This article appeared in the February, 1997 issue of Innovative Leader. Dr. Winston Brill, the publisher of Innovative Leader, can be reached at
(608) 231-6766 and by fax at (608) 231-6794. Applying the Power of Systems Thinking to Innovation Daniel Aronson As competition increases, the value added by each dollar of R & D must go up. One way to increase value is to target innovation efforts so
they result in innovations that are more powerful and have greater benefits for the organization. Innovation creates progress in one of two ways, either (1) by small steps, with the benefits of innovation overwhelmed
by other factors or (2) by giant leaps, with the benefits of the innovation reverberating through the company. The more often innovation efforts can produce leaps where before they would have produced small steps, the
more success the company will enjoy. There are two parts to turning innovation efforts from producers of small-step progress into producers of leaps forward, one dealing with innovation designed to produce internal
improvement, and one dealing with innovations designed to produce products for the marketplace. Here we will deal with only with innovation designed to lead to internal improvement. The key to making an innovation
lead to greater internal improvement is to understand where it fits into the bigger picture of the company and its needs. A field of study know as systems thinking can play a key role in producing the understanding of
the overall system needed to target innovation efforts more effectively and creating more giant leaps. Systems thinking does this by providing a methodology and a set of tools for constructing maps of systems and
determining the points at which change can have the greatest impact on a companys performance. Ill provide an introduction to some of the foundations and concepts of systems thinking, and will demonstrate how using it
with your innovation efforts can dramatically increase your chances of enjoying the kind of breakthrough that creates new solutions, adds value, and sustains competitive advantage. The approach of systems thinking is
fundamentally different from that of traditional forms of analysis. Instead of focusing on the individual pieces of what is being studied, systems thinking focuses on the feedback relationships between the thing being
studied and the other parts of system. Therefore instead of isolating smaller and smaller parts of a system, systems thinking involves a broader view, looking at larger and larger numbers of interactions. In this way,
systems thinking creates a better understanding of the big picture. As an example of how this better understanding of the big picture can increase the benefits of innovation, consider the department of an agricultural
firm charged with finding a way to reduce the crop damage created by insects that have proven resistant to common pesticides. One way to approach the problem would be to create an especially strong pesticide that is
designed to be potent enough to kill even unusually resistant insects. The company might then instruct their R & D department to develop such a strong pesticide which they would then be used on their crops. The
reasoning behind this course of action can be shown as follows: In this diagram, the arrows represent the direction of causality - one element causing the other to change - while the o represents how one makes the other change. The o
next to the arrow from Pesticide Application to Insects Damaging Crops means that Pesticide Application causes Insects Damaging Crops to change
in the opposite way it doesif the application of pesticides increases, the number of insects damaging crops goes down, a change in the opposite direction. (In the same way, if Pesticide Application
went down, that would increase the number of Insects Damaging Crops, according to this view.) The problem in this case is that the R & D department has been asked to do
something based on a faulty understanding of the system, and so the departments success at producing a stronger pesticide may not translate into the companys
program for reducing crop damage being successful in the long runin fact, the strategy as a whole may backfire. The reason for this is that the policy is based on an understanding of the system that, while not wrong
per se, is incompleteit leaves out the feedback relationships involved. The diagram below shows a picture of the system that captures the set of
interactions that are likely, in fact, to make the companys strategy backfire: While the application of the stronger pesticide indeed reduces the numbers of Insect Aand thus the total crop damagein the short run (as shown in the inner loop from Application of Pesticide to
Number of Insect A Damaging Crops), it kills even more of the other insects in the area than it does of Insect A becauseas mentioned earlierInsect A is more resistant to pesticides than other insects are.
(This effect is shown in the outer loop from Application of Pesticide to Number of Other Insects Controlling the Population of Insect A). Some of the insects
killed by the pesticide helped control the population of Insect A by preying on them or competing with them (as shown by the connection between Number of Other Insects Controlling the Population of Insect A and
Number of Insect A Damaging Crops). When these insects are killed, the degree of control they exerted on the population of Insect A is lessened.
Eventually, when the population of Insect A recovers from the effect of the pesticide application, this reduction in the control provided by competing insects
leads to an explosion in the population of Insect A. As the population of Insect A goes up, so does total crop damage, as the link between Number of Insect A Damaging Crops and Total Crop Damage shows (the
s indicates that the two change in the same directionas the numbers of Insect A go up, so does the total crop damage). This leads to even greater crop damage than before, encouraging the company to
apply the pesticide againin the language of the diagram, as Total Crop Damage goes up, Application of Pesticide goes up (with the s again indicated that they
change in the same direction). However, even the temporary gains originally made by applying the new pesticide begin to lessen as Insect A develops greater
resistance to it, and crop damage continues to get worse. What worked well at the beginning does not work nearly as well any more. In this case, the very effectiveness with which the R & D department did what it
was asked to docreate a stronger pesticideserved to make the original problem worse because the side effects of using a more powerful pesticide were not
considered. An understanding of the interactions that produced these side effects would have enabled the company to see that their plan to use a stronger pesticide
was likely to backfire. They would also have been able to consider other options that would not backfire, such as introducing more of Insect As predators into the
area and developing strains of the crops that were more resistant to Insect A. Giving the R & D department either of these tasks would have led to an innovation
fit better into the big picture and, as a result, created greater long-term benefit. As this example shows, systems thinking can provide some of its greatest benefit by
giving companies a way to make sure that the benefits of their innovation efforts are not compromised by the lack of a big picture understanding. With no more effort,
innovation efforts targeted with the big picture in mind can produce greater benefit for the company, and a company that gets more benefit from its R & D will have a competitive advantage over its rivals.
It is because of the potential for benefits like these that I believe systems thinking has so much to offer those involved in innovation. As I have tried to show, the big
picture understanding produced by systems thinking can help ensure that the creative energy of innovation produces its greatest benefit, carrying innovative organizations forward in giant leaps instead of small steps.
This article is copyright 1997 by Daniel Aronson. He can be reached at aronson@thinking.net
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