Whenever I visit a bookstore, It is tough to resist buying a book. One recent book investment was “Thinking in Systems” by Donella Meadows. As I read through, I was impressed by how applicable the content was. In this article, I will share what I think are the most relevant concepts, but first, a definition. Meadows defines a system as “an interconnected set of elements that is coherently organized in a way that achieves something”. But to appreciate this definition, it helps if you think in terms of stocks and flows. Stocks are the elements (foundation) of a system that you can count or measure at any time. Flows (as an inflow or outflow) change the level of a stock. In a bathtub, the stock is the volume of water, an inflow is from the faucet, and an outflow is through the drain.
Though the model is simple, Meadows layers on feedback loops. They are fascinating and come in two notable flavors: reinforcing and balancing. Firstly, feedback loops cause changes in a stock to affect its own flows. The author gives an example of an interest-bearing savings account. The account balance (stock) affects the interest coming in (inflow). As you see the balance reduce, you may work more hours, or if the balance increases, you may spend more. Together, this is a stabilizing/balancing feedback loop because it stabilizes the stock, keeping the value in an acceptable range.
On the other hand, a reinforcing feedback loop happens when a system element has the ability to grow as a constant fraction of itself. This applies to populations and economies. The more people you have, the more people are born, which gives you more people, which reinforces the birth rate. With this understanding, let’s explore peculiar cases the author calls systems traps before sharing my biggest takeaway.
The Tragedy of the Commons
This trap was foreign to me initially, but I realized that we all have some experience with it. The tragedy happens when a shared resource is destructible when overused, but overuse is rational for each party. Consider a country supporting asylum seekers (or cookies in a common space). The abundance of this resource, shelter or cookies, attracts many interested parties. But the resource is soon overutilized through more users/usage than is tenable — now, few cookies or asylum spots are left. It is intriguing that this scarcity then incentivizes even more overuse. People think to themselves, ‘If there are few cookies left, then I’d better get mine now!’ Regulation is one solution and parking meters are a great example. If you could park anywhere and for however long (and so could everyone else), then there would be way more cars on the streets, in parking spots, than in garages. You would always struggle to find a place to park. Ironically, regulation allows you to enjoy the resource more!
Drift to Low Performance
This trap is reinforcing and difficult to address, even when striving for high performance. Drift to Low Performance happens when a bad system actually gets worse over time, despite efforts against the decline. In this system, a relevant party (e.g. a government) observes the state of the (economic) system, compares it to their desired state, and then takes action to close that gap. This is usually fine, and it is why a government might lower interest rates. However, the central issue is that the perceived desired state is more strongly influenced by past bad performances than by good ones. So the ‘best possible state’ is believed to be worse than it is. (If you consistently get 40% grades in high school, that 70% from that one middle school test starts to look like the best you can do!). So the more this system falls short of the targeted state, the more normalized poor performance is, leading to lower standards.
Rule Beating
Rule Beating means taking evasive action to get around the intent of the system’s rules —
abiding by the letter and not the spirit of the rules. We can observe this behavior in institutions with departments, including universities. Typically, the system functions such that a department that underspends (and supposedly needs less money), is given a lower budget. However, spending your allocated budget (supposedly due to good investment needs) is grounds for a budget increase. The problem is that many departments engage in an unnatural increase in spending towards the end of the fiscal year to justify their ‘need’ for more funds. That icky feeling of ‘gaming the system’ is exactly rule beating. Meadows suggests that we redesign such systems so that energy is spent towards the system’s purpose (giving money to departments to invest wisely), instead of spending energy on circumventing the rules.
Wrong Goal Systems
This system trap is the most frustrating in my opinion. Here’s the problem. We have a system and a purpose for it. We design the system to serve that purpose by optimizing some stock. We succeed and optimize the stock, but everyone is unhappy. We didn’t actually achieve the purpose because we had the wrong goal/focus. Meadows chooses the example of national economies. She finds GNP (or GDP) to be a poor measure because more car accidents (more medical bills) increase GNP, but more efficient longer-lasting light bulbs reduce GNP. “Although there is every reason to want a thriving economy, there is no particular reason to want GNP to go up” but this is what governments are fixated on. We should question the goals we set, and whether they are aligned with our intended purpose. Meadows also advises us to be wary of confusing efforts with results. In education, a system that achieves more spending per student (effort), might not achieve more learning per student (result).
Conclusion - Systems thinking
Do you recall the stocks and flows model of a system? With a bathtub, the volume of water was the stock, the faucet brought an inflow, and the drain brought an outflow. My biggest takeaway from the book is that humans are biased to pay attention to stocks rather than flows. And even when we consider flows, we focus on inflows. (In the bathtub example, did you consider evaporation as an outflow?) Let’s revisit the interest-bearing savings account. We first care about our account balance, as opposed to how much is coming in. It is even rarer to monitor how much we spend. Yet it is more important that the balance is increasing (net positive flows) than that the balance is high. Even when we turn our focus to flows, we try to figure out how to make more money. Instead, we should maybe pay more attention to our impulse buys or cancel a few of our 25 monthly subscriptions.
Systems thinking is a powerful tool, but not every problem requires a systems lens. That said, if the problem involves interconnected elements working towards a purpose, then I will be applying some of the ideas I’ve picked from this enlightening book.