Strategic Thinking Illustrated
Strategy Made Visual Using Systems Thinking
This book is about the behaviour of systems. Systems are important, for we interact with them all the time, and many of the actions we take are influenced by a system – for example, the system of performance measures in an organisation influences, often very strongly, how individuals within that organisation behave. Furthermore, sometimes we are involved in the design of systems, as is any manager contributing to the definition of what those performance measures might be. That manager will want to ensure that all the proposed performance measures will drive the ‘right’ behaviours rather than (inadvertently) encouraging dysfunctional ‘game playing’, and so anticipating how the performance measurement system will work in practice is a vital part of a wise design process.
Some of the systems with which we interact are local, such as your organisation’s performance measurement system. Some systems, however, are distant, but nonetheless very real, such as the healthcare system, the education system, the legal system and the climate system. Systems, therefore, exist on all scales, from the local to the global. And all systems are complex, some hugely so. That’s why understanding how systems behave can be very helpful.
Systems are complex for two main reasons. First, the manner in which they behave over time can be very hard to anticipate – and anticipating the future sensibly is of course a key objective of management. Second, the ‘entities’ within a system can be connected together in very complex ways, so that an intervention ‘here’ can result in an effect ‘there’, perhaps a long time afterward. Sometimes this can be surprising, and so we talk of ‘unintended consequences’ – but this is of course a euphemism for ‘because I didn’t understand how this system behaves, I had not anticipated that’.
Systems thinking, the subject matter of this book, is the disciplined study of systems, and causal loop diagrams – the ‘pictures’ of this ‘picture book’ – are a very insightful way to represent the connectedness of the entities from which any system is composed, so taming that system’s complexity.
Table of Contents
Part 1 - Systems
Chapter 1 – Systems and mental models
Chapter 2 - Links and dangles
Chapter 3 – Causal loop diagrams
Chapter 4 – Reinforcing loops
Chapter 5 – Balancing loops
Chapter 6 – Targets and budgets
Part 2 - Applications
Chapter 7 – Competitive markets
Chapter 8 – Controlling stock levels
Chapter 9 – Queues, angry customers, borrowing, supply and demand
Chapter 10 – Prices, inflation, economic depression and growth
Chapter 11 – Conflict – and teamwork
Chapter 12 – Businesses are inherently ‘joined up’
Chapter 13 – Targets and budgets in practice
Chapter 14 - Teachers behaving badly
Chapter 15 – Perverse incentives and unintended consequences
Chapter 16 – Delivering General Practice
Chapter 17 – The climate crisis
Part 3 – Over to you!
Chapter 18 – How to draw causal loop diagrams
Chapter 19 – How to use causal loop diagrams
Some good things to read
Dennis Sherwood is currently the managing director of The Silver Bullet Machine Manufacturing Company Limited, specializing in creativity, innovation, and systems thinking.
His previous positions include:
-- Consulting Partner, Deloitte Haskins + Sells, and subsequently Coopers & Lybrand
-- Executive Director, Goldman Sachs
-- Managing Director, UK operations, SRI Consulting (Stanford Research Institute).
He has been using systems thinking since 1984 and is one of the UK’s leading experts.
He is the author of many journal articles, and their modern equivalent, blogs. In addition, he has authored 14 books on a variety of subjects, including systems thinking, creativity, innovation, and financial modelling.
He holds a degree from Cambridge (Natural Sciences, Part II Physics) as well as an MPhil from Yale (Molecular Biophysics and Biochemistry) and a Ph.D. from the University of California at San Diego (Biology). He is a Sloan Fellow (with distinction) of London Business School.
Essential reading for all involved in formulating and implementing policy and winning hearts and minds - full of wise and practical advice on how to avoid those twin trip-wires of 'perverse incentives' and 'unintended consequences'.
-- Jim Mather, Visiting Professor, Heriot-Watt University, Co-founder of the Scottish Leadership Institute and former Scottish Government Minister for Enterprise, Energy and Tourism.
It can be difficult to know how to start using systems thinking to tackle the challenges we face in business and society - but not anymore. This book provides an accessible and enjoyable introduction to systems thinking. It uses causal loop diagrams to explain a range of issues and does so in a highly engaging manner. Readers are provided with practical advice and clear insight into how to think about problems in a connected and meaningful way.
-- Susan Howick, Professor of Management Science and Vice-Dean (Academic) for Strathclyde Business School
This book clearly shows the complexity of the climate challenge we are facing and the systemic approach we need to take to solve it. We need a positive societal tipping point, a mind shift that will bring us from abundance to sufficiency, from wealth to value and from me to us. The right political frameworks, inspiring role models and positive narratives of a net zero future and collaborative participation to create agency are all needed in parallel.
-- Nathalie Moral, CEO, Clima Now
In an increasingly complex and volatile world we are constantly advised to think systemically not just in traditional silos. But it has been hard to find a practical guide to systems thinking that isn’t burdened by technicality or computer models. Dennis Sherwood’s new book fills this vital gap by providing an accessible, engaging and practical way to understand and apply powerful systems thinking tools.
-- Nick Mabey OBE, Founder Director and Chief Executive of the highly influential think tank, E3G, Third Generation Environmentalism
This book is important! It is a precious resource for anyone, people in organizations in particular. Dennis Sherwood, the author, is a foremost thinker of the Systems approach. He delivers Systems Thinking at its very best. Strategic Thinking Illustrated is a booster for the reader´s creativity. It also makes a superb read. The visual approach to mental models fosters understanding. This book is a blueprint for dealing with complexity. It enables readers to mastering challenges and problems more effectively.
-- Markus Schwaninger, Professor Emeritus, University of St. Gallen, Switzerland
I think we will get a renaissance in the use of systems thinking as (digital) ecosystem business models become more and more prevalent. Understanding the opportunities / impacts / value loops / partnerships etc inherent in such models is hot and systems thinking is a great way to explore them. The book offers a very accessible way into what systems thinking is but more importantly how to think about complex, inter related systems; exactly what ecosystem business models are.
-- Dai Bedford, Global Transformation Consulting Leader, EY
This book lives up to the promise encapsulated in its title and front cover. Through a wealth of illustrations and fully developed case studies, covering a broad range of fields, it guides the reader towards a deep understanding of the value and role of Systems Thinking and equips the reader with accessible but powerful techniques of great value in managing organisations and addressing societal issues such as responses to climate change.
-- Michael Kennedy, Visiting Professor at the University of Bologna and at the Baden-Wuerttemberg Cooperative State University, Stuttgart and Past Co-Chair Education SIG, System Dynamics Society.