Systems thinking and system traps

Introduction

Thinking in Systems, written by the late Donella Meadows, is a book about how to think about systems, how to control systems and how systems change and control themselves. A system can be anything from a heating furnace to a social system. The book is conceptual, there’s not a single equation in it, it's not about differential equations or control theory.

System traps

The gem of the book is the part about system traps. System traps are ways a system can go wrong. It’s really interesting to read about system traps and then notice and observe them in action: in micro environments such as a company and in macro environments such as an industry or a country. Here’s a list of the most interesting system traps from the book, with some examples.

1. Policy resistance: The inherent resistance of the establishment to allow changes to affect the system. People would rather live with a flawed system that is familiar then to allow changes that might cause uncertainty and instability. Such resistance can cause inevitable collapse to be more dramatic, sometime even catastrophic.
   Example: US citizens resisting Obama’s gun control changes.

2. Drift to low performance: The notion that prolonged failures causes acceptance of the new state of things, “new normal”.
   Example: a great example is soccer in Hungary. Hungary used to have a very strong soccer culture, but over time quality decayed to the point where today, a draw or only getting defeated by 1 goal is considered a good result. All this even though the hungarian government is investing large amounts into the sport. The root cause for this sustained drift to low performance seems to be that soccer is used as a way to channel money from the government to private individuals, ie. corruption.

3. Seeking wrong goals: Sometime goals change. Many systems suffer from the fact that original goal don’t make any sense in the current context, or never did. Pursuit of wrong goals will cause the system pursue these goals, capturing wrong or insignificant metrics, leaving the illusion of progress, while heading toward system collapse.
   Example: startups seeking to increase vanity metrics such as registered users and bookings instead of engagement and profits.

4. Shifting the burden: Notion that risk is shifted to someone else, while success is reaped by the actor.
   Example: venture capitalists and hedge fund managers work under a model where they get a nice base salary, a nice bonus if their fund performs well, but there is no downside for them. Turn around times are on the order of 10 years, so there’s little historic data on fund manager’s performance.

5. The tragedy of commons: This is classic economic theory, described in terms of system thinking. The common, defined as community space – such as a town common, is a shared resource. This resource can be governed by community standards, privatization or effective regulation. Each approach has tradeoffs and benefits. It’s the conclusion of the [Donella Meadows] that only regulation is effective since the community standards are usually not enough.
   Example: domain name squatting.

6. Success to the Successful: The notion that success will give advantage to those that have already succeeded, thus limiting the “losers” ability to win in the future. “The rich get richer!”
   Example: that’s how it is everywhere, see Thomas Piketty’s book Capital. A more specific example is entrepreneurs who’ve had a successful startup previous have an easier time raising money for their next startup. Surprisingly, data doesn’t show a correlation between past and future success.

7. Rule beating: The notion that rules, or laws, are ignored, broken or skirted. The cause of rule breaking is usually related to the fact that these rules are perceived as unjust or not flexible enough wrt real life issues.
   Example: there’s a whole industry called SEO to game search engine rankings.