Photo by Denys Nevozhai on Unsplash
In a world where Amazon is getting into healthcare, BMW is getting into energy, and BP is getting into electric car charging, business people are trying to understand what’s going on. A field of knowledge that helps one make these seemingly odd business moves easy to explain is Systems Thinking.
As Geoffrey West suggests
‘A typical complex system is composed of myriad individual constituents or agents that, once aggregated, take on collective characteristics that are usually not manifested in, nor could be easily predicted from, the individual properties of the individual components themselves.
I get a lot of questions about systems thinking. Because it’s a transdisciplinary field I just end up recommending books. The understanding of the energy system and how it relates to the built environment and how that relates to cities and how that also relates to health systems etc will make clear the opportunities for critical solutions and opportunities. The person with that understanding could be you. That piece of insight could form the basis of your next startup/business opportunity.
Here are 5 books I recommend
- Thinking In Systems: A Primer by Donella Meadows: This is the one I’ve recommended, referenced and gifted the most. It’s an easy read and the chapter structure aids the acquisition of knowledge in chunks that, at the same time, work for the noob and provide the opportunity of quick recall for the expert.
There are no separate systems. The world is a continuum. Where to draw a boundary around a system depends on the purpose of the discussion — the questions we want to ask.
and in what might be considered a biological representation of the Power Law and provides an explanation for why venture capitalists invest like they do.
A quantity growing exponentially toward a constraint or limit reaches that limit in a surprisingly short time.
To understand how Jeff Bezos thinks and why he seems to be trying to get into every industry possible
In physical, exponentially growing systems, there must be at least one reinforcing loop driving the growth and at least one balancing loop constraining the growth, because no physical system can grow forever in a finite environment.
https://insider.zentail.com/bezos-virtuous-cycle-leverage-invest-infrastructure/
- The Fifth Discipline by Peter Senge: This book focuses on how companies need to imbue the culture of learning to survive in the business world by taking on the fifth discipline, Systems Thinking. The first four disciplines — team learning, shared vision, mental models, and personal skills mastery- had been covered in depth by management experts. The four get elevated by the adoption of a systems thinking long term approach to business. Being a learning organization enables a company to create great products, adapt to market changes, reinvent the organization to address market/system changes and innovate to prevent troughs. Some of the concepts — feedback loops, leverage points etc- that were touched on in Donella Meadows’ book above get expounded upon by Peter Senge.
Lastly, systems thinking makes understandable the subtlest aspect of the learning organization- the new way individuals perceive themselves and their world. At the heart of the learning organization is a shift of mind- from seeing ourselves as separate from the world to connected to the world, from seeing problems as caused by someone or something ‘out there’ to seeing how our own actions create the problems we experience. A learning organization is a place where people are continually discovering how they create their reality. And how they can change it. As Archimedes said, “Give me a lever lon enough…
- The Systems Bible: A beginners guide to systems Large and Small by John Gall: More a guide than any of the others, this book follows a System Declaration/Explanation format that suggests a systems concept and provides an explanation and an example. It’s one you can pick up and skim right before bedtime, so your subconscious can dive deeper into the topic. For example
A Temporary Patch Will Very Likely Be Permanent: Since systems generally don’t go away, and since they occupy space, our landscape is now littered with the bleached bones and rotting carcasses of old attempted solutions to our problems
That comment applies to practically every governmental system we have out there right now…
And another excerpt from the book that talks about the interconnectedness of everything (including how our myths recognize this interconnectedness)
Any Given element of one system is simultaneously an element in an infinity of other systems: In Hindu Legend the Net of Indra is infinitely large. At every intersection of the meshes of the net is a precious jewel. The net consists of an infinity of precious jewels, each of which reflects the entire net, including the infinity of other jewels….Or simply put: Everything Correlates.
- The Quark and The Jaguar: Adventures In The Simple and Complex by Murray Gell-Mann: Written in 1994, and with the most scientific bent of the recommendations, this is a book that Stephen Hawking recommended. With quotes like the one below, it’s not hard to see why.
Unfortunately, that information explosion is in great part a misinformation explosion. All of us are exposed to huge amounts of materials consisting of data, ideas, and conclusions — much of it wrong or misunderstood or just plain confused. There is a crying need for more intelligent commentary and review.
- ‘Scale: The Universal Laws of Life, Growth, and Death In Organisms, Cities and Companies by Geoffrey West: Systems thinking, at it’s core, is fundamentally about the consideration of the interconnectedness of things. This book, an exploration of biological systems and how their laws apply to everything around us, is a perfect representation of that interconnectedness.
To understand why companies keep churning out of the Fortune (and now churning at a faster rate) look to sublinear scaling from biology
A crucial aspect of the scaling of companies is that many of their key metrics scale sublinearly like organisms rather than super-linearly like cities. This suggests that companies are more like organisms than cities and are dominated by a version of economies of scale rather than by increasing returns and innovation. This has profound implications for their life history and in particular for their growth and mortality…sublinear scaling in biology leads to bounded growth and a finite life span, whereas…we saw that superlinear scaling of cities leads to open-ended growth.
The quark, to the human body, to a company, to financial systems, to the oceans, and everything in-between, they are all complex systems. It would behoove you to understand how they work and the principles that govern them because those principles apply everywhere. The ability to understand the interrelatedness of everything around us is where the business opportunities lie. Get learning!
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