Posted by Lancing Farrell                                                                              1600 words

There have been a number of posts on systems thinking examining both its theoretical underpinnings and practical application. I recently had reason to consider how systems thinking, or lack thereof, affects organisations from day to day, and the ways that systems thinking can shape or influence organisational culture.

This was prompted by an article by Brian Martens on ‘the impact of leadership in applying systems thinking to organisations’. It is a thoughtful explanation of his research and thinking.

“Systems thinking is a natural way to look at the world and all the relationships and interconnections that are involved in its functioning.”

I think it is the only way to think about leadership or management in councils because connections matter so much in delivering services that meet the expectations of recipients and because resources are scarce and must be shared whenever possible.

People in the community don’t differentiate between local laws, town planning, building control, waste collection, libraries or parks and gardens. They just see ‘the council’. And so should we. In reality each function may operate largely as a discrete service but the organisational context for their delivery should be similar. For example, standards for customer service, regulatory enforcement, and decision making should all be experienced in the same way.

Some of the symptoms of an absence of systems thinking are evident in the community satisfaction surveys conducted in Victoria since the mid 1990’s. Some services are standouts for helpfulness and responsiveness (e.g. libraries and waste management) and others are the opposite (e.g. planning permits and road maintenance). This is discernible from the scores given in ‘performance/importance’ assessments.

There are some intrinsic differences in these services but much of the dissatisfaction comes from differences in how they are managed and delivered. We are not learning from our successes.

Brian Martens got me thinking about some basic organisational leadership challenges for local government in using systems thinking.

1. Team work

Systems thinking is all about relationships. In local government the building block of organisational performance management is the individual performance plan. Councils prohibit performance plans covering groups. Everyone has to have their own. Team performance is not measured.

In addition, the Executive typically has no collective authority and it is simply a meeting point for key individual members who are each held accountable for managing their own part of the organisation. There is no collective measurement of Executive performance. Many are highly dysfunctional.

Team work depends on the establishment of relationships between team members. Common goals, good communication, sharing responsibility and working together are some hallmarks of team work. Team work is weakened when individual performance is encouraged and rewarded. There can be no system thinking if each person focuses solely on their own area of responsibility.

2. Job Descriptions

Everyone employed in local government has a job description. It is another of the building blocks. It specifies the attributes of the person required for the job and describes the tasks they must perform. It will say what the hierarchical reporting relationships are for the position but not how the job fits into cross-organisation processes.

This is despite the reality that tasks described in a position description are always part of larger process required to deliver a service outcome. The contract of employment is created for the individual without any consideration of the work system that it is part of.

3. Risk aversion

Martens cites the work of Kurt Lewin who says that to understand a system you must seek to change it. This is a perceptive observation. Toddlers understand their world by playing with sand and water in the play pit and changing the physical environment around them. They can get dirty doing it.

Similarly, teenagers rebel and challenge the boundaries set by parental authority to understand how they can influence power structures. They can become annoying. Once they get into the workplace, especially one as risk averse as local government, changing the environment around them or challenging authority is discouraged. They stop learning.

We don’t take risks in councils, for reasons that have been discussed in previous posts (see here and here). As a result the boundaries on systems are rarely challenged or pushed for performance so that they are better understood. We tend not to disassemble and reassemble cross organisational processes. There is a lot of convenient thinking that ‘if it isn’t broken, don’t fix it’, when the reality is that many things are breaking but not yet obviously broken.

4. Specialisation

Systems thinking requires generalist management, much like health care needs General Practitioners. General practice has become a specialist area of medical practice. It is a paradox – a specialism in generalism.

Councils have become increasingly specialised. Over the last three decades new departments and new jobs have been created. Services have also become increasingly specialised. In Victoria there has always been a split between engineering/infrastructure and administration/services under the former ‘Town Clerk/City Engineer’ model. In the 1990’s this was then fragmented further into a corporate structure with functional areas, such as infrastructure, social services, administration/local laws and town planning.

Now we are seeing the addition of departments or units created for fashionable/contemporary functions, such as environmental sustainability, recreation, organisational development, open space, advocacy and tourism. It is not uncommon for a council to have 20 departments with over 50 units, each with a different function. This results in 75 or more organisational leaders. Specialisation increases fragmentation and frustrates systems thinking in the absence if strong generalist management.

If the CEO and Directors come straight from specialised functional areas they are unlikely to have the broad and deep ‘whole of organisation’ understanding necessary to use systems thinking effectively.

In local government the combination of focus on individual effort and performance, risk avoidance and specialisation frustrates systems thinking. The expectation that leaders will look for the big picture and plan for the long-term has proven to be unrealistic.

Martens makes a pertinent point when he discusses leadership in systems thinking:

“My assumption is that thinking about the whole will lead us to the realisation that we are interdependent and, by understanding the whole, we can foster a willingness to ask questions about how and why everything affects everything else.

Instead of focusing on specific organisational or individual problems, leadership can start to understand the interrelatedness between the individual and the organisation.

Systems thinking can help organisations understand their processes, realising that change can take time, small changes can have large impacts, and learning self-organising teamwork benefits the system.

Systems need time to change and natural processes cannot be manipulated. Systems are interconnected, so any change can have a large impact, because it can impact the whole system.”

The challenge is for leaders to use this knowledge to make a difference. It begins with them being able to focus on the particular while keeping the whole context in mind. It continues with them knowing the difference between ‘quick wins’ and the ‘short term successes’ that are made on the way to long-term goals. It is the difference between just reacting to events and really looking hard for underlying patterns and structures. The diagram used by Michael Goodman of  Applied Systems Thinking illustrates this point.

Source: Michael Goodman, Applied System Thinking

It is the typical ‘iceberg’ problem – what you see above the water is not enough to understand the root causes. That requires systems thinking.

The reality in local government is that the CEO is held responsible for organisational performance in a system where their future employment depends on the goodwill of the councillors. The councillors expect that the CEO is exercising direct and continuous control over the activities of the organisation. When they report a pothole to the CEO they expect an immediate intervention to rectify the situation.

Telling councillors that an immediate impact isn’t possible because a system is being developed or improved to enable efficient and sustainable service, has its risks. Councillors operate in the short-term. Elections are held every 4 years. Telling them that the organisation is in a long-term improvement process often doesn’t matter to them. The diagram below shows that organisations go through stages in developing the systems maturity necessary for high performance to be deployed in all of the organisation, all of the time.

The lack of commitment to long-term or complicated improvement actions is the main reason why systemic improvement in the sector usually fails. Four year council election cycles, four year Council Plans, five year CEO/Director contracts, and three year contracts for managers – it all mitigates towards short-term decision making.

Even though many councils have 10 year Financial Plans and 5 or 10 year capital works programs, they are often worthless documents. Most are inaccurate and few are actively maintained. They are based on assumptions that suit short-term thinking and reacting to immediate issues. The new rate capping system in place in Victoria will exacerbate this problem.

Councils apply for an exemption from the rate cap based on financial projections for the short-term (this year it was 1 year, next year it will be 4 years). You don’t have to be a rocket scientist to work out that if the problem is in the long-term, and it is related to the loss of compounding effects of revenue increases, that deciding whether or not a council will receive an exemption based on short-term financial performance is nonsense.

This thinking may encourage councils to throw financial prudence to the wind and to spend up to quickly create the type of funding problem that will get them an exemption from the rate cap.

The recent review of the City of Greater Geelong has recommended that planning be carried out over much longer timeframes (up to 30 years) and that their hundreds of plans and strategies are integrated. It sounds like systems thinking to me. Unfortunately, it is unlikely to lead to change in the sector.

Unless change is legislated the sector continues to be shaped by the inherent fragmented thinking.

Martens, Brian 2011. The Impact of Leadership in Applying Systems Thinking to Organizations