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 The Business Realist

   A dose of reality for a saner workplace


Businesses rarely account for the many feedback loops that effect every change and every decision. Most actions will have multiple unintended consequences as well as the intended ones. Because of this,  improvement initiatives often fall prey to predictable vicious cycles.

Spinning wheels got to go round

Posted  on 6/23/09

Hamster on wheelMost of our models and thinking are linear, but most everything in life is non-linear

In school, we are taught to think in a linear fashion -Step 1 leads to Step 2 leads to Step 3 and so on until we are finished. When we model processes, we use flowcharts that usually proceed nicely from Point A to Point B with a few decision branches and feedback loops built in.  However, much of the world does not obey the orderly cause-and effect-paradigm. Much of world works like this - Cause A leads to multiple effects that then change Cause A which then changes the original multiple effects plus some new ones that leads back to changing Cause A and so on. 

I like to use the diet and health analogy to help explain these things because we are very familiar with these loops. Let's say a normally healthy person suffers a back injury and needs bed rest for a prolonged period of time. Because he is laid up and bored, he starts to overeat and gains a substantial amount of weight. During his rehabilitation, he finds that he is sorely out-of-shape and doing his exercises is very difficult, especially due to the extra weight. This is also causing more strain on his back. As a result, he does not follow his rehab regimen, and his activity level remains low, causing him to gain more weight and lose more muscle tone. Now when he tries to get in shape again, he is even more tired and sore and has the onset of diabetes, making it even more difficult for him to exercise.  Plus, his anxiety over his weight is also causing him to eat more. This is a classic vicious cycle.

These vicious cycles take place all the time, especially in business. I've seen two companies fall prey to the classic death spiral caused by cost cutting. You just can't cut your way to growth. The first things that usually get cut are people development and investment - the two things that are critical to growing revenues. Many initiatives suffer the same fate when they get implemented without the proper expectations, time, money, and resources. I've outlined two classic initiative vicious cycles that often lead to failure. These are based on systems dynamics work from  two Sloan School of Management professors, Nelson Repenning and John Sterman.

Here's one of my favorite quotes taken from one of their articles:  (Here's the article.)

“Techniques touted as today’s “core competencies” all too often become tomorrow’s failed programs. Once an effort has failed, there is an almost irresistible temptation to label it as a fad or “flavor of the month.” However, digging a little deeper shows that many such techniques have useful content. It should come as little surprise then that many currently popular innovations are little more than old ideas with new acronyms. The core disciplines associated with statistical process control and variance reduction become six sigma; what was once called a quality circle is now a high-performance work team.”

Keeping with the diet analogy, I call the first vicious cycle Have Cake and Eat it, too!

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Pile of light bulbsIf you have some ideas for articles, please drop me a note or leave a comment. If you have an article you'd like to contribute or link to,  I will be happy to publish your link and ensure that you get attributed.

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