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A Lifetime of Systems Thinking (thesystemsthinker.com)
283 points by gorm 6 days ago | hide | past | favorite | 75 comments

> The principal function of most corporations is not to maximize shareholder value, but to maximize the standard of living and quality of work life of those who manage the corporation. Providing the shareholders with a return on their investments is a requirement, not an objective.

I love this quote. At first it sounds very critical, but thinking about it more it reveals something deeper: companies are a collection of people, if those people aren’t satisfied with the work they will move on and delivering value to investors will be that much harder. So maximize for worker happiness while delivering enough ROI to your investors, not the other way around.

> So maximize for worker

Uh, the article explicitly mentions "those who manage the corporation" not "those who work for the corporation".

You're thinking of regular workers, but i would bet 10$ that the author is thinking about upper management (not even team-leaders or middle-managers).

All the way down to the person managing a single grill on the kitchen line, everyone is managing something. Their ability to steer the org toward their own quality of life improvements is dependent upon the scope of their management, but indeed everyone holds the exact same objective.

Surely that was the intended meaning. When one says 'managerial class' it's clearly referring to those managing grills.

Where does the author say managerial class in relation to this statement?

When one says “social system,” as this author actually does, do you think he arbitrarily excludes people below a certain pay grade?

> A corporation that fails to provide an adequate return for their investment to its employees and customers is just as likely to fail as one that does not reward its shareholders adequately.

Author distinguishes corporation from employees in following sentence, so managers likely refers to employers which employ the employees. Employees are those who are employed by employers, the managers are those employers.

Person A is an employee with no managerial responsibility. Person B is the direct manager of Person A and no one else.

Is your interpretation of the author’s argument that Person B and all of her superiors hold the same objective of improving the quality of their work life, but that Person A does not hold this as their objective?

The format of the article was that of a critique. The author described how systems currently operate in a manner he viewed as deficient and then suggested ideas for improvements.

When the author states "the principal function of most corporations is not to maximize shareholder value, but to maximize the standard of living and quality of work life of those who manage the corporation", the author was implying that this is wrong.

They then stated that "Employees have a much larger investment in most corporations than their shareholders. Corporations should be maximizing stakeholder, not shareholder, value to employees, customers, and shareholders."

Thus the author semantically implies that "employees" are a separate group of persons from "those who manage the corporations". If employees and "those who manage the corporation" were the same group of persons or part of the system, then it would not have been necessary for the author to claim that corporations should also maximize value for employees, they would have only mentioned customers as the excluded group of stakeholders.

The objective of a corporation is a distinct concept from the objectives of the people working in the corporation. They may or may not align, depending on which person you're comparing it to.


I did reread that part and I was clearly wrong. You are absolutely correct, it refers to a wider category.

Now I kinda want to take person up the comment chain on their bet.

I haven’t read any Ackoff but I’ve read a decent bit that is clearly in the intellectual orbit (e.g. Weick) and you would win that bet.

The entire basis of their analysis is that these arbitrary distinctions people propagate in common parlance are not real.

The basis of systems thinking is considering the relation of parts to the whole, and the relation of the whole to the parts. Classically it was simply referred to as 'geometry'. The author distinguishes 'corporation' from 'employees and customers' in following sentence. This implies that corporate managers, employees, and customers are separate parts of a larger system and that use of term manager likely referred to the employers which employ the employees and not also to the employees which metaphorically employ the equipment.

> companies are a collection of people

Peter Drucker was on top of this. It's so obvious yet so often forgotten (ignored?). An organization is a group of people.

Jumping back to systems thinking. People can respond a number of ways in organizations. Enter 'policy refusal' (see Donella Meadows' systems literature for more). Executive wants A to happen. A is not in employees' best interest. Employees ignore, delay, obfuscate, outright refuse, or actively undermine A.

People are very good at policy refusal. Executives are good at not knowing its happening.

What’s your favorite resource on Drucker? I love re-reading his book “The Effective Executive”.

His 1973 tome Management: Tasks, Responsibilities, Practices, The Essential Drucker, and Managing for Results are three I find myself opening regularly.

The Effective Executive is great as well. It's hard to narrow down because he was such a prolific writer. Recommendations are also hard because you've got to meet the reader where they are. I picked up and put down Drucker early in my career. Years later, the same pages burst with insight when I read them.

"You've got to meet the reader where they are....Years later, the same pages burst with insight when I read them. " - Thanks for this, I find it is a great way of phrasing it, and gets to the heart of much about both education and communication.

Only maximizing happiness for the controlling workers. Fungible labor is going to be left out because moving on is no real threat from them.

Yes, because everyone at the level of employee is someone being exploited...

Those of us who actually grew up with nothing and suffered through minimum wage labor and were able to change our class and turn our lives around through labor look at you people like you're from another planet.

Both following statements can be true at the same time:

1) It is possible for many to work their way through the labour ladder and find good life.

2) “The System” can incentivise corporations to maximise transfer of wealth towards the top brass without incentivising it to raise wages any more than only to keep people from leaving.

> 2) “The System” can incentivise corporations to maximise transfer of wealth towards the top brass without incentivising it to raise wages any more than only to keep people from leaving.

And they can do that without being exploitative. People go to their bosses and ask for more money. Some percentage of the time they get it.

If you were in business for yourself you would have to negotiate your own prices. Being employed isn't really different, just the risk is much less. You're trading something away for the security of a regular paycheck.

Of course. Some people can do that and nobody I know of has ever said anything different. But what is also true is that some people can’t do it, sometimes people are trading their lives away for only basic sustenance and no job security.

> sometimes people are trading their lives away for only basic sustenance and no job security.

And they're still not being exploited. You're describing people that cannot fend for themselves. Also not everyone you're describing is only receiving basic sustenance. A lot of people in this situation live reasonably middle class lives.

No one is saying that every single employee at the bottom is being exploited - just that exploitation is rational for those in power, because there's no particular incentive for them to completely avoid it.

They shouldn't do it too much, or then society responds in various ways (unions, legislation, etc.), so in that sense it's much like shareholder value. The company owners cannot write themselves a bonus equal to the entire profits of the company, or the shareholders will get mad. But they can certainly write themselves generous bonuses nonetheless. They don't have to completely maximize shareholder value, or completely minimize exploitation; they just have to do enough.

It’s a subtle distinction between labor and capital. And gets blurred by debt vs equity.

Who owns the company? The people who work there? The person who founded it? The people who the founders sold shares to? Or the people who lent it money?

Legally it’s the people who own shares. And if they miss their debt payments, it’s the lenders.

Companies can inform their shareholders “if you want to invest, here is how we operate differently.” Bezos and Buffet both do that in terms of defining focus and time horizons.

One may want to optimize for worker happiness first, but that’s not legal ownership. (Employee engagement is a predictor of shareholder return, but it’s hard to measure, and different from happiness)

Except the quote isn’t about legal ownership it all. It’s about who has skin in the game, and who actually makes the company function.

The vast majority of shareholders have very little skin in the game, while the employees of the company absolutely have a lot of skin in the game. The employees depend on the company for their livelihood, whereas a shareholder is generally just trying to make money on their money.

I view him as defining value as to accrue to stakeholders, with employees as primary.

One way to frame the question is “If the company gets a million dollar windfall, who should get it?” Employees? Owners? Even the most customer centric company won’t say a cash payment to customers, though they may say improving service or R and D.

> to maximize the standard of living and quality of work life of those who manage the corporation.

Considering that managers compete to climb the hierarchy, I'm surprised to hear this claim from a systems thinker. It'd predict that managers work 40 hours or less per week, for example.

"Corporate behavior is shaped by managers shaped by this competition" seems a more realistic starting point.

Yes. And also acknowledge that “happiness” can mean vastly different things to different groups of people. Thus the culture of one company may be very off-putting to some and highly attractive to others.

Don’t tell we need to adapt your standard culture (e.g. new work) because that’s what makes everyone happy.

I’m not sure who he is thinking of when he says, “those who manage a corporation”. If he means senior executives then he is definitely wrong. Most executives do not have a high quality of work life. They may get money, power, and status, but it often comes at a high cost.

Your comment is being downvoted, but IME working at a few startups where the owner went from making 2M to 10M, then 50 and 100M+ a year I rarely saw founders who had a good work/life balance. Sure, they could afford to pay people to take care of all their domestic needs, their life consisted mostly of working 24/7. Even their vacations were often working vacations.

I think your characterization is accurate.

Thanks, really not sure what people are voting it down for. I know a lot of sr execs at big companies, they definitely aren’t optimizing for their work life balance or their mental health. Most seem obsessed with status and seem generally anxious and unbalanced.

Edit: I’m talking about big co execs, not founders. They are typically two different breeds.

The thing to remember is people are nearly always motivated by selfish impulses, not altruism. (Even the most dedicated communists in the USSR still participated in the black market.)

Any system that relies on people being selfless is doomed to failure.

(Even charity work is selfishly motivated - people like the status they get from donating to charity, praise from their social circle, and feeling good from doing it.)

So a system that relies on people being altruistic can work fine as long as people feel good about being altruistic?

It can work fine if they can find enough people who feel good about being altruistic and don't want more. There are certainly people like that. Are there enough to run an economy? Not remotely. Are there enough to run a largish organization? Nope.

> Are there enough to run a largish organization? Nope.

I'm not convinced this is true. I can think of some small organizations full of employees who could make more money elsewhere but who are dedicated to an altruistic cause.

> small

Sounds like you agree with me.

BTW, the D Language Foundation is an example :-)

I can think of a bunch of small organizations. Together that's enough people to fill a large organization. Maybe there are some other properties of large organizations that make it impossible to compose them out of altruistic people.

I can't think of any large organization that operates without people motivated by their self interest. Can you?

I can't think of any large organizations containing only people who are financially secure, which seems like basically a prerequisite.

I'm not a huge fan of this quote because it's an opinion presented as a fact.

The entire article is basically "conclusions from a lifetime of systems thinking". Of course it is opinion (a conclusion), explicitly so.

It reads like a descriptive statement, not a normative one, because it calls out specifically that the corporation enriches its management, not its employees.

The Six Revelations from the article:

    Improving the performance of the parts of a system taken separately will not necessarily improve the performance of the whole; in fact, it may harm the whole.

    Problems are not disciplinary in nature but are holistic.

    The best thing that can be done to a problem is not to solve it but to dissolve it.

    The healthcare system of the United States is not a healthcare system; it is a sickness and disability-care system.

    The educational system is not dedicated to produce learning by students, but teaching by teachers—and teaching is a major obstruction to learning.

    The principal function of most corporations is not to maximize shareholder value, but to maximize the standard of living and quality of work life of those who manage the corporation.

> The educational system is not dedicated to produce learning by students, but teaching by teachers—and teaching is a major obstruction to learning.

1) The education system is designed to corral children for working hours so their parents can be cogs in the machine.

2) The education system is designed to produce a minimum competence so that the students can eventually become cogs in the machine.

At no point was the public education system designed for anything significantly different from "average".

Any effective excursions from average are a result of some exceptional teacher bucking the system rather than being helped by it.

People keep using the phrase "the education system is designed", but it really wasn't. People who say this really have no idea about the history of public education in this country, nor it's ongoing operation.

The system has been a tool used by some to advance their own selfish goals, but it's hard to say things about the system as a whole that is is actually honestly applicable across the entire system.

And it's even more complicated by the grudges people hold against the terrible teachers they had. it's understandable. Teachers hold important positions of authority in our most vulnerable and developing years. When they do not do what's best for us, it's a massive betrayal, and I can see why many would hold onto that and allow that to shape their entire view of the system. But it is an extremely skewed view.

> The educational system is not dedicated to produce learning by students, but teaching by teachers—and teaching is a major obstruction to learning.

Yes and no. Disciplined Minds by Jeff Schmidt has a different take (one I agree with), which argues that the educational system is dedicated to producing political discipline. Yes, this serves the interest of the teachers, and no, the system is not designed to produce learning. But it's highly arguable whether you could truly design, build, and sustainably run an institution which reliably produces autodidacts and independent thinkers, particularly at higher levels, particularly since it's difficult to impossible to measure how reliably such an institution is succeeding at its mission.

I think the point here is on instructionism vs. constructionism - learning by experience (constructing things) seem to work better and in particular for long term assimilation than learning from instructors telling you. I think Epstein was putting it in Range as something along the lines of "you need to struggle to really learn". Constructionism can take many forms, from hands on projects and workshops, to frequent internships and apprenticeships.

I've been homeschooling my children for about four years, and figuring out how to achieve experiential learning has been a primary goal for the entire time. It has been very tricky for me to get it right, because there is a constant need to balance between over- and under-challenging them, and the process of struggling that's so crucial to learning is also self-defeating because it generates so much frustration. Emotional resilience is a skill that I think is foundational to being able to learn in this way, but it's been glossed over in the materials I've read on constructivist learning. The closest I've seen is the material about growth mindsets, but it's generally vastly oversimplified in my opinion.

The approach I'm currently working with is to ask them to do difficult tasks (such as math problems that don't have a straightforward, mechanical process to produce an answer), then I watch them work. When they get stuck, I try to get them to explore what they know and think about what would help them break a bit of new ground, but so far it's been very hard to guide without showing. Generally, they struggle for a bit and then I show them a couple of ways in which they could make progress. This seems to have very good results, but I can't imagine how it could be institutionalized effectively when you start to get beyond the most elementary topics. Even with only two students it's challenging to manage.

Right. My point is that I'm not convinced that hands-on projects and workshops, when force-fed to students within the context of a course taken at an educational institution, is inherently more effective than any other teaching method. As someone whose career is in software engineering, and who never had much interest in any of the sciences outside software engineering, I certainly remember having to do hands-on projects in required chemistry, biology, and physics courses... not that I remember much, if any, of it at all. The vast majority of true academic learning is self-directed, and the value of experience is in making mistakes that you are forced to bear the consequences of. "Consequences" do not really exist in a classroom (almost by definition), and grades (particularly in an era of grade inflation that renders them largely meaningless) do not count.

> Effective research is not disciplinary, interdisciplinary, or multidisciplinary; it is transdisciplinary... Disciplines are taken by science to represent different parts of the reality we experience. In effect, science assumes that reality is structured and organized in the same way universities are.

Not just the sciences. Rigid, path-dependent taxonomies are a plague in all disciplines and in daily life.

it's especially a plague in medicine, though I'm reliably informed that a new movement within the medical establishment called integrative medicine may help to start treating human health as a system, not a collection of disparate parts.

I don’t know if it’s a plague. I see value in both approaches and going to one extreme or the other seems unhealthy. You want generalists to be working with specialists. Just generalists or just specialists won’t perform as well as a healthy mix and going to one extreme let’s the other outcompete you in certain areas.

the plague is that right now we _are_ going to one extreme - the extreme of separation and specialisation. Systems thinkers want the two integrated, they don't want to throw out analysis and replace it with synthesis, they want the combination (synthesis!) of the two.

The reason I say “plague” is that effort and discussion (not just public discussion) focus on the map, not the territory itself.

Just look at us politics today: the discussions around “infrastructure” and “defense” are hobbled by the descriptions of those words rather than addressing the structural issues themselves.

Somewhat buried, but this my favorite takeaway

>Errors of omission are generally much more serious than errors of commission, but errors of commission are the only ones picked up by most accounting systems. Since mistakes are a no-no in most corporations, and the only mistakes identified and measured are ones involving doing something that should not have been done, the best strategy for managers is to do as little as possible. No wonder managerial paralysis prevails in American organizations.

I've seen bright forward thinking leaders who delivered results get canned when one reasonable bet doesn't pay off, but mostly I've watched decision-makers stall when action is badly needed. This explains very succinctly what is wrong with so many places I've worked.

> but errors of commission are the only ones picked up by most accounting systems

Except for actual accountants, for whom I can attest certainly do hunt down omissions. Especially when it's not your money you're spending.

I have been thinking a lot about Systems Thinking recently. Will Larson writes in An Elegant Puzzle: Systems of Engineering Management that it's one of the most useful general tools he's discovered for approaching management problems. That inspired me to read Donella Meadows Thing in Systems, but even after reading that, I'm not sure how to apply it to engineering organizations. It's only tangential to this topic, but if anyone has a good course or book that works through examples which can be transferred to managing engineering teams or organizations, I'd be grateful. When I read most systems thinking materials I get the sense that they are mostly focused on civilization-level problems like global warming, rather than on ways that I can individually use it to understand and make changes within my more prosaic scope.

I also have a little bit of the feeling that the emperor has no clothes, since in spite of all their ideas, I can't find any major company that has successfully transformed an industry based on systems thinking, nor can I find any major social ill that has been solved through the application of systems thinking. If anyone has any concrete cases of those, I'd also be interested.

I have a blog post working on applying Donella Meadows' Leverage Points to an engineering problem (incident retrospectives), but it's unsatisfying enough that I haven't figured out how to make it publishable.

In addition to the other excellent recommendations here, I'd suggest the work of Jerry Weinberg. He wrote 'An Introduction to General Systems Thinking,' and he applied systems thinking in the work that he did. The two works that come to mind in view of your question are 'How To Become a Technical Leader', focused on the individual manager and their team, and the four-volume 'Quality Software Management', focused on both the manager and the organization.

Have you come across Business Dynamics by John Sterman? It's essentially Meadows approach applied to the business environment, including thinking about general organizational structure.

Thanks, this is a great recommendation based on the Amazon reviews!

Toyota and their production system comes to mind as the prototype of a system oriented company that transformed their industry. And Ford, in the original.

You might be interested in Stafford Beer's work and books, which applies cybernetics to organizational management.

I liked the article ; one additional lesson I got from it is that you should not change your writing paradigm mid post. The first few bullets are things that he's disproving. Then they're things he concluded. I had to read again to understand he changed his writing

Articles like this really drive home to me how much I appreciate this site and all it’s contributors and commenters. Thank you all!

It's the guy, Russell Ackoff! I still remember reading all about Systems Thinking from year 1. Do they still use the same material in Systems Design Engineering?

> The interactive manager plans backward from where he wants to be ideally, right now, not forward to where he wants to be in the future.

I'm having trouble understanding this point. Is he saying the interactive manager looks backwards at what he might have done differently in the past, to be in a better place today? Would a better term for this be a "retrospective manager"?

Or does this mean something else?

If you drop the assumptions that you can forecast or plan, you can only do small steps "interactively". So invest no effort into planning but think about the last days and change something so you will make better decisions tomorrow. For example, have real time metrics so you can quickly observe the impact of deployed changes.

People like Ackoff are discussing healthcare and education systems. As a software developer I find I can't learn much about agility/velocity there.

"Retrospective" does not suggest anything about the delay. Could be a manager who comes up with 20yo war stories all the time. I rather believe it is about tight feedback loops and "interactive" captures that quite well.

I’ve heard this put another way, when someone asked me: “what did the ideal version of yourself do differently today?”

Which I found to be a dramatically different, and dramatically easier question to answer than something like “where do you want to be in 5 years?”

I found it help me shift away from trying to make predictions, and towards making healthy, productive (not self-sabotaging), well-rounded decisions with obvious long term benefits.

See also regret minimization framework.


There was a recent Chess topic[0] that should help explain better.

Basically all the engines in Chess start with the present position, and try to look into the future move by move. To be able to find the winning position like that is almost impossible for the position they were looking at. And yet, if you give the idea to an average Chess player, they will work out how to get a Checkmate. They will do so by finding Mate, then working back on how to get the board to that state. They will find the winning position when they reach the current state.

He's simply taken this idea and generalized it further to more than Chess.

[0]: https://news.ycombinator.com/item?id=27188854

I think he's saying the interactive manager doesn't guess what the future will be and plot a course for success in that future, but rather asks what would be ideal right now and plots a course to achieve that ideal.

Here is a PDF version of the article. Apparently its from a 1999 speech given at Villanova. https://thesystemsthinker.com/wp-content/uploads/pdfs/100501...

Shiva Aayadurai also had some great content on this topic.. we need more of such people to carry the message forward in next generations

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