Systems thinking for Product Managers part 2


I thought it would be good to focus on the common problems people encounter and why we get surprised by systems. Perhaps we best get started with an anecdote.

In India during the British rule there was a snake “problem”. I imagine it was much like Australia’s spider “problem”. The colonists decided that to rid the problem, it would be best to offer a bounty. They would provide monetary compensation for the brave snake hunters who would bring them dead snakes. Indians being natural entrepreneurs started breeding the snakes, in very large quantities. The imperial overlords were not willing to compensate the people and their ingenuity any longer hence they ceased the bounty. This led to the people releasing the snakes into the wild, making the problem worse.

The cobra effect results when people have attempted to solve a problem with an answer that reinforces the problem thus making it worse. A problem that is faced by teams everywhere.

Remember loops and purpose?

The reinforcing loop of mass snake production was far greater than the balancing one. There is an apparent problem with seeking the wrong goal. By measuring the success of their initiative through the number of decapitated snakes received, they achieved a lot of snake decapitation but not fewer snakes in the population.

There are themes of rule beating and policy resistance which we will further discuss in this article. There are elements of surprise in this story because we do not completely understand how systems work and are often surprised. If you can identify these themes in your organisation perhaps that could be the first step to phrasing your problem in terms of systems.

If the portion about feedback loops need clarification read part 1 here:

Common problems that can be phrased in terms of systems.

Here is a handy list to identify and put terms to the problems you face.

Policy Resistance: When various actors pull the system toward different goals. Everyone puts in great effort into keeping the system where nobody wants it. A way to overcome this is to bring all the actors to seek out a mutually satisfactory goal.

Tragedy of the Commons: Delayed feedback is usually the cause for such a tragedy. Farmers often don’t realise until it is too late that their aggressive grazing has led to nobody being able to use the commons. This can be overcome by either educating or exhorting the actors to model ideal behaviour.

Drift to Low Performance: The desired state of the system is influenced by its perceived state creating a self-fulfilling prophecy. ‘Oh it’s a slow quarter so conversions will be lower’. When this carries on for a long time the compounding drift can lull people over to underperformance. This can be overcome by keeping standards absolute.

Escalation: Reinforcing loops set by competition can lead to horrible outcomes. The Cold War is a good example of escalation or perhaps a price war between two retailers. There is always one loser, usually the smaller competitor. The way out is unilateral disarmament, negotiation or to refuse competing if stuck in an escalating system.

Success to the successful: There is usually a reinforcing loop that divides a system into winners that keep winning and losers that keep losing. An example would probably be the top 1% and the bottom 40%. Diversification, allowing losers to leave and start another game elsewhere or levelling the playing field (government / organisational intervention) are possible solutions.

Shifting the burden to the intervenor: We are all dependent, whether it is shifting the burden of memory to a smartphone or relying on lawmakers. If a burden is shifted long enough we lose the ability to deal with the problem by ourselves. The best way out is to avoid getting in it, be watchful of symptoms. Stop prescribing solutions that don’t solve the root cause of the problem like hiring an agency.

Rule beating: Evasive action to get around the system’s rules. The most prolific example is the pointless spending of surplus budget at the end of a fiscal year so that the budgets are not reduced next year. The solution is to redesign the rules which make people creative, not in beating the rules, but in achieving the purpose of the rules.

Seeking the wrong goal: Most powerful influencer of a system is its goal. If national security is defined as the amount of spending on military then it will achieve military spending but not national security. A solution is to specify indicators that reflect real welfare of the system and to be careful not to confuse effort with result

Systems will still surprise us

There are probably many reasons we get surprised. Having the awareness we will be surprised is more important than to avoid being surprised.

Everything we know is a mental model. It is shaped by our experiences. We are often surprised because mental models fall short of representing the world. The human brain can only keep track of a few variables at a time. Data driven decision making can help.

People are fooled by seeing the world as a series of events. There would be fewer reasons to be surprised if everybody saw how events accumulate into patterns. If news stories put things in historical context there are better chances of understanding why things are happening.

Boundaries are made by people. Systems don’t actually have boundaries. Since boundaries are of our own making sometimes we get surprised when things lie outside the scope of what was initially expected.

The law of the minimum states that growth is limited by the scarcest resource. Wealthy countries send aid such as money or technology to impoverished ones yet those economies don’t develop, never thinking that capital or technology may not be the most limiting factor.

We are often surprised by how much time something takes. Delays are a normal part of any system. It takes several years for a forest to become lush. No amount of water or fertiliser is going to make your garden grow overnight.

People make decisions based on the information they have. However how often do we have perfect information? Bounded rationality is another reason we are often surprised.


Now that you’ve got a brief introduction to systems thinking by reading part 1 and 2 go forth and apply your newfound skillset. Try to focus on purpose first.

Unfortunately within systems the most noticeable parts are the elements; changing them in most cases makes little difference in how the systems operate.  People change teams, streams, software often but there is arguably little reason to expect any meaningful change by manipulating elements or artefacts. Try not to get caught up with the tangible but focus beyond the visible. If we vote not by how few poor we see on the streets but instead by the amount of poor hidden out of sight then the government might have to fix poverty!

A quick review of what you know

You already knew about systems having loops, elements, interconnections and purpose. This article reviewed.

  • Systems have problems, some of which are common
  • Systems are surprising

The first article can be found here:

If you want to learn more I suggest watching the video in the references.


Thinking in systems by Donella Meadows
Upstream by Dan Heath – Russel Ackoff on Systems Thinking