - group of interacting, interrelated, or
interdependent components that form a complex and unified
whole.
SYSTEM’S COMPONENTS
1. Physical Objects – parts
2. Intangible - processes; relationships; company
policies; information flows; interpersonal
interactions; and internal states of mind such as
feelings, values, and beliefs.
EXAMPLE:
1. R&D GROUP - system made up of people,
equipment, and processes that create new products
to be manufactured by the production system and
sold by the sales system.
2. COMPONENTS OF R&D GROUP - interact with one
another to perform their function and thus are
interdependent. In turn, the R&D group interacts
and is interdependent with other systems within the
company.
3. SPECIFIC PURPOSE - entire organization
SYSTEMS – nodes embedded in a giant network in which
every- thing is connected.
NATURAL SYSTEMS - living being’s body, human societies, an
ecosystem.
HUMAN- MADE SYSTEMS - more self-contained than natural
systems.
CHARACTERISTICS OF SYSTEMS
1. ALL BE PRESENT FOR THE SYSTEM
- COLLECTION - something without affecting its
functioning and its relationships.
2. ARRANGED IN A SPECIFIC WAY
- COMPONENTS OF A COLLECTION - combined in
any random order.
3. SPECIFIC PURPOSES WITHIN LARGER SYSTEMS - all
systems have a specific purpose in relationship to
the larger system in which they’re embedded.
- each is a discrete entity and has a kind of
integrity that holds it together.
4. MAINTAIN THEIR STABILITY THROUGH
FLUCTUATIONS AND ADJUSTMENTS
- systems seek to maintain their stability.
- Systems achieve this stability through
interactions, feedback, and adjustments.
5. FEEDBACK - transmission and return of information.
- MOST IMPORTANT FEATURE OF FEEDBACK -
provides the catalyst for a change in behavior.
- system has feedback within itself
- feedback is not necessarily transmitted and
returned through the same system component
—or even through the same system.
- may travel through several intervening
components within the system first, or return
from an external system
EVENTS, PATTERNS, STRUCTURE
SYSTEMS - built on structures that leave evidence of their
presence.
STRUCTURE - overall way in which the system components
are interrelated.
- defined by the interrelationships of a system’s
parts, and not the parts themselves
IMPORTANT TO UNDERSTAND A SYSTEM’S STRUCTURE -
system structure that gives rise to—that explains—all the
events and trends that we see happening in the world around
us.
- explore the Events / Patterns / Structure
pyramid
EVENTS
- uncovering the elusive systemic structure that
drives events, you can begin identifying higher-
leverage actions
NEXT STEP TO COMPREHENDING SYSTEMIC STRUCTURE -
move from thinking at the event level to thinking at the
pattern level.
PATTERNS
EVENTS - snapshot, a picture of a single moment in time
PATTERNS – understand reality at a deeper level
- trends, or changes in events over time.
ADVANTAGE OF THINKING AT THE PATTERN LEVEL
- put the most recent event in the context of
other, similar events
- focus on exploring how the series of events are
related and begin thinking about what caused
them
- structure
THINKING AT THE STRUCTURAL LEVEL
- Thinking in terms of causal connections.
- Holds the key to lasting, high-leverage change
- To address the problem at this level, you need to
think about the structure that gives rise to the
pattern.
A NOTE ABOUT DIAGRAMMING SYSTEMS
HOW YOU MIGHT ALTER ITS BEHAVIOR
- create a causal loop diagram, or CLD.
- gain insight into systemic structures, and they
identify ways you might change the system’s
behavior
- causal loop diagram generated by a group is
especially valuable
- reveals the interplay of each group
- member’s perspective on the system in question
REAL POWER OF STRUCTURAL- LEVEL THINKING - help you to
shape a different future, the future that you want
THE FIVE BASIC DISCIPLINES OF THE LEARNING
ORGANIZATION
1. MENTAL MODELS - deeply ingrained assumptions,
generalizations, or even pictures or images that
influence how we understand the world and how we
take action.
DISCIPLINE OF WORKING WITH MENTAL MODELS
- learning to unearth our internal pictures of the
world, to bring them to the surface and hold
them rigorously to scrutiny
- expose their own thinking effectively and make
that thinking open to the influence of others
2. PERSONAL MASTERY - discipline of continually
clarifying and deepening our [the members of the
organization’s] personal vision, of focusing our
energies, of developing patience, and of seeing
reality objectively
3. SHARED VISION - involves the skills of unearthing
shared “pictures of the future” that foster genuine
commitment and enrollment rather than compliance
4. TEAM LEARNING - starts with “dialogue,” the
capacity of members of a team to suspend
assumptions and enter into a genuine “thinking
together
- involves learning how to recognize the patterns
of interaction in teams that undermine learning
5. SYSTEMS THINKING - “discipline that involves
approaching problem solving and addressing issues,
 not by focusing on isolated events or parts of the 2.
whole but rather by looking at the patterns and
events as interrelated parts that effect and are
affected by each other and that collectively make up
a unified and inseparable whole.”
3.
4.
5.
PRINCIPLES OF SYTEMS THINKING (CONCEPTS & LAWS)
CHAOS - a result, not an event
- complete disorder and confusion” as in
“snow caused chaos in the region.” It can
result from behavior so unpredictable as to
appear random, owing to great sensitivity
to small changes in conditions
CHAOTIC EVENT - event that is unpredictable even if
there is an underlying science
- “straw that broke the camel’s back”
- “butterfly effect”
- “non-linear” - small change may cause a
large change
COMPLICATED SYSTEMS - there are several well-
defined relationships between cause and effect. If all
of these relationships are known then we can predict
the outcome of the actions.
COMPLEXITY - the exact relationships between
things are neither known and possibly unknowable

SYSTEMS THINKING
- discipline used to understand systems to
provide a desired effect; the system for thinking
about systems
- provides methods for “seeing wholes and a
framework for seeing interrelationships rather
than things, for seeing patterns of change rather
than static snapshots
- intent is to increase understanding and
determine the point of “highest leverage”
SIX FOUNDATIONAL PRINCIPLES THAT DRIVE SYTEMS
THINKING METHODS
1. WHOLENESS AND INTERACTION - The whole is
greater than the sum of its parts (the property of the
whole, not the property of the parts; the product of
interactions, not the sum of actions of the parts).
2. OPENNESS - Living systems can only be understood
in the context of its environment
3. PATTERS - To identify uniformity or similarity that
exists in multiple entities or at multiple times
4. PURPOSEFULNESS - What you know about how they
do what they do leads to understanding WHY they
do what they do.
5. MULTIDIMENSIONALITY - To see complementary
relations in opposing tendencies and to create
feasible wholes with infeasible parts
6. COUNTERINTUITIVE - That actions intended to
produce a desired outcome may generate opposite
result
DIFFERENCE BETWEEN INHERENT NATURE AND WHAT WE
UNDERSTAND
- Many things that appear complex in the past were
really just events for which we had no
understanding.
TAKING A SYSTEMS THINKING POINT OF VIEW
- We must recognize that all of the parts of a system
are interrelated and that changing part of the system
affects it all. Furthermore, the system is not the sum
of the whole but exhibits its own behavior. Please
read.
- system affects the behavior of the people in it in a
very significant manner
- a system likely exhibits all 4 types of events: simple,
complicated, chaotic, and complex
HOW TO MANAGE CHAOS AND COMPLEXITY; CHAOS FROM
CHAOTIC EVENTS AND COMPLEXITY
- chaotic events and behavior of complex systems
- can’t be predicted
- can be controlled
- FEEDBACK IS ESSENTIAL - enables the unplanned for
actions that occur, such as misunderstandings and
creating errors, to be attended too quickly
- negative impact of these unplanned actions can
thereby be mitigated
CHAOS FROM SIMPLE AND COMPLICATED SYSTEMS

THE SYSTEMS THINKING VIEW OF SIMPLE, COMPLICATED,
CHAOTIC, AND COMPLEX
1. SIMPLE - well-defined relationship between an event
and the resulting action from that
- SYSTEMS ARE OVERLOADED – have more work in
process (WIP) than they should, this will introduce
delays in workflow, feedback and using information.
This alone will cause problems (new unplanned
 work) as well as exacerbate any challenges from the
chaotic and complexity described above
PREDICTABILITY VS. REPEATABILITY IN COMPLEX SYSTEMS
1. MICRO- PREDICTABILITY - refers to a particular
event
2. MACRO- PREDICTABILITY - refers to the result over
time
- achieving repeatability is one thing and maintaining
it is another
- systems are either improving or decaying, there is no
stasis
- achieving repeatability does not mean the system is
predictable when new changes are attempted
- The method you are using becomes part of your
system. This should be accounted for in the design of
your approach. Many approaches take a different
attitude about how they will/should affect the
system.
CHAPTER 2: What Is Systems Thinking?
SYSTEMS THINKING
- looking at issues as systemic wholes
- Language
- offers a way to communicate about dynamic
complexities and interdependencies
THE PRINCIPLES OF SYSTEMS THINKING
THE BIG PICTURE - step back from that immediate focus and
look at the bigger picture.
DISCOVER THE SOURCE OF A PROBLEM - widen your focus to
include that bigger system.
LONG TERM, SHORT TERM - behavior that leads to short-
term success or that is prompted by short-term assessments
can actually hurt long- term success.
THINKING ABOUT ANY DECISIONS - best approach is to strike
a balance, to consider short-term and long-term options and
to look for the course of action that encompasses both.
- be aware of all the potential impacts of whichever
strategy you choose
DYNAMIC, COMPLEX, AND INTERDEPENDENT
- simplification, structure, and linear thinking have
their limits, and can generate as many problems as
they solve
- be aware of all the system’s relationships—both
within it and external to it
MEASURABLE VS. NON- MEASURABLE DATA
- Some organizations value quantitative (measurable)
over qualitative (non- measurable) data.
- Systems thinking encourages the use of both kinds of
data
- Both are important
- alerts us to our tendency to “see” only what we
measure
WE ARE PART OF THE SYSTEM - we usually contribute to our
own problems.
UNINTENDED CONSEQUENCES – unintended consequence of
a solution we implemented yesterday.
ASSUMPTIONS – assumptions about how the world works.
MENTAL MODELS – powerful drivers of the decisions we
make
VALUES AND BELIEFS – values and beliefs can lock us into
counterproductive ways of making decisions.
SYSTEMS THINKING AS A SPECIAL LANGUAGE
- unique qualities that make it a valuable tool for
discussing complex systemic issues
- emphasizes looking at wholes rather than parts, and
stresses the role of interconnections; we are part of
the systems in which we function, and that we
therefore contribute to how those systems behave
- circular rather than linear language; focuses on
“closed interdependencies,” where x influences y, y
influences z, and z come back around to influence x
- precise set of rules that reduce the ambiguities and
miscommunications
- offers visual tools; rich in implications and insights;
easier to remember; defuse the defensiveness
because they emphasize the dynamics of a problem
- opens a window on our mental models
- systems thinking offers a whole different way to
communicate about the way we see the world, and
 to work together more productively on
understanding and solving complex problems
ELEMENTS OF THE LANGUAGE
QUALITIES MAKE SYSTEMS THINKING A USEFUL
FRAMEWORK FOR DISCUSSING AND ANALYZING COMPLEX
ISSUES:
 FOCUSES ON “CLOSED INTERDEPENDENCIES”
- language of systems thinking is circular
 “VISUAL” LANGUAGE
- Help clarify complex issues by summing up,
concisely and clearly , the key elements involved
- facilitate learning
- SYSTEMS DIAGRAM – essence of a problem into
a format
- rich in implications and insights
 ADDS PRECISION
- “SYNTACTICAL RULES” – reduce the ambiguities
and miscommunications that can occur when
tackling complex issues
 FORCES AN “EXPLICITNESS” OF MENTAL MODELS
- can reveal subtle differences in viewpoint
 ALLOWS EXAMINATION AND INQUIRY
- SYSTEMS DIAGRAMS – can be powerful means
for fostering a collective understanding of a
problem
- Focusing the discussion on the diagrams
- defuses much of the defensiveness
 EMBODIES A WORLDVIEW
- looks at wholes
- recognizes the importance of understanding
how the different segments of a system are
interconnected
- INHERENT ASSUMPTION OF THE SYSTEMS
THINKIN G WORLDVIEW – problems are
internally generated
SYSTEMS THINKING WORLD VIEW
- dispels the “us versus them” mentality
- “us” and “them” are part of the same system and
thus responsible for both the problems and their
solutions
LANGUAGE OF SYSTEMS THINKING
- systems diagrams such as causal loops can be
thought of as sentences constructed by linking
together key variables and indicating the causal
relationships between them. By stringing together
several loops, we can create a “paragraph” that tells
a coherent story about a particular problem under
study
- FIXES THAT BACKFIRE” OR “ SHIFTING THE
BURDEN” – common used phrases
- take events; trace out an underlying pattern
- it fits one of the systems archetypes
- sketch out a causal loop
- key words that suggest linear thinking is occurring
FLUENCY – understanding the surrounding culture of the
language—the worldview
THE LANGUAGE OF SYSTEMS THINKING
LINEAR THINKING
- immediate cause and effect of events
- Cause and effect are assumed to occur together.
SYSTEMS THINKING
- interrelationship and dynamics among system
components
- Cause and effect are separated in time and space
DETAIL COMPLEXITY
- Characterized by many variables and complex
arrangements
- Cause and effect occur together
DYNAMIC COMPLEXITY
- Created by system structural interrelationships and
dynamics
- Cause and effect are separated in time and space
CONVERGENT PROBLEMS
- A quantified and optimal solution is possible
- Linear thinking
DIVERGENT PROBLEMS
- No best solution can be determined and many
solutions are possible.
- require a systems approach
CIRCLES OF CAUSALITY
- Every event or happening is both a cause and an
effect
FEEDBACK
 - Observed patterns of behavior or results of actions
taken
LEVERAGE
- Highly focused actions that can change system
structure.
Chapter 3: Uncovering Systemic Structures: Drawing Behavior
over Time Graphs
SYSTEMIC STRUCTURES – generate patterns of behavior and
are therefore at the root of many of our problems.
SEVERAL STEPS FOR UNCOVERING THESE STRUCTURES:
1. FORMULATING THE PROBLEM
2. IDENTIFYING THE KEY VARIABLES IN THE SITUATION
– main actors in the systemic structure
3. GRAPHING THE BEHAVIOR OF THOSE VARIABLES
OVER TIME
THINKING SYSTEMATICALLY
- experimental process involving trial and error
- involves an iterative process of formulating
problems with care, creating hypotheses to explain
what is going on, tracking and revising the reasoning
behind your explanations, testing possible solutions
to problems, and reformulating the problem based
on new understandings
1. FORMULATING A PROBLEM
GUIDELINES FOR IDENTIFYING SYSTEMIC PROBLEMS
- chronic and recurring
- long enough to have a history
- attempts either did not work at all or stopped
working after a while
- haven’t been able to identify an obvious reason for
the pattern of behavior
- pattern of the problem’s behavior over time shows
- “Patterns of Problem Behavior.”
Here are some examples of problems that show typical
systemic behavior:
• We’ve been having trouble getting our refrigerators
assembled fast enough to fulfill customer orders. So, we
reconfigured the flow of materials on the manufacturing floor
to try to improve the assembly process. However, after we
made this change, the assembly process actually took more
time than before. Somehow, the change seems to have made
everything worse.
• We introduced a line of high-grade investment portfolio
products two years ago, but our agents continue to sell the
older products. We’ve tried changing the incentive schemes,
and we’ve put out stacks of marketing and information
materials, but nothing seems to motivate agents to focus on
the newer line.
• Every six months we go through another round of cost-
cutting campaigns, from laying off workers to lengthening
maintenance intervals to simplifying marketing. Costs go
down for a while but then start rising again.
GUIDELINES FOR FORMULATING THE PROBLEM
DEVELOPING A CLEAR, SUCCINT STATEMENT OF THE
PROBLEM
- more clearly and specifically
- more focused your systemic analysis
- proceed with two or three formulations of the
problem and learn from the different views
PROBLEM STATEMENTS – often include the following
components (though they don’t have to):
1. BEHAVIOR – (example: customer-service problems)
2. DESCRIPTION OF THE BEHAVIOR OVER TIME –
(example: the problems have increased)
MEASUREMENT OF HOW THE BEHAVIOR HAS
CHANGED OVER TIME – (example: the problems
have increased 25 percent)
3. TIME FRAME OF THE BEHAVIOR – (example: the
problems have increased 25 percent in the last year)
2. IDETIFYING VARIABLES
VARIABLES
- components of the problem whose value
can vary over time; that is, go up or down
- tell the story of the problem briefly
GUIDELINES FOR IDENTIFYING VARIABLES
- choice of variables shapes the rest of your analysis
IDENTIFYING VARIABLES

- iterative process - Visualize the behavior over time of each

- listing several
- decide to delete some or add new ones
- go back and rework your story of the problem
GUIDELINES
 List all the variables that could reasonably be
included; quantitative and qualitative; do this as a
group; start off with a big list of variables
 Narrow your list down to the most important
variables; combining some variables; remove some
variables from your list; not as firmly linked to the
central problem.
GUIIDELINES FOR NAMING VARIABLES
 Use nouns or noun phrases
 WELL– NAMED VARIABLE – fits into phrases; “the
level of,” “the amount of,” “the number of,” “the
size of”.
 Use a neutral or positive term whenever possible to
name a variable
 variables can be concrete entities; as well as
intangibles
3. DRAWING BEHAVIOR OVER TIME GRAPHS
variable between the “Earlier” point and
“Now.”
- reconstruct each variable’s “Earliest”
behavior, if possible
- how the variable will behave in the future if
nothing around it changes
“THOUGHT EXPERIMENTS” – help you visualize the behavior
of your variables over a broad span of time
SKETCHING THE GRAPH
1. Graph your key variables together on the same
graph.
BOTs – reveal how variations in behavior of variables
might be dynamically related
2. Label the lines clearly; use different colors
3. horizontal axis, write the time horizon, either the
number of years covered or the dates
4. If a significant event occurred during this time frame
- If you find that a series of significant events
associated with variables in the graph have occurred,
you may have identified another variable to include
in your graph.

USE THE GRAPHS – to hypothesize about the variables’

interrelationships, and to generate additional graphs that 4. USING YOUR BOT GRAPH TO BUILD TESTABLE
lead to deeper understanding of the problem HYPOTHESES

BEHAVIOR OVER TIME GRAPHS (BOTs) THREE STEPS: - to hypothesize about how the variables’ behavior
might be interrelated
1. Select a time horizon.
2. Sketch the graph. SALES WERE RISING, PROFITS WERE FALLING
3. Build theories about how the graph’s variables are
- total number of new products
interrelated.
- unit cost of carrying new products
SELECTING A TIME HORIZON – time horizon affects the
SECOND HYPOTHESIS
amount and kind of information your graph will ultimately
depict - number of low- revenue new products
- level of the average selling price
1. Pick the variable with the longest time cycle
2. work with a minimum of two years, and experiment
with five or more years
3. NOW – present moment in which you are analyzing
the problem
EARLIER – point earlier in time, two to five years ago,
where you will begin tracing the behavior of the
variables
EARLIEST –point even earlier in time, where
something that happened may have started the
problem
THE 11 LAWS OF SYSTEMS THINKING AND STAKEHOLDER - The challenge is that sometimes there is a
ENGAGEMENT clear and present relationship between
cause and effect. Just not all the time.
1. TODAY’S PROBLEMS COME FROM YESTERDAY’S
8. SMALL CHANGES CAN PRODUCE BIG RESULTS – BUT
SOLUTIONS.
THE AREAS IF HIGHEST LEVERAGE ARE OFTEN THE
- Decisions we make today often become
LEAST OBVIOUS.
tomorrow’s problems. The solution –
- LAW OF LEVERAGE
engage your community to help identify,
- Small, focused actions at the right place in
frame and solve the problem. A large,
the system can produce the biggest and
diverse group will see the problem from all
best changes.
angles is more likely to anticipate
- The key to being able to use leverage in a
unintended consequences
system is knowing the structure of the
2. THE HARDER YOU PUSH, THE HARDER THE SYSTEM
system.
PUSHES BACK.
9. YOU CAN HAVE YOUR CAKE AND EAT IT TOO – BUT
- “COMPENSATING FEEDBACK” – we often
NOT AT ONCE.
try to argue our point by disagreeing with
- Invite stakeholders into the process of
the other person. Our “push” helps them
imagining possible solutions and potential
strengthen their position
long term outcomes.
- “INTERVENTION” – “we will push hard”
10. DIVIDING AN ELEPHANT IN HALF DOES NOT
3. BEHAVIOR GROWS BETTER BEFORE IT GROWS
PRODUCE TWO SMALL ELEPHANTS.
WORSE.
- Inability to see the system as a whole can
- dominoes begin to fall there is a release as
create world of problems.
immediate pressure is relieved but after a
- staying aware of the whole, using multiple,
delay the problem returns
diverse perspectives and attending to how
- provided the arena for engagement reduces
the parts interact will be more helpful and
bias and allows ideas and potential
less messy
solutions to rise above personalities and
11. THERE IS NO BLAME.
politics
- Everything and everyone is connected and
4. THE EASY WAY OUT USUALLY LEADS BACK IN.
together we co-create the whole system.
- THE LAW OF INSTRUMENT – ” Give a small
boy a hammer, and he will find that
everything he encounters needs pounding”
- This happens when we try to apply “best
practices” to complex problems
5. THE CURE CAN BE WORSE THAN THE DISEASE.
- “SHIFTING BURDEN” – “cure” in this case is
an intervention that is enabling and
becomes addictive. As dependence on the
intervention increases the system’s ability
to cure itself lessens
- In some ways public education shifted the
burden of teaching children from parents to
teachers
6. FASTER IS SLOWER.
- Every system has its own unique and
optimal speed.
- “FIXING” THINGS
- A fast fix often leads to a slow cure
- Community members may need time and
space to absorb and adjust to new ideas or
changes
7. CAUSE AND EFFECT ARE NOT CLOSELY RELATED IN
TIME AND SPACE
      The  EnergyDrainIt’s 6:00 AM on Monday. The alarm
blares, jolting you out of bed. You shuffle down to the kitchen
to grab a cup of coffee. A few gulps and . . . ahhh. Your eyes
start to open and the fog begins to clear. 10:30 AM, time for the
weekly staff meeting. “I feel so groggy,” you think. “I gotta
have something to keep me awake through this one.” You pour
yourself another cup of coffee and head for the conference ro
om. Noon, and you’re chatting with your colleagues at a quick
lunch break. Someone refers to an article in the newspaper
about fashion models’ fitness routines. “Honest, it said that
those high-priced runway models have to really watch it on
caffeine. The way they keep their energy up is daily exer- cise
and lots of sleep . . . ‘beauty sleep,’ I’ll bet!” Comments fly
about who has time for daily exercise, getting paid to work
out, and so on.
3:30 PM, you’re feeling the mid-afternoon energy slump. You
head to the crowded coffee cart to get another cup. “I really
ought to cut down on this stuff,” you comment to your friend
in line. He nods. “I’m a five-cup-a-day guy, myself,” he
confesses. “I just can’t give it up.”

QUESTIONS
1. What’s the problem in this story?
The person is addicted to caffein. He/she
depends on coffee to be energize through
out the day and we all know eventually it can
harm the person’s health.
2. What are the three or four most import
ant variables in the case?
Coffee dependency, health consciousness, time
management, self-control
3. What is the behavior of those variable
s over time? Graph them in the space 
below.

4.   What do you observe about the

behavior of the variables? For example,
do any of them increase   or decrease
steadily over time? Are there dramatic
changes (sudden upswings or plunges)?
Do any of the variables seem to go
through a cycle, as indicated by up-and-
down patterns? Do any of   them
hold  steady?

5.    Do you observe any relationships among

the behavior patterns of the variables? If
so, what? For
example, does one variable seem to rise or 
fall, followed by another variable’s rising or 
falling?