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Archive for December, 2010

Shifting the Burden

December 22nd, 2010 3 comments

The Shifting the Burden Systems Archetype shows how attacking symptoms, rather than identifying and fixing fundamental problems, can lead to a further dependence on symptomatic solutions.  This Systems Archetype was formally identified in Appendix 2 of The Fifth Discipline by Peter Senge (1990).  The Causal Loop Diagram (CLD) is shown below.

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When a problem symptom appears, two options present themselves:  1) apply a short-term fix to the symptom, or 2) identify and apply a longer-term fix to the fundamental issue.  The second option is less attractive because it involves a greater time delay and probably additional cost before the problem symptom is relieved.  However, applying a short-term fix, as a result of relieving the problem symptoms sooner, reduces the desire to identify and apply a more permanent fix.  Often the short-term fix also induces a secondary unintended side-effect that further undermines any efforts to apply a long-term fix.  Note that the short-term fix only relieves the symptoms, it does not fix the problem.  Thus, the symptoms will eventually re-appear and have to be addressed again.

Classic examples of shifting the burden include:

  • Making up lost time for homework by not sleeping (and then controlling lack of sleep with stimulants)
  • Borrowing money to cover uncontrolled spending
  • Feeling better through the use of drugs (dependency is the unintended side-effect)
  • Taking pain relievers to address chronic pain rather than visiting your doctor to try to address the underlying problem
  • Improving current sales by focusing on selling more product to existing customers rather than expanding the customer base
  • Improving current sales by cannibalizing future sales through deep discounts
  • Firefighting to solve business problems, e.g., slapping a low-quality – and untested – fix onto a product and shipping it out the door to placate a customer
  • Repeatedly fixing new problems yourself rather than properly training your staff to fix the problems – this is a special form known as “shifting the burden to the intervener” where you are the intervener who is inadvertently eroding the capabilities and confidence of your staff (the unintended side-effect)
  • Outsourcing core business competencies rather than building internal capacity (also shifting the burden to the intervener, in this case, to the outsource provider)
  • Implementing government programs that increase the recipient’s dependency on the government, e.g., welfare programs that do not attempt to simultaneously address low unemployment or low wages (also shifting the burden to the intervener, in this case, to the government)

Read more…

The Politics of Economic Recovery

December 3rd, 2010 3 comments

Editor’s Note: This is a guest post from isee’s training and consulting partner, Corey Peck of Lexidyne LLC.

The mid-term elections are now a month behind us and the political airwaves are still abuzz with commentary about the results.  Exit polls showed that unemployment was at the top of most voters’ list of issues, and that concerns about the federal government’s financial condition (record deficits and debt levels) were a hot topic as well.  Voters appeared to be asking “How can the federal government spend so much money and have so little positive impact on the nation’s economy?” 

The responses by politicians to such an important question are all over the map.  Democrats are claiming that economic conditions would have been much worse if not for massive federal bailouts and stimulus spending.  Republicans are touting the situation as a death knoll for the Obama platform in an effort to position themselves for 2012.  And the Tea Party movement has emerged to push for a roll-back of what they see as an intrusive and ineffective “Big Government”.

But, this political posturing reminds me that one of the true strengths of Systems Thinking is to force people to think very clearly and very operationally about the structure/behavior link embedded in such cases.  A little over a year ago, we sat down with Dr. Mark Paich, who used some very simple stock/flow language and some well-established principles of macroeconomics to lay out some relevant dynamics about the economic crisis and its aftermath:

  • Why the collapse of the housing market made consumers re-evaluate their net asset position and hence started saving more of their incomes to pay off high interest credit card debt.
  • How such actions on the part of consumers, in aggregate, kicked off a vicious cycle of decreased spending and contracting national output.
  • Why government stimulus spending could close some, but not all, of the gap left by suddenly thrifty consumers, and that the recovery was likely to be a long, slow one.

We certainly don’t know how the future will play out, but the data suggest that consumers are indeed cutting back spending, and paying off debt.  (The Bureau of Economic Analysis has terrific historical data on household balance sheets and income.)  The unemployment numbers remain stubbornly high (around 9.5%), and although the recession is technically over, few economists are predicting rapid post-crisis economic expansion.

For a bit of clarity amidst all the rhetoric, you may want to check out Mark’s video offering.  His model and associated explanation do not provide a “magic bullet” of a solution, but they do provide some substance (and perhaps insight) to this vexing situation.  Now if only the politicians could follow suit!

To read a previous blog post about Modeling the Economic Crisis or view a 5-minute video trailer, click here.