September 23, 2014

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The Evolution of Change: Three Essential Guidelines to Mapping Complexity

When we fail to explore the nuances of a problem, we hamper the flexibility and effectiveness of our response.

Probst-and-bassi

By Dr. Gilbert Probst and Dr. Andrea M. Bassi

There are several problems companies and individuals face on a daily basis, some of which are direct consequences of our actions or reactions to the situations we are facing. When we fail to explore the nuances of a problem, we hamper the flexibility and effectiveness of our response.

Conceptual Mistake 1: Failure to Dig Down

Don’t solve complex problems with simple maps of causes.

In today’s world, it would be very optimistic to believe that a single effect causes a given problem. More troubling is the assumption that addressing this effect would solve the problem. Honestly, this is too simple (and too good) to be true.

The following is an example of a typical complex problem in the context of treasure-mappublic policy: in 2012, China announced a $372 billion plan for energy efficiency and pollution control, with a specific focus on water pollution from industrial waste.

However, the Chinese government simultaneously subsidizes the national industries that produce chemical fertilizers for agriculture. They thus artificially lower the price of substances that greatly pollute groundwater. Owing to these two conflicting policies, public expenses and private investment have both increased, with water pollution likely to remain unchanged.

Conceptual Mistake 2: Forgetting the Time Factor and Agents of Change

It’s tempting to think we only need an accurate “snapshot” of the problem to find solutions. But this approach underestimates the power of time; time is a factor of a change! And, as Heraclitus wrote around 500 BC “The only constant is change.” There is a relation between the history of a system, its present state, and its future state.

Developing countries, whose economic activity depends on natural capital (e.g., tourism, relying on the presence of blue lagoons and colorful coral reefs) often fall into this trap; they take their natural resources for granted and their approach is purely profit-oriented. They assume that nature will be as generous in the future as it was in the past, regardless of the environmental damage caused by their profit-oriented business models. They thus ignore the link between today and tomorrow. In this case, success today will most probably lead to failure tomorrow.

The ‘snapshot approach’ fails to indicate important information about the agents of change in the system and how they evolve over time. For instance, a postal company might cut jobs due to a decrease in shipping requests. What if the reason behind the decrease in requests has to do with customer dissatisfaction due to the late arrival of deliveries? The new Future-signstrategy would then not help the company.

And Now, the Shoulds

What not to do should now be clearer. However, what do we need to do?

We have to map the complexity and try to explore the dynamic properties of the system. In a way, it is similar to the route calculation function of a satnav, which takes the length of the journey, traffic, etc. into account. This effectively helps us gain an understanding of the system we are dealing with and enables us to subsequently make informed decisions.

Guidelines to Mapping Complexity

1. Build a causal diagram and define the boundaries of the system.

Causal diagrams include variables and arrows, and represent how key variables influence each other. Before creating a causal diagram, however, it is important to identify the key indicator that represents the actual problem. Then the causes of the problem should be listed and linked to the first variable, and so on. It is important to use nouns, not verbs, and distinguish between immediate and long-term impacts!

2. Create a shared understanding of the functioning of the system.

If different stakeholders or colleagues are involved in creating a map, this will increase its quality and diversity. Present your diagram to them or collectively develop one. This will also help all participants understand their respective roles and potential contributions to solving the problem.

3. Identify key feedback loops and entry points for action.

Creating a map is also an opportunity to discover entry points for intervention. Identify those policies that trigger feedback loops that lead to reaching desired goals, and weaken those that are responsible for the creation of the problem.

Complexity Case Study: Fuel Subsidies

Below is an illustrative causal diagram of the possible introduction of fuel subsidies.

Fuel-subsidy-tackling-complexity

If subsidies are introduced, two balancing feedback loops can be identified in the simple causal loop diagram.

These indicate that fuel subsidies can be effective in increasing the GDP in the short term (because they reduce energy costs), but ultimately the system tends to balance—unless other interventions are implemented (e.g., if low energy prices stimulate GDP, energy consumption will increase, as well as energy costs; this offsets the initial positive impact resulting from the introduction of subsidies).

Consequently, when the role of subsidies is considered in isolation, it is obvious that this intervention will not have lasting positive impacts on the GDP.

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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