And Sometimes the Butterflies' Wings Carry it Over to Pollinate the Tree of the Knowledge of Good and Evil

I got introduced to systems thinking by the management guru W. Edwards Deming. He made the point that when assessing a team made up of three people, it is easy to think that we’ll know how the group would perform simply by looking at the performance of each individual. The team performance of Tom, Carmen, and Jin could look like this:

Tom’s performance [T] + Carmen’s performance [C] + Jin’s performance [J] = team performance [x]

In fact, that might well be the least of the equation. The team’s performance is also a function of

Tom’s working relationship with Carmen [T~C] + Carmen’s working relationship with Jin [C~J] + Jin’s working relationship with Tom [J~T] + the dynamic that emerges between all three [T~C~J]

An equation that at first blush looks like:

T + C + J = x

Is actually

T + C + J + [T~C] + [C~J] + [J~T] + [T~C~J] = x

This is not a problem of simple addition. This is a problem of relationships and emergent phenomenon. Jin could be a great guy but cause the other two team members to perform poorly. Carmen may be a poor performer on her own but might make the team perform better. The symbol ~ sometimes adds and sometimes multiplies as team members bring out what is better in each other; it sometimes subtracts and sometimes divides as they, at other times, undermine each other or leave each other feeling like less. What emerges out of relationship is not simple and cannot be reduced to the parts. Systems are defined by emergent properties, not just their parts.

“In an avalanche, each snowflake pleads its innocence.”

-         - Proverb

And of course, the world in which we live is defined by system dynamics, by the interaction of systems and even the performance of systems within systems. Cultures and societies are not the product of just one person, they emerge out of a dynamic between people and their times and circumstances. Your work place, your town, your portfolio, your marriage… these are defined by not just by emergent properties but how they, as systems, fit within the larger system we call the environment. Like Russian dolls, our world is not only composed of systems but has layers of systems. Your respiratory system can perform in ways that allow you to run a marathon or be unable to rise out of bed; if you are king, this difference can ripple across a kingdom to shatter a fragile peace. 

Sometimes the butterfly stirs up a storm and sometimes it gets pinned inertly into the collection. It’s hard to predict which it will do by just looking at the butterfly. 

Shaping Schools to Individuals (rather than vice versa)

The book, The Fourth Economy: Inventing Western Civilization from 1300 to 2050 is done. I'm now ready for the editing phase. The central notion is that social invention will become as intentional in this century as technological invention became in the last. The goal of this social invention will be to create institutions and organizations that not only create more value but better adapt to the reality of real, rather than idealized, people. Here is an excerpt about the future of education.

Schools can better adapt to real human beings by designing education to accord with some of the best theories about who people are.

Someone quipped that after Howard Gardner defined various kinds of intelligence, the question shifted from whether your child was smart to how your child was smart. Gardner writes and talks to these different ways that people learn, think, and create careers and change communities and lists 8 kinds of intelligence.

His list of intelligences:

§  Spatial- the artist or architect with the ability to conceive of and manipulate objects in three-dimensions,

§  Linguistic – Poets and speakers who use words and language as their tools.

§  Logical-mathematical – the computer programmer or math professor who can reason and manipulate numbers.

§  Bodily-kinesthetic – the dancers and athletes whose control over their body lets them do with precision and strength what others are left to admire.

§  Musical – performers, song writers, and composers.

§  Interpersonal – the leaders, salespeople, and politicians who sense what others are feeling and know how to influence their emotions, reasoning, and actions.

§  Intrapersonal – the psychologists and theologians who are introspective enough to understand the inner life.

§  Naturalistic – the farmers and ecologists who understand and work with the rhythms and dynamics of nature.

Additionally, fairly popular notions of learning suggests that people have at least three kinds of learning styles: some are visual, some auditory, and some kinesthetic learners. If we assume that anyone of the 8 kinds of intelligences could mix with one of the three kinds of learning styles, we have a fairly complex menu of minds. In theory, we’d have 3 X 8, or 24 different kinds of minds. This suggests that in a time of entrepreneurship and social invention, we might create at least 24 kinds of learning experiences, if not even 24 different learning institutions. This customization of learning for different types of students would be just one example of how institutions could be made into tools for the individual.

In this context, thinking of developing an educational system that would work best for a particular kind of learner, one gets a better appreciation of W. Edwards Deming disdain for grades. Imagine grading a visual learner whose potential intelligence was intrapersonal – a person who might be brilliant at reading facial expressions, gestures, and body language for clues about another’s emotions and thoughts. Now imagine that this person was struggling to learn within a school designed for auditory learners where the intelligences that are emphasized are language and math. This child would get a low grade. In this system, they would be made to (unfairly) look stupid or inept or lazy. This would almost be excusable if it were really the case that the only way to make a living was to be good at math or language. In fact, a person who can read and influence others might make more money in sales or management than anyone using literature or algebra.

Deming said that if we know a student got a 92, say, or a 58, we know nothing about the student. The amount of learning a student gains is a function of an equation of X * Y = student score. X is the system and Y is the student. You can’t solve for Y – the student’s ability – without knowing X, the system’s contribution. And of course, for one child the system is a perfect complement to her potential whereas for another it is a miserable clash. For one student, the system works. For another, it does not. For the intrapersonal, visual learner, the interaction of the educational system and the student produces a 58. A grade of D. For the logical – mathematical, auditory learner, the interaction of the system and student produces a 92, or an A. (And it is worth noting that these grades, the A, B, C ‘s that are so ubiquitous, are remnants of a time before the information economy. They were first used by cotton buyers to communicate back to England on the quality of cotton. This was a time when information was very expensive and a single letter grade was so much cheaper to send across the Atlantic than a description of the particulars of the cotton. Even in an information age where every high school kid seems to have the equivalent of a telegraph in his pocket, the now ubiquitous cell phone for texting, we still distill the child’s academic performance into a single letter.) 

The question is not whether the student is smart but how. In a time of rampant social invention, there is no reason that new systems can’t be created that better suit the individual. School should be a means for a student to discover and develop his own potential, not be ranked against other students on criteria that may or may not have anything to do with his future.

In the end, the child’s GPA is a distraction from the real task of creating a life and career. GPA tells us how well the child performed within the school system, a vague approximation of the child’s subsequent performance with the larger social system. (Although, of course, a child convinced that the grade really is a good indication of who she is would be more likely to let this become a prediction of their behavior if it is a poor grade. Sadly, a school’s label of failure is more likely to predict life after school than the label of success. Subject matter is not all that children learn in school; they also learn who they are.) 

Looking for Individual Accountability in all the Wrong Places

"I must create a system, or be enslav'd by another man's."
- William Blake

Today at lunch with Bill (who, unlike Bernard, is a real person) we briefly talked politics. Bill is utterly disgusted with the Republicans. Like me, he feels that one of the worst indictments against the current crop of Republican presidential candidates is the fact that they have not spoke out against Bush, have not bothered to repudiate the Bush policies.

But Bill isn't particularly trusting of the Democrats either. He dislikes their seeming disregard for individual responsibility. "They seem to me like a party that encourages victimization," he said.

I think he's right, really. And I'm not sure how one reconciles this problem between the parties.

(And I know that some of you are saying, "Look at Ron Paul. He's about individual responsibility and is unafraid to repudiate Bush's policies." True, but Ron Paul (says this Ron Paul Davison), is a nut job if he believes that we'll make progress by getting rid of things like public education. People like Ron Paul could not explain the difference in incomes in Mexico (per capita GDP of $7,300 and tax rates of 18.5%) and Sweden (per capita GDP of $32,000 and tax rates of 51%) and somehow thinks that taking government back to the stage it is in third world countries would be a step forward - an oddly naive concept that rightfully engages only a small fraction of the electorate.)

It seems to me that the Republican Party's belief in individual responsibility is what one must accept for one's life. The system is what the system is and we're left to make the best of it. We have to make something of our lives in whatever situation we find ourselves. In that sense, the Republicans seem to have it just right.

Yet as a student of Deming, I know that the system determines 90+% of outcomes. I live close to the border and I know that Mexicans are not people who are only one-fourth as talented as Americans. The fact that they make one-fourth as much as us has nothing to do with individual effort or potential. It is their systems - the economic, political, financial, and educational systems - that determines this outcome. It is ridiculous to tell an individual Mexican that if only they worked as hard as the average American they would make as much. They put in as much effort but have less to show for it. In that sense, an emphasis on individual responsibility shows an almost willful ignorance. Systems are hugely determinant of outcomes - from crimes rates to unemployment levels to average incomes. In this sense, the Democrats have got it right.

When making policy, one has to look at systems. When making a life, one has to look at one's self.

How does one strike this balance? How does one stress individual accountability even while acknowledging that individual efforts are inevitably paltry and ineffectual things against something as big as a system?

If a candidate can strike that balance, he just might win Bill's vote. And I suspect that Bill would bring along a few like-minded Americans.

2 Change in Thinking - New Economic Age

Once people change their thinking, all other changes follow. In this segment, I compare the philosophy of Rene Descartes and Adam Smith - making the claim that organizing around the principles of analytic, or reductionist, thinking led to capitalism. An economic and social revolution followed from an intellectual revolution. This pattern is set to happen again, as organizations and leaders begin to organize around the principles of systems thinking.

Chapter 7 Change in Thinking Video - Leadership

In this final chapter, I simply declare that just as it would be good for a person living in Itay to speak Italian, so it would be good for a person dealing with systems to adopt systems thinking.

Systems thinking will be to the next economy what reductionist, or analytical, thinking was to the industrial revolution. It's time to begin taking a systems perspective.

W. Edwards Deming's Birthday

October 14 is W. Edwards Deming's birthday. Born in 1900, he delivered his last four-day seminar from a wheel chair, within a month of when he died in December of 1993. In his last couple of years, he'd end up in the hospital from time to time and the doctors would examine him and then say, "He's just old." After resting up, he'd head back out to conduct more seminars, desperate to change the prevailing system of management. Even in my thirties, I found it exhausting to conduct three and four day sessions. As much as I admire his philosophy, I envy the passion he had for his work and personal mission even more.

Deming's message seemed to have two dimensions. One had to do with seemingly abstract concepts and the other had to do with the individual.

Walking through a GM plant in the late 1980s, he muttered, "The worker must be released." Three of Deming's 14 points were to "Drive out fear," and to remove barriers that rob employees and managers of "their right to pride of workmanship." As I work with a variety of companies, I still see little evidence of this as a goal and a great deal of evidence of the benefit of making them goals.

Deming's management philosophy he labeled a "system of profound knowledge." It includes four elements: psychology, a theory of knowledge, appreciation for a system, and an understanding of variation. He convincingly argued that one could not, and ought not to, be in management with at least some rudimentary appreciation for these four elements.

By psychology, he was referring to the importance of respecting intrinsic motivation as essential to creativity, problem-solving, and quality. One example of what he meant by variation is the use of control charts by factory workers as tools to improve quality, perhaps the most visible element of the quality movement with which he was often associated. Appreciation for a system is complex, but it basically points to the importance of orchestrating parts, processes, and people to work well together. Finally, the question at the heart of theory of knowledge is simple but profound: how do you know what you know?

The Japanese gave Deming a great deal of credit for their economic revival after the devastation of World War II. What became known as the quality movement, or TQM (total quality management) became very popular in the U.S. as Japan gained large shares of automobile and electronic markets in the U.S. While American and European companies were focused on rework and blaming individuals, the Japanese companies that drew from Deming's teaching were focusing on system-wide improvements. At one point, the German and Japanese luxury cars had the same quality, as measured by flaws; but the Germans were using as many people to perform re-work at the end as the Japanese were using for the entire production process. Last year, the profits of Toyota (a company that has given huge credit to Deming) were more than the next five largest car companies combined.

Deming argued that bad managers focused on finding individuals to blame whereas good managers focused on changing the system: they had appreciation for a system and knew that an individual who may appear bad in one system can thrive in another. Progress comes from creating and modifying systems that allow real individuals to get real results. Understanding what to attribute to the system and what to attribute to the individual depends on understanding variation - seeing the difference between common cause (outputs caused by the system) and special cause (egregiously bad or amazingly good results that come in defiance of the system).

To this day, most managers still practice management without an articulated theory of management. Much of what animates management practice is little different from what once animated Indian rain dancers, a reliance on exhortations and slogans and tradition that has inspired hundreds of Dilbert cartoons. That management so often lives at the intersection of science and the occult is not something for which we can blame Deming. He tried to transform us. Perhaps, in time, he still will.

Welcome Back to School! Here's Your Packet of Destructive Forces

Kids have been in school for weeks now. If this is their first time, they likely left home full of excitement, their eyes aglow with expectancy. Given it is mid-September, they may already be disillusioned with the experience, as is cce's darling daughter.

We all are born with intrinsic motivation. A baby doesn't need the reward of strained carrots to learn how to crawl or talk. In fact, at no stage of our life do we learn more quickly than at this one - transformed from nearly comatose bundle to bouncing, running, jabbering person in just a couple of years.


But intrinsic motivation is gradually destroyed by a series of destructive forces encountered at school and work. Children are given incentives to learn - gold stars and A's. Although there is no evidence that such incentives actually enhance learning, there is lots of evidence that such incentives dissuade children from learning. Short term, the inducement of a reward makes a child do more of the rewarded activity. Longer term, such inducements actually convince children that, sans inducements, this activity is not worth doing. (Imagine a child who spoke whenever his mother smiled and said, "Good boy! You can talk!" but talked only for such rewards. Presumably, we teach activities we'd like people to continue doing.) One thing that children learn is that learning is not worth doing for its own sake - a ludicrious conclusion akin to concluding that eating, sleeping, or hugging is not worth doing unless we're rewarded for it. Learning is intrinsic to being human and it takes an elaborate and medieval educational philosophy to change this.

Worse, grades and rankings in school further the damage. It has always been - and will always be - true that there are variations in intelligence, learning styles and the speed of learning in any group. Nothing we can do will end such variation. Bad managers latch onto this inevitability as if it matters - as if they can do something about it. They spend all their energy trying to codify rankings, tweaking the standings, focusing on who is excellent and who is merely good. Such effort is proof that they lack the simplest understanding of systems and human psychology. (Or, to be fair, are teachers or supervisors forced by their system to engage in these rituals that will someday be written about with the same disbelief we use to write about rain dances or drowning witches.) The more people focus on rewards and rankings, the less they focus on the tasks we're rewarding them for doing. Again, repeated studies have shown that such rankings make people less creative and result in lower quality work. People who are distracted do not do their best work.

Good managers understand that there will be variation but focus on the overall system. Sure, Ariela did better at math than Sam. So what. Look at the distribution for the entire class and look for ways to move that upwards. Maybe the introduction of new methods will move the curve upwards. (And if you use hands on methods instead of verbal ones, you may find that Sam is suddenly doing better than Ariela. Ranking is largely a function of method and task. Differ the methods or task and a very different ranking emerges.)

Great managers understand that tapping intrinsic motivation is much better than forcing extrinsic motivation.

If you have children forced into such a system, coach them through this. This is a game they have to play, but one that they should understand as a game with perverse rules. If you are a policy maker, work to lessen the insistence on grades, rankings, and even rewards. No matter who you are, read or listen to Alfie Kohn. (I'd recommend W. Edwards Deming but for all his genius, he was never terribly accessible.) Kohn has the audacity to actually point to research, rather than folk lore, and point out that the emperor of education has no clothes. Quite simply, research does not support current methods - a sorry fact that should could continue in no other domain but this: NASA, the Pentagon, the Federal Reserve, the EPA would never continue to get funding were they to so thumb their noses at empirical data. Alas, failures in methodology are merely blamed on the children who obviously are not trying hard enough.

The Futility of Grades and Performance Reviews

Once or twice a year, supervisors all over the world sit down and solve for X in the following equation:
Y * X = 47

X = the employee performance.
Y = the system they perform within.
47 (or whatever value) = what the employee was able to create within that system.

There are so many things that are wrong with this equation, literally.

For one, the value of 47 is itself subject to massive amount of measurement error. The performance of an individual in a system typically results in indeterminate and hard to measure outcomes.

If Y is the value of the "system" in which the individual performs, this system is constantly changing. Even if the company is static, its environment, its markets, its technology are all changing. Y is a dynamic variable, not a static value.

Nonetheless, supervisors around the world are sitting down right now to solve for X. The scariest thing? Most will actually think that they've found "the" value of X and will never realize that as long as they attribute complementary values to Y, they can justify any value of X that they want.

[And yes, alert readers, this is basically a recap of an argument that Deming repeatedly made onto deaf ears. Apparently, the millions of administrators demanding grades and managers giving performance reviews all understand systems, and variability more than the departed Dr. Deming. Either that or they just don't get it and feel compelled to continue with a system of grading and ranking only slightly less archaic than sinking women in water to determine whether or not they are witches.]

The Need for Systems Thinking, Part of a Continuing Saga

Norman and Vladimir have made some really great points in response to my "Time to Upgrade Civilization's Operating System" post. I was going to respond in comments but realized that a proper response deserved its own post.

First, there is the matter of technology to facilitate systems thinking. Vladimir points out that we can't hold too many things in our head at one time. This is true, but it doesn't mean that we can't create technology to enhance our ability. For instance, if you want to cross the room, you use your feet. If you want to cross town, you use a car. If you want to cross the continent, you use an airplane. Depending on the scope of our ambitions, we use different technology. Yet if we want to plan lunch, we talk. If management wants to plan next year's goals, they talk. If legislators want to plan budgets, programs, and laws that impact the next generation, they talk. This is, ultimately, about as effective as walking across the continent.

In order to promote systems thinking we'll need to develop and popularize tools for systems thinking. In my mind, these tools include econometric models, project planning software, statistical quality control tools, and other tools as varied as mind maps and systems simulation software. (Look here, for instance: http://www.pegasuscom.com/gallery.html). Along with these tools we'll need to grapple more with the implications of systems thinking as explicated in the thinking of people like W. Edwards Deming, Russell Ackoff, Donella Meadows, and Peter Senge.

Finally, the consequences of these systems thinking tools need to be institutionalized. I like Norman's notion of creating "hardware" to go along with civilization's new operating system. Part of the genius of Adam Smith is that he saw in specialization of labor a means to translate Descartes’ analytic thinking into institutions; the resultant capitalism transformed the world. What we now need are entrepreneurs who take on the task of creating institutions able to become a vehicle for systems thinking in the same way that factories were a vehicle for analytic thinking.

One last note. Russell Ackoff, a person who has probably done as much as anyone to popularize and pioneer systems thinking, has just come out with a new book, Management f-Laws. You find information about the book here. The publisher describes it as “easy to read and accessible - setting out the uncomfortable truths about how organizations really work, what's wrong with the way we design and manage businesses, what makes managers tick, and how we can make things work better. Russ himself comments on the book here.”

If you decide to order the book, enter “triarchy-ten” in the promotional code field on the order form to get a ten percent discount.