Leverage

Effectiveness and efficiency are attained through interaction of the sub-systems in pursuit of the purpose of the system in its environment.  The goal of sub-systems is concerned with the purpose of the system and the means of achieving that purpose:

  • The human sub-system deals with the people and their management and motivation
  • The technical sub-system handles the operations (input-transformation-output) with the aid of human sub-system
  • Managerial sub-system co-ordinates and manages each of the others  balancing their relationship and attending to environmental relationship to ensure viability

A System is a whole, which consists of interdependent and interacting elements with a single purpose. A system is greater than the sum of its elements. When a system is taken apart it loses its value and so do the parts.

Leverage 1

The implication of all this is that performance of the system depends on how well the parts fit together, not how well they perform individually.

A system being a whole cannot be leveraged but rather places within the system need to leveraged in order to create changes. Types of leverage differ in terms of relevance and importance depending on the system that requires change. An economic system requires leverage points whose relevance and priority will differ to say an organization like Kodak or Blackberry.

System or business transformation is about putting into place a process of continuous and effective leverage. Effective implying relevance of the leverage points that maximize system benefit.

The following approach is fundamental in achieving increasing leverage:

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  • Events:

What is happening in the system over time in relation to key variables system state

  • Patterns of Behavior 

Prior to undertaking a leverage exercise, it is critical to understand the system and its behavior.

Leverage is found during analysis of modeling results, by exploring positive or negative behaviors (dominant influences with respect to connectors and flows) , looking for sources of pressure and imbalance that cause things to change, and determining changes to structure, so that behavior is improved and bad events become less frequent. Each model structure represents logic that determines behavior, and events are snapshots of that behavior:

  1. An event is an occurrence or happening of significance to our understanding of complex system behavior.
  2. A behavior pattern is something that connects together a long series of events over time.
  • System Structure: is the set of physical and information interconnections that generate behavior that determine how the parts are related  and understanding what influences the patterns.
  • Mental Models: Understanding what values, assumption and beliefs shape the system behavior in achieving its purpose and minimizing possibility of costly errors in intervening in complex systems.

In the language of system dynamics, important system variables are represented as stocks, flows, and feedback loops. Stocks are the accumulations points in a system. Simple examples of stocks are water that accumulates in a bathtub, accumulations of product inventory, or money that accumulates in a bank account.

With respect to leverage; adaptability conditions are fundamental to identify the right leverage applicable (the  right thing to do) in order to maximize potential, potentiality and capability.

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