Systems Thinking

Examples & Insights

During due diligence, it was discovered that Olive Garden stopped salting their pasta water to extend pot warranties. This perfectly illustrates how optimizing for equipment maintenance (a subsystem) undermined food quality (the system's purpose). It shows how focusing on a subsystem without considering the whole system can lead to perverse outcomes.

"Structure influences behavior. More often than we realize systems cause their own crises not external forces or individual mistakes."

— Source: The Fifth Discipline

The structure of a system determines its behavior more than individual actions within it.

"When placed in the same system people however different tend to produce similar results"

— Source: The Fifth Discipline

System design shapes outcomes more than individual characteristics.

"The more productive we get, the more we do, the more emails we send…the more comes back and the busier we get."

— Source: Four Thousand Weeks

Feedback loops can create self-reinforcing cycles that defeat the original purpose of interventions.

Complex Organizations

"A Detroit auto maker examining a Japanese import found the Japanese car used the same bolt throughout the engine where the American car used 3 different bolts in 3 different components designed by 3 different engineers."

— Source: The Fifth Discipline

This example shows how system-level thinking (standardization) versus component-level thinking (individual optimization) leads to vastly different outcomes. Systems designed holistically often outperform those designed in isolation.

"A company is like a cthonic beast with many writhing tentacles that is in fact composed of thousands of cats. A black mass of cats, writhing, seeking, crawling toward anything that will increase its share price or get a cat promoted..."

— Source: Internet folklore

This vivid metaphor captures how large organizations often act as emergent systems, with behaviors arising from thousands of individual actors pursuing their own interests rather than following central direction.

"Most successful corporations are learning organizations. The ability to learn faster than the competition is the only sustainable competitive advantage."

— Source: The Fifth Discipline

Learning and adaptation are fundamental to system survival and success. Organizations that can't learn and adapt quickly become obsolete.

"Early innovations and movers pave way for learning organizations. The Wright brothers first flight was 1903. First commercial flight was 1935."

— Source: The Fifth Discipline

System evolution often follows long periods of experimentation before reaching commercial viability. The path from innovation to widespread adoption is itself a complex system.

"Survival learning = doing minimum necessary to service. Generative learning = learning that enhances our capacity to create."

— Source: The Fifth Discipline

Systems can operate at different levels of learning and adaptation, from basic survival to generative growth.

"FedEx in the late 1990s crunched the numbers on its 30 largest clients—a group that generated about 10% of the shipping firm's total revenues and volume. The company found that certain clients, including some who required lots of residential deliveries, weren't bringing in as much revenue as they had promised when they first negotiated discounted rates with FedEx."

— Source: HBR

Even seemingly valuable customers can create systemic inefficiencies when analyzed holistically. What looks profitable at the surface level may hide deeper system-wide costs and complexities.