Abhinav Sinha

Posts Tagged ‘Systems Thinking’

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.

The Game Theory

In Game Theory on September 28, 2010 at 11:51 pm

While driving around the India gate, have you ever wondered why most (if not all) ice cream vendors are stacked together in and around a small patch.  Or that most highway ‘dhabas’ are located in clusters. Or maybe, next time when you fly out do check why various airlines schedule flights fairly close to each other, on a given route!

It comes to me as a surprise why would each one of them choose to operate in a zone of maximum competition. Maybe a possible explanation is that since the cluster is already frequented by a lot of potential customers, it makes sense for a new entrant to logically attach itself to the cluster, rather than someplace else, where he would have to invest in building customer traffic.

The question to be answered is how the clustering begins. What would the scenario be like if there was a unchartered territory and just two players in perfect competition. Does system thinking in any way influence the way, they would approach setting up their respective businesses.

Consider a scenario where the two ice-cream vendors A and B, who have to sell their products at similar pricing for sustenance, have to decide on where to locate themselves on a stretch of road, that will make perfect business sense.

To capture the sense of this example, imagine that customers are smoothly distributed all across the road and brand and price being the same for both A and B, they choose on the basis of sheer convenience and proximity.

 Imagine that the two vendors ‘A’ and ‘B’ start by locating themselves at roughly a position shown above. It now appears to ‘A’, that they have a equitable access to business opportunity, since half of customers located between ‘A’ and ‘B’ will go to ‘A’ and the other half to ‘B’, depending on a convenient walking distance for them.

‘A’ turns out to be an aggressive competitor to ‘B’ and decides to move a 100 meters towards the center of the road so as to gain access to a share of ‘B’ customers while protecting his own share of customers (lying to his left).

To offset this, ‘B’ plays his own counter move and moves 200meters towards the center. Subsequently, ‘A’ moves 300 meters and this continues till both ‘A’ and ‘B’ are located right next to each other, at the center of the road.

Both A and B have created an equilibrium that stays even when a third player C enters the market. C has limited choice, but to locate itself within the cluster for survival.

This is of course until C weighs his payoffs and decides to locate at a niche location and offset the disadvantage by offering a discounted price to the customers. This of course will set up another un-equilibrium which in due course will be answered by the competition A and B.

The study of strategic decisions making process in an interactive environment is called ‘The Game Theory’.

It deals with the situations where people who are a part of same overall system but with different (mostly competing) goals, try to take into account each others’ actions in deciding on the optimal course of action.

The Game theory finds applications in a lot of areas including behavioral science, business and a number of conditions appearing in day to day life including interactive decision making in a competitive environment.

There is a whole lot to delve into when it comes to the game theory. However, for the sake of avoiding complexity, I prefer to punctuate the discussion merely at the juncture of definition itself.

Would be looking forward to build on this discussion further, based on your comments, queries and feedback.

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.