Abhinav Sinha

Archive for the ‘Systems Thinking’ Category

Holistic Brand Management

In Brand Management, Holism, Systems Thinking on October 22, 2010 at 4:24 am

When someone asks you, ‘what’ would your next car be; ‘how’ do you answer? Would you call the thought process that gets triggered, rational? or analytical? skeptical? emotional? or none of them may be. Or maybe, all!

Whatever your answer to the ‘what’ may be, what I want to dwell upon in this post is the ‘how‘ part!

With my background in a variety of customer centric roles with the automotive industry, this question is also of immense professional interest to me. So, I like taking this personally.

On a number of occasions, my inquisitive self has asked this question to a eclectic mix of audience ranging from friends to family, all age groups and varying social strata. I avoid picking colleagues from auto industry though, and am happy about it!

Most people, come up with their snap second responses. Not just quick but firm and confident ones as well. No one has ever asked me for a KBC style set of four options to choose for an answer. Although, while making a a real purchase decision they probably would take into account most options available, but in this case they just seem to know it.

My next act of devil is when I start getting deeper. I quiz them on the power output that their ‘choice’ delivers. Majority does not have a faintest idea, but they somehow believe that it has to be good! I ask them if their ‘choice’ has an airbag option? a tilt steering? or  electrically operated outside rear view mirrors? etc. The most consistent answer that I have got for whatever choice of the car they have come up with is, ‘I think…’

Then ‘how’ do they answer? How could they be so confident in giving out a name, while virtually having no idea of the specifics!

The answer probably lies in the definition of what we delightfully call a ‘brand’. I researched my sources and stumbled across hundreds of definitions but none more satisfying and complete than this one:

‘A Brand is the costliest real estate; a piece in the corner of a consumers’ mind’.                 

To elaborate further, it is a collective set of perceptions that a consumer carries about a person, product or service.  Although a brand is something that provides an identity to that product, it in itself remains intangible.

This takes me to my answer. ‘How’ do people answer flash question pertaining to their choices. The piece in the corner of their minds shouts the answer out and the mouth just rattles it. All of them seem to have a  holistic perception about the product or service, and that is what drives their opinion. Simple! Rest are just details.

However, what isn’t as simple is getting your name plate up on that piece of estate. Brand managers slog their personal and family lives away in wanting to get their first. While getting there is important, what is even more critical is leaving the right impressions behind.

Management of brands is a highly complex business task. For many brand owning companies, brand value is the key driver for the company’s overall strategy. Though it may be considered from a number of viewpoints, one insightful starting point is to recognise that brand value is linked to ‘preferential choice’ for a brand relative to some other.

Organisations that are system thinkers at large and able to see a holistic image of reality, are concerned with not just the choices that their customer make but also the choices made by other stakeholders like employees and shareholders. 

Choice is affected by a host of factors both internal and external to the business. Most evolved companies, including the one for which I work for, have good tools to manage and control internal operational processes and the cost side of the brand management.

However, in my opinion far fewer companies will have the processes to manage the ‘intangibles’ and other consumer processes that are fundamental to the revenue generating part of the brand management. Competitive advantages in delivering the ‘intangibles’ can create substantial value that will be ‘hard to copy’ for the rest.

These processes could be hugely complex in nature and in the absence of systems thinking and a sharp understanding of the causality between drivers and outcome over time, brand management would continue to be dealt ‘intuitively’.

The dominant business tradition called the ‘spreadsheet thinking’ is designed to isolate key variables in order to reduce complexity using a bottom line focus and linear thinking. Most marketing managers would give their right hand away to trade it for a larger number of ‘spot enquiries’ generated out of a brand activity, while completely failing to mention the ‘long term value creation’ objective.

A balance of short term deliverables along with long term targets for the brand is desirable, but hard to achieve. This is where the opportunity exists.

In my very personal opinion, the key objective of successful brand management is to maximize the population of loyals. Thus brand strategy involves the identification of appropriate management actions to create loyalty amongst its stakeholders.

A brand manager in today’s world need to be cognizant of the fact that retention is as much a part of his portfolio as acquisition is.

The study of brands from the perspective of dynamic system theory is enlightening because it leaves the nature of the brand, especially their holistic and dynamic character, fully intact.

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Systems Thinking – Randomness vs Chaos

In Chaos Theory, Systems Thinking on August 16, 2010 at 3:36 pm

Just four articles old, I had already begun to face the writer’s block, till Bollywood came to my rescue. My last movie going experience was both entertaining and a stimulating one. This Friday, I watched the much anticipated, ‘Peepli Live’.

The story deals with the sensitive issue of farmer suicide, served to the taste of the mainstream audience with a dash of humor and satire. What made me mention the movie here is the chain of events that get rolling by a seemingly trivial issue.

For the benefit of those, who have not yet been to the theaters, the farmer brothers in the story are deep in debt, when they pick up the idea of a suicide. They see it as the easiest way out of their woes, as the government would pay the surviving family an amount of 1 lakh as compensation.

Their decision does not seem to change or influence anything big until their story is accidently picked by a local reporter and published. This triggers of a sequence of events that alters political equations both at the state and at the center, sends national media into a frenzy with army of reporters and cameraman camping at Peepli. The village, with all the attention that it is getting, turns into a land of opportunities for everyone from bangle sellers to coffee vendors from nearby areas.

One single event twisted a large part of the previously existing socio-political system. You will have to watch the movie to experience the pandemonium yourself but at the end of the movie I found myself wondering, whether what happened was just random sequence of events or was it chaos?

You might wonder what the difference is, anyways!

Let me bring in another example that almost each one of us would be aware of (even the non movie goers).

In the US presidential elections of 2000, the Palm Beach county supervisor of elections, Theresa LePore decided to make the typeface on ballots larger for Palm Beach voters, because many of her residents were older and had difficulty seeing small print. She did not notice that it now took two pages instead of one, and that could confuse voters about which button to push when they voted.

As a result 19,120 voters punched holes for both Pat Buchanan and Al Gore, and their ballots had to be thrown out. Another 3,407 people appeared to vote for Pat Buchanan, which he himself found most surprising, expecting only a couple of hundred votes. Ms. LePore’s new design caused about 22,000 votes for Al Gore to not be counted. If they had, Florida would have gone to Gore and he would have been the President of the United States. (Source – CNN News report)

Gore in turn would have likely signed the Kyoto protocol on global warming and probably not have declared war on Iraq. Of course, other things would certainly have happened that we cannot imagine.
What do we attribute such an outcome to? Chance, Randomness or Chaos?

Such condition where, small differences in the ‘initial condition’ of a dynamic system may produce large variations in the long term behavior of the system is called the ‘Butterfly Effect’ in the ‘Chaos Theory’.

There is frequent confusion between chaos and randomness. There are some similarities in the nature of chaotic and random system, but there are also some fundamental differences.

A random sequence of events is one in which anything that can ever happen, can happen next. A familiar example serving as a paradigm of randomness is the toss of a coin. Here either heads or tails, the only two things that can ever happen, can happen in the next throw. The probability of throwing a heads on the next toss is the same as in any other toss. Knowing in addition the outcome of last toss, cannot increase our chances of guessing the outcome of next toss.

On the other end, chaos consists of things that are actually not random, but only seem to be. Knowing the initial conditions well, there outcome can be determined by the known laws of scientific enquiry. But their dependence on the initial conditions is so high, that perfect determinism is a practical impossibility.

As it is popularly understood, chaos deals with unpredictable complex systems. Chaos theory studies how these systems, once thought to be completely random, actually contain hidden ordered patterns.

An example of a chaotic system is the weather forecasting system.

Chaos theory as a field of study in mathematics stems, in part, from the work of Edward Lorenz of MIT, a meteorologist, who simulated weather patterns on a computer. Working with a computer having limited memory, after viewing a particular pattern, he wanted to recover the data. He started the program again, except that this time he put in the initial values of temperature, air pressure, humidity etc. rounded off to 3 places after decimal instead of the original 6.

He was surprised to find a completely different result of weather patterns on his computer, than he had before. The sensitivity of initial conditions in a chaotic system is so high. that it is sometimes metaphorically quoted, that even a flutter of a butterfly’s wing somewhere over the deserts of Rajasthan can create a turbulence miles across, over the islands of Andaman!

This is how the ‘Butterfly effect’ has come to become a popular slogan of the chaos theory. If you make a error while dealing with a random system, the effect would be nothing significant as it would only lead us back to randomness. However, effect of small errors in initial condition of a chaotic system could be explosive.

The same principle applies to human society. Tiny changes in one person’s state of mind can, on occasions, lead to major changes in society as a whole. Or simple acts can lead to unintended consequences.
Chaos is important as it helps us to cope with dynamic, complex and unstable systems (like a few described above, including weather forecast) by improving our ability to describe, understand and even forecast them.

Another arena within which chaos theory is useful is that of organizations.

Applying chaos theory to organizational behavior allows strategists to take a step back from the management of day-to-day activities and see how organizations function as unified systems. An organization is a classic example of a nonlinear system (i.e., a system in which minor events have the potential to set off grave consequences or chain reactions, and major changes may have little or no effect on the system whatsoever).

In order to exploit the chaotic quality of an organization, one needs to try to see the organizational shape that emerges from a distance. Instead of pinpointing causes in the organization for organizational problems, the company is better served, according to chaos theory, by looking for organizational patterns that lead to certain types of behavior within the organization.

The Economics of Motivation

In Leadership, Motivation, Systems Thinking on July 22, 2010 at 11:38 am

Sometime in my early childhood, I had heard this fairytale of a king, who was forced into believing by his tailor that he was wearing a royal suit stitched out of such priceless fabric that it would be invisible to the royals and the gods. While the others would only be able to see an ordinary dress, when worn by the king.

While the king roamed around his kingdom wearing nothing, the people in his kingdom were so intimidated by the consequences of contradicting their emperor’s belief that they convinced themselves into believing that he really was wearing a new suit. Just that they couldn’t see it!

It took the ingenuinity of a brave (we may call it unworldliness) child to state the obvious, exposing the fradulent claim of the tailor. The emperor was left running for cover, but the damage had been done.

Each and every subject of the kingdom, had given in to the prevalent system (a ‘belief system’, in this case) and failed to acknowledge what was obvious and evident. In more ways then one, this is what is taking place in our organizations or society at large.

Adaptability is a virtue. But its application in the case above is misplaced. Instead of effecting systemic changes, most indivduals in a system choose to adapt to the prevalant system itself.

Why would someone do so?
To my understanding, the reason is lack of motivation.

Reason for this wide spread lack of motivation?
Simple and straight forward. For an individual, it is easier to adapt rather than effect systemic transformation. To most individuals, the effort is not worth it or in other words is uneconomical.

Economics of Motivation

Let us compare a social or organizational system to a battle field scenario. Consider a soldier at the front, waiting with his comrades to repulse an enemy attack. It may occur to him that if the defense is likely to be successful, then it isn’t very probable that his own personal contribution will be essential. But if he stays, he runs the risk of being killed or wounded—apparently for no point.

On the other hand, if the enemy is going to win the battle, then his chances of death or injury are higher still, and now quite clearly to no point, since the line will be overwhelmed anyway.

Based on this reasoning, it would appear that the soldier is better off running away regardless of who is going to win the battle. Of course, if all of the soldiers reason this way—as they all apparently should, since they’re all in identical situations—then this will bring about the outcome in which the battle is certainly lost.

The soldier’s reasoning is applicable in any other system or scenario. In a system, if a change was to come by I will reason what difference will my meager contribution make. It will never be recognized, leave apart rewarded. In contrast, if there is no hope of a systemic improvement; my question would be, why make an effort at all!

Even a quite brave soldier may prefer to run rather than heroically, but pointlessly, die trying to stem the oncoming tide all by himself. It takes a Mahatma Gandhi to cut through this self cancelling economic equation and tilt the balance.

Tilting the balance

At large, it takes ‘leadership’ to tilt the balance from inaction to decisive action. To see leadership in action, let us get back again to the battlefield once again and pick a leaf from the history.

Once, a Spanish conqueror Cortez landed in Mexico with a small force. They spanish army had good reason to fear their capacity to repel attack from the far more numerous Aztecs. In order to remove the risk that his army might think their way into a retreat, he burnt the very ships on which they had landed. With retreat having thus been rendered physically impossible, the Spanish soldiers had no better course of action but to stand and fight. Furthermore, to fight with as much determination and motivation, as they could.

Better still, Cortez’s action had a discouraging effect on the motivation of the Aztecs. He took care to burn his ships very visibly, so that the Aztecs would be sure to see what he had done. The Aztecs were forced to reason that any commander who could be so confident as to willfully destroy his own option of return if the battle went badly for him must have good reasons for such extreme optimism. It cannot be wise to attack an opponent who has a good reason (whatever, exactly, it might be) for being sure that he can’t lose. The Aztecs therefore retreated into the surrounding hills, and Cortez had his victory bloodlessly.

Closer to our homes, Major Kuldeep Singh Jaanpuri (Sunny Deol in ‘Border’) ‘burnt the boats’ of his company men before going into the battle of Longewala, by announcing that any retractors will be shot in the back. By doing so he made the retreat economically unviable. Since, the soldier know that in an event of running away, he will surely be shot by hiss own commander, he calculates that the cost of running away is sure to be at least as high as the cost of staying.

There are several examples of a able leadership tilting the balance and crafting motivation. Infact the role of leadership is to ensure that the economic equation of motivation stays tilted in favour of action, instead of inaction.

Correspondingly, in a social system, behavioral economics show us that the intangibles like love, gratitude, trust, and community that we receive in a social exchange are good enough motivators that quiet easily tilt the balance.

In a corporate system, managers must understand that while intrinsic motivation is better and far more economical at motivating employees to be creative, productive, and loyal; it is also creates a long term commitment of honoring that social relationship. The reason intrinsic motivation works so well is that in addition to market capital it uses social capital to dramatically increase the employees valuation of their time.

Employees feel they are getting the better end of the bargain and are willing to own the system rather than just being in it!

Systems Approach to Problem Solving

In Problem Solving, Systems Thinking on July 11, 2010 at 9:39 pm

Today’s problems cannot be solved by the same level of thinking that once created them.

-Albert Einstein

With that statement, one of the greatest thinkers of our century had made the strongest case for an approach that needed us to do more than trying to address the whole by merely stimulating its parts.

Before we take the discussion forward, it is important to debate on, what exactly do we call a problem?

A problem is decided by purposes. If let’s say I am hungry and desperately want to eat. I scan my refrigerator and find nothing. I have a problem. But if someone does not want to eat, having nothing in the refrigerator is not a problem.

In 2001, I did my summer internship at Machine shop of India’s largest passenger car maker. One of the deliverables, on which the manufacturing managers were evaluated upon, was the line-operation rate. This was shown as a percentage of operated hours to potential total operation hours.

Therefore there was a strong urge for the manufacturing managers sometimes to operate lines without schedule. As a trainee of the department, it seemed perfectly logical. If I were to get my promotions on the number of hours that my line was running, I would maximize that output, what may. It is only now that I realize that this may produce more than the demand and make excessive inventories. The excessive inventories may be a problem for general managers but were surely not defined as a negative marker in the appraisal sheet of the manufacturing manager. I now wonder, why?

If a purpose is different between managers, they see the identical situation in different ways. One may see a problem but the others may not see the problem.

Equifinality and Multifinality

It seems right to introduce two more tenets of Systems Thinking at this point in the discussion.  As defined by Wikipedia,

  • Equifinality – alternative ways of attaining the same objectives (convergence)
  • Multifinality – attaining alternative objectives from the same inputs (divergence)

As an example, using the tenet of ‘Multifinality’, a supermarket could be considered to be:

  • a ‘profit making system’ from the perspective of management and owners
  • a ‘distribution system’ from the perspective of the suppliers
  • an ‘employment system’ from the perspective of employees
  • a ‘materials supply system’ from the perspective of customers
  • a ‘social system’ from the perspective of local residents

What this really points to is the significance of understanding different ‘perspectives’ of all stakeholders of the problem. Some of whom may only be indirectly related.

Perspectives often represent the deep rooted belief systems of the individuals. Sometimes, a perspective may stem only from ignorance.

The problem solver’s perceptions and attitudes are an integral part of the problem situation.

In order to build on the concept of ‘Multifinality’ and to understand the importance of ‘perspectives’ in viewing the same situation differently, I recommend you click on the following case study that I picked from BBC Open University:

http://www.open2.net/systems/thinking/perflash.html

Traditional problem solving techniques and processes are, by and large linear and reductionist. They often focus on problem symptoms which results in short lived solutions with adverse unintended consequences down the track. They overlook complex, non-linear relationships that characterise most daily life situation that we encounter. 

In contrast, Systems approach to problem solving is a scientific approach that starts with the whole. It takes into account complex relationships as well as ‘soft’ variables like human emotions, motivation and behaviour e.g., morale, fear, frustration, recognition, resistance etc., thus providing a holistic approach to complex policy and social issues.

While I hope you will enjoy this journey through the perspectives of different individuals, I also leave you with another problem to solve.

Consider a set of nine dots, in the layout as represented here. 

The problem definition is as follows: Connect all the nine dots, by using four straight lines or less, without lifting the pen.

Post your results, if you are able to get through. In case not, I shall be happy to mail you the solution on your email id.

Happy Systems Thinking!

Holism versus Reductionism

In Emergence, Holism, Systems Thinking on June 29, 2010 at 10:03 pm

The way I learnt to spell Czechoslovakia, was to break it into two halves. Memorize the tricky and more difficult part ‘Czecho’ and then confidently add the easier and the more obvious ‘slovakia’.

How we all learnt to multiply 13×12 mentally, was by breaking one of the multipliers in its simpler factors and, add! It is much faster for most of us to mentally calculate (13×10) + (13×2) = 156. Frankly, I never had the memory to remember those tables all the way up to 20. Thankfully, factors came to my rescue.

Elementary science text books educate young students about smaller and smaller division achievable. All matter is made of molecules, molecules of atoms and atoms from electron, proton and neutrons.

It is not difficult to realize why analytical behavior is a natural instinct for most of us. Reductionism or attempting to understand visible complexity by breaking it into smaller constituent parts forms the core of our primary education structure.

Systems thinking however incorporate ‘Holism’ as one of its primary tenet.

Holism stands for the idea that all properties of a given system cannot be determined or explained by its component parts alone.

But how do we visualize holism around us? As we saw above, Reductionism happens all around us. Appears in every analysis we do. Where do we search for Holism? Why does it not make itself evident?

Indeed, holism is all around us. All we need is to train our faculties to look at the larger picture and not merely at the constituent parts. In fact, there are certain systems that not be explained at all, by a purely reductionist approach.

Let us look around, holistically. Let us look at ‘Life’.

Life itself is a holistic phenomenon. In case of living systems, nobody would deny that an organization is a collection of atoms. The mistake is what certain reductionist scientists make very often. To suppose that it is nothing but a collection of atoms.

Such a claim is as absurd as asserting that all Ustad Bismillah Khan’s masterpiece was nothing more than a collection of notes played on his shehnai or that a Shakespeare’s classic is nothing more than a collection of words.

The property of life, the theme of the tune or the plot of Shakespeare’s play is what is known as the ‘emergent’ property. Emergence is largely an outcome of holistic view and is also another tenet of systems thinking.

You would realize that the ‘emergent’ properties only make sense at collective level and are rather meaningless at the component level.

It is important for us to acknowledge at this point in time that the idea of this article is not establish superiority of one mode of the two ‘isms’ in understanding or defining the system.

The component level description, does not contradict the holistic description. Instead the two are complimentary to each other. The two point of views are both valid and useful at their own level. The use of either one of them depends on what you want to know.

I have come to realize that a graphical or illustrative representation of a newly introduced concept, leaves a much lasting impression on the reader’s memories. Keeping inline with this understanding, I have fetched for you the following –

While you look at the whole, what you get is the Monalisa. A historic work of art that invokes impressions of beauty,  mystery, sophestication and grace in your heart.

Next, while you put on your reductionist lens this is all that you get –  

With reductionism, all that you are left with with is 3,604 cups of coffee, with different proportions of milk and coffee.

If you are wondering, where did Monalisa along with feelings of beauty and mystery that she invoked in your hearts, go? Then don’t.

All of them are emergent properties of this system, that only have an existence at a holistic frame of reference. A part of this system, a cup of coffee surely does not have beauty or mystery as an intrinsic property. 

Will await your comments, feedback, questions or contributions.

Request your participation and sharing. Sharing of knowledge is the only reduction, that leads to holistic growth. 

Systems Thinking – A Beginner’s Quest

In Systems Thinking on June 28, 2010 at 6:42 am

I have been aware of this term ‘Systems’ for a little over eight years now. My college where I did my Bachelors in Mechanical Engineering, has been offering Masters program in ‘Engineering Systems’ for a very long time. Without much diligence or delibration, the word continued to represent something complex and arcane, in my mind.

For a long time I continued to believe that this was a concpet fit for only those pursuing interests in academics, research or the likes. It was not untill very recently, that I was exposed to the immense transformational attributes and limitless possibilities of ‘Systems Thinking’, in matters that concerns our day to day living.

The ideas that Systems thinking propogates are not far fetched at all. In fact, it potentially touches and influence everything around us. The corporate lives we lead or the relationships we live in, could just be the examples of the fields where systems thinking can contributes.

So, what is systems thinking?

Rather than a conventional definition, I would like to set the bearings rolling with an appropriate example of what ‘lack of systems thinking’ is. Consider this,

Have we not come across a similar situation as in this cartoon, which is of course symbolic. It is not infrequent when you will find people giving more importance and attention to the ‘parts’ that they alone are concerned with, while not realising that their ‘part’ is indeed a part of a larger system.

The peils of failing to adopt a ‘systems view’ in this case are obvious. The boat will sink, inevitably.

Since you would have realised what lack of ‘systems thinking’ is, a more conventional definition could be given like this, “Systems thinking is a framework for seeing interrelationships rather than things”

‘Systems Thinking’ vs ‘Analysis’

Our traditional education system and methods of scintific enquiry are both biased towards conventional approach of problem solving, which is by ‘analysis’. By definition, ‘analysis’ is the separation of an intellectual or material whole into its constituent parts for individual study. In this sense and spirit, ‘Systems thinking’ is in sharp contrast and possibly an opposite of Analysis.

While analysis favours, breaking down a whole into fundamental parts for study or identifying the root cause of a problem, ‘Systems thinking’ proposes study of parts not in isolation but in seamless interconnectedness with others and with the whole. ‘Systems thinking’ propogates that the whole is not merely the sum of parts, but much more.

Systems thinking works by expanding its view to take into account larger and larger number of interactions as an issue is being studied. This results in sometimes strikingly different conclusions than those returned by traditional forms of analysis.

Let me try to illustrate the difference in approach with an example. Let us consider a scenario where an insect is eating up and damaging the crops. The traditional analytical response to this seemingly simple problem would be to spray the crop with a pesticide designed to kill the insect.

The conventional insecticides have a limited effectiveness, besides they cause irreversible damage through water and soil pollution. Let us for a moment assume a perfect pesticide that kills the targeted insect without causing much side effects on air, water or soil. Have we addressed the problem in hand?

 There is no doubt, that such a spray would partially and temporarily improve the condition of the crop and reduce damage. Unfortunately, this is only a part of the whole. What happens is is in the following years the problem of the crop damage gets worse and the pesticide that formally seemd to work, is not effective any more.

This is because the insect eating the crops initially, was controlling the population of another insect, either by preying on it or competining with it. When the pesticides kills the insects that were eating the crops, it eliminates the control that those insects were applying on population of the other insects. This leads to the population of these other insects to explode, causing continued and more severe damage than the insects killed by the pesticide.

Our analytical approach sorted the problem in shorter run, but indeed aggravated in the longer frame of reference. With this picture in mind, now consider an alternate method known as ‘Integrated Pest Management’, that controls the insects eating the crop by introducing more of its predators in the area. This approach has proven to be effective by MIT, the National Academy of Sciences and others.

In the process, we can eliminate running the risk of soil and water pollution and toxication of our edibles in the long run.

To keep my introductory article simple, I shall not bring in any more depth as of now but shall conclude with another peep into what lack of ‘systems thinking’, mean for all of us!

My idea behind setting up this blog, is to do my bit in propogating this unique approach, and to setup a platform where like minded individuals express and share there views, doubts or concerns about the systems view of the world around us. I do not claim a mastery of any sorts in the concepts or field of systems thinking.

This blog is an outcome of my quest for a deeper understanding. While I shall continue to add more articles, it will be of great pleasure to find your participation and interest. Follow this blog, share your views, express your feedback or bring in new topics.

We can together turn this into a platform for learning and sharing together.

Looking forward to hear from you.