Systems Dynamics
& Systems Thinking
Systems Dynamics and Systems Thinking are about modeling the many interactions, variables and feedback loops characterizing business processes, in order to understand more deeply how the business operates as a system, and to try and predict the consequences of modifications to any of its parts in terms of the system's total behaviour. Systems Dynamics uses powerful mathematical models and computerized simulations to study systems in great detail and aims at deep analysis and predictive power. Systems Thinking aims more for a conceptual level of clarifying the many feedback and feedforward loops existing in modern businesses, without trying to exhaustively analyse or predict on a detailed level.
A systemic view applied to organizations provides powerful insights into the dynamics and (often counter-intuitive) behaviour of business processes when (local) conditions and variables change. Systems dynamics modeling often reveals that changes that seem small and/or local in scope can have far-reaching consequences throughout an organisation.
A classic example is a business that tries to improve profits by stepping up sales efforts. At first the strategy seems to pay off: sales figures increase, and profits soar. Then something unexpected happens: not only does the growth in sales figures slow down, some of the regular customers are leaving. Pressure on sales staff to gain new customers fails to produce significant improvements and the loss of established customers escalates. At a certain point sales figures begin to drop. Systems analysis brought to light a negative feedback loop between the volume of sales and the quality of service the organisation could provide: the more new customers were brought in, the more backlog was created in servicing customers, both new and existing. The gradual drop in service levels drove away existing customers and the failure to adequately respond to customers rapidly ruined the organisation's reputation for speedy and impeccable service. Short and simple: the increased sales effort produced a momentary, local improvement, but caused a long-term deterioration of the whole system.
Systems Thinking is a powerful tool for the Enterprise Architect since it reveals relations and loops that usually remain hidden in other forms of business and systems analysis. As such, it can be used to gain a better overall view and understanding of an organisation and its total behaviour and dynamics, enabling far more relevant and better aligned architectures.
Systems Thinking has its limitations too, that Enterprise Architects using this approach should be aware off.
A systems modeling approach works best when the system under consideration allows one to map all the relevant variables and feedback loops in enough detail to create models that accurately predict behaviour based on propagating changes through the modeled connections. When a system passes a certain threshold and turns from complicated into complex, however, such models rapidly loose their predictive power: there simply are too many variables and interactions, the chains and loops of cause and effect change their dynamics and the system as a whole reacts in upredictable ways to changing variables. Even the fact that the system reacted in a specific manner to certain changes in the past does no longer mean it is necessarily likely to do so now.
Systems thinking can still be a useful tool to map feedback loops and some of the relations inside the complex system that local analysis leaves undiscovered. But we have to keep in mind that causality is no longer stable and therefore can not be used to accurately describe the system or predict its behaviour.
