Systems thinking for Product Managers part 1

Ni hao,

Systems thinking is a complex topic but we can make sense of it. We will try to define systems and how to think about them in simple terms. The discipline is as useful for product teams as it is for economists, politicians and other strategists.

Why product managers?

Everybody loves calling everyone else a superstar for doing tangible work. As a product manager it is easy to be a hero “Oh we did so and so and improved x by 20%”. Sometimes it makes sense, most times it isn’t very impressive when you think about the bigger picture. There was a quote in one of the Heath brother books called Upstream about a police commissioner (yes, very meta) saying this

A lot of people on the force want to play cops and robbers, it is much easier to say ‘I arrested this guy’ than to say ‘I spent time talking to this wayward kid’.

– Police commissioner from relevant quote

There is comfort in getting tangible feedback. Arresting someone, helping a customer using live chat, remarketing to people who were bored of your product and retaining a customer with a quick call are tangible. This kind of work is easier and everybody gets to be a hero.

Not growing up to a life of crime, customers being oblivious to live chat and not sending remarketing emails are boring. Nobody is wiser of the efforts that have gone into creating this non-experience. The customer has no idea. The product team may not always have a point-of-reference to know whether they had any significant impact.

Measuring the wrong things, like Steve Jobs said..

Often times people can be well-intentioned but ill-informed and get rewarded for doing the wrong things. When prospects can’t follow your product and contact support; the product team still sees growth for having made an acquisition and customer service teams get credit for handling the issue quickly. There is nothing wrong with the scenario but those flyers about being customer-obsessed or empowering users in your open-plan office won’t trick anyone that has spoken to your users. A goal of not having customer inquiries will lead to a drastically different solution than having quicker resolutions to customer inquiries as a goal.

It’s okay to be boring by thinking in systems; often it’s much harder work than quick fixes. You could always find clever ways to measure non-experiences.

Intro to systems thinking

A system is an interconnected set of elements which is organised in a way to achieve something.

Elements, interconnections and purpose.

  • Changing elements have the least effect on a system, if you change the players in a football team it will still be a football team.
  • Changing interconnections can make things unrecognisable. Alter the job-description or rules from football to baseball and the team will have a whole new ballgame.
  • Changing purpose can be drastic. If the players and the rules are unchanged but the purpose is to lose, imagine how that would change behaviour.

Focusing on purpose is crucial. When subsystems have conflicting purposes it costs the larger system. This is called sub-optimisation. Similarly optimising each subsystem on their own might not improve the system as a whole. Having a shared north-star metric that is customer-focused can help product managers.

Systems are loopy

Systems have feedback loops. There may be different amounts of delay but they exist. The agile principle of having a short feedback loop helps us check the health of a subsystem pretty often but this isn’t a systems feedback loop. An agile feedback loop has a small scope with consistent behaviour and gives you variable information about how you are doing. A systems feedback loop are causal connections based on rules that let a stock maintain, grow or decline. A stock can be anything that can accumulate from customer satisfaction to physical stock like inventory.

Balancing and reinforcing loops

  • Balancing Feedback Loop: A stabilising, goal-seeking loop that keeps stock (of good will, customer satisfaction or whatever else) within an acceptable range. This loop can operate to correct over supply or under supply. These loops are often a source of stability, resilience and resistance to change.
  • Reinforcing Feedback Loop: It is an amplifying loop that can be good or horrendous. It compounds prolific effects. It is like compound interest, the more money you have the more money you can earn with interest payments. It provides the system with the ability to reproduce or grow itself.

An easy way to understand the difference between balancing and reinforcing loops is by conceptualising global population. In this system births are a reinforcing loop while deaths are a balancing loop. As long as the reinforcing loop is stronger than the balancing loop, population (which is the stock) will increase. When they are equal the system is in the state of dynamic equilibrium.

If we add more loops such as pro-immigration policies the population stock will grow, similarly if we add a deportation balancing feedback loop the the population will decline.

Stocks can also be helped by removing existing loops. If customers are accustomed to contacting support then find the loops that reinforce this behaviour. If removing loops won’t work then add new reinforcing loops to encourage ideal behaviour or balancing loops to discourage overindulgence.

What you know about systems

Cool, now you already know the following about systems

  • They have elements, interconnections and purpose
  • They have loops
  • Systems interventions are HARDER and sometimes intangible

This should already take you a long way to frame your problems in terms of systems. Common issues for product managers and why systems surprise us will be the a part of the next article found here:


Thinking in systems by Donella Meadows
Upstream by Dan Heath