ABEGINNER’S GUIDETO SYSTEMSTHINKING

Edited by Colleen Lannon

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SYSTEMS THINKING AS A LANGUAGE

BY MICHAEL R. GOODMAN

L anguage has a subtle, yet powerful Diagrams also facilitate learning. ceptions of a problem into black-and- effect on the way we view the Studies have shown that many people learn white pictures that can reveal subtle differ - world. English, like most other Western best through representational images, such ences in viewpoint. languages, is linear—its basic sentence con - as pictures or stories. A diagram is Example : In one systems thinking struction, noun-verb-noun, translates into a powerful means of communication course, a team of managers was working a worldview of “x causes y.” This linearity because it distills the essence of a problem on an issue they had been wrestling with predisposes us to focus on one-way rela - into a format that can be easily remem - for months. One manager was explaining tionships rather than circular or mutually bered, yet is rich in implications and his position, tracing through the loops he causative ones, where x influences y, and y insights. had drawn, when a team member stopped in turn influences x. Unfortunately, many him. “Does that model represent your of the most vexing problems confronting thinking about this problem?” he asked. managers and corporations today are The presenter hesitated a bit, reviewed caused by a web of tightly interconnected A systems diagram is a his diagram, and finally answered, “Yes.” circular relationships. To enhance our powerful means of The first man, evidently relieved, understanding and communication of such communication because it responded, “After all of these months, I problems, we need a language more natu - finally really understand your thoughts on distills the essence of a rally suited to the task. this issue. I disagree with it, but at least problem into a format that can now that we are clear on our different ELEMENTS OF THE be easily remembered, yet is viewpoints, we can work together to clar - LANGUAGE ify the problem.” rich in implications and insights. Systems thinking can be thought of as a • Allows examination and inquiry. language for communicating about com - Systems diagrams can be powerful means plexities and interdependencies. In particu - for fostering a collective understanding of lar, the following qualities make systems • Adds precision. The specific set of a problem. Once individuals have stated thinking a useful framework for discussing “syntactical” rules that govern systems dia - their understanding of the problem, they and analyzing complex issues: grams greatly reduce the ambiguities and can col-laborate on addressing the chal - • Focuses on “closed interdependen - miscommunications that can occur when lenges it poses. And by focusing the discus - cies.” The language of systems thinking is we tackle complex issues. sion on the diagrams, systems thinking circular rather than linear. It focuses on Example : In drawing out the relation - defuses much of the defensiveness that can closed interdependencies, where x influ - ships between key aspects of a problem, arise in a high-level debate. ences y, y influences z, and z influences x. causal links are not only indicated by Example : When carrying on a systems • Offers a “visual” language. Many of arrows, but are labeled “s” (same) or “o” discussion, differing opinions are no longer the systems thinking tools—causal loop (opposite) to specify how one variable viewed as “human resources’ view of our diagrams, behavior over time diagrams, sys - affects another. Such labeling makes the productivity problem” or “marketing’s tems archetypes, and structural diagrams— nature of the relationship more precise, description of decreasing customer satisfac - have a strong visual component. They help ensuring only one possible interpretation. tion,” but simply different structural repre - clarify complex issues by summing up, • Forces an “explicitness” of mental sentations of the . This shifts the concisely and clearly, the key elements models. The systems thinking language focus of the discussion from whether involved. translates “war stories” and individual per - human resources or marketing is right, to

2 A BEGINNERʼS GUIDE TO SYSTEMS THINKING PEGASUS COMMUNICATIONS, INC. 781.398.9700 constructing a diagram that best captures simple sentences. In the language of sys - Don’t expect to be fluent in systems the behavior of the system. tems thinking, systems diagrams such as thinking right away. Remember, after your • Embodies a worldview that looks at causal loops can be thought of as sen - first few Latin classes, you still couldn’t read wholes, rather than parts, and that rec - tences constructed by linking together The Odyssey. For that matter, you probably ognizes the importance of understanding key variables and indicating the causal knew only a few key phrases and vocabu - how the different segments of a system are relationships between them. By stringing lary words, but you improved your skills by interconnected. An inherent assumption of together several loops, we can create a using the language as often as possible. The the systems thinking worldview is that “paragraph” that tells a coherent story same holds true for systems thinking. problems are internally generated—that we about a particular problem under study. When sitting in a meeting, see if you often create our own “worst nightmares.” If there were a Berlitz guide to systems can inform your understanding of a prob - Example : At systems thinking courses thinking, archetypes such as “Fixes That lem by applying a systems perspective. at Innovation Associates, participants play a Fail” or “Shifting the Burden” would be Look for key words that suggest linear board game known as the Beer Game, listed as “commonly used phrases.” They thinking is occurring—statements such as where they assume the position of retailer, provide a ready-made library of common “we need more of the same” or “that solu - wholesaler, distributor, or producer. Each structures and behaviors that can apply to tion worked for us the last time this hap - player tries to achieve a careful balance many situations. Memorizing them can pened, why not use it again?”You can also between carrying too much inventory or create low-key practice sessions by work - being backlogged. When things go wrong, ing with a small team of colleagues to dia - many people blame their supplier (“I kept An inherent assumption of the gram a particular problem or issue. ordering more, but he didn’t respond”) or BECOMING FLUENT the buyers (“fickle consumers—one day systems thinking worldview is they’re buying it by the truckload, the next that problems are internally We say someone is fluent when they begin day they won’t even touch the stuff”). In generated—we often create our to think in a particular language and no reality, neither the buyers nor the suppliers longer have to translate. But fluency means own “worst nightmares.” are responsible for the wide fluctuations in more than just an ability to communicate inventory—they are a natural consequence in a language; it means understanding the of the structure of the system in which the surrounding culture of the language—the players are functioning. help you recognize a business situation or worldview. As with any foreign language, The systems thinking worldview dis - problem that is exhibiting common symp - mastering systems thinking will allow us to pels the “us versus them” mentality by toms of a systemic breakdown. fully engage in and absorb the worldview expanding the boundary of our thinking. Of course, the key to becoming more that pervades it. By learning the language Within the framework of systems thinking, proficient in any language is to practice— of systems thinking, we will hopefully “us” and “them” are part of the same sys - and practice often. When reading a news - change not only the way we discuss com - tem and thus responsible for both the paper article, for example, try to plex issues, but the way we think about problems and their solutions. “translate” it into a systems perspective: them as well. • • Take events reported in the newspaper LEARNING THE and try to trace out an underlying pattern Michael Goodman is an associate director of LANGUAGE Innovation Associates, Inc. (Cambridge, MA). The that is at work. material in this article was drawn from his 20 years Learning systems thinking can be likened • Check whether the story fits one of the of experience in the field, as well as from business to mastering a foreign language. In systems archetypes, or whether it is per - courses developed by Innovation Associates. school, we studied a foreign language by haps a combination of several archetypes. first memorizing the essential vocabulary • Try to sketch out a causal loop or two words and verb conjugations. Then we that captures the structure producing that This article was originally published in The Systems began putting together the pieces into pattern. Thinke r® V2N3, April 1991.

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THE VOCABULARY OF SYSTEMS THINKING: A POCKET GUIDE

S ystems thinking can serve as a lan - system are interrelated. A CLD takes the GFDs show how one variable, such as guage for communicating about form of a closed loop that depicts cause- delivery delays, interacts with another, complexity and interdependencies. To be and-effect linkages. such as sales, by plotting the relationship fully conversant in any language, you must Drifting Goals —A systems archetype. In a between the two over the entire range of gain some mastery of the vocabulary, espe - “Drifting Goals” scenario, a gradual relevant values. The resulting diagram is a cially the phrases and idioms unique to that downward slide in performance goals concise hypothesis of how the two vari - language. This glossary lists many terms that goes unnoticed, threatening the long- ables interrelate. Also called Table may come in handy when you’re faced with term future of the system or organiza - Function . a systems problem. tion. Example: lengthening delivery Growth and Underinvestment —A sys - delays. tems archetype. In this situation, resource Accumulator —Anything that builds up or Escalation —A systems archetype. In the investments in a growing area are not dwindles; for example, water in a bath - “Escalation” archetype, two parties com - made, owing to short-term pressures. As tub, savings in a bank account, inventory pete for superiority in an arena. As one growth begins to stall because of lack of in a warehouse. In modeling software, a party’s actions put it ahead, the other resources, there is less incentive for stock is often used as a generic symbol party “retaliates” by increasing its actions. adding capacity, and growth slows even for accumulators. Also known as Stock The result is a continual ratcheting up of further. or Level . activity on both sides. Examples: price Learning Laboratory —One of the 10 Balancing Process/Loop —Combined battles, the Cold War. tools of systems thinking. A learning lab - with reinforcing loops, balancing pro - —The return of information oratory embeds a management flight cesses form the building blocks of about the status of a process. simulator in a learning environment. dynamic systems. Balancing processes Example: annual performance reviews Groups of managers use a combination seek equilibrium: They try to bring return information to an employee about of systems thinking tools to explore the things to a desired state and keep them the quality of his or her work. dynamics of a particular system and there. They also limit and constrain Fixes That Fail —A systems archetype. In a inquire into their own understanding of change generated by reinforcing pro - “Fixes That Fail” situation, a fix is applied that system. Learning labs serve as a cesses. A balancing loop in a causal loop to a problem and has immediate positive manager’s practice field. diagram depicts a balancing process. results. However, the fix also has unfore - Level— See Accumulator. Balancing Process with Delay —A com - seen long-term consequences that even - Leverage Point —An area where small monly occurring structure. When a bal - tually worsen the problem. Also known change can yield large improvements in a ancing process has a long delay, the usual as “Fixes That Backfire.” system. response is to overcorrect. Flow —The amount of change something Limits to Success —A systems archetype. Overcorrection leads to wild swings in undergoes during a particular unit of In a “Limits to Success” scenario, a com - behavior. Example: real estate cycles. time. Example: the amount of water that pany or product line grows rapidly at Behavior Over Time (BOT) flows out of a bathtub each minute, or first, but eventually begins to slow or Diagram —One of the 10 tools of sys - the amount of interest earned in a sav - even decline. The reason is that the sys - tems thinking. BOT diagrams capture ings account each month. Also called a tem has hit some limit—capacity con - the history or trend of one or more vari - Rate . straints, resource limits, market ables over time. By sketching several Generic Structures —Structures that can saturation, etc.—that is inhibiting further variables on one graph, you can gain an be generalized across many different set - growth. Also called “Limits to Growth.” explicit understanding of how they inter - tings because the underlying relationships Management Flight Simulator (MFS) — act over time. Also called Reference are fundamentally the same. Systems One of the 10 tools of systems thinking. Mode. archetypes are a class of generic struc - Similar to a pilot’s flight simulator, an Causal Loop Diagram (CLD) —One of tures. MFS allows managers to test the out - the 10 tools of systems thinking. Causal Graphical Function Diagram (GFD) — come of different policies and decisions loop diagrams capture how variables in a One of the 10 tools of systems thinking. without “crashing and burning” real

4 A BEGINNERʼS GUIDE TO SYSTEMS THINKING PEGASUS COMMUNICATIONS, INC. 781.398.9700 companies. An MFS is based on a system Simulation Model —One of the 10 tools of a complex whole. Almost always defined dynamics computer model that has been systems thinking. A computer model that with respect to a specific purpose within a changed into an interactive decision- lets you map the relationships that are larger system. Example: An R&D depart - making simulator through the use of a important to a problem or an issue and ment is a system that has a purpose in the user interface. then simulate the interaction of those vari - context of the larger organization. Policy Structure Diagram —One of the ables over time. Systems Archetypes —One of the 10 tools 10 tools of systems thinking. Policy struc - Stock— See Accumulator. of systems thinking. Systems archetypes ture diagrams are used to create a concep - Structural Diagram —Draws out the accu - are the “classic stories” in systems think - tual “map” of the decision-making process mulators and flows in a system, giving an ing—common patterns and structures that is embedded in an organization. It overview of the major structural elements that occur repeatedly in different settings. highlights the factors that are weighed at that produce the system’s behavior. Also Systems Thinking —A school of thought each decision point. called flow diagram or accumulator/flow that focuses on recognizing the intercon - Rate— See Flow. diagram. nections between the parts of a system Reference Mode— See Behavior Over Structure-Behavior Pair —One of the 10 and synthesizing them into a unified Time Diagram. tools of systems thinking. A structure- view of the whole. Reinforcing Process/Loop —Along with behavior pair consists of a structural rep - Table Function— See Graphical balancing loops, reinforcing loops form resentation of a business issue, using Function Diagram. the building blocks of dynamic systems. accumulators and flows, and the corre - Template —A tool used to identify systems Reinforcing processes compound change sponding behavior over time (BOT) dia - archetypes. To use a template, you fill in in one direction with even more change gram for the issue being studied. the blank variables in causal loop dia - in that same direction. As such, they gen - Structure —The manner in which a sys - grams. erate both growth and collapse. A rein - tem’s elements are organized or interre - Tragedy of the Commons —A systems forcing loop in a causal loop diagram lated. The structure of an organization, archetype. In a “Tragedy of the depicts a reinforcing process. Also known for example, could include not only the Commons” scenario, a shared resource as vicious cycles or virtuous cycles. organizational chart but also incentive becomes overburdened as each person in Shifting the Burden —A systems systems, information flows, and inter- the system uses more and more of the archetype. In a “Shifting the Burden” sit - personal interactions. resource for individual gain. Eventually, uation, a short-term solution is tried that Success to the Successful —A systems the resource dwindles or is wiped out, successfully solves an ongoing problem. archetype. In a “Success to the Successful” resulting in lower gains for everyone As the solution is used over and over situation, two activities compete for a involved. Example: the Greenhouse Effect . again, it takes attention away from more common but limited resource. The activity • fundamental, enduring solutions. Over that is initially more successful is consis - time, the ability to apply a fundamental tently given more resources, allowing it to solution may decrease, resulting in more succeed even more. At the same time, the The above glossary is a compilation of definitions from many sources, including: and more reliance on the symptomatic activity that is initially less successful solution. Examples: drug and alcohol becomes starved for resources and eventu - • Innovation Associates’ and GKA’s Introduction to Systems Thinking coursebooks dependency. ally dies out. Example: the QWERTY lay - Shifting the Burden to the out of typewriter keyboards. • The Fifth Discipline: The Art and Practice of the Intervener —A special case of the —A field of study that Learning Organization , by “Shifting the Burden” systems archetype includes a methodology for constructing • High Performance Systems’ Academic User’s that occurs when an intervener is computer simulation models to achieve Guide to STELLA brought in to help solve an ongoing better understanding of social and corpo - • The American Heritage Dictionary and The problem. Over time, as the intervener rate systems. It draws on organizational Random House Dictionary. successfully handles the problem, the studies, behavioral decision theory, and people within the system become less engineering to provide a theoretical and capable of solving the problem them - empirical base for structuring the rela - selves. They become even more depen - tionships in complex systems.

dent on the intervener. Example: System —A group of interacting, interre - This article was originally published in The Systems ongoing use of outside consultants. lated, or interdependent elements forming Thinke r® V2N10, Dec 1991/Jan 1992

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A PALETTE OF SYSTEMS THINKING TOOLS

T here is a full array of systems think - turn have sub sub-factors. Many layers of archetype. They serve as a starting point ing tools that you can think of in nesting, however, may be a sign that one of from which one can build a clearer articu - the same way as a painter views colors— the sub-factors should be turned into a lation of a business story or issue. Specific many shades can be created out of three major factor. archetypes include: “Drifting Goals,” primary colors, but having a full range of “Shifting the Burden,” “Limits to Success,” ready-made colors makes painting much DYNAMIC THINKING “Success to the Successful,” “Fixes That TOOLS easier. Fail,” “Tragedy of the Commons,” “Growth There are at least 10 distinct types of Behavior Over Time (BOT) Diagrams are and Underinvestment,” and “Escalation” systems thinking tools (an abbreviated more than simple line projections—they (see “Systems Archetypes at a Glance,” p. summary diagram appears on the facing capture the dynamic relationships among 20). page). They fall under four broad cate - variables. For example, say we were trying gories: brainstorming tools, dynamic to project the relationship between sales, STRUCTURAL THINKING TOOLS thinking tools, structural thinking tools, inventory, and production. If sales jump 20 and computer-based tools. Although each percent, production cannot jump instanta - Graphical Function Diagrams, Structure- of the tools is designed to stand alone, they neously to the new sales number. In addi - Behavior Pairs, and Policy Structure Diagrams also build upon one another and can be tion, inventory must drop below its can be viewed as the building blocks for used in combination to achieve deeper previous level while production catches up computer models. Graphical Functions are insights into dynamic behavior. with sales. By sketching out the behavior useful for clarifying nonlinear relationships of different variables on the same graph, between variables. They are particularly BRAINSTORMING TOOLS we can gain a more explicit understanding helpful for quantifying the effects of vari - The Double-Q (QQ) Diagram is based on of how these variables interrelate. ables that are difficult to measure, such as what is commonly known as a fishbone or Causal Loop Diagrams (CLDs) provide a morale or time pressure. Structure- cause-and-effect diagram. The Qs stand for useful way to represent dynamic interrela - Behavior Pairs link a specific structure qualitative and quantitative , and the tech - tionships. CLDs make explicit one’s under - with its corresponding behavior. Policy nique is designed to help participants standing of a system’s structure, provide a Structure Diagrams represent the processes begin to see the whole system. During a visual representation to help communicate that drive policies. In a sense, when we use structured brainstorming session with the that understanding, and capture complex these tools we are moving from painting QQ diagram, both sides of an issue remain systems in a succinct form. CLDs can be on canvas to sculpting three-dimensional equally visible and properly balanced, combined with BOTs to form structure- figures. avoiding a “top-heavy” perspective. The behavior pairs, which provide a rich frame - COMPUTER-BASED TOOLS diagram also provides a visual map of the work for describing complex dynamic key factors involved. Once those factors are phenomena. CLDs are the systems This class of tools, including computer pinpointed, Behavior Over Time Diagrams thinker’s equivalent of the painter’s primary models, management flight simulators, and and/or Causal Loop Diagrams can be used colors. learning laboratories, demands the highest to explore how they interact. Systems Archetypes is the name given to level of technical proficiency to create. A QQ diagram begins with a heavy certain common dynamics that seem to On the other hand, very little advance horizontal arrow that points to the issue recur in many different settings. These training is required to use them once they being addressed. Major “hard” (quantita - archetypes, consisting of various combina - are developed. • tive) factors branch off along the top and tions of balancing and reinforcing loops, “soft” (qualitative) factors run along the are the systems thinker’s “paint-by-num - bers” set—users can take real-world exam - bottom. Arrows leading off of the major This article was originally published in The Systems factors represent sub-factors, which can in ples and fit them into the appropriate Thinke r® V1N3, August 1990

6 A BEGINNERʼS GUIDE TO SYSTEMS THINKING PEGASUS COMMUNICATIONS, INC. 781.398.9700 DYNAMIC THINKING TOOLS STRUCTURAL THINKING TOOLS COMPUTER - BASED TOOLS

Behavior Over Time Diagram Graphical Function Diagram Computer Model

f(x) A B

C

Time x

Can be used to graph the behavior of Captures the way in which one variable Lets you translate all relationships variables over time and gain insights affects another, by plotting the relation - identified as relevant into mathematical into any interrelationships between ship between the two over the full range equations. You can then run policy them. (BOT diagrams are also known as of relevant values. analyses through multiple simulations. reference mode diagrams.)

Causal Loop Diagram Structure-Behavior Pair Management Flight Simulator

COCKPIT B DECISION INFO s STOCK o HIRING STOCK C R B HIRING s A s Time

Provides “flight training” for managers Used in conjunction with behavior over Consists of the basic dynamic structures through the use of interactive computer time diagrams, can help you identify that can serve as building blocks for games based on a computer model. Users reinforcing (R) and balancing (B) developing computer models (for exam - can recognize long-term consequences of processes. ple, exponential growth, delays, smooths, decisions by formulating strategies and S-shaped growth, oscillations, and so on). making decisions based on those strategies. Systems Archetype Policy Structure Diagram Learning Laboratory

Reflection

Experimentation

Helps you recognize common system A conceptual map of the decision-making A manager’s practice field. Is equivalent behavior patterns such as “Drifting process embedded in the organization. to a sports team’s experience, which Goals,” “Shifting the Burden,” “Limits to Focuses on the factors that are weighed blends active experimentation with Growth,” “Fixes That Fail,” and so on— for each decision, and can be used to reflection and discussion. Uses all the all the compelling, recurring “stories” of build a library of generic structures. systems thinking tools, from behavior organizational dynamics. over time diagrams to MFSs.

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GUIDELINES FOR DRAWING CAUSAL LOOP DIAGRAMS

T he old adage “if the only tool you • Time horizon. It is also helpful to you don’t stay focused on the issue, you have is a hammer, everything begins determine an appropriate time horizon for may quickly find yourself overwhelmed to look like a nail” can also apply to lan - the issue—one long enough to see the by the number of connections possible. guage. If our language is linear and static, dynamics play out. For a change in corpo - Remember, you are not trying to draw we will tend to view and interact with our rate strategy, the time horizon may span out the whole system—only what is criti - world as if it were linear and static. Taking a several years, while a change in advertising cal to the theme being addressed. When in complex, dynamic, and circular world and campaigns may be on the order of months. doubt, ask, “If I were to double or halve linearizing it into a set of snapshots may Time itself should not be included as a this variable, would it have a significant make things seem simpler, but we may causal agent, however. After a heavy rainfall, effect on the issue I am mapping?” If not, totally misread the very reality we were a river level steadily rises over time, but we it probably can be omitted. seeking to understand. Making such inap - would not attribute it to the passage of • Level of aggregation. How detailed propriate simplifications “is like putting on time.You need to identify what is actually should the diagram be? Again, the level your brakes and then looking at your driving the change. In computer chips, should be determined by the issue itself. speedometer to see how fast you were $/MIPS (million instructions per second) The time horizon also can help determine going,” says Bill Isaacs of DIA •logos. decreased in a straight line in the 1990s. It how detailed the variables need to be. If would be incorrect, however, to draw a the time horizon is on the order of weeks ARTICULATING REALITY causal connection between time and (fluctuations on the production line), vari - Causal loop diagrams provide a language $/MIPS. Instead, increasing investments and ables that change slowly over a period of for articulating our understanding of the learning curve effects were likely causal many years may be assumed to be constant dynamic, interconnected nature of our forces. (such as building new factories). As a rule world. We can think of them as sentences • Behavior over time charts. Identifying of thumb, the variables should not describe that are constructed by linking together and drawing out the behavior over time of specific events (a broken pump); they key variables and indicating the causal rela - key variables is an important first step should represent patterns of behavior tionships between them. By stringing toward articulating the current understand - (pump breakdowns throughout the plant). together several loops, we can create a ing of the system. Drawing out future • Significant delays. Make sure to iden - coherent story about a particular problem behavior means taking a risk—the risk of tify which (if any) links have significant or issue. being wrong. The fact is, any projection of delays relative to the rest of the diagram. Following are some more general the future will be wrong, but by making it Delays are important because they are guidelines that should help lead you explicit, we can test our assumptions and often the source of imbalances that accu - through the process: uncover inconsistencies that may otherwise mulate in the system. It may help to visu - • Theme selection. Creating causal loop never get surfaced. For example, drawing alize pressures building up in the system diagrams is not an end unto itself, but part projections of steady productivity growth by viewing the delay connection as a of a process of articulating and communi - while training dollars are shrinking raises relief valve that either opens slowly as cating deeper insights about complex issues. the question, “If training is not driving our pressure builds or opens abruptly when It is pointless to begin creating a causal loop growth, what will?” The behavior over time the pressure hits a critical value. An exam - diagram without having selected a theme diagram also points out key variables that ple of this might be a delay between long or issue that you wish to understand better. should be included in the diagram, such as work hours and burnout: After sustained “To understand the implications of chang - Training Budget and Productivity.Your dia - periods of working 60+ hours per week, a ing from a technology-driven to a market - gram should try to capture the structure sudden collapse might occur in the form ing-oriented strategy,” for example, is a that will produce the projected behavior. of burnout. • better theme than “To better understand • Boundary issue. How do you know This article was originally published in The Systems our strategic planning process.” when to stop adding to your diagram? If Thinke r® V3N1, February 1992

8 A BEGINNERʼS GUIDE TO SYSTEMS THINKING PEGASUS COMMUNICATIONS, INC. 781.398.9700 GUIDELINE EXAMPLE

Litigation S Use nouns when choosing a variable name. Avoid verbs and action phrases, because the E action is conveyed in the loop’s arrows. For example, “Costs” is better than “Increasing M 1 Costs

A Costs,” because a decrease in Increasing Costs is confusing. The sign of the arrow (“s” for same Increasing Costs N or “o” for opposite) indicates whether Costs increase or decrease relative to the other variable. E L Rewards B Use variables that represent quantities that can vary over time. It does not make sense A I to say that “State of Mind” increases or decreases. A term like “Happiness,” on the

R 2 Happiness

A other hand, can vary. V State of Mind G N I Whenever possible, choose the more “positive” sense of a variable name. For example, Demand T

C the concept of “Growth” increasing or decreasing is clearer than an increase or

E 3 Growth

L decrease in “Contraction.” E

S Contraction

Think of the possible as well as the expected outcomes for s Production Output 4 every course of action included in the diagram. For example, an increase in s “Production Pressure” may increase “Production Output,” but it may also increase “Stress” Production Pressure Stress o and decrease “Quality.” Quality, etc.

All balancing loops are goal-seeking processes. Try to make explicit the goals driving s Quality Quality 5 the loop. For example, Loop B1 may raise questions as to why increasing “Quality” s o would lead to a decrease in “Actions to Improve Quality.” By explicitly identifying B1 Desired “Desired Quality” as the goal in Loop B2, we see that the “Gap in Quality” is really driv - B2 Gap in Quality Quality ing improvement actions. Actions to Actions to s Improve o Improve Quality Quality s N

D O Distinguishing between perceived and actual states, such as “Perceived Quality” s e

I l Actual a y s T 6 versus “Actual Quality,” is important. Perceptions often change slower than reality Quality C does, and mistaking the perceived status for current reality can be misleading and create Perceived U Actions to Quality R undesirable results. Improve B2 R1 T Quality

S o

N s s Gap in Desired O Quality Quality C s P

O If a variable has multiple consequences, start by lumping them into one term while O completing the rest of the loop. For example, “Coping Strategies” can represent many s L 7 different ways we respond to stress (exercise, meditation, alcohol use, etc.). Stress B Coping Strategies o

Actions almost always have different long-term and short-term consequences. Draw 8 larger loops as they progress from short- to long-term processes. Loop B1 shows the s short-term behavior of using alcohol to combat stress. Loop R2, however, draws out the Stress B1 Alcohol long-term consequences of this behavior, showing that it actually increases stress. o Use o o Productivity R2 Health s If a link between two terms requires a lot of explanation to be clear, redefine the o Demand Quality 9 variables or insert an intermediate term. Thus, the relationship between “Demand” and

S “Quality” may be more obvious when “Production Pressure” is inserted between them. s Production o

P Demand Quality

I Pressure T

L A shortcut to determining whether a loop is balancing or reinforcing is to count o A Bank

R the number of “o’s” in the loop. An odd number of “o’s” indicates a balancing loop Failures E 10 o

N (i.e., an odd number of U-turns keeps you headed in the opposite direction); an even Depositors’ E Solvency R number or no “o’s” means it is a reinforcing loop. CAUTION: After labeling the loop, you Confidence G should always read through it to make sure the story agrees with your R or B label. o Withdrawals from Banks o

9 PEGASUS COMMUNICATIONS, INC. WWW.PEGASUSCOM.COM A BEGINNERʼS GUIDE TO SYSTEMS THINKING