hbr article proposal: look for the loops

HBR Article Proposal:Look for the Loops

by Robert E. Powell

Strategy isn’t a “one-shot” affair. For a reality check, use systems thinking to look for virtuous cycles

that aren’t restrained by limits to growth.

Proposal answering the requested questions:

� What is the message of the article you propose to write?

For strategy to be sustainable it must create virtuous cycles; after all, nothing grows without a reinforcingprocess. An effective strategy assures a virtuous cycle does not become a vicious cycle. And becausenothing grows forever, an effective strategy must identify and address limits to growth to assure they do notnegatively impact virtuous cycles.

� What are the implications of the message? Or, as Harvard Business Review editors often say, What’sthe “so what”? Why should a busy manager stop and read your article? What is new, unusual, useful,counterintuitive, or important about your message?

Managers and leaders should care about this because it’s important for their long-term success, indeed it’svital for their long-term survival. The lens of systems thinking allows organizations to think more effectivelyabout, communicate explicitly about, and resolve conflicts around their most important issues. Systemsthinking is a lens that surfaces the reasons behind organizational behaviors that are perceived to be coun-terintuitive; practice using this lens helps change intuition … the counterintuitive becomes intuitive.

� Who is the targeted audience?

All leaders who read the Harvard Business Review and want to better test the validity of what they read.

� What research have you conducted to support the argument or logic in your article? What company ex-amples can you cite to support your argument?

Company examples are drawn directly from the pages of the Harvard Business Review. Systems thinkingcausal loop diagrams show visually why the principles and recommendations in the HBR articles are valid.The referenced articles are:

w Gordon Shaw, et al., “Strategic Stories: How 3M is Rewriting Business Planning,” HBR May-June 1998

w Jim Collins, “Turning Goals into Results: The Power of Catalytic Mechanisms,” HBR, Jul-Aug 1999

w David P. Norton; Robert S. Kaplan, “Having Trouble with Your Strategy? Then Map It”, Sep-Oct 2000 and“Using the Balanced Scorecard as a Strategic Management System”, Jan-Feb 1996.

w Larry E. Greiner, “Evolution and revolution as organizations grow,” HBR, May-June 1998 (orig. 1972)

Other referenced articles

w Nigel Nicholson, “How Hardwired Is Human Behavior?, HBR, Jul-Aug 1998

w Clayton Christensen, “Making Strategy: Learning by Doing,” HBR, Nov/Dec 1997

� What is the authority or expertise that you will draw on to make your argument convincing?

The authority and expertise that makes the argument convincing are the fields of systems thinking and sys-tem dynamics. Causal loop diagrams allow readers to test the logic of the argument and convince them-selves that the systems approach brings clarity to the recommendations in the referenced HBR articles.

Bob Powell, Ph.D., MBA PP Continuous Improvement Associates PP 6992 Blackhawk Place PP Colorado Springs, CO 80919 Phone (719) 599-0977 PP Fax (719) 599-0564 PP E-mail: [email protected] P P © Copyright 2002 (07/28/02)

Outline:Look for the Loops

by Robert E. Powell

… outline the manuscript, offering enough detail for an editor to be able to understand the article’s mainpoints and the evidence or examples that will support those points.

Strategy and Feedback

Explains why using the lens of systems thinking is so necessary for organizations. Using this lens we can un-derstand the organic processes behind strategic approaches found in HBR articles. Loops are everywhere,we only need to look; loops determine our fate; we’d better look.

Example 1: Stories vs. Lists … the Language of Causal Loops

Describes why stories are better for defining strategy than lists (our evolutionary tendency) and how strategicstories are feedback loops. Shows an example of how two different linear strategic stories are obviously a loop.

Draws from:� Nigel Nicholson, “How Hardwired Is Human Behavior?”, Harvard Business Review, HBR, Jul-Aug 1998

� Gordon Shaw, et al., “Strategic Stories: How 3M is Rewriting Business Planning,” HBR, May-June 1998

There’s More to the Systems Thinking Language

Explains how to read systems thinking causal loop diagrams.

Example 2: A “Catalytic Mechanism”

Shows the structure of the Granite Rock “short pay” “catalytic mechanism” and shows that it is really an “or-ganic process.”

Draws from:� Jim Collins, “Turning Goals into Results: The Power of Catalytic Mechanisms,” HBR, Jul-Aug 1999

Example 3. High Level Strategy

Shows that the “Balanced Scorecard is a very high-level definition of the feedback process for growth, the ra-tionale or theory behind why growth is expected to occur. It calls for measures that test whether the rationale iscorrect.

Draws from:� David P. Norton; Robert S. Kaplan, “Having Trouble with Your Strategy? Then Map It”, HBR, Sep-Oct 2000; and “Using the

Balanced Scorecard as a Strategic Management System”, HBR, Jan-Feb 1996.


Example 4. Organizational Evolution and Revolution

Shows how each organizational phase is composed of an evolution stage where a balancing loop increases to-ward, and is eventually held back by, its limit … until a revolutionary reinforcing feedback is introduced toovercome the limit. With each new phase comes another new evolution and revolution (if the organization sur-vives). Revolutions are required, not only to meet the challenges of a changing environment, but also to meetthe challenges created by success in an unchanging environment as the organization itself changes.

Draws from:� Larry E. Greiner, “Evolution and revolution as organizations grow,” HBR, May-June 1998 (orig. 1972)

So What Good are these Causal Loop Diagrams?

Extends Christensen’s “strategy matrix” and shows how to use it to practically move from making causal loopstructures explicit to creating strategy and defining action plans.

Draws from:� Clayton Christensen, “Making Strategy: Learning by Doing,” Harvard Business Review, Nov/Dec 1997

From “Catalytic Mechanisms” to “Organic Processes”

Explains the systems thinking rationale behind the characteristics of Jim Collins’ “catalytic mechanisms.” “Or-ganic processes” is a more appropriate metaphor. Systems thinking provides a theoretical understanding ofCollins’ characteristics and also provides what might be called a meta-mechanism to describe, analyze, anddesign catalytic or tangible mechanisms.

Draws from:� Jim Collins, “Turning Goals into Results: The Power of Catalytic Mechanisms,” HBR, Jul-Aug 1999

Loop Leadership

Conclusion. A test of the validity of a strategy or improvement initiative is whether it has the feedback struc-tures and measures that will allow the strategy or improvement initiative to work over time and be tested forlearning. If feedback is not there, the approach is likely to fail.

Systems thinking is about leadership. Leadership is understanding, designing, and nurturing the feedbackprocesses and information systems that foster organizational performance that displays desired behaviors. It’sthe leadership style we take in a garden. We nurture a garden, we don’t drive it.


Draft:“Look for the Loops”

by Robert E. Powell

… write a draft of the first few paragraphs of the article, which contains the central message of the piece.

Strategy and Feedback

An effective strategy must work over time, it isn’t a “one-shot” set of ac-tions. A sustainable strategy must foster reinforcing processes overtime, reinforcing processes that create virtuous cycles. After all, nothinggrows without a reinforcing process.

Because reinforcing processes can go “up” or “down,” an effective strategy assures virtuous cycles do not be-come vicious cycles. And because nothing grows forever, an effective strategy must identify and address lim-its to growth in order that they not limit virtuous cycles.

These feedback loops are “structure,” the relationships among the parts of a systems. Structure tells stories,stories that explain the behaviors we observe in systems. A key principle of systems thinking is that the behav-ior of the system is determined primarily by its internal structure, not by external influences. It’s not that exter-nal influences do not affect system behavior, it’s that we first look for how the system itself may be creating (orwill create) behavior. When considering external influences, we understand that the system’s response is de-termined by its internal structure, not by the external influences.

Organizational vision and purpose are vital, but if our organizations do not have structures that support visionand purpose, we are unlikely to achieve our desired outcomes. Instead, we experience counterintuitive and un-intended consequences. When something happens we don’t expect, we say that the decisions we’ve madehave “side-effects;” but there are no “side-effects,” there are only “effects,” some of which we do not intend orforesee … and we call those “side-effects.”

Once we begin to look for them, we see feedback loops everywhere. That’s because living beings, organiza-tions and societies are systems. Feedback loops are the simple act of filling a glass with water (we observe thelevel and turn off the tap when the glass is full), in our organizations (TQM is a feedback process: observe, ap-ply corrective action, and observe some more), and in our economy (business cycles arise from the entrainedcycles of filling and depleting company inventories).

Systems thinking allows us to see the long-term payoff (or cost) of our actions. Systems thinking isn’t a fad.1

Without it, organizational performance suffers and they may not survive. With it, they can go beyond survivalto learn and thrive. It’s an enduring practice because it’s based on principles that are absolutely fundamental tothe nature of reality:

� Feedback is ubiquitous, like the air we breathe.

� There is a primacy of the whole. Systems have emergent properties that do not belong to the parts.

� Our instincts fail us in the face of dynamic complexity, which is an environment with multiple feedbacks andlong delays. Because of long delays in the system, humans have as much difficulty managing organizationsas they do driving while drunk.

� Reality is both objective and subjective, not everything that’s important can be measured (e.g., creativity,morale, burnout, etc.). These important factors are considered in systems thinking approaches.

� Systems thinking recognizes interdependence and the collective nature of self. Reality is both individual andcollective.

This article takes four examples from the pages of the Harvard Business Review and shows the underlying

Bob Powell, Ph.D., MBA PP Continuous Improvement Associates PP 6992 Blackhawk Place PP Colorado Springs, CO 80919 Phone (719) 599-0977 PP Fax (719) 599-0564 PP E-mail: [email protected] P P © Copyright 2002 (07/28/02) page 1

What is systems thinking?Seeking to understand system behav-

ior by examining “the whole”… instead of by analyzing the parts.

Graphic: Picture of a “Sher-lock Holmes” type lookingthrough the lens of a magnify-ing glass at an organizationand seeing feedback loops.

1 A definitive text is John Sterman, Business Dynamics: Systems Thinking and Modeling for a Complex World, Irwin/McGraw-Hill, 2000

feedback structures in the language of causal loop diagrams. Causal loop diagrams describe a “theory of thesystem.” Theory is not just academic; it is very practical. The word “theory” comes from the same root as theword “theater” … both are ways of displaying our thinking. Systems thinking creates a basis for productivedialogue. It helps us gain insight, arrive at a shared understanding of the issues, and resolve conflicts.2

Extending a “strategy matrix” to consider feedback loopsas “internal driving forces,” in addition to “external drivingforces,” gives us a practical way to make use of causalloop diagrams.

Example 1: Stories vs. Lists … the Languageof Causal Loops

Like it or not, we humans are now stuck with the tenden-cies with which we evolved. In the HBR article, “HowHardwired Is Human Behavior?,” Nigel Nicholson3 writes,“You can take the person out of the Stone Age, but youcan’t take the Stone Age out of the person.” Homo Sapi-ens evolved 200,000 years ago, but we’re little changedsince the invention of agriculture 10,000 years ago; therejust hasn’t been enough time to evolve further. We’restuck with the brains of a hunter-gatherer society.

One of the engrained instincts he describes is “classifica-tion before calculus,” by which he means we’re reallygood at making lists. We evolved that way … to classify,and know where to find, the plants and animals necessaryfor survival.

The HBR paper “Strategic Stories: How 3M is RewritingBusiness Planning”4 notices this same tendency. It statesthat, while “virtually all business people plan using lists,outlines and bullets,” this approach fails to “reflect deepthought” or “explain the logic or rationale of winning in themarketplace.” As the authors note: “Bullets leave criticalassumptions about how the business worksunstated.”

As example of how stories correct thisproblem, they give the Story 1 and Story 2examples in Figure 1. In Story 1, the strat-egy is to increase Market Share by im-proved marketing to increase Profits toallow more investment in New Product De-velopment. The Story 2 alternative is thatthe story could begin with Profits derivedfrom a windfall.

Looking at the two alternatives, it’s clear that


“Stories do many things for us as indi-viduals and as people united by cus-toms, beliefs, hopes, and goals. Storiescan make us laugh and cry, imagineand think, empathize with others, im-prove our personal values, see newways to solve problems and conflicts,learn from the past, and make wise de-cisions for the future.”

Storytelling Festival, Program Notes, Northwest Florida Emerald Coast,

Sept. 27, 1997

The wisdom of cul-tures is passeddown in stories.

Feedback loops tell stories.

Wisdom is at the topof the hierarchy:�Wisdom � Knowledge� Information� Data

Figure 1. Strategic Stories

Story 1

Story 2

The Combined Stories

MarketShare

New ProductDevelopment

Profits

improvedmarketing

It could be this story:

MarketShare


Profits

windfallprofits

Or it could be this story:

MarketShare


Profits

windfallprofits

improvedmarketing

Or it could be the combined stories:

4 Gordon Shaw, et al., “Strategic Stories: How 3M is Rewriting Business Planning,” HBR May-June 1998

3 Nigel Nicholson, “How Hardwired Is Human Behavior?”, Harvard Business Review, Jul-Aug 1998

2 A caveat, while dialogue around systems models is powerful, we can’t simulate even simple models in our heads, it’s often necessary tocreate a system dynamics model, gather data to populate the model, then engage in simulation, testing, and dialogue … and iterate. Tolearn we need a language, thinking skills, and a brain … for many problems our physical brains aren’t up to the job, we need computersimulations.

they can be combined to show a feedback loop (The Combined Stories). It’s a loop to which can be added thefactors, it is hoped, will foster a virtuous cycle.

But a loop raises the question, “Where do you start?” The answer: “Anywhere you want.” That’s because for astrategy to work, the whole loop needs to work. Like a bicycle chain, one link doesn’t move unless all the linksmove.

And it prompts other questions: How much Profit goes to increasing New Product Development? Do we in-crease Market Share simply by adding New Products or do we increase Advertising or Direct Sales? Will ournew products increase overall Industry Demand as well as increase “Market Share? Such questions make the“Strategic Stories” authors’ point clear: The story must be explicit.

But that can also make the story complicated. And that’s where it gets difficult for us. As Nigel Nicholson ex-plains, we are not good at considering “complex explanations of cause and effect” (systems thinking). Rein-forcing this point, in “Strategic Stories” there’s this: “… writing is thinking. Bullets allow us to skip the thinkingstep, genially tricking ourselves into supposing that we have planned when, in fact, we’ve only listed some goodthings to do.” To think effectively about organizational issues, we must develop systems thinking skills.

Stories are important for learning; they have been used by human cultures to pass wisdom from one genera-tion to the next. Reading a causal loop diagram is telling a story about what’s happening.

There’s More to the Systems Thinking Language

It’s difficult to communicate without language. Further, even with language, it’s difficult to communicate if thelanguage is not suited to the subject matter.

When everyday language won’t suffice for some application, we invent amore appropriate language. For example, electrical engineers inventedcircuit schematics to visually show components and theirinterconnections. It’s much easier and faster to comprehend a schematicdiagram than pages of text. An electrical engineer needs a clear under-standing of the structure of the circuit because its behavior depends on itscomponents and interconnections … its structure.

The same is true for organizational systems. If we want to under-stand system behavior, we must understand its structure. To do thiswe need language suited to describing structure.

Consider the objects in Figure 2.5 In systems thinking workshops weask a volunteer to not show the diagrams to the group, but verballydescribe first one object, then the other, to the group taking 20 sec-onds to describe each. Each person in the group is asked to inde-pendently draw what is described. The volunteer has no problemdescribing object a, and almost everyone draws a very similarshape. However, both have considerable difficulty describing anddrawing object b; the drawings don’t come even close, because wedon’t have words to describe the shapes in object b.

The diagram in Figure 3 takes the next step to put the New Product Development loop in Figure 1 in the lan-guage of causal loops. Each link is labeled with the polarity of influence (in this case an “s” for an influence inthe “same” direction) and with a name for the loop that characterizes the story being told. See the box “Read-ing a Causal Loop Diagram” for a detailed description of the language.


Figure 2. It’s easy to describe someobjects, harder to describe others.

object a object b

MarketShare


Profits

S

S

S

R1New

Products

windfall profits

improvedmarketingS

S

Figure 3. Showing influence polarities and naming the loops.

5 Dennis Meadows showed drawings such as this at a System Dynamics in Education conference.


Reading a Causal Loop DiagramThough some diagrams are complex, they are relatively simple to read.Here’s how:

� Same Direction Links: An “S” means an influence in the “Same” di-rection, e.g., more “births” give more “population,” or fewer “births”give less “population” (than there otherwise would have been).

• Opposite Direction Links: An “O” means an influence in the “Oppo-site” direction, e.g., more “deaths” gives less “population” … or fewer“deaths” gives more “population” (than there otherwise would havebeen).

• Delay: A slash across a link indicates that it has a significantly longertime delay than the other links.

• Reinforcing Loops: Loops, labeled with an R, are reinforcing if thereare an even number of “O” links (zero is an even number). The actionof a Reinforcing Loop is to increase or decrease the amplitude of thebehaviors associated with the loop. An example is the squeal of feed-back when a microphone gets too close to a loudspeaker.

• Balancing Loops: Loops are balancing if there are an odd number of “O” links. The action of a Balancing Loop is limit-ing or goal seeking, for behavior to approach the goal, though large oscillations can result when there are long delaysassociated with the links. An example is a heating system approaching the room thermostat setting.

An Example StoryLoops are stories; follow the arrow links to read them. As an example, at right is adiagram that goes with quote by Yogi Berra. You can start anywhere around the loop.For this example start at “customer traffic”:

• More “customer traffic” creates a longer “length of line.”

• A longer “length of line” creates more “wait time.”

• More “wait time” results in lower “service quality.” We compare “wait time,” to “ex-pected wait time” to determine “service quality.” The greater the “expected waittime,” the better the “service quality.”

• Lower “service quality” results in lower “perceived service quality” … after somedelay. That is, it takes time to sink in that service quality is lower.

• After some delay less “perceived service quality” results in less “customer traffic.”It may take several experiences of lower “service quality” before someone de-cides to no longer go there.

In this example we started with more “customer traffic” and completed the loop with less “customer traffic.” The diagram’s“story” can also be told in the opposite sense, starting with less “customer traffic,” etc., and ending with more “customertraffic.”

This is an example of a “goal-seeking” balancing loop, where going entirely around the loop creates an influence that coun-teracts the initial change. A balancing loop’s action is similar to that of a home heating system with a thermostat; in thiscase “expected wait time” is the thermostat setting. A thermostat-like reference is present for all balancing loops, either ex-plicitly or implicitly (it’s best to show it explicitly). This diagram shows that “customer traffic” increases until “wait time”equals the “expected wait time.” If “wait time” increases above the “expected wait time,” the influence will cause “customertraffic” to fall back to a level where “wait time” equals “expected wait time” … and perhaps then oscillate about that level(… the oscillation could be damped or undamped).

In the case of a reinforcing loop, going around the entire loop produces an action in the same direction as the original ac-tion … it produces an increasing or decreasing response (an increasing feedback example is the squeal of sound systemfeedback). Reinforcing loops are two-edged swords; they can be either virtuous or vicious cycles.

Links and Loops

population

Links

births deaths

S O

"S" = Samedirection

"O" = Oppositedirection

populationbirths deaths

S

S

O

S

LoopTypes

even #of O's

odd #of O's

"R" = ReinforcingLoop

"B" = BalancingLoop

R1 B2

Birthing Dying

LoopswithLoop

Names

LinkPolarityCounts

customertraffic

lengthof line

waittime

perceivedservicequality

servicequality

expectedwait time

S

S S

O

S

S

NobodyGoes There

Anymore

“That place is too popular. No-body goes there anymore.”

Yogi Berra

Example 2: A “Catalytic Mechanism”

For a more complex example, let’s examine the Granite RockCompany’s “short pay” policy. It includes on each invoice thefollowing statement: “If you are not satisfied for any reason,don’t pay us for it. Simply scratch out the line item, write abrief note about the problem, and return a copy of this invoicealong with your check for the balance.” In the HBR article,“Turning Goals into Results: The Power of Catalytic Mecha-nisms,” Jim Collins, describes this as a “catalyticmechanism.”6

Yes, the policy is drastic, but it encourages a company toface problems with its product or service head on. The reve-nue loss can direct attention to learning how to prevent futureproblems … a long term focus.7

Figure 4 shows the stories that the “short pay” mechanism isdesigned to address: Sales can grow, but they can eventuallybe limited by customer service capacity. The loops:

R1: Growth. Sales grow or decline based on the effectivenessof product development, marketing, sales and revenue fromsales.

B2: Customer Service Quality. As “sales” grow, there aremore customers problems, which increases “customer serv-ice demand.” Service quality declines (for constant customerservice capacity), reducing “customer satisfaction” and caus-ing a decline in sales. [The slashes on two links indicatelonger delays.]

This is the basic “Limits to Growth” structure that re-flects the reality that nothing grows without a reinforc-ing process and nothing grows forever. The challengeis to develop a sustainable way to overcome this limit togrowth and not slow growth.

Figure 5 shows the short-term effects of a “short pay”policy: When customers don’t have to pay, it doesmake them feel somewhat better. The downside is thatit hurts revenue. The loops:

B3: At Least I Don’t Have to Pay for It. The use of“short pay” increases customer satisfaction immedi-ately because at least they don’t have to pay for prod-ucts or services with which they are dissatisfied.

B4: But It Sure Hurts. But, there’s an immediate nega-tive impact on revenue when customers take the “shortpay” option.

These short-term effects set the stage for long-termimprovement. They are the typical “worse before


R1a,b

revenue

CustomerServiceQuality

customersatisfaction

S

productdevelopment

marketing& sales

sales

customerproblems

customerservice

demand (totalservice hours

required)

servicequality

customerservicecapacity

customerstake "shortpay" option

B4But ItSureHurts At Least I

Don't Haveto Pay for It

Growth

B2

B3

S

S

S

S

S

O

S

S

S

O

SO

S

R1a,b

revenue



S

productdevelopment

marketing& sales

sales

customerproblems

customerservice


required)

servicequality

customerservice

capacity

Growth

B2

S

S

S

S

S

O

S

S

S

S

Figure 4. The company must continue to improve customersatisfaction (B2) to keep growing (R1).

Figure 5. To improve customer satisfaction and promotelearning how to continually improve, allow customers tonot pay if they’re not satisfied (B3). It hurts revenue(B4), but nevertheless … (see Figure 6)

Figure 6. … the mechanism provides real incentive for everyone in theorganization to find the root causes. This reduces future problems(B5) and it takes less time to resolve similar problems (B6).

R1a,b

revenue



S

productdevelopment

marketing& sales

sales

customerproblems

customerservice


required)

servicequality

customerservice

capacity


investigage reasonscustomers take the"short pay" option

findroot

causes

understandcustomerproblems

takecorrective

action

problemsper sale

inform customerservice about

problemsencountered

customer servicehours required

per problem

B6More

Efficient inthe Future

FewerProblems inthe Future

B5 B4But ItSureHurts At Least I

Don't Haveto Pay for It

Growth

B2

B3

S

S

S

S

S

O

S

S

S

O

S

S

O

S

S

S

O

SS

O

S

S

customer serviceawareness of customer

problemsS

7 Such a policy is not sufficient to force a long-term focus. One company said, “We promise we’ll complete the contract even if weoverrun.” However, they do not have an explicit policy to determine the root causes and apply corrective action to prevent future overruns.

6 Jim Collins, “Turning Goals into Results: The Power of Catalytic Mechanisms,” HBR, Jul-Aug 1999

better” behavior we get when we take action to benefit the long-term health of the system (address rootcauses), rather than simply take actions that re-lieve symptoms (to “feel better fast”).

Figure 6 shows how the “short pay” policy pro-vides incentives for long-term improvement: Thepain of loss of revenue motivates eliminating theroot causes of customer dissatisfaction and han-dling problems more efficiently. The loops:

B5: Fewer Problems in the Future. In the longterm a decrease in “customer satisfaction” iscounteracted by the learning associated withfinding the root causes of problems and reducingthe number of problems.

B6: More Efficient in the Future. If the learningassociated with investigating problems is con-veyed to customer service personnel, then thetime to address customer problems can also bereduced.

These last two loops foster a long-term focus and provide the incentive for long-term improvement. The “shortpay” policy accepts short-term pain for long-term improvement. Often, too often, we do the opposite; we getshort-term relief, but pay a long-term price.

Example 3. High Level Strategy

A high level example of promoting reinforcing feedback is the Balanced Scorecard described by Norton &Kaplan.8 It helps teams develop strategic focus by understanding the feedback processes and measures thatfoster improved organizational performance. These feedbacks are the “structure” through which an organiza-tion carries out its strategy. With the Balanced Scorecard, teams engage in “strategic learning,” that is, learn-ing that improves strategy, as opposed to“operational learning” that improves operationalperformance.

There’s been a long debate in the strategy litera-ture about which came first, strategy orstructure? Using a military analogy, would westructure our forces to carry out strategy? Orwould we create a strategy based on the forcesavailable? This is like the “chicken or the egg”riddle.

Paradoxical questions that ask for “either-or” an-swers are a clue that systems effects are impor-tant. Instead of an “either-or” answer however,the answer is “both-and.” Strategy and structureare two sides of the same coin; we must developboth … iteratively.

Figure 7 shows the generic structure of the Bal-anced Scorecard. It explicitly defines two rein-forcing feedback loops for improving


FinancialPerformance

CustomerValue

(business innovation,business operations,

post-sale)

(product, image,relationship by

segment)

Capabilities &Motivation

R

Invest inPeople & IT

R

Invest in InternalProcesses

ServeCustomers Investment

(reinforcingstrategy)

(people capabilities,support technology,

empowerment)

(revenue, costof operations)

InternalProcess

Perspective

CapabilitiesPerspective

CustomerValue

Perspective

FinancialPerspective

Figure 7. Balanced Scorecard loops are fundamental, high level reinforcingprocesses for improving performance. They define the expected finan-cial returns, the customer value that will provide the returns, the proc-esses that will provide the customer value, the capabilities needed tosupport the processes, and the investments that will be made in proc-esses and capabilities.

“The Learning Curve is a loop” by Victoria Roberts. HBR Jan-Feb 1996.

8 David P. Norton; Robert S. Kaplan, “Having Trouble with Your Strategy? Then Map It”, Sep-Oct 2000; and “Using the Balanced Scorecardas a Strategic Management System”, Jan-Feb 1996.

performance: “Invest in Internal Processes” and “Invest in People & IT.”

At the top, the Financial Perspective defines explicitly how financial performance will be improved (by newsales or by reduced costs). The Customer Value Perspective describes the value the organization provides tocustomers that produces the financial returns. The Internal Process Perspective defines the key processesthat support providing customer value. And the Capabilities Perspective9 determines the key skills and capabili-ties that support the processes. Describing the investments in processes and capabilities that reinforce strat-egy complements the standard operational budget with an explicit strategic budget.

These loops are a practical theory for organizational success. It’s practical because organizations measure alot of things, but behind every measure there’s either an explicit or implicit theory. Someone thought thateach measure was important; there was a rationale behind it. We manage by these measures whether they’rekey to organizational success or not because what we measure gets attention. The Balanced Scorecard is anexample of how the systems thinking behind it guides organizations in measuring what’s most important for re-inforcing growth.

Tracking the measures tells us whether our theory is correct. When measurements show the expected struc-tural links aren’t valid, we learn what isn’t working and adapt. This is fundamentally a creative process by whichstrategy becomes emergent.10

There’s nothing so practical as a good theory.11

Example 4. Organizational Evolution andRevolution

Figure 8 shows the traditional model of organizational birth,maturity and decline. While there’s some truth to this view,the problem is that it’s too simple. In an HBR classic paper,“Evolution and revolution as organizations grow,”12 LarryGreiner describes five phases of growth with “Death” being ispossible at the end of each evolutionary phase unless the or-ganization can successfully go through a revolution.

Figure 9 shows that there is some basic reinforcing feedbackthat generates (R0, Growth). There are many possibleengines.13 The engine might be the New Products loop in Fig-ure 3, the Growth feedbacks R1a & b in Figure 4, or an engine created by thefeedbacks through the Levels of Perspective of the Balanced Scorecard (Figure7). Figure 9 is a simple system dynamics stock and flow diagram (see box,“Reading a Stock & Flow Diagram”).14

This simple structure allows continuing growth. But, nothing grows forever andGreiner describes some of the limiting forces that arise as an organizationgrows. His model (Figure 10) shows a series of evolutionary stages punctuatedby revolutions that must successfully resolve a series of crises. These crises


Figure 8. The “traditional” life cycle shows a profile of birthto death.

birth

growth

maturity

aging

dying

The Traditional Organizational Life Cycle

Figure 9. An engine drives growth.

operation offundamental engines

of growth

S

S

S

growth

R0

Growth

Size of Organization:Sales or Installed

Base

“The task of top management is to be aware of thestages; otherwise, it may not recognize when thetime for change has come, or it may act to imposethe wrong solution.”

Larry Greiner, HBR

14 The conceptualization of systems in terms of stocks & flows is vitally important, however this diagram could be shown as a causal loopdiagram to avoid having to explain stocks & flows.

13 See John Sterman, Business Dynamics: Systems Thinking and Modeling for a Complex World, 2001, Chapter 10. Path Dependence andPositive Feedback.

12 Larry E. Greiner, “Evolution and revolution as organizations grow,” HBR, May-June 1998 (orig. 1972)

11 Lewin

10 Reference HBR article by Mintzberg.

9 Instead of showing the lowest level as a “Learning and Growth Perspective,” it is labeled as the “Capabilities Perspective.” This is be-cause the entire structure is about “learning and growth”: Defining the links in the loops, developing measures around the loop, learningwhether the postulated links are working, and modifying influences and measures accordingly. This is essentially the scientific method …iterating between theory and experiment.

are limiting feedback loops that must be addressed for the revolutions to succeed and allow growth to continue.

Growth begins, according to Greiner, in a Creative Phase. Eventually informal communication, lack of proce-dures, and process inefficiency limit growth. The organi-zation becomes too big to manage informally. Creativitybegins to look more like chaos.

Figure 11 shows that, as the organization grows, eventu-ally the “informal communication” and “need for businessmgmt systems” begins to limit the “creative phase growthfactor.” The “size atwhich lack of mgmtsystems limits growth”is the “thermostat” ofbalancing loop, B1,the level at whichgrowth in the phasebecomes negative.

Those who have livedthrough this transitionknow it’s very difficult.It’s precisely the infor-mality that many haveliked. Many perceive


Figure 10. If revolution isn’t successful at each stage, it dies orregresses to an earlier stage. Earlier or later stage solutionswon’t work.

Creative

(entrepreneurial)

Systems &

(direction)

Autonomous

(delegation)

Collaboration

Phase

Phase

Coordination

StructurePhase

Phase

Phase

(coordination)

(collaboration)

leadership

autonomy

red tape

control

???revolution: stages of crisis

evolution: stages of growth

Age of Organizationyoung mature

large

smallS

i ze

o

f O

rga

ni z

at i

on

Greiner's "Five Phases of Growth" Model

Reading a Stock & Flow (S&F) diagram

A S&F diagram distinguishes between stocks and flows; it shows theflows into and out of the stocks. A stock is the accumulation of theflows over time and is represented by a rectangle. Flows are indicatedby valve-like structures. In the example at right, “Net Revenue” is thedifference between “revenue” and “expense.”

Mathematically, a stock is the integral (the accumulation) of the flowsinto and out of the stock over time. This sounds complicated, but it isour common experience.

We can’t fill a glass of water without making use of them … we ob-serve the level of water in the glass (the stock) to know when to turn offthe tap (the flow). The water in a lake is the accumulation over time ofthe water flow into the lake minus the water flow out of the lake. Amathematician would say that nature does integral, not differential,calculus!

So stocks and flows are fundamentally different kinds of variables. Ac-countants recognize the difference between stocks & flows when theycreate a balance sheet (the state of organizational stocks) and a profit& loss (P&L) statement (the net flows into or out of stocks over a giventime period).

The links between the valves and arrows have the polarity indicated.Note that, though the S&F “expense” flow arrow goes out of the “NetRevenue” stock (showing that cost is an outflow), the influence of the “expense” variable is on “net revenue” and the influ-ence is negative.

As shown in the causal loop diagram format of the same structure, the arrow goes from “expense” to “Net Revenue.” Notethat the typical causal loop diagram does not distinguish between stocks and flows. And some causal loop diagrams donot even show the Ss and Os.

It’s good to remember though that in a S&F simulation model, whether a flow is actually in or out of a stock is determinedby the equations governing the flow, not the direction of the arrows.

A Typical Stock & Flow Diagram

A Stock & Flow Diagram Showing Influences

A Causal Loop Diagram

A Stock & Flow Diagram of Births & Deaths

NetRevenue

S

revenue

O

expense

NetRevenue

OSexpenserevenue

NetRevenue

revenue

expense

PopulationS

births

O

deaths

S SR1 B2

Birthing Dying

Figure 11. Growth in the Creative Phaseis limited by a lack of formal systems(B1).


of growth

size at whichlack of mgmt

systemslimits growth

S

S

S

S

B1

CreativePhase

S

growth

informalcommunication

& neglect ofgrowing mgmt

problems

need for businessmgmt systems

O

S

creativephasegrowthfactor

SR0

Growth


Base

the change as a threat to the organization, because itsstrength has been its creativity and ability to reactquickly. So people rebel against “processes andsystems” that appear “bureaucratic,” but are necessaryas a foundation to support further growth. Without them,an organization can not only cease to grow, it can die.

Figure 12 shows (in red) the influences that allow growthto continue. When the “need for business mgmtsystems” becomes sufficiently great, it prompts manage-ment to provide “direction & formal systems.” If it does, itagain reinforces growth (R1, Phase 1 Leadership Revo-lution).

The organization eventually encounters the limitingforces of the B2, Systems & Structure Phase, as the or-ganization faces the next crisis, a “crisis of autonomy.”The organization gets so large that management losestouch with the market and processes, at which point dif-ferent groups need more autonomy.

It’s tempting at this point for organizations to try the solution of the past (in this case, going back toinformality), but doing so would only bring failure. We must keep process & systems while granting autonomyto larger units. As Ken Wilber says, “Evolution is a process of transcend and include, transcend andinclude.”15

Greiner’s phases are shown in Table 1. In each an evolution in the presence of a limiting balancing feedbackis eventually overcome with a revolution that introduces a reinforcing process that allows growth to continue.The revolutions are required, not only to meet the challenges of a changing environment, but also to meet thechallenges created by success in an unchanging environment as the organization itself changes.

Though Greiner’s model is based on his empirical observations, systems thinking allows us to see the structurethat supports his theory.


”???”Lack of internal solutions(e.g., new products) forstimulating growth, a need tolook outside for partnering.

Less formal control with more facilitationfor decision-making, matrix structureused to assemble cross-functionalteams, economic rewards geared moreto team, than to individual, performance.

Innovation &problemsolving

Collaboration5

Red tape: that needs tobe overcome.

Headquarters unfamiliar withlocal conditions. Conflict be-tween line & staff, betweenheadquarters & the field.

Merging decentralized units into productgroups, formal planning, company widecontrol & review of line managers, cen-tralized capital expenditure allocation.

Organizationalconsolidation

Coordination4

Control: to regain controlover the organization asa whole.

The top loses control overhighly diversified operations,parochial attitudes.

Greater responsibility is given to plantmanagers and market territories.

Marketexpansion

Autonomous(delegation ordecentralization)

3

Autonomy: to remove re-strictions on lower-levelemployees.

Cumbersome hierarchy thathas difficulty controlling amore complex organization.

Process efficiency, more formal commu-nication systems, accounting systems& procedures.

Efficiency ofoperations

Systems &Structure(direction)

2

Leadership: solutions tomanagerial problems.

Confusion and a crisis ofleadership.

Ad hoc systems and processes, techni-cal orientation.

Make & sellCreative1

Crises that must be overcome by revolutions to get to the next stage

Problems that arise fromthe solutionsof this stage

Some characterizations of the evolutionary stage(i.e., solutions that end the previous stage’s crisis)

ManagementFocus

TheEvolutionaryStages

Phase

Greiner’s Five Phases of Growth

Table 1. Greiner’s five phases of growth


of growth

size at whichlack of mgmt

systemslimits growth

S

S

S

S

B1

CreativePhase

S

growth

informalcommunication

& neglect ofgrowing mgmt

problems

need for businessmgmt systems

O

SR1

Phase 1LeadershipRevolution

creativephasegrowthfactor

S

direction& formalsystems

S

systems &structure

phase growthfactor

S

S

mgmt losingtouch w/market

& eng/mfgprocesses

S

need forautonomy S

O

size at which needfor autonomy limits

growth

S

B2

Systems &Structure Phase

R0

Growth


Base

Figure 12. Providing direction & formal systems (R1) allowsgrowth by overcoming the limits (B1) of the Creative Phase.Balancing loop, B2, limits eventually growth in the Systems& Structure Phase.

15 Ken Wilber, A Brief History of Everything, 1996, p. 30.

So What Good are these Causal Loop Diagrams?

Let’s admit it, systems thinking causal loop diagrams don’t look all that useful. After all they represent “theories”of the system, and we don’t have all that much respect for theory. After all, when we’re in a hurry, someone willsay, “That’s too theoretical. Get real. Let’s just get on with it.” We tend to be activists, not “thinkivists.”

Indeed, such impatience isoften justified. Many or-ganizations have createdcomplex diagrams, but theyhaven’t known how to usethem as a basis for action.

One approach16 is to ex-tends Clayton Chris-tensen’s “strategy matrix” inthe HBR article, “MakingStrategy: Learning byDoing.”17 In his strategymatrix, each organizationalfunction describes its strat-egy for addressing eachexternal driving force. Be-cause feedback loops are essentially internal drivingforces, Figure 13 shows they can similarly be takeninto account.

For guidance on which organizational functionsshould be involved in developing strategy for eachfeedback loop, we can overlay a map of the func-tion responsible for each variable on top of thecausal loop diagram. Figure 14 shows how this isdone using the “short pay” mechanism causal loopdiagram in Figure 6. The causal loops are grayedout with the functional organization responsibleshown.

We tend to organize functionally, but success de-pends on fostering favorable feedback loop opera-tion. When we don’t connect the silosappropriately, we have difficulty making them workfor us, instead of against us. The groups involvedwith each feedback loop must participate in defin-ing the strategy for the loop. They form teams thatdevelop strategy for the driving forces and meas-ures that will confirm the strategy is working overtime.

So each function defines its strategy for improvingthe operation of each loop and also defines a summary strategy for all loops in which it is involved.Additionally, “loop leaders” summarize a strategy that describes how all groups will foster each loop.


At Least IDon't Haveto Pay for It

O

Customer

O

R1a,b

revenue



S

productdevelopment

marketing& sales

sales

customerproblems

customerservice


required)

servicequality

customerservicecapacity


investigage reasonscustomers take the"short pay" option

findroot

causes

understandcustomerproblems

takecorrective

action

problemsper sale

inform customerservice about

problemsencountered

customer servicehours required

per problem

B6More

Efficient inthe Future

FewerProblems inthe Future

B5 B4But ItSureHurts

Growth

B2

B3

S

S

S

S

S

O

S

S

S

S

S

O

S

S

S

O

SS

O

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customer serviceawareness of customer

problemsS

o

o

o

o

OO

O

CustomerService

O

O

Mktg &Sales

OO

Finance

ProductEngineering

OO

Eng'gOO

??

O

O

O

Figure 14. When a loop spans functions, it shows who must work withwhom to achieve desired outcomes.

Organizationor Individual

Loop B2

Customer Service Quality

Loop B4

Short Pay

Effect on Revenue

Loop B5

Short Pay Effect on Customer

Satisfaction

Loop B6 Short Pay Effect on Customer Service

Efficiency

Driving ForceF1

Driving Force

F2Summary of Strategy for

each FunctionMktg & Sales

Finance

Customer Service

Product Eng'g

Other

Summary of Strategy for Each Loop or Driving Force

Key Success Loops & Driving Forces

Figure 13. The Strategy Matrix. Taking into account internal (causal loops) and external drivingforces to define strategies and action plans sets the stage for major improvement.

17 Clayton Christensen, “Making Strategy: Learning by Doing,” Harvard Business Review, Nov/Dec 1997

16 This raises the level of thinking, however “thinking through” the behavior of a complex structure is beyond the capability of the humanbrain; we have to go from mental simulation to computer simulation to understand the system dynamics.

Finally, we have a well-defined project when all groups and individuals define “who’s going to do what, bywhen, with what level of quality” for each box in the matrix. This engages the necessary functions in improvingsystem performance.

Systems diagrams provide a shared understanding of how everyone’s actions promote success. Teams learnwhen they create them and use them as an integrating framework to go from causal loop theories to action.

From “Catalytic Mechanisms” to “Organic Processes”

Jim Collins uses a chemical metaphor in referring to “catalytic mechanisms” in his earlier-mentioned paper on“Turning Goals into Results: The Power of Catalytic Mechanisms.” This is a reference to using a catalyst tolower the energy required for a chemical reaction to proceed. Another metaphor to describe organizations isthat of organic processes that add to, subtract from, increase or decrease the feedback in a system to changethe behavior of the system.

The power in a metaphor is a function of how closely the characteristics of the metaphor match the subject.Because organizations are living systems, the feedback metaphor is a better fit than a chemical reaction cata-lytic metaphor. System thinking provides a theoretical understanding of the origin of Collins’ list of essentialcharacteristics of a catalytic mechanism.

Characteristic 1. It produces desired results in unpredictable ways.

The results appear unpredictable because our intuition in dynamically complex systems is poor, though ourintuition can be improved with experience. The systems thinking and system dynamics literature is full ofwhat have been described as counterintuitive behaviors in social systems.

Characteristic 2. It distributes power for the benefit of the overall system, often to the great discomfort ofthose who traditionally hold power in the system.

In general this depends on the Values, Purpose, & Vision (VPV) that are being supported by the mecha-nism. Some VPVs might not lead to distributed power. Yet, perhaps this is specifically true for mechanismswhich are effective in improving overall system performance because, while we are able to influence dy-namically complex systems, we cannot control them. Centralized power just isn’t as effective.

Characteristic 3. It has a sharp set of teeth.

Effective mechanisms are those that provide long-term improvement, as opposed to short-term relief. Theseare painful because we observe “worse before better” behavior in systems undergoing transformations thatbenefit long-term performance. This is the root of the addiction problem; it requires discipline to endure theshort-term pain in order to gain the long-term payoff. Or more generally, we require discipline and/or a“sharp set of teeth” to enforce discipline.18

Characteristic 4. It attracts the right people and stimulates the ejection of viruses.

Effective mechanisms make it particularly painful for those who do not believe in the VPV of an organiza-tion. They leave and others are attracted who do.

Characteristic 5. It produces an ongoing effect.

The effect is ongoing because the power of reinforcing and balancing feedback mechanisms is their per-sistence over time … they are not a one time occurrence. This is the “clock building” metaphor in Built toLast is so appropriate: the combinations of gears in a clock (the reinforcing and balancing feedback proc-esses) keep turning to tell the time (produce the behavior we desire).

A systems point of view provides an insightful perspective on questions at the Harvard Business Review webdiscussion on Collins’ catalytic mechanisms.

Question: “If catalytic mechanisms are powerful and effective at helping us get beyond rhetoric and to


18 For more on fostering action for the long-term, see our papers on “Exponential Improvement” and “The Crisis Syndrome” series.

stimulate significant and tangible progress (which the evidence suggests), then why are true catalyticmechanisms so rare? Why is it difficult for people and organizations to create and install them?”

They are rare and difficult to create and install because the systems way of thinking, and the languagenecessary to support the thinking, are “unnatural;” as Nigel Nicholson observes, we did not evolve withthe tendency. A good thing about humans, however, is that we can change what’s natural; we can learnto be systems thinkers.

Question: “Granted that ‘nothing ventured nothing gained,’ I am keen to know if in your catalogue of catalyticmechanisms there are examples of organizations having implemented catalytic mechanisms that passevery test of the criteria that catalytic mechanisms have to fulfill but yet failed to produce desired result orworse still backfired and bombed!”

This is common when organizations do not stick with it to get through the initial “worse before better” be-havior. People tend to see the immediate negative impact of effective mechanisms as an indication ofpolicy failure and give up. This is why it’s so important to understand the structure of the system and es-timate the delays required for the positive benefits of the policy to appear.

Question: “It seems to me that the greatest thing for a leader would be to find some way to create one“meta” catalytic mechanism that leads others in the organization to come up with new mechanisms. Somesort of a “clock” for continuously stimulating the creation of new mechanisms. Do these exist? Is it feasibleto create these?”

This “meta” mechanism for creating stimulating the creation of new mechanisms is systems thinking. Ithelps organizations dialogue about and think through proposed ideas and design effective organic proc-esses that achieve the desired system behaviors.

Question: “The article talks a lot about catalytic mechanisms and their relationship to BHAGs (Big Hairy,Audacious Goals). I would be interested in exploring morehow catalytic mechanisms relate to an organization’s coreideology, more specifically the values that an organizationhold.”

Built to Last makes clear the value of Values andPurpose and the need for tangible mechanisms tosupport them. Systems thinking is the way to designthose mechanisms, mechanisms that should rein-force the “How do we act?” “Concept” statementsassociated with each Value.

Collins’ Notes: “The following has become clear since thepublication of the article: there is an interesting relation-ship between information and knowledge and catalyticmechanisms.

A good catalytic mechanism helps you make the shift from information to information *that you cannot ig-nore*. A customer survey system, for example, gives you knowledge and information about yourcustomers, but short pay gives Granite Rock knowledge and information *that it cannot ignore*.

The problem in most companies is not that they lack information or knowledge (there is little evidence thathigh performing companies have more information and knowledge than their mediocre industrycomparisons); the problem is that they don’t pay attention to the right information or act on what they know.Perhaps, then, there can be a useful link between “knowledge management” and catalytic mechanisms.”

This point underscores the need to understand the feedback loops and delays in the system; and we needto have the right information, that is, measures that truly indicate the “real health of the system,” as opposedto the “perceived health of the system.” Without measures that gauge the behavior of the feedback loops inthe system, we create “management misinformation systems.”19


flowStock

Information

Policy(decisions)

Action

Jay Forrester, "A Response to Ansoff and Slevin"Management Science 14, #9, 5/68

Focus ofOperationsResearch

Focus ofMIS & IT

Figure 15. Information Systems, Operations Research, & Sys-tem Dynamics

19 Russell Ackoff, “Management Misinformation Systems,” Management Science 14, #4, 12/67

As illustrated in Figure 15, operations research focuses on how tomake the best individual decisions at the flow, whereas systemdynamics deals with the whole loop including the time-varying de-cision stream (as opposed to individual decisions).

Developing measures to guide proper action might mean lookingnot only at how to increase sales, but also looking at measures of“customer problems per sale” to understand how reducing themwill play through the system affect the number of customers andrevenue. In the case of claims processing, it would mean not justmeasuring claims processors on the number of claims they proc-ess in a given time, but also measuring total claims expense(claims pay out plus claim processing expense).

Loop Leadership

A test of the validity of a strategy orimprovement initiative is whether it hasthe feedback structures needed to allow it to work over time. Ifwe can’t identify the feedbacks, the approach is likely to fail.And we must identify the loops so we select the right measures.There are so many things to measure, we can’t measure eve-rything; so we’ve got to target them to what’s important.

Figure 16 shows that if we want to be effective in influencingsystem behavior, we must work at the level of structure whereleverage is high, instead of reacting to events.

Designing and nurturing the loops is the foundation of leader-ship. We often persist in using command and control in organi-zations, because the “machine” metaphor is powerful. But wecannot drive human social systems as we drive a car.

If organizations were machines, rather than livingsystems, that might be possible. But living systemscan’t be controlled … we’ll always be out of control.The question is, how do we live with this truth?Systems thinking doesn’t ask us to give up control,it asks us give up the illusion of control … and in-stead assert influence by designing effective poli-cies. It’s more like gardening than driving.

Systems thinking is about leadership.20 It’s theleadership style we adopt in a garden. For the rein-forcing processes we provide sun, water, and fer-tilizer; and for the balancing processes we pull theweeds. We nurture a garden; we don’t “drive” it.Leadership is understanding, designing, and nur-turing the feedback processes and informationsystems that determine organizational performance.

Loops help followers, too. As the “Strategic Stories” article observes, because the loops are stories, they in-crease involvement and commitment … “people can locate themselves in the story.”


Figure 18. Definitions of Values, Purpose, Vision, and Structure/Men-tal Models.

Values: What do we value?Concept: Who are we? If this is our value, how do we act? It

informs our “winning strategy,” our mental model ofhow we must act in pursuing safety & success.

Purpose: Why do we exist?Vision: What do we want? The two Vision components:

� Outcome: What outcome do we desire?� Vehicle: What will our organization to look like?

Structure/Mental Models: The structures (interdependenciesand policies) and beliefs that support us in acting in away consistent with our Values in pursuing our Pur-pose on the way to our Vision.

Events

Vision

Patterns of Events

SystemStructure

MentalModels

Purpose Values & Concept Preserve

the Core

Stimulate Progress

CreateTangibleMechanisms

Reap Rewards orPay the Price

Figure 17. To experience the events we desire, we musthave Structures that create Tangible Mechanisms(organic processes!) to achieve our Vision while ful-filling our Purpose and living according to our Values.

“The single most important point … is the critical importance ofcreating tangible mechanisms aligned to preserve the core and

stimulate progress.” Collins & Porras, Built to Last (1994)

Better yet, organic processes described by causal loops do exactly that.

Figure 16. Leverage is low when we attemptto apply corrective action at the level ofevents, because beneath the surfacethere are powerful structures that influ-ence system behavior.

EVENTSEVENTS

PATTERNS OF EVENTS

High High

Leverage toInfluence

Low Low

SYSTEMSTRUCTURE

MENTALMODELS

20 Reference Senge on Leadership.

hbr article proposal: look for the loops

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