1. System characteristicsCircular Economy in the Cloud

2. Systems ThinkingLearning to see the world systemicallyEncourages us to see the whole as well as the parts. 3. TopicsSystem ThinkingLinear & networksystemsFeedbackloopsExponential growthNestedhierarchiesResilience &stabilityTechniques forsystem thinkers 4. System Thinking 5. SYSTEM THINKING APPROACHTraditional analysis Systems thinkingTraditional analysis focuses onthe separating the individualpieces of what is being studied; infact, the word analysis actuallycomes from the root meaning tobreak into constituent parts.Systems thinking, in contrast,focuses on how the thing beingstudied interacts with the otherconstituents of the systema setof elements that interact toproduce behaviorof which it is apart. 6. System thinking = Network thinking 7. Linear & Network Systems 8. Linear systems: linear causality While the 17th century was a time of intensereligious feeling, Isaac Newton, anexperimental and a mathematical genius,found the new mechanics in the 18th century. Mechanics came to be regarded as theultimate explanatory science: phenomena ofany kind, it was believed, could and should beexplained in terms of mechanical conceptions. Newtonian physics was used to support the deistic view that Godhad created the world as a perfect machine that then required nofurther interference from Him, the Newtonian world machine orClockwork Universe. 9. Simple cause-effect relationships At their simplest, linear systems arethose that display the common cause-and-effect relationships that we seearound us, for example shooting abilliard ball on a pool table One characteristic of linear systems arethat input is proportionate to output:how hard the ball is shot has a clearrelationship to how quickly it acceleratesand how it will come to a standstill. The clockwork can be understood in a similar fashion: by lookingat the parts. The relationships are deterministic and, therefore,predictable and controllable. There are no surprises 10. Boxed thinking 1/2Stephen Sterling described it as boxed thinking as opposed to moreconnective or systems thinking. Here are five assumptions of boxed-thinking:1. To every problem, theres a solution belief in the power of problem-solvingapproaches2. We can understand something by breaking it down into its componentparts understanding a complex whole by looking at the detail3. The whole (of something) is no more than the sum of its parts there areno emergent properties4. Most processes are linear events and phenomena have a definablebeginning and finishing point5. Most issues and events are fundamentally separate or may be regardedas such, and may be dealt with adequately in a segregated way issuesare essentially unrelated 11. Boxed thinking 2/26. It is acceptable to draw your circle of attention or concern quite tightly,as in thats not my concern we do not need to look beyond ourimmediate concerns as an individual, a householder, a consumer, abusinessman, etc.7. We can define or value something by distinguishing it from what it is not,or from its opposite a belief that economics is separate from ecology,people are separate from nature, facts are separate from values, etc8. Objectivity is both possible and necessary to understand issues it isimportant to exclude our feelings and values in our analysis andjudgment9. We can understand things best through a rational response. Any otherapproach is irrational we need to downplay our intuition and non-rationalknowing10. If we know what the state of something is now, we can usually predictfuture outcomes a belief in certainty, prediction, and the possibility ofcontrol 12. Network systems explained 13. Network systems: network causality Opposite to the clock metaphor of linear system, networksystems are more complex in their behavior Links between the components can change the state of thesystem (enhance or diminish the stability) Like in the video, unforeseen effect occured on Borneo afterspraying the DDT While a linear cause-effect relations was assumed (DDT wouldkill the musquitoes and thereby decrease malaria problemsolved)... ... it had severe side-effects that caused other problems (atypical example of #5 in Boxed Thinking) 14. The Borneo Food Web 15. Living systems Within living systems - like anecosystem - life is sustained by theinteractions of many differentorganisms, functioning together, andinteracting through their physical andchemical environment One species is affected by theevolution of another species And species are affected by changesin the environment 16. Web of Life 17. The butterfly effect? The butterfly effect shows how a small change at one place in anonlinear system can result in large differences in a later state. Edward Lorenz, who coined the term, illustrated the effect with atheoretical example in which a hurricane (exact time of formation,exact path taken) was being influenced by the flapping of the wingsof a distant butterfly several weeks earlier 18. Exponential Growth 19. Ranis TaleA long time ago in India a raja demands that his villagers turn over almost all theirrice for safe storage, leaving them just enough to get by on. When a year of droughtarrives, famine and hunger ensue and his people beg him to release some of the ricefrom the royal store but he refuses. As his people become more and more famished,the Raja decides to have a feast at his court. As a parade of elephants returns from theroyal storehouses loaded down with sacks of rice, Rani, a clever village girl, walksbehind them, collecting falling rice in her skirt. When she is caught she explains thatshe is collecting the rice to return to the Raja.The Raja, striving to be wise and fair, decides to reward her for returning his rice. Hetells Rani: Ask me for anything and you shall have it. To the Rajas surprise, Rani asksfor just one grain of rice. When the Raja says that is not enough of a reward, sheacquiesces and asks that he give her one grain of rice on the first day, then each day,for the following 30 days, he is to give her double the rice he gave her the day before.The Raja considers this to be a modest request and readily agrees. By the end of the30 days, Rani has more than a billion grains of rice and the Raja has no more to give.The Raja, having learned an important lesson both about math and about fairness,promises to only take as much rice as he needs from now on. 20. Growth of Rice in Ranis Store 21. Reinforcing feedback Feedback describes the situation whenoutput from an event in the past willinfluence the same event in the present orfuture. You can see from this example abovehow Ranis next delivery by the Raja isdetermined by the rice last received from theRaja. Each time Ranis delivery doubles from 1 to 2to 4 to 8 to 16 to 36 and so on until by the30th doubling Rani has actually accumulatedmore than one billion grains of rice. This typeof exponential growth, triggered byreinforcing feedback is widespread in Nature. 22. Exponential growth 23. Population growthThe world population is currently growing exponentially driven by asimilar reinforcing feedback. 24. Options for sustained growth Population growth suggests thatthere is a need for an exponentialincrease in most resources,including food, water and metals. Coupled with this is theexponential increase in wasteproduction and loss of naturalcapital. How stabilizing feedbackmechanisms can be more activelyemployed to impact onunsustainable growth is a key tounderstanding a circular economy. 25. Feedback Loops 26. Feedback loops Its clear that components of a systemdont exist in isolation: they are linked These links are called couplings and theyare important for the regulation of asystems state Like a heating system in a house, theresan exchange of information (feedbackloop) between the components (theroom, thermostat and heater) And they keep the room on apredetermined temperature (state)roomheater21oCthermostat19oCon/off 27. Example simple heating system Two couplings create a round trip or feedbackloop between components Feedback is a continuing mechanism of change(disturbance) and the response to that change So, if you open a window in the room and itscold outside, the re-action to your action will bethat the thermostat will ..... the heating There are two types of feedback loops Balancing: this will diminish the effect of thedisturbance Reinforcing: this will amplify the effect of thedisturbance The thermostat opening the heating, is a............... feedback loop 28. Types of feedback loopsReinforcing and balancing loops are the building blocks of complex systems A reinforcing loop (+) produces aresult which influences more ofthe same action thus resulting ingrowth or decline for instance your savingsaccount interacts with theinterest rate. Interest added willincrease the capital and this willresult in higher interest Balancing loops (-) generatefactors that resist furtherincreases in a given direction for example current state of acompany is low profit and itfocusses on more sales This action taken then adds tothe current state 29. Example: DDT sprayed on Borneo Here we saw that the issue was regarded in aseparate way without any prior attention for theinterrelated context The problem (malaria) was solved by sprayingDDT (quick fix), with immediate positive effect.Nonetheless, the side effects of this solutionturned out in the future. This is described by a circles of causality: one is the balancingfeedback loop B1 of the corrective action, the second is thereinforcing feedback loop R2 of the unintended consequences. These influence the problem with a delay and therefore make itdifficult to recognize the source of the new rise of the problem 30. Causal LoopR= ReinforcingB= BalancingBR B CA 31. Causal LoopR= ReinforcingB= BalancingStressB1R2Alcohol UseProductivity Health 32. Nested Hierarchies 33. Nested hierarchies Every living system is made up of subsystemsand in turn holds membership in one ormore larger systems, forming a kind ofnested hierarchy The concept of nesting is easy to understandwith the eample of the Russian Matryoshkadolls. Each doll is encompassed by anotherdoll and so on In 1978 James Grier Miller constructed ageneral theory on living sytems in which heposits that the mutual interrelationship ofthe components of a system extends acrossthe hierarchical levels Miller identified eight levels within livingsystems 34. Eight levels of living systems1. cells2. organs3. organisms4. groups5. organizations6. communities7. societies8. supranational systems 35. So, whats the benefit? First of all, being aware of nested hierarchieshelps you to see different levels and theirconnections Second, broadening your world view andawareness enables offers you a more realisticpicture of the situation your studying Lets take a look at the following exampleshow the world view changed the lastdecennia... 36. Typical world viewECONOMYSocietyEnvironment 37. Sustainable world view?This is how the relationshipbetween people, planet andprofit is mostly visualizedHowever, this is a more realisticway of looking at it, taking theinterdependent hierarchicrelations into account (systemnestedness) 38. Other examples A person is part of a company, a company is part of asector, a sector is part of the market and the market ispart of the global economy. Compare this to a tree, which is part of a group of trees,the group of trees is part of the forest, the forest is partof an ecosystem and the ecosystem is part of planetEarths climate system Are you already capable of identifying different systemlevels in relationships with your clients company? 39. Resilience & Stability 40. Resilience Resilience is a characteristic of natural systems: its the capacity ofan (eco)system to tolerate disturbances without collapsing into adifferent state Diversity is a key issue in maintaining and restoring resilience In an evolutionary sense, for instance, a higher diversity of speciesincreases the resilience of a food chain/web If resilience is low or weakened, then smaller or brieferdisturbances can push the (eco)system into a different state, whereits dynamics change Differentiation is also a strategy used by companies to adapt to amoving environment 41. Business relevance: case-study On the July 8th 2014, Crumbs Bake Shop - theNew York cupcake chain, closed its 50 storesafter a decade riding the wave of popularity Lesson: a one-product business has its pitfalls Companies that only offer one item have anumber of risks. For one, trendy products tend to attractcompetition from big and small players, inthis case Starbucks that tried to capitalize onthe cupcake trend Or shifting consumer demands 42. Differentiation & Innovation In general, sticking to one business line can be risky, especially in anfast-changing industry At market level, differentiation is the way through which the qualityof goods is improved over time thanks to innovation Launching new goods with entirely new performances is a radicalinnovation, often leading to changes in market shares and industrystructures In an evolutionary sense, differentiation is a strategy to adapt to amoving environment Differentiation is stimulated in Nature by evolution and naturalselection, thus increasing resilience The same is true for businesses: innovation and differentiation arecrucial to stay alive in a moving market environment 43. Resilience in a food webBiodiversity is an important component of resilience, and is thereforeimportant even if the types of biodiversity have no market value 44. Resilience in a computer networkWhat would happen if...? 45. Stability Stable doesnt mean static Stability and change are interrelated The human body has a dynamicstability, maintaining equilibrium - ofyour temperature for instance - ininteraction with the environment Stability is measured in how quickly asystem will return to its originalequilibrium position, like a pendulum 46. Stable system: the Pendulum The pendulum is astable system If disturbed it willswing left and rightuntil gravity returnsit to its originalposition Gravity dampensthe force thatcaused thependulum to move 47. Stability Stability defines the collective states of thesystem (human being, an organization, a country,etc) assessed by its resistance to change Fluctuations dynamic activity are the source ofnew forms of behavior and development The context and conditions determine thestability of a system in time, as well as theproperties determine its state Each state is dependent on the previous state(incremental innovation) 48. Homeostasis 49. Homeostasis Homeostasis is the property of a system in which variables areregulated so that the internal conditions remain stable andrelatively constant. Its a process that maintains the stability of the human bodysinternal environment in response to changes in externalconditions Example from technology: cruise control to keep a cars speedstable in response to different road conditions(uphill/downhill) Example from ecology: evolution of biodiversity (speciespopulation) on an island from start to climax 50. Techniques for System Thinkers 51. Techniques for system thinkers Systems thinkers use visual diagrams to identify issues in relationwith their context: The Fishbone diagram Process flowcharts Process models Correlation diagrams Network diagrams Visualizing issues helps to enhance understanding and tocommunicate it in a way that can be easily remembered