Not thinking in systems yet? One key you might be missing

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Credit: Bill Oxford

I’ve written a lot in this space about anxiety and uncertainty which, I think, are good things to get comfortable with.

I believe that what is needed to be a successful leader in our modern world is to shift from a stance of knowing to one of curiosity.

I recently interviewed my friend and mentor Roger Martin for an upcoming podcast episode. Roger’s just written a great new book called When More is Not Better about, among other things, how the goal of economic growth has subsumed so many other important aspects of American life.

The central idea of the book is that we need to think in terms of systems— something that I both wholeheartedly agree with and something that, in many ways, Roger helped me see earlier in my career.

There’s a number of interesting things that happen when you make the shift to thinking in terms of systems, but I’d like to highlight one here: recognizing the importance of balancing feedback loops.

Many systems exhibit what’s called homeostasis, a tendency to revert to some default set point. This is often by design. Think about how a thermostat turns on the heat when the temperature is too low and shuts it off when the temperature reaches the goal.

But sometimes homeostasis shows up in ways that we don’t always expect.

Consider, for example, a manufacturer trying to increase profitability. It might set goals to reduce costs, causing the VP of procurement to source the cheapest raw materials she can find. In most companies, the VP would be rewarded for her work helping the company meet its targets.

But, as systems thinkers, our analysis can’t end there. Using cheaper raw materials has a consequence. In the instance I’m thinking of, it introduced quality problems in the finished product and additional waste in the form of raw materials that can’t be used.

These consequences—which balance the original efforts to make the system run more cheaply—often happen after a delay. It’s not clear that they’re caused by past choices because they show up as a different problem (one that the VP of quality now has to figure out).

This isn’t a concept that just applies to manufacturing. A software company might reduce testing in an effort to get its products out the door faster. Or a law firm might try to save money by reducing the number of support staff-only to see billable hours fall as attorneys have to spend more time managing administrata.

The most successful leaders recognize that every choice represents a tension. They consider their system holistically. Their goal isn’t necessarily to be the cheapest or the fastest. Rather, their goal is to learn and experiment with their system. By attending to all its parts, they can balance their goals across a number of dimensions and, ultimately, deliver outstanding value.

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