Lecture 1 –

Fundamentals of Systems Thinking

IE2141 Systems Thinking and Dynamics

Dr. LI Haobin, Senior Lecturer

Department of Industrial Systems Engineering and Management (ISEM)
College of Design and Engineering
National University of Singapore

IE2141 Systems Thinking and Dynamics – ISEM Department, National University of Singapore
 Let's protect the environment
Lecture notes are subject to change before
the class for further improvement
(Ver. 8 January 2023)

Acknowledgement
The preparation of this module has been made possible by the support from IE2141
teaching team, and the past teaching materials developed by A/Prof. Aaron Chia.

IE2141 Systems Thinking and Dynamics – ISEM Department, National University of Singapore 2
 Industrial Systems Engineering
and Management

Who are we?

Industrial Engineers
System Engineers
IE2141 Systems Thinking and Dynamics – ISEM Department, National University of Singapore 4
 Lecture 1 – Fundamentals of Systems Thinking

▪ Why learn systems thinking?

▪ Definition of systems
▪ Elements and Boundaries of systems
▪ Classifications of systems
▪ Level of perspectives
▪ Sub-systems and Stakeholders

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 Why to Learn Systems Thinking?

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 Why to Learn Systems Thinking?
▪ Example of urban transportation in mega cities

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 Why to Learn Systems Thinking?
▪ Various roles of Designers and Engineers

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 Why to Learn Systems Thinking?
▪ Interdisciplinary consideration

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 Why to Learn Systems Thinking?
▪ System problems, E.g.
▪ How effective is the odd-even restriction policy?
▪ Car plate bidding or lottery, which is better? Car Plate

Lottery Bidding
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 Why to Learn Systems Thinking?
▪ Consideration of stakeholders with different levels of
perspectives, E.g.
▪ Should the government restrict car ownership, if the car manufacturers
are the major industry and taxpayers?
▪ Car ownership vs. road usage, who is bearing the cost?

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 Why to Learn Systems Thinking?
▪ Good system solutions, E.g.
▪ COE with validity period, road and fuel tax, ERP
▪ Well designed road network
▪ Shared parking facility
▪ Subsidised public transit

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 Why to Learn Systems Thinking?
▪ As Engineers,
▪ How shall we design a good system?
▪ How to design a product that helps to build the good system?
▪ Alternatively, how to design a product that can fit well into the
dynamics of the system?
▪ To achieve this, you will need to
▪ Learn to think from the system perspectives, and
▪ Master tools to understand and analyse
system dynamics

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 Definition of a System

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 What is a System?
▪ A system is a group of interacting or interrelated elements that
act according to a set of rules to form a unified whole.
▪ A system, surrounded and influenced by its environment, is
described by its boundaries, structure and purpose and
expressed in its functioning.

Source: Alexander Backlund (2000). "The definition of system". In:

Kybernetes Vol. 29 nr. 4, pp. 444–451.
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 How to Define a System?
▪ Elements / Parts
▪ Interaction / Interrelation / Structure
▪ Boundaries / Environment
Elements / Parts
▪ Purpose / Functions
Boundaries
▪ Input / Output
Input Output

(Dependency on (Purpose / Functions)

Surroundings)

Interaction / Interrelation / Structure

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 Examples of Systems
▪ Human Body Systems

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 Examples of Systems
▪ Computer Systems

Software System Hardware System

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 Examples of Systems
▪ Industrial Systems

Container Port System Warehouse System

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 Examples of Systems
▪ Natural / Technological Eco-Systems

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 Examples of Systems
▪ Social Systems

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 Systems vs. Collections
▪ Collection is a set of items or amount of material procured or
gathered together while system is a collection of “organized” things

Elements / Parts Elements / Parts

Boundaries Boundaries

Input Output

(Dependency on (Purpose / Functions)

Environment)

Interaction / Interrelation / Structure

System Collection

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 Systems vs. Collections
▪ Collection is a set of items or amount of material procured or
gathered together while system is a collection of “organized” things
▪ Examples of Collections:

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 Elements and
Boundaries of Systems

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 Elements and Boundaries
▪ A limit to the system’s internal components and processes
(i.e., elements and their interactions).
▪ Internal to which it has integrity
▪ Integrity gives the system autonomy Elements / Parts

(consideration of feedback) Boundaries

Input Output
(Dependency on (Purpose / Functions)
Surroundings)

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Interaction / Interrelation / Structure 25
 Elements and Boundaries
▪ PESTLE
▪ Political
▪ Economic / Financial Elements / Parts
▪ Socio-Cultural / Societal
Boundaries
▪ Technological
▪ Legal
Input Output
▪ Environmental
(Dependency on (Purpose / Functions)
Surroundings)

Interaction / Interrelation / Structure

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 Elements and Boundaries
▪ Political Factors relate to the pressures brought by political
institutions
▪ Elections and political trends
▪ Internal political issues
▪ Inter country relationships
▪ Local commissioning processes
▪ Corruption, Bureaucracy
▪ Wars, terrorism and conflicts
▪ Government policies
▪ Lobbying and pressure groups

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 Elements and Boundaries
▪ Economic Factors relate to economic policies and structures
▪ Local economy
▪ Taxation, inflation, interest
▪ Economy trends seasonality issues
▪ Industry growth
▪ Import / export ratios
▪ International trade
▪ International exchange rates

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 Elements and Boundaries
▪ Social Factors relate to the cultural aspects that affect the demand of
products and how business operates
▪ Demographics
▪ Media views of the industry
▪ Work ethic
▪ Brand, company, technology image
▪ Lifestyle trends
▪ Consumer buying patterns
▪ Ethical issues
▪ Advertising and publicity

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 Elements and Boundaries
▪ Technological Factors relate to the technological aspects,
innovations, barriers and incentives
▪ Emerging technologies
▪ Maturity of technology
▪ Technology legislation
▪ Research and Innovation
▪ Information and communications
▪ Competitor technology development
▪ Intellectual property issues

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 Elements and Boundaries
▪ Legal Factors relate to the laws, regulation and legislation that will
affect the way businesses operate
▪ Current legislation
▪ International legislation
▪ Employment law
▪ Consumer protection
▪ Health and safety regulations
▪ Tax regulations
▪ Competitive regulations
▪ Industry specific regulations

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 Elements and Boundaries
▪ Environmental Factors relate to the aspects of climate and
natural environment
▪ Environmental regulations
▪ Ecological regulations
▪ Reduction of carbon footprint
▪ Sustainability
▪ Impact of adverse weather

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 Elements and Boundaries
▪ PESTLE
▪ Political
▪ Economic / Financial Elements / Parts
▪ Socio-Cultural / Societal
Boundaries
▪ Technological
▪ Legal
Input Output
▪ Environmental
(Dependency on (Purpose / Functions)
Surroundings)

Interaction / Interrelation / Structure

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 Classification of Systems

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 Classification of Systems
▪ Classification by system characteristics
▪ Static vs. Dynamic Systems
▪ Causal vs. Non-Causal Systems
▪ Time-Variant vs. Time-Invariant Systems
▪ Linear vs. Non-Linear Systems
▪ Invertible vs. Non-Invertible Systems
▪ Stable vs. Unstable Systems

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 Static vs. Dynamic Systems
▪ Static System – output of system depends only on present values of input
▪ Memoryless system
▪ Dynamic System – output of system depends on past or future values of
input at any instant of time
▪ System with memory
Example of static systems:
𝑌 𝑡 = 𝑋 𝑡 + 3, 𝑌 𝑡 = 2𝑋 𝑡
𝑋 𝑡−𝛿
Example of dynamic systems:
𝑋 𝑡 𝑌 𝑡
SYSTEM 𝑌 𝑡 = 𝑋 𝑡 − 1 , 𝑌 𝑡 = 3𝑋 𝑡 + 2 ,
𝑋 𝑡+𝛿 𝑌 𝑡 = 𝑋 𝑡 + 2𝑋 𝑡 − 1

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 Static vs. Dynamic Systems
▪ Examples
▪ Static systems – furniture, dishes, buildings, bridges, fix deposit, one-
time investment
(simplification, approximation or abstraction of real-world dynamic systems)
▪ Dynamic systems – human body, computer, machinery, car, property,
trading strategy

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 Causal vs. Non-Causal Systems
▪ Causal System – output of system is independent of future values of input
▪ All real-life system, all practical or physically realizable systems are causal systems
▪ Non-Causal System – output of system depends on future values of input at any
instant of time
▪ Anti-causal system – output of system only depends on future values of the input

Example of cause systems:

𝑌 𝑡 = 𝑋 𝑡 + 3, 𝑌 𝑡 = 2𝑋 𝑡 + 𝑋 𝑡 − 1
𝑋 𝑡−𝛿
Example of non-causal systems:
𝑋 𝑡 𝑌 𝑡
SYSTEM 𝑌 𝑡 = 𝑋 𝑡 − 1 + 2𝑋 𝑡 + 3𝑋 𝑡 + 2
𝑋 𝑡+𝛿
Example of anti-causal systems:
𝑌 𝑡 = 2𝑋 𝑡 + 1
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 Causal vs. Non-Causal Systems
▪ Examples
▪ Causal systems – furniture, dishes, buildings, bridges, fix deposit,
one-time investment, human body, computer, machinery, car, property,
trading strategy
▪ Non-causal systems – an ideal predictive maintenance system, a
perfect just-in-time system
(not practical or implementable in real-life)

Just-In-Time
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Predictive Maintenance 39
 Time-Variant vs. Time-Invariant Systems
▪ Time-Variant (TV) System – a system whose output response depends on
moment of observation as well as moment of input signal application.
▪ In other words, a time delay or time advance of input not only shifts the output signal
in time but also changes other parameters and behavior.
▪ Time variant systems respond differently to the same input at different times.
▪ Time-Invariant (TIV) System – a system where the opposite is true for.

𝑋 𝑡 𝑌 𝑡 𝑌 ′ 𝑡 = 𝑌 𝑡 − 𝑡0
SYSTEM Delay by 𝑡0
𝑌 ′′ 𝑡 ≠ 𝑌 ′ 𝑡
𝑋 ′ 𝑡 = 𝑋 𝑡 − 𝑡0
Delay by 𝑡0 SYSTEM
𝑌 ′′ 𝑡 = 𝑌 ′ 𝑡
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 Time-Variant vs. Time-Invariant Systems
▪ Examples
▪ Time-variant (TV) systems – investment in stocks
▪ Time-invariant (TIV) systems – investment in CPF Accounts
(TIV systems are relative in real-life, e.g., reaching age of 55)

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 Linear vs. Non-Linear Systems
▪ Linear System – a system which follows the principle of superposition
▪ Law of Additivity + Law of Homogeneity
▪ Non-Linear System – a system for which the principle of superposition is
violated.

𝑋1 𝑡 𝑌1 𝑡
SYSTEM
𝑋1 𝑡 + 𝑋2 𝑡 𝑌 ′′ 𝑡 = 𝑌 ′ 𝑡 𝑌 ′ = 𝑌1 𝑡 + 𝑌2 𝑡
∑ SYSTEM ∑
𝑌 ′′ 𝑡 ≠ 𝑌 ′ 𝑡

SYSTEM Law of Additivity

𝑋2 𝑡 𝑌2 𝑡

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 Linear vs. Non-Linear Systems
▪ Linear System – a system which follows the principle of superposition
▪ Law of Additivity + Law of Homogeneity
▪ Non-Linear System – a system for which the principle of superposition is
violated.

𝑋 𝑡 𝑌 𝑡 𝑌 ′ = 𝑘𝑌 𝑡
SYSTEM 𝑘

𝑘𝑋 𝑡 𝑌 ′′ 𝑡 = 𝑌 ′ 𝑡
𝑘 SYSTEM
𝑌 ′′ 𝑡 ≠ 𝑌 ′ 𝑡
Law of Homogeneity

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 Linear vs. Non-Linear Systems
▪ Examples
▪ Linear systems – pricing for groceries at FairPrice, total time spent by a
crowd watching a movie
▪ Non-linear systems – pricing for stocks at SGX, total time spent by a
crowd queueing for a restaurant
(real-life systems are difficult to control as many of them are non-linear)

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 Invertible vs. Non-Invertible Systems
▪ For an invertible system, there should be one to one mapping
between input and output at each and every instant of time
One to one mapping Many to one mapping

1 𝑎 2
𝑎
2 𝑏 4
3 𝑐 6 𝑏

𝑋 𝑡 𝑌 𝑡 𝑋 𝑡 𝑌 𝑡
SYSTEM SYSTEM

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 Invertible vs. Non-Invertible Systems
▪ For an invertible system, there should be one to one mapping
between input and output at each and every instant of time

𝑋 𝑡 Invertible 𝑌 𝑡 Inverse 𝑌′ 𝑡 = 𝑋 𝑡 ± 𝛿

System System 𝑌′ 𝑡 ≠ 𝑋 𝑡 ± 𝛿

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 Invertible vs. Non-Invertible Systems
▪ Examples
▪ Invertible systems – identifying a person by his/her IC, knowing a
person by his/her spouse, sending emails by an internet user
▪ Non-invertible systems – paying bills, scoring in an exam, sending
emails by a hacker
(real-life systems are complex as many of them are non-invertible)

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 Stable vs. Unstable Systems
▪ For a stable system, output should be bounded for bounded
input (BIBO) at each and every instant of time

𝑋 𝑡 𝑌 𝑡
SYSTEM
𝑋 𝑡 ∈ 𝐿𝑋 , 𝑈 𝑋 𝑌 𝑡 ± 𝛿 ∈ 𝐿𝑌 , 𝑈 𝑌

𝑌 𝑡 ± 𝛿 ∈ −∞, ∞

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 Stable vs. Unstable Systems
▪ Examples
▪ Stable systems – market of iPhone 13, restaurant, public transit
▪ Unstable systems – climate change, financial crisis
(unstable systems are relative, as the output can be always bounded under
a larger system, however it is beyond our control or not in favor)

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 Perception and
Level of Perspectives

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 Perception
▪ Attaining awareness or understanding of sensory information
▪ A result of interplays between past experiences, culture, and
the interpretation of the perceived.

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 Conscious Perception
▪ Awareness of some aspect of the environment as a result of
integration of filtered sensory info with stored knowledge

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 Unconscious Perception
▪ Result of sensory info processed automatically below level of
conscious awareness, but may still influence how we react

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 Levels of Perspectives
▪ The Systems Iceberg
Definition
Events / Individual situations and actions
Behaviour
Patterns that form over time as a result of
Patterns decisions and actions

Organizational structures,
Systemic Structures processes and policies

Mental Models Beliefs and assumptions

Visions Desired future state

of vision in use

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 Levels of Perspectives
▪ Example – Good Social Life
Definition
Tired; bad grades; partying Events / Individual situations and actions
with friends Behaviour

Grades are getting worse; making Patterns that form over time as a result of
Patterns decisions and actions
more friends

Allocate more time to spend with Organizational structures,

Systemic Structures processes and policies
friends and less time to study

Making friends is more

important than studying Mental Models Beliefs and assumptions

Good social life Visions Desired future state

of vision in use

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 Levels of Perspectives
▪ Example – Good Grades
Definition
Events / Individual situations and actions
Studying; motivated
Behaviour

Increasing time spent on studying; decreasing time Patterns that form over time as a result of
Patterns decisions and actions
spent on social life; grades are getting better

Better motivation and more time spent Organizational structures,

Systemic Structures processes and policies
on studying to get better grades

Grades are more

important than friends Mental Models Beliefs and assumptions

Get good grades Visions Desired future state

of vision in use

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 Levels of Perspectives
▪ Action Modes
Definition

Reactive Events / Individual situations and actions

Behaviour
Patterns that form over time as a result of
Adaptive Patterns decisions and actions
Increasing Leverage

Tightly Coupled
Creative Organizational structures,
Visible Systemic Structures processes and policies

Reflective
Hidden Mental Models Beliefs and assumptions

Generative or Desired future state

Visions
Imaginative of vision in use

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 Sub-Systems and Stakeholders

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 Sub-System
▪ A system that is part of a larger system.

Elements / Parts

Boundaries
Sub-System 1

Input Output

(Dependency on (Purpose / Functions)

Environment)

Interaction / Interrelation / Structure Sub-System 2

System (Parent)
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 Stakeholders
▪ Stakeholders are persons, groups, and organizations who may be
affected by or have an effect on a system, or its sub-systems.

Who may have 𝑋 𝑡 System / 𝑌 𝑡 Who may be

an effect on a affected by the
system input Sub-System output system

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 Stakeholders
▪ Examples of stakeholders of a system
Society / A Wider System
Governments Community Owners

Consumer
Suppliers Advocates

Environ- Industry /
mentalists
System / Associations
Sub-System
Financial
Competitors
Institutions
Special Interests
Media
Groups
Union / Labor Management

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 Stakeholders
▪ Types of stakeholders of a system

Beneficiary
Sponsor / Implementer
Payer
Monetary
input /output
Orders /
instruction Orchestrator
System /
Regulator
Rules Sub-System
Ideas / opinions
Interests
Advisor /
Marginalized Consultant
Interested
Groups Parties

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 Summary of Lecture 1 –
Fundamentals of Systems Thinking
▪ Why learn systems thinking?
▪ Definition of systems
▪ Elements and Boundary of systems
▪ Classifications of systems
▪ Level of perspectives
▪ Sub-systems and Stakeholders

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 Next Week… Lecture 2 –
BOTGs and Causal Loop Diagrams (CLDs)
▪ Methodologies of Systems Thinking
▪ Behavior Over Time Graphs (BOTGs)
▪ Notations of Causal Loop Diagrams (CLDs)
▪ Feedback and controls
▪ 8 General Trends of System Behaviors

IE2141 Systems Thinking and Dynamics – ISEM Department, National University of Singapore 64
 Let's protect the environment
Lecture notes are subject to change before
the class for further improvement

THANK YOU
The preparation of this module has been made possible by
the support from IE2141 teaching team, and the past
teaching materials developed by A/Prof. Aaron Chia.

IE2141 Systems Thinking and Dynamics – ISEM Department, National University of Singapore 65