Understanding Systems Flashcards
Gall’s Law
“A complex system that works is invariably found to have evolved from a simple system that worked. The inverse proposition also appears to be true: A complex system designed from scratch never works and cannot be made to work. You have to start over, beginning with a simple system.”
— John Gall, systems theorist
Complex System
A complex system is a self-perpetuating arrangement of interconnected parts that make up a whole.
Businesses are complex systems within even more complex systems (markets, industries, societies)
To explain why complex systems cannot be developed from scratch, we revisit Gall.
“All complex systems that work evolved from simpler systems that worked. Complex systems are full of variables and interdependencies that must be arranged just right in order to function”
Gall’s Law is where environmental selection test meets system design. Environmental selections test meaning is more like a survival test — the environment will not sustain that which does not meet its selection tests.
If you want to build a working system, the best approach is to build a simple system that meets the environments current selection tests first, then improve it over time.
Iteration and incremental augmentation over time will produce complex systems that work, and, ideally, even as the environment changes
Flow
Flows are movements of resources into and out of the system.
- inflows are resources moving in
- outflows are resources moving out.
Follow the flows to understand how the system works.
Examine what’s coming in and what’s coming out to understand how the system works.
Stock
By following a system’s flows you will find places where resources tend to pool together.
Stock refers to a pool or holding tank of resources.
i.e. a bank account is a pool of money waiting to be used. Inventories. Customer queues. Waiting lists.
Stocks are affected mathematically by inflows and outflows.
Slack
Slack is the actual amount of resources in a stock. More resources = more slack. (makes sense in the traditional way we think of slack)
In a biz, you want slack to be just right. not too much where you have assets tied up to heavily in one stock and not too little where a lack of slack could create a constraint that affects the business.
Large stocks grant flexibility, but come at a cost, especially when thinking of stock of inventory and its related costs.
Constraint
“Once you eliminate your number one problem, number two gets a promotion” — Gerald Weinberg
The performance of a system is always limited by the availability of a critical input.
“Theory of Constraints”:
Any manageable system is always limited in achieving more of its goal by at least one constraint.
Five Focusing Steps to use to identify and alleviate a constraint:
1) Identification: examine the system and find the limiting factor. (where do bottlenecks exist?)
2) Exploitation: ensuring the resources related to the constraint aren’t wasted. (identify the ‘waste’ in a bottleneck.)
3) Subordination: redesign the entire system to support the constraint. (redesign to facilitate alleviation - further waste reduction even at a penalty in other areas(reasonably))
4) Elevation: permanently increase the capacity of the constraint. (add new resources or upgrade existing resources)
5) Reevaluation: After making changes, reevaluate the system to locate the constraints.
Feedback loops
Exist whenever the output of a system becomes one of the inputs in the next cycle.
Feedback is how systems learn.
Balancing loops
Dampen each system cycle’s output, leading to system equilibrium and resistance to change. i.e. Tennis ball falling and each bounce getting smaller due to friction and air resistance.
They stabilize the system, dampening oscillations and keeping the system in a certain state
Perceptual control systems are usually balancing loops. i.e. thermostat
Reinforcing loops
Reinforcing loops amplify the system’s output with each cycle.
- Tend to lead to runaway growth or decay over time. i.e. price war
- Compounding is an example of runaway growth (a reinforcing loop)
Stock is influenced by several loops all pulling it in different directions. i.e. bank account that has many input sources and outputs, all related to different systems.
Autocatalysis:
A reaction whose output produces the raw materials necessary for an identical reaction.
An autocatalyizing system produces the inputs necessary for the next cycle as a by-product of the previous cycle, amplifying the cycle. Autocatalysis is a compounding, positive, self-reinforcing feedback loop.
i.e. television advertising in the 20th century which had a great return on investment, which was reinvested, yielding greater returns, until it reached the massive scale it’s at.
1) Doesn’t have to be money; “network effects” and “viral loops” are examples. i.e. someone viewing a video on YT and sharing it.
2) *If your business includes some autocatalyzing element, it will grow more quickly (i.e. sticky, shareable software)
No system stands alone.
An environment is the structure in which a system operates and influences or impacts the system’s flows or processes, changing the output of the system.
When the environment changes, the system must change with it to continue operating. aka adaptability is key.
Self-perpetuating systems
(like business and organisms) must meet the environmental conditions necessary to exist.
Selection test
Is an environmental constraint that determines which systems continue to self-perpetuate and which ones die. (literally, the “environment” tests us. failure = death)
Instead of survival of the fittest, it’s more of “death of the unfit”
As the environment changes, so do the selection tests.
STs are ruthless [but really just objective]
