“Applying systems thinking principles and tools enables you to achieve better results with fewer resources in more lasting ways.“

Intro

Welcome to the Think Act Regenerate podcast, where we explore the rich smorgasbord of business and career opportunities that today’s commercial regenerative solutions offer. I’m Leigh Baker, your host for this episode. This podcast episode was recorded and produced on Wurundjeri lands on the edge of Naarm, Melbourne, Australia.

As a supply chain consultant turned writer, I’ve been watching entrepreneurial thinkers commercialize today’s powerful regenerative solutions since 2002. Over time, I’ve distilled what I’ve seen into a set of 10 straightforward design shifts or insights that I assess are accelerating the spread of today’s commercial and regenerative solutions.

This podcast episode is number seven in an ongoing series that explores those 10 insights. Not all the 10 insights will apply to all individuals or, all businesses, but they are fundamental and growing mindset shifts that are well worth understanding.

You can listen back to past episodes for the first six insights, and there’s a full transcript of each along with useful links in posts on the Think Act Regenerate website.

In the previous six insights, we’ve talked about key approaches to business strategy and design. We’ve talked about what’s happening, About growing opportunities, about the goal of regeneration, about circular design, product as a service, nature-based biomimicry innovation, and 3D safety.

Now we’re shifting focus a bit to the how of regenerative business execution, the smarter skills and strategies that enable better results faster.

[00:03:00] In this episode, we’re exploring the power of systems awareness and systems capabilities, including their value in business innovation. We’ll also dip into a few of the tools available today that you can use to develop and strengthen your system’s effectiveness.

As humans operating in today’s complex world, we like to keep things simple. Part of that’s straight biology, because our brains operate on the energy equivalent of an old-style 40-watt light bulb.

That biological energy limit means that our brains evolved to rely a lot on rules of thumb, and cause-effect thinking On top of this physiological limitation, we’re also operating with all the complications and pressures and concerns of 21st century living. That overload often increases our tendency to preference simple actions, straightforward solutions and to respond inside our existing patterns

This doesn’t mean that we don’t have the potential to find ways to manage complex relationships and to solve complex issues. It does mean that we need some tools and capabilities, and the intention to make the time to tackle our challenges differently.

When we started building big buildings, we developed When we started using electricity, we developed circuit diagrams. And as we move into a world of increasingly complex system challenges, we need ways to understand those systems, ways to identify the root causes behind some of the strange behaviours; and ways to develop the non-obvious solutions that improve overall systems outcomes.

Today’s accessible, affordable systems-level tools are available, many for free, through global information networks; creating opportunities for individuals, communities, and businesses to get more done with fewer resources and achieve longer-lasting results.

Expanding beyond the default, predominantly linear thinking habits embedded by multiple centuries of industrialisation is taking some time. So you may not have come across systems tools yet, however, that doesn’t mean that practical, well-tested, learnable tools aren’t available today.

Linear thinking and its limits and costs

It’s been a key strategy of industrial thinking to subdivide systems into linear processes, then focus on making each individual process super efficient. It’s been an extremely valuable approach and will continue to be so in a whole heap of circumstances. However, while linear thinking is great for straightforward problems, it has limitations when we’re faced with complex interrelated systems.

[00:06:00] Linear thinking tends to solve traffic congestion with more roads rather than smarter traffic flow systems. Linear context-specific thinking can lead dentists to tackle gum issues that look like gingivitis with dentistry without considering the sadly growing possibility of scurvy. Excessive process efficiency in a factory can lead to overproduction and warehouse shelves full of excess stock

Linear thinking is insufficient when you’re tackling a system with multiple flows of information and resources, particularly one where reactions take significant time to show up, meaning there isn’t an obvious observable cause-effect link.

The cost of overusing linear cause-effect analytical approaches to address complex systems issues is that firstly, we often don’t get to the actual root cause. So even if short-term fixes help for a while, the problem recurs. And because we didn’t address the actual root cause, the problem often gets worse.

Many of the big challenges we face today, from winning new customers to regenerating our host ecosystems, need smarter, more sophisticated approaches that deal with the complexities of systems. They need approaches that enable us to explore for and uncover non-obvious leverage points – and respond to complex systems interactions that develop over time.

Over recent decades, a range of approaches to solving systems challenges has been evolving. so today, when you run across a complex challenge or want to make your bit of the world work better, there are systems-level tools that you can leverage to help you explore and improve systems behaviours.

To quote systems thinking practitioner David Stroh, “Applying systems thinking principles and tools enables you to achieve better results with fewer resources in more lasting ways.”

Increasing your systems awareness and systems capabilities can make a difference across all sorts of areas.

Applications of systems thinking

While today’s tools came out of supply chain systems and biology, they can be applied much more broadly.

You can apply systems thinking tools and practices to help understand your body, your family dynamics, your community, your local economy, or the cash flow of your business.

If you don’t get enough vitamin C in your diet, then you get all sorts of problems, including gum disease. Res-coping the boundary of the system under investigation from your oral health to your body changes the system scope.

[00:09:00] Guessing at the reasons for your partner’s behaviour because you don’t know how to explore it without judgement can cause distancing and stress. Reviewing the communication patterns at play could identify a systems pattern called accidental adversary. Identifying that systems pattern would give you the tools to effectively interrupt it.

If the flow of cash through your business is regularly interrupted by delayed customer payments and every payday becomes a high stress financial juggling act. A systems level analysis might help you recognise a restricted resource flow and explore for new financing tools to free up the cash you’ve already earned.

If you clear fell a forest to increase the land available for farming, you may not realise that you’ve taken out the cloud seeding bacteria and organic particles that it used to emit, particles that contribute to local rainfall.

With a systems perspective and an understanding of the science behind the small water cycle, you can explore more broadly for solutions into areas such as agroecology and silvopasture.

Many of the key challenges facing society and business and communities in the 21st century are systems challenges. so to deal with them, we need more than linear divide and simplify approaches. There’s a big advantage in understanding the systems you’re part of and how they behave.

So what is a system?

When we say system, most of us think of whatever conversational default we learned about growing up. let’s take a closer look at an actual definition of system.

I looked up a dictionary definition of system. It told me that “a system is a group of things that connect and form some kind of coherent whole”. Which is pretty high level.

Today’s toolkits for understanding and optimizing systems behavior go beyond conversational usage. So let’s explore in a bit more detail.

Systems outcomes

Firstly, a system is something that has a purpose. It produces an outcome.

Systems are groups of independent parts that work together to form a single unified whole and achieve an outcome. A spare part on a shelf is not a system

The outcome of a system, particularly a human system, is often something other than its stated purpose or goal.

A homeless refuge while being helpful may also have the outcome of making homelessness less visible and more tolerable, and hence may not actually contribute to a long-term goal of solving homelessness – unless it’s part of a broader strategy addressed at creating residential stability. In and of itself, a homeless refuge doesn’t do much to create residential stability.

[00:12:00] A corporate performance management system that has a stated purpose of motivating employees and improving productivity might actually have the outcome of enforcing conformity, minimising salary growth, and encouraging internal competition.

So while a system is a group of independent parts that work together to form a single unified whole and achieve an outcome, the outcome that system delivers- may not be what it was intended to deliver.

The outcome of a system is what it does, not what it should do.

Systems flows and feedback

Systems are not static- systems are collections of components with stocks and flows of both resources and information that move through them with feedback loops that can operate on a whole range of time frames

A car uses a stock of fuel and oil. Running low on those resources can bring it to a halt, and sometimes fatally.

A fuel gauge will keep the user informed on one of those resource levels. A temperature warning gauge may only light up when there’s an immediate problem that’s been developing over a long period of time. The delay in that feedback loop can have all sorts of consequences.

Smoking has a short-term feedback loop in the human body that increases good feelings. It’s one that’s highly addictive. It also has a long-term feed back loop of increasing heart and lung disease- but that takes a whole lot longer to get to an observable level.

The flow of resources and information through a system includes multiple feedback loops that can have significant impacts on how the system performs. And a feature of human systems is that humans are a whole lot better operating with short-term feedback loops than with slower, longer feedback loops.

Self-conserving systems

A third characteristic of systems is that systems are self-conserving. They develop not only to achieve an outcome, but also to maintain that outcome.

This means that changing a system’s behaviour can be challenging, particularly if the change desired threatens that system’s status quo or someone in that system.

When installing a bolt-on chemical-free water efficiency unit on an industrial air conditioner, the project team got very confusing results until they locked the cabinet. It turned out that the new equipment threatened the relationship between the purchasing manager and the plant’s chemical supplier

If you set out to solve homelessness with affordable housing and appropriate social support, you also need to consider What happens to the staff earning a living from running those homeless shelters? And what about the donors who gain social capital through their contribution to those shelters?

[00:15:00] It’s worth keeping in mind as you work with a system that that system developed in order to achieve an outcome and also to maintain that outcome. Improving the behaviour of that system is also about improving the outcome for all participants.

In today’s world of complex systems, developing systems literacy and the capability to work with them improves results. It can be applied in all sorts of contexts, from building new regenerative business opportunities to improving community relationships and even personal communication.

If there’s somewhere in your life that you want a different result out of a system that you participate in then developing your understanding of systems and your capability to work with systems will give you more leverage for changing the behaviour of those systems.

As a species, our awareness of the existence of systems isn’t new. We’ve known about them for thousands of years. Aristotle told us over 2,000 years ago that the whole is more than the sum of its parts.

Ancient tradition tells us the Buddha said, ” All things appear and disappear because of the concurrence of causes and conditions. Everything is in relation to everything else.”

We have age-old sayings – like an ounce of prevention is worth a pound of cure, and a stitch in time saves nine. Sayings that indicate a level of awareness of both systems’ leverage points and the impact of delayed feedback loops. However, like other forms of literacy, systems literacy and capability hasn’t been global.

Tools for broader systems understanding

Today, we have a whole range of detailed tools. Over the last six decades, our systems understanding has developed into a learnable set of principles and practices. Their development started out in fields from biology and ecology to IT and production engineering.

Today, practices such as systems thinking and systemic design are now detailed knowledge bases and practical tool sets. They’ve developed to enable human beings to create better systems outcomes And they’re needed because we have more and more complicated systems in our lives.

Approaches such as systems thinking and systemic design are coherent, learnable skill sets and thanks to today’s technology, many of them free. As multi-use tools, systems approaches have been applied in fields from family dynamics to business innovation to ecosystem regeneration

For example, in the scaling of renewable energy, systems understanding has been key to the development of a range of battery-based solutions. These solutions smooth energy demand and accelerate the shift to renewable energy supplies.

[00:18:00] Fleets of smart device level batteries are smoothing district level energy demand and doing it without a two-way connection to the grid because The fleet can be managed remotely, allowing its operators to interact effectively with large-scale grid supply.

Smart traffic management systems that use cameras and optimise signalling are showing up often a better solution to many congestion problems than building more roads.

Systems understanding has been fundamental to effective re-wilding programs such as introducing beavers to regenerate wetlands and reintroducing apex predators like wolves to help regenerate overgrazed forests.

In Australia, understanding our drought-tolerant native species has led to waterway regeneration – because local Australian fish populations can survive dry periods, but European carp can’t.

The discipline of systems thinking and the sustainability innovation approach of systemic design are tools based on systems awareness. They are well worth exploring if you’re a regenerative business entrepreneur or intrapreneur, or even if you just want better results faster in the systems at play in your life

Systems tools

I’ve put introductory links to the tool sets of systems thinking and systemic design in the show notes.

As I’ve said, systems are made up of components and interrelated flows of information and resources. And these interrelated flows of information and resources can have substantially delayed feedback loops and very different flow rates.

Anyone who’s managed to achieve a reasonably warm shower in a hotel with a very distant hot water supply has dealt with a systems challenge. The delayed feedback loops in changing the flow of the hot water requires careful manipulation in order to avoid a freezing cold or scalding hot shower.

What tools such as systems thinking and system design do is firstly enable us to develop these skills more consciously and apply them to bigger challenges more effectively.

There’s a whole subset of systems thinking tools, for example, to help you diagnose and recognise problems that have been around for centuries. Everything from “the tragedy of the commons” to ” success to the successful”.

The power of systems approaches is to help us uncover non-obvious interventions and to collaborate to implement them.

Leverage points

[00:21:00] One really useful insight that comes from systems thinking is a concept of leverage points for change. It e why a lot of ” everybody knows” theories of change that we inherited from the 20th century are well out of date

Foundation systems thinker Donella Meadows developed a hierarchy called the Points of Power for Changing Systems. Meadows’ hierarchy starts with the least powerful place to change a system, which is in its rules and regulations, somewhat counter to a lot of approaches today, which are all about ” we’ve got to get the government to create rules”

It’s not that you don’t get benefit from rules, but they’re impactful when people have a strong expectation that they’ll be enforced. so if you want to change the outcome of a system, then there are more useful starting points to intervene.

Some people will tell you seat belts prove that you need regulation, but that’s a partial picture. Seat belts were invented by Volvo, who then open-sourced the design to their industry, who then installed them as a feature, and a whole lot of parents chose to have them fitted and to make their children use them years before seat belts became mandatory.

So that’s a really interesting perspective from systems thinking, that the least powerful place to change a system is in its rules and regulations.

A moderately powerful place to change a system is by better managing its resource flows and the information flows that control them. For example, intelligent traffic management systems adjust traffic signals, allowing traffic to flow more freely

In a different context, a number of SME businesses are now taking on tech-enabled cash flow finance, which enables them to borrow against the value of invoices that are yet to be paid by the customer. It gives them access to money they’ve already earned at an affordable rate- and for some businesses it can make a very big difference.

The most powerful level to change a system is in the mindsets and the paradigms driving that system

In sustainable business, corporate players like Ray Anderson of Interface and Yvon Chouinard of Patagonia have Changed the mindset and the culture of their businesses to focus on profitability through sustainability.

At Interface, that unleashed a tsunami of innovation as a result of looking beyond compliance and efficiency

Changing the mindset of a system you’re seeking to improve is a less investigated but often more powerful alternative

Whether the system you want to change is your primary relationship, your sales team performance, or your business strategy, understanding points of power is going to save you time and energy

[00:24:00] Systems thinking founder Donella Meadows put together a paper explaining this hierarchy in quite a lot of detail. recently I found a really good graphic by healthcare improvement strategist Professor Helen Bevan.

I’ve put a link to Bevan’s diagram and to the original Donella Meadows paper in the show notes.

Systems archetypes

Systems approaches come with a collection of really useful diagnostic tools, including both problem archetypes and now solutions archetypes.

Archetypes are common and recurring patterns, and they can help us recognise the characteristics of systems challenges.

Some of them have names that you may recognize without knowing where they came from

They’re names like Fixes That Fail, Shifting the Burden, Eroding Goals – the tragedy of the commons. Success to the successful

More recently, and to me possibly more helpfully, is another set of positive archetypes that has been put together – one that summarises how to grow good systems results.

Decades of development have gone what works and what doesn’t work in better dealing with archetypes.

One example of the original set of eight archetypes, and a term that is well overused, is called the limits to growth. This is a pattern where problems show up due to a capacity bottleneck, whether it’s the carrying capacity of a community paddock or the production capacity of a small business.

In a business, this could show if you launch a marketing campaign and sign a heap of new clients overnight. The result of this excellent performance can be a delayed reaction. If you don’t actually have the capacity to deliver on time with a sufficient quality of work. At first, everyone works really hard, but over time, customer service levels drop, response times lag, and negative reviews show up, destroying the very growth the marketing campaign generated.

The classic systems thinking archetype you’ve activated, called the limits to growth, is about balancing your growth based on the capacity of the system supporting it. The positive alternative archetype is called Plan for Limits, where you identify, evaluate, and plan for your limits using systems thinking tools.

I’ll put a link to an article explaining the classic archetypes and their positive alternatives in the show notes.

Another example of this limits to growth archetype is renewable energy, where the ability to generate solar energy needs to be balanced by the ability to store it.

In the early days of rooftop solar, feed-in tariffs were generous because all the energy generated could be used pretty much as it was generated. with the massive growth in rooftop solar, feed-in tariffs are now low and sometimes negative because the grid gets overloaded in lower demand middle of the day peaks.

[00:27:00] The balancing process is underway with a range of battery solutions from domestic solar and battery to larger scale precinct level batteries and the fleets of one-way device level batteries I mentioned earlier.

Systems thinking enables effective group solutions

Solving a systems problem by yourself is not solving a systems problem.

Systems approaches are about much more than individuals doing clever problem analysis, their tool kits include methodologies that enable constructive, productive group problem-solving and really effective communication.

Firstly, there’s the question of how well you’ve actually understood the full complexity of the systems just by working in isolation with what you know.

There’s growing research confirming that when done effectively, small group problem-solving is more effective and lasting than solo analysis. It does need to be effectively led to avoid the so-called “group solution” ending up being the “loudest voice wins”. But well organised, it creates better results.

Inventing a solution is not implementing a solution.

Even if you have understood the system and identified the best solution all by yourself Then you’ve got to turn your solution into action by a community when you have no buy-in to your thinking. And you’re dealing with systems behaviours that are fundamentally self-conserving.

Systems thinking is a great set of tools for conducting effective group problem-solving, and it has the added benefit of generating buy-in and understanding all the way through

Solving complex systems problems is now more doable than ever before

Deep reflection and individual brilliance have been solving complex p-problems for millennia However, they’re no longer our only options.

In the same way that we develop blueprints to help us build big buildings and CAD to build complex machines and to drive our 3D printers, today we also have access to tools like systems thinking and systemic design to accelerate the implementation of higher quality longer-term solutions to today’s toughest challenges – from homelessness to business innovation to ecosystem regeneration

Who’s used systems approaches?

Inventors like audio innovators Bose and appliance manufacturer Dyson have applied systems thinking to develop some seriously smart, high-quality products.

[00:30:00] It’s systems awareness and understanding that led an Australian brewery to start Bitcoin mining as an extra income stream that used their solar excesses. You’d think surely a battery, but their insurance company wouldn’t come at the perceived fire risk.

It’s a system aware designer who put aside a linear higher temperature equals more energy mindset and came up with a solution to electrify a biscuit production line and save money. It turns out that cooking biscuits at a higher temperature cooks them quicker because the heat gets stored in the product and helps it cook that change made an electrical oven system a cost competitive alternative to gas.

Systems approaches offer us the tools to solve 21st century wicked problems faster and more permanently, whether they’re in a family, on a production line, or in a community

Starting resources

As I’ve said, there’s a wealth of systems thinking resources available. I’ll put some of my favourites in the show notes. But once you start looking, you’ll probably find your own.

In addition to teaching yourself on various websites, there’s a range of free and low-cost online courses available, including university-based massively open online courses that you have the option to turn into qualifications if you need them.

There’s also a range of really useful books about current applications of systems thinking, including David Stroh’s excellent SYSTEMS THINKING FOR SOCIAL CHANGE and Ray Ison’s THE HIDDEN POWER OF SYSTEMS THINKING that discusses systems thinking in the context of policy and governance.

Plus, there’s still value in foundational books including Donella Meadows’ THINKING IN SYSTEMS and Peter Senge’s THE FIFTH DISCIPLINE.

Some of the websites you can get started on include thesystemsthinker.com, which is great for practical business applications, case studies, and tools.

To go back to the groundwork at donellameadows.org. where the Academy for Systems Change that continues her work, which offers core theory and insights for beginners.

There are even online diagramming tools developed specifically for systems thinking, as long as you keep in mind that the biggest value will be when you use the tools for group problem-solving. Have a look at kumu.io for one example, and see the show notes for the spelling of these links.

As Einstein is quoted as saying, “You can’t solve a problem from the mindset that created it.” And applying a systems mindset to the problems created by 20th century linear reductionist design is part of that mindset change.

So if there’s a part of your life or your work where you’re spinning your wheels, it could be worth exploring today’s systems-based approaches to innovation and problem-solving. Possibly starting with the systems archetype article that I’ve linked to.

[00:33:00] The bigger game of regeneration is about systems awareness and upgrading to business systems that regenerate our host ecosystems. It’s About using today’s practical systems-oriented tools and practices to upgrade overall systems, not to just maximise process productivity or reduce process impact.It’s about designing regenerative outcomes into business and supply chain systems.

Regenerative entrepreneurs and intrapreneurs today are shifting their scope from processes to systems. They’re exploring ways to upgrade from systems designed with extractive one-way mindsets to profitable regenerative circular systems that enhance their future prosperity by responding to 21st century ecosystem reality

Whether or not you’ve already identified this shift to systems level awareness, innovation, and systemic design in your environment, it could be worth asking yourself what your industry’s early adopters are quietly leveraging today.

Don’t miss out on opportunities because your approach to ” the environment” is to focus on reducing your process-level impacts while you wait for government policy changes.

Close

This episode is Insight 7 in a series of 10 regenerative business insights. check out for other core insights and for more stories and sources.

Most importantly, start exploring the systems you’re part of from the perspective of where’s our opportunity

Thanks for listening to this episode of the Think Act Regenerate podcast. I’m Leigh Baker, and I’ve enjoyed being your host today.

In coming podcast episodes, I’ll be summarising the final three Think Act Regenerate insights, which focus on key implementation mindset shifts that can be really useful. If you don’t want to wait for future podcast episodes, then go to the Think Act Regenerate website and sign up for the free insight email series

If you liked this episode, then please leave a rating and review on your favourite platform so that you can help other people find access to their opportunities/

Now it’s over to you to start exploring and see if you have unrecognised systems level opportunities in your pit of the world. Can you spot high-level leverage points where you could change a mindset or a resource flow?

If you’re in an extra hurry, then head over to the website and check out my Regenerative Thinking in Action program. It might accelerate you somewhere you never thought you could go

There’s far more powerful action to be taken today than most people know. There’s a world of [00:36:00] practical, commercial, rewarding solutions and opportunities out there already being scaled.

So be excited. Be very excited…