The Ackoff Center Weblog provides an opportunity to keep up with the latest research in Systems Thinking. It is also a forum where you can interact with others in the field and share your own experiences.
December 29, 2021
Digital Transformation: Creating the Path to Strategic Outcomes
The average lifespan of a public corporation recently dropped to only nine years. Change and digital disruption have dramatically transformed the nature of competitive advantage. The rules of business today bear little resemblance to those which Michael Porter shared in his seminal book, “Competitive Advantage: Creating and Sustaining Superior Performance.”
Digital today is not simply about digitizing the things you already do. Paul Leinwand and Mahadeva Matt Mani put it this way in their forthcoming book, "Beyond Digital: How Great Leaders Transform Their Organizations and Shape the Future" "With product lifetimes shortening, organizations are recognizing they can’t sustain a differentiated position by focusing narrowly on products and services.” Digital transformation, therefore, is about creating whole new business models. Businesses that succeed here can reimagine their corporate future and transform their basis of competition
“Managers do not solve problems,” the late University of Pennsylvania systems theorist Russell Ackoff famously said, “they manage messes.” Messes emerge because it is difficult to decipher the interconnections between and among business units and the external environment. And messes are difficult to manage because it is hard to save what is valuable without causing damage.
The systems thinker’s first task is to understand the nature of the interconnections. Take, for example, rapid and frequent changes in technology. These have implications for an organization’s human-resources policies—who should be hired, how they should be trained and managed, etc. Technological change also forces the organization to evaluate its structure and work practices: Should it have a flatter or steeper hierarchy? Should employees be given substantial autonomy? And so on.
The systems thinker’s second task is to match distinct business processes to activity within the company and to set policy directives on how every unit and activity initiates and responds to change.
The systems thinker aims to see the forest as well as the trees, looking beyond the first-order effects of changes to anticipate the size and magnitude of subsequent opportunities and constraints. He then designs a response system so that if it were to fail, it would do so in noncritical ways before failing in catastrophic ones—the engineering principle of “leak-before-break.”
The systems thinker is acutely aware that feedback loops mean that success begets success and failure begets failure. The 1980 IBM-Microsoft agreement illustrates this principle. That year, IBM asked Bill Gates and his fledgling startup, Microsoft, to develop an operating system for IBM’s new personal computer. The first part of the deal that Gates structured was standard: IBM would have to pay Microsoft a development fee of $200,000 and as much as $500,000 for incremental development work. The second part of the deal is noteworthy for Gates’s recognition of feedback effects. He gave IBM the rights to use the Microsoft operating system and several related products for no additional fees, on the condition that Microsoft had exclusive rights to license the system and related software to other manufacturers.
Why did Gates introduce this second element? In their book, The Business of Platforms, MIT’s Michael A. Cusumano, University of Surrey’s Annabelle Gawer, and Harvard’s David B. Yoffie note that Gates was aware of a growing “clone” industry and calculated that exclusive licensing could be very valuable if the market for personal computers took off. And indeed it did: an entire ecosystem of hardware and software developers emerged during the 1980s and ’90s centered around Microsoft’s operating system, which drove the company’s revenues from $16 million in 1981 to $19 billion by 1999.
The systems thinker is acutely aware that feedback loops mean that success begets success and failure begets failure. The 1980 IBM-Microsoft agreement illustrates this principle. That year, IBM asked Bill Gates and his fledgling startup, Microsoft, to develop an operating system for IBM’s new personal computer. The first part of the deal that Gates structured was standard: IBM would have to pay Microsoft a development fee of $200,000 and as much as $500,000 for incremental development work. The second part of the deal is noteworthy for Gates’s recognition of feedback effects. He gave IBM the rights to use the Microsoft operating system and several related products for no additional fees, on the condition that Microsoft had exclusive rights to license the system and related software to other manufacturers.
Why did Gates introduce this second element? In their book, The Business of Platforms, MIT’s Michael A. Cusumano, University of Surrey’s Annabelle Gawer, and Harvard’s David B. Yoffie note that Gates was aware of a growing “clone” industry and calculated that exclusive licensing could be very valuable if the market for personal computers took off. And indeed, it did: an entire ecosystem of hardware and software developers emerged during the 1980s and ’90s centered around Microsoft’s operating system, which drove the company’s revenues from $16 million in 1981 to $19 billion by 1999.
We live in a world whose complexity grows by the nano-second. And yet, few have been taught the full complement of skills necessary to make sense of and thereby cope with a complex, messy world. And yet, our very survival hinges on it.
Because they’re all highly interdependent, and thereby interrelated, we could start with any of the critical skills. But since the kind of knowledge necessary to deal with a complex, messy world is fundamental, Philosophy is a natural starting point. Further, if any Philosophic system is especially suited for dealing with complexity, it’s the Philosophical School of Pragmatism. Its essence is best captured in terms of a brief definition of what it regards as the Truth, especially how to obtain it. While the definition is important in itself, it’s made even greater by the unparalleled insights it offers into the nature of complexity.
In brief, “Truth is that which Makes an Ethical and Spiritual difference in the Quality of Our Lives.” Thus, unlike other Philosophic systems for producing knowledge, according to Pragmatism, Epistemology, Ethics, Spirituality, and Aesthetics are not only interrelated, but inseparable. In short, Truth does not consist of facts and abstract propositions alone.
Epistemology is the systematic means by which produce and thereby secure Formal Knowledge. Ethics is the means by which we know what is Right Ethically and what we need to do in order to achieve it. Spirituality is the feelings deep inside of us by which we know that there is more to the Human condition than our bodies and Pure Thought alone. The Quality of Life is a stand-in for Aesthetics, that is, what is Harmonious and thereby Pleasing. Finally, the little word “Makes” means that Truth does not consist of a set of published articles and books, but a carefully crafted set of Ethical Actions designed to Right a set of Wrongs. In other words, Ethical Actions are not only the means by which Truth is achieved, but its very essence.
The true importance of the Pragmatist approach is that it leads to a deeper understanding of complex, messy systems. The late, great distinguished Social System’s educator and scientist par excellence, Russell L. Ackoff appropriated the word “Mess” to stand for a whole system of problems that were so highly interconnected, and thus constantly changing in direct response to one another, such that one couldn’t take any of the so-called individual problems out of the Mess and attempt to analyze them on their own without doing irreparable damage to the fundamental nature of the problems and the entire Mess of which they were a part. In other words, looking at problems in isolation violated one of the key properties of every Mess, all of the vital interactions between the problems. Indeed, interactions are the key attributes of every Mess.
(As an aside, Ackoff was the first PhD students of my Philosophical mentor at UC Berkeley, C. West Churchman. In turn, Churchman was a student of E.A. Singer who was one of William James’ best students, one of the principal founders of Pragmatism. Thus, if intellectually speaking, Singer is my Grandfather, then James is my Great Grandfather, a fact of which I couldn’t be prouder. My link with Pragmatism is direct indeed.)
There’s another important consideration that makes things both more complex and interesting. The late, distinguished UC Berkeley Architectural planner Horst Rittel introduced the concept of Wicked Problems. Wicked Problems are the complete opposite of Tame Problems, of which Exercises are the prime examples. Their endless attraction is due to the fact that students and teachers alike prefer them because they’re Bounded and Well-Structured, thus lowering the anxiety associated with uncertainty. “X+5=11, find X” is a typical example. Thus, following the classic rules of Algebra, everyone is expected to get the single right answer, X=6. Furthermore, once solved, Tame Problems stay solved forever. Not so with Wicked Problems. No single academic discipline or profession has the final say in either their definition or solution. Furthermore, they are constantly changing.
Putting the two together, the result is Wicked Messes. All of the key problems with which we are faced—the Economy, Extreme Divisiveness and Polarization, Homelessness, Women’s Rights, etc.–are Wicked Messes. But things are even more complicated. Because they continually impact one another, all Wicked Messes are thereby part of the larger Wicked Mess known as The World Mess. In short, all of the known problems of Society and the World are deeply interconnected.
In this way, Pragmatism not only forces us to grapple with, but challenges us constantly to surmount the immense turmoil associated with the most complex entities imaginable. Psychology is thereby a key element with regard to our ability to cope with complexity. In short, one’s state of mind is a key component of every Wicked Mess. Not only does one need to able to tolerate high degrees of uncertainty, but to appreciate the widest possible diversity of Expert Opinion. Indeed, one needs to seek it out. Without it, one is doomed to falling prey to one of the most damaging of all errors, the Error of the Third Kind: “Solving the Wrong Problems Precisely.” Before one makes the critical decision as to which problem one ought to solve, multiple perspectives are absolutely essential.
Since crises are an ever-present feature of today’s world, Crisis Management (CM) is also an integral component of coping with Wicked Messes. Indeed, every Wicked Mess both contains and leads to enumerable crises.
CM is fundamentally Thinking the Unthinkable and then doing everything in one’s power to prevent it from happening. But since crises both happen to and are the result of the faulty and irresponsible—read “Unethical”–behavior of organizations, specialized knowledge of organizations is also a critical ingredient in coping with complexity. In order to be as prepared as possible, it not only necessitates understanding what organizations need to do Before, During, and After crises, but especially why too many are resistant to CM.
The set of activities that encompass Before are first of all the consideration of as many Worst-Case Scenarios as possible. Namely, how crises can and will occur in the most unimaginable ways and at the most inopportune times. Second, that none of the known types of crises should be discounted. Rather, the key question is, “What is the form that say Product Tampering or Domestic Terrorism can and will assume such that it’s either our fault or does insurmountable damage to us?” Third, how do we identify and overcome the barriers that stand in the way to making CM a key priority for our organization? Fourth, how do we form and maintain Crisis Management Teams (CMTs) throughout our entire organization that will meet regularly, assess our susceptibility to crises, and address if our preparations are adequate?
During involves enacting all of one’s Before preparations. And After involves the most brutal, no-holds- bared assessment of what one did right versus wrong so that one is better prepared for future crises. In other words, learning is key.
One of the most critical of all activities is coming to terms with the different forms and sources of Denial.
In a previous blog[i], I examined a series of arguments/claims that have been constantly bandied about for not getting vaccinated for Covid 19. It quickly became clear that as bad as the individual arguments/claims were, they were made even worse by the disturbing fact that they reinforced one another in the most insidious of ways. Not only are they highly interactive, but they naturally grouped together into tight clusters thereby bolstering one another even more.
While they are by far one of the most destressing outcomes of Covid 19, the situation is made worse by the fact they are a direct reflection of the sad state of Reason in general. The greatest downfall is that they impede our collective ability to tackle the important issues facing us. In short, they are Denial writ large.
To recall, first and foremost is the Hoax Cluster, namely that Virus is not real, and therefore, not deserving of any, let alone serious, attention. It’s supported by the false assertion that the numbers of people affected are too small to worry about. It’s further reinforced by the Conspiracy/Paranoia Cluster. Namely, the Virus has been intentionally fomented by the Government so that by surreptitiously placing microchips in the vaccines, not only can it track our every whereabouts and thoughts at all times, but control them and thereby take away our precious freedoms and liberties. The I Know Best Cluster is the false belief that I and I alone know better than anyone else everything there is to know about myself. Therefore, I and no one else has the right to make important decisions pertaining to my body. The Invulnerability Cluster is the mistaken belief that “If in the highly improbable case that the Virus is real, I’m immune to it.” The Product Defect Cluster is the unfounded claim that the Vaccine, not the Virus, is the true culprit since it’s responsible for causing the Virus in the first place. In other words, it completely reverses the correct order of things. Furthermore, the vaccine has not been tested enough to ensure its complete safety. Therefore, there are no valid reasons for our trusting it.
The major point is that all of the Clusters are part of every Wicked Mess. Whatever the particular case, there are always voices claiming that it’s a Hoax, and so on. For this reason alone, Critical Thinking—surfacing and rebutting fallacious arguments/claims–is one of the most important skills in dealing with Wicked Messes.
Coping with Wicked Messes calls for all the fortitude and skills we can muster. Nothing less will do.
Reframing social and global problems could yield viable solutions to major issues such as climate change and gender inequality.
Being able to identify patterns in how people tend to frame problems underpins this approach.
Three such patterns include framing problems to avoid change, to blame individuals instead of the system, and to bypass "messy" realities.
Imagine you own an office building and your tenants are complaining that the elevator is way too slow. What do you do?
Faced with this problem, most people instinctively jump into solution mode. How can we make the elevator faster? Can we upgrade the motor? Tweak the algorithm? Do we need to buy a new elevator?
The speed of the elevator might be the wrong problem to focus on, however. Talk to an experienced landlord and they might offer you a more elegant solution: put up mirrors next to the elevator so people don’t notice the wait. Gazing lovingly at your own reflection tends to have that effect.
The mirror doesn’t make the elevator faster. It solves a different problem – that the wait is annoying.
Solve the right problem
The slow elevator story highlights an important truth, in that the way we frame a problem often determines which solutions we come up with. By shifting the way we see a problem, we can sometimes find better solutions.
Problem framing is of paramount importance when it comes to tackling the many hard challenges our societies face. And yet, we’re not terribly good at it. In a survey of 106 corporate leaders, 87% said their people waste significant resources solving the wrong problems. When we go to the doctor, we know very well that identifying the right problem is key. Too often, we fail to apply the same thinking to social and global problems.
Problem framing is of paramount importance when it comes to tackling the many hard challenges our societies face.
Annenberg graduate students Mia Jovanova and Chioma Woko have received the Russell Ackoff Doctoral Student Fellowship Award for 2021 from the Wharton Risk Management and Decision Processes Center. This is the seventh year in a row, and the thirteenth year overall, those Annenberg students have been fellowship recipients.
The research fellowship, now in its fourteenth year, is named in honor of Russell Ackoff, professor emeritus of management science, whose work was dedicated to furthering the understanding of human behavior in organizations. Made possible by an endowment from the Anheuser-Busch Charitable Trust, the fellowships are awarded to University of Pennsylvania doctoral students who are pursuing research in decision making under risk and uncertainty.
Ms. Jovanova will pursue a project called Brains, Social Networks and Susceptibility to Risky Health Behavior.
Health behaviors are often not independent, and one important form of influence includes conversations among peers. As such, considerable effort has been invested to understand how the brain responds to interpersonal influences, and how social network characteristics relate to risky decision-making in groups, separately. Yet, little is known about how brains and social networks interact.
In the current project, Ms. Jovanova is part of a large team of researchers at Penn, Columbia, UNC, and Dartmouth, seeking to understand the interplay between brains and social networks. In her part of the project, Ms. Jovanova seeks to understand how differences in young adults’ brains relate to how they respond to social influences on drinking outside the lab.
To ask these questions, the team followed ten existing social groups of college students, across two campuses. Ms. Jovanova combines three different types of data: social network assessments, brain scans, and daily mobile phone surveys. The researchers characterized the ten social networks at baseline, 6 months, and 12 month periods. A subset of participants from each group was scanned and reported their alcohol-related conversations and drinking, twice a day over 28 days. Ms. Jovanova examines differences in brain activity in two brain systems, the reward, and mentalizing systems. These systems are associated with how individuals process rewards, such as social approval from peers, and make sense of peers’ mental states, among other cognitive processes. Ms. Jovanova relates differences in these neural responses to day-to-day drinking following pro-alcohol conversations. Further, she investigates how these links vary based on how connected people are to others within their social group.
The avatars of the strategist This one ubiquitous job actually has four distinct roles
“Managers do not solve problems,” the late University of Pennsylvania systems theorist Russell Ackoff famously said, “they manage messes.” Messes emerge because it is difficult to decipher the interconnections between and among business units and the external environment. And messes are difficult to manage because it is hard to save what is valuable without causing damage.
The systems thinker’s first task is to understand the nature of the interconnections. Take, for example, rapid and frequent changes in technology. These have implications for an organization’s human-resources policies—who should be hired, how they should be trained and managed, etc. Technological change also forces the organization to evaluate its structure and work practices: Should it have a flatter or steeper hierarchy? Should employees be given substantial autonomy? And so on.
The systems thinker’s second task is to match distinct business processes to activity within the company and to set policy directives on how every unit and activity initiates and responds to change.
The systems thinker aims to see the forest as well as the trees, looking beyond the first-order effects of changes to anticipate the size and magnitude of subsequent opportunities and constraints. He then designs a response system so that if it were to fail, it would do so in noncritical ways before failing in catastrophic ones—the engineering principle of “leak-before-break.”
The systems thinker is acutely aware that feedback loops mean that success begets success and failure begets failure. The 1980 IBM-Microsoft agreement illustrates this principle. That year, IBM asked Bill Gates and his fledgling startup, Microsoft, to develop an operating system for IBM’s new personal computer. The first part of the deal that Gates structured was standard: IBM would have to pay Microsoft a development fee of $200,000 and as much as $500,000 for incremental development work. The second part of the deal is noteworthy for Gates’s recognition of feedback effects. He gave IBM the right to use the Microsoft operating system and several related products for no additional fees, on the condition that Microsoft had exclusive rights to license the system and related software to other manufacturers.
Why did Gates introduce this second element? In their book, The Business of Platforms, MIT’s Michael A. Cusumano, University of Surrey’s Annabelle Gawer, and Harvard’s David B. Yoffie note that Gates was aware of a growing “clone” industry and calculated that exclusive licensing could be very valuable if the market for personal computers took off. And indeed it did: an entire ecosystem of hardware and software developers emerged during the 1980s and ’90s centered around Microsoft’s operating system, which drove the company’s revenues from $16 million in 1981 to $19 billion by 1999."
To solve big issues like climate change, we need to reframe our problems
World Economic Forum
July 19, 2021
Most of our social and global problems are multi-causal. The problem-solving scholar Russell L. Ackoff memorably used the term “messes” to describe real-world problems. But people often dislike complexity, preferring neat stories with a single, easily identifiable villain.
Take the case of gun deaths in the US. Advocates for gun ownership often use the “mental health” argument that guns don’t kill people, people do. On the other hand, people who dislike guns often see it as an access problem and call for a ban on all guns. Arguably, both of these framings are as simplistic as they are infeasible.
Contrast this with the approach described by the economist Paul Krugman in a recent New York Times column. He uses the car industry to reframe the gun debate. We fight automobile accidents through a broad suite of different interventions, which allows us to keep using our cars but in a safer way.
This approach calls for a portfolio of reasonable regulations that recognizes the political fact that many Americans want to keep their guns. This is a far stretch from the binary "access-or-mental-health" framing and, in our opinion, much more likely to create results.
In 1991, Harvard Business School professor Chris Argyris wrote, “Any company that aspires to succeed in the tougher business environment of the 1990s must first resolve a basic dilemma: Success in the marketplace increasingly depends on learning, yet most people don’t know how to learn.”1 Fast-forward 30 years and swap in “the 2020s,” and these words likely ring true for many executives today.
To be clear, learning is as high a priority as ever for corporate leaders. Before the pandemic, learning and development (L&D) efforts aimed at reskilling and upskilling workforces ranked among global CEOs’ top concerns. COVID-19 has accelerated existing trends in remote work and automation and shined a spotlight on digital skills gaps in organizations.
Despite concern at the top and significant investments in training each year, many organizations are failing to meet employees’ learning needs.2 Gallup data shows that only 4 in 10 employees strongly agree that they have opportunities at work to learn and grow.3
So where do things go wrong?
For Argyris, the learning dilemma demonstrated that organizations make two critical mistakes: First, they define learning too narrowly, and second, they fail to reflect on how internal behaviors and thought patterns block effective learning.
Over the past year, L&D teams have had to pivot quickly and reshuffle priorities in order to meet the needs of remote workforces, from moving in-person learning models online to thinking beyond a focus on technical skills to the behavioral “human skills” at the core of virtual communication and collaboration. Along the way, companies are finding that some traditional systems of learning must shift to meet new needs.
The Complexity in the Social World series of interviews (and YouTube Playlist) follows on from the seminar we organized in March 2021. The aim of this series is to capture some of the foundational thinkers in conversation around how to apply complexity thinking to the social world, the world of managers, economists, change agents, and societies. In this way, some of these foundational thinkers, many starting their work in the 1980s, are represented and their differing perspectives and different foci of application are available in one place.
Call for Papers: Special Issue on Diversity & Universality in Systems Thinking
The field of systems thinking may be in the midst of a sea change event—a 'fourth wave' predicated on the search to identify universal patterns that unify the diversity of frameworks and methods in the field as well as, perhaps, knowledge and disciplines in general. It is critically important that the field of systems thinking resolve what Bateson called a 'double bind' between a diversity of methods and the universality of patterns that underlies them. Furthermore, the best candidate theories, grounded in evidence, must be vetted and reviewed. JoST's Special Issue on Diversity and Unity will frame the debate. Thus, we issue a Call for Papers—an open and invited call for papers responding to the paper:
Cabrera, D., Cabrera, L. and Midgley, G. (2021) The Four Waves of Systems Thinking. In, Routledge Handbook of Systems Thinking, (Eds) Cabrera, D., Cabrera, L. and Midgley, G. Routledge. London, UK.
We are inviting notable experts on the topic as well as providing an open, general call for response papers.
Submissions can be of any length up to 8000 words.
Using this form, you must notify us that you intend to submit a paper by May 30, 2021 (this takes less than one minute).
