The Laws of the Fifth Discipline

Senge: Chapter 4THE FIFTH DISCIPLINE

2Prepared by James R. Burns1 June 2002

Today’s problems come from yesterday’s solutions• IT solutions of yesterday are

today’s “problems”– Bringing integration, complexity– And along with complexity

• The potential for Chaos• The potential for Catastrophe

3Prepared by James R. Burns1 June 2002

Today’s problems come from yesterday’s solutions• THE CARPET BUMP: Jump on the bump

and the bump reappears somewhere else• Why are sales of autos so slow, nationally

this quarter?– Because of the tremendous rebates and zero

interest promotions of the previous quarters– Of course, this would dry up demand, as

those planning to buy in this quarter bought last because of the extraordinarily good “deals”

4Prepared by James R. Burns1 June 2002

Today’s problems come from yesterday’s solutions• A new manager attacks chronically

high inventory problems and succeeds• Now, market spends 20% of its time

responding to angry customers whose orders are not fulfilled on time

• Now, the sales force must convince the customer they can have any color they want so long as its BLACK

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Today’s problems come from yesterday’s solutions• Police are able to arrest narcotics

dealers on east 34th street • Now the drug scene has switched

to north Frankford

6Prepared by James R. Burns1 June 2002

The harder you push, the harder the system pushes back• THIS IS CALLED COMPENSATING

FEEDBACK• Low income housing projects of the

60’s• Food and agricultural assistance in

developing countries

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MORE: The harder you push, the harder the system pushes back• The weakening dollar—due to some

foreigners pulling the dollar out of our equity markets—thinking their own markets are better places to invest

• But what happens is that domestic manufacturers goods are now more competitive in foreign and domestic markets

• This leads to better profits• Which leads to better stock prices• Which leads to foreign investors getting back

into American markets

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strength ofdollar

price of our goods inforeign markets

margins of foreigngoods in our markets

profits of ourmanufacturers

profits of foreignmanufacturersstock prices of our

manufacturers

stock prices of foreignmanufacturers

++

+

+

B+

-

+

+

B

Bank of Japanbuys dollars

-

-

B

9Prepared by James R. Burns1 June 2002

MORE: The harder you push, the harder the system pushes back• Slowing sales leads to more sales

people selling the same product at lower cost with more advertising, leading to still less revenues needed to solve the real problem—the competition’s better products

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MORE: The harder you push, the harder the system pushes back• When your performance is sub-par,

how to you respond?– Do you, like the respond like Boxer in

Orwell’s Animal Farm, “I will work harder..?”

– This is the wrong response—you have to look for a more fundamental solution

– You are responding to symptoms here, not core problems, root causes

11Prepared by James R. Burns1 June 2002

The harder you push, the harder the system pushes back• This is exhausting• While, like Boxer, working harder

we are blinding ourselves as to how we

ourselves are contributing to the obstacles

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Behavior grows better before it grows worse• Compensating feedback usually involves

a delay, a time lag between the short-term benefit and the long-term dis-benefit

• Choose carefully who you follow up the corporate ladder—if you pick people who are interested only in the short run, you will get blind-sided by the negative long-term effects of their decisions

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The easy way out usually leads back in• We tend to apply familiar solutions

to complex problems, applying what we know best

• Pushing harder and harder on familiar solutions, is a reliable indicator of non-systemic thinking

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The easy way out usually leads back in• Drug companies look for drug

therapies as a cure for cancer– Why don’t they look for nutrition

therapies?? Diet Therapies??– They can’t patent and acquire an

exclusive right to market such a therapy• In other words, they can’t make money

off these other therapies

15Prepared by James R. Burns1 June 2002

The cure can be worse than the disease• This is sometimes true of

Chemotherapy• Short-term improvements may

lead to long-term dependencies, addictions, as expressed by the SHIFTING THE BURDEN ARCHETYPE

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Shifting the Burden

• Consultants, often used by companies, become addictive and prevent a company from training its managers to solve its own problems

• These structures reduce the ability of the system to shoulder its own burdens

• Long-term solutions must do the opposite

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Faster is slower

• WHY?? Too many mistakes were made– We must do it right the first time

• We try to do things fast, make a mistake and wind up having to re-do all that we did

• This is a process issue—get the process right and we WILL do things right the first time

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Cause and effect are not closely related in time and space• The effects we see today may be

attributable to a cause that occurred years ago

• Most of us assume most of the time that cause and effect are closely related in time and space

• Even Allen Greenspan can make this mistake

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Cause and effect are not closely related in time and space• There is a fundamental mismatch

between the nature of reality in complex systems and our predominant ways of thinking about that reality

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Cause and effect are not closely related in time and space• If there is a problem in manufacturing, we

assume the cause is also in manufacturing• If sales people can’t meet targets, we

think we need new sales incentives and promotions

• If there is inadequate housing, we build more housing

• If there is insufficient food, we send more food

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Small changes can produce big results--but the areas of highest leverage are often the least obvious• Systems thinking teaches that the

most obvious solutions don’t work—at best they improve matters in the short run, only to make things worse in the long run.

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Small changes can produce big results--but the areas of highest leverage are often the least obvious• Trim tabs and ships rudders• If you wanted to make a moving

tanker turn left, where would you go to push on the ship?

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You can have your cake and eat it too, but not at once• Skip it

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Dividing an elephant in half does not produce two small elephants.• Living systems have integrity• Three blind men each encountered

an elephant…• Seeing whole elephants does mean

understanding how major functions such as manufacturing, marketing and engineering interact

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Principle of the system boundary• Interactions that must be examined

are those most important to the issue at hand

regardless of parochial organizational boundaries

• What makes this difficult to practice is the way organizations are designed to keep people from seeing important interactions

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Principle of the system boundary, continued• One obvious way is by enforcing

rigid internal divisions that inhibit inquiry across divisional boundaries, such as those that grow up between marketing, manufacturing and engineering

• THIS IS BAD POLICY

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There is no blame

• We tend to blame outside circumstances for our problems—the competitors, the press, the changing mood of the marketplace, the government

• Systems thinking teaches that there is no outside—that you and your problems are part of a single system

28Prepared by James R. Burns1 June 2002

Copyright C 2002 by James R. Burns• All rights reserved world-wide.

CLEAR Project Steering Committee members have a right to use these slides in their presentations. However, they do not have the right to remove this copyright or to remove the “prepared by….” footnote that appears at the bottom of each slide.

Prepared by James R. Burns