Considering an organization as a dynamic system moves our thinking beyond correlation, into the realm of scientific thinking. You can use a model of the present system to aid determining what changes will impact the system the way you want. Dynamic models are important because business systems are dynamic. The Laws of the Fifth Discipline discussed in Chapter 2 apply. One of the most important and difficult to appreciate laws is that causes and effects are displaced in time and space. This means that the effect you observe in Milwaukee today may be due to some management action taken in Tampa last year, not due to the new manager that just came aboard in Milwaukee. The new manager simply correlates in time and space with the effect you are observing. No one seriously believes the outcome of the Superbowl causes the stock market to do anything, but every year the media discusses remarkable correlations.
Correlation of effects in dynamic systems makes causes very difficult to determine and often difficult to describe. The definition of cause and effect is that the effect invariably follows when the cause is present. (The effect may also be present without the cause in question if it can also follow from additional causes.) The cause of effects in dynamic systems most often is the system structure, not a specific event. Most people have difficulty gaining an intuitive appreciation for this.
Consider chickens and eggs. The question of which came first is meaningless in a dynamic system that includes chickens and eggs. They coexist. Their numbers correlate in time; that is, everything else being equal, the more chickens you have, the more eggs you get. It is true that chickens cause eggs. It is true that eggs cause chickens. Thus, entity causality is completely circular. This is fine in a dynamic system. Based on the cliché, it does not appear to be intuitive. Depending on the system, it may or may not follow that the more eggs you get, the more chickens you get. Someone may be eating a lot of eggs. This would be part of the system structure and would significantly affect the number of chickens over time.
The Thinking Process that Dr. Eliyahu Goldratt recommends models reality with a cause-and-effect tree—the CRT. This tree structure allows for the inclusion of nonlinear effects and dynamic feedback. It does not provide a way to test and understand the relative importance of system entities and relationships dynamically, but treatment of the feedback loops (more and more entities in the model) attempt to provide a qualitative understanding of the impact. The method helps plan a move from current reality to a desired model of future reality (the FRT) by identifying a core conflict. The core conflict plays a central role in many of the current system UDEs. This conflict is one of the driving forces that maintain the system in equilibrium. Goldratt's Thinking Process always provides a starting point for planning change and usually selects one of the more influential parts of the system to begin the change. Some system thinkers identify the influential parts of the system as "leverage points." They usually involve a feedback loop. The most effective feedback loops in organizations involve the performance-measurement and reward systems.
The core conflict often involves a measurement or policy of the system. It always influences the behavior of people in the system. The Thinking Process method then surfaces underlying assumptions to identify a starting point to modify the system. Eventually, the process looks to install feedback loops into future reality in order to accelerate movement to future reality and to maintain the system in the new equilibrium.
General system theory and system dynamics teach us that feedback loops are one of the most important elements of understanding and influencing system behavior over time. Feedback loops are the forces that maintain the system in equilibrium and can be used to drive the system to new equilibrium. Measurement systems comprise the primary feedback loops that drive business-system behavior.
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