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Complete Review of the book by the Magazine 'Business Bestseller'

Review of Frederic Vesters Book: The Art of Networked Thinking - Ideas and Tools for a New Dealing with Complexity

Translation from "Business bestseller" no. 01/00.

Alarming changes in our environment, structural unemployment, recurring indications for a stock exchange crash, wars facing an increasingly complex world we are aware of the inadequacy of our conventional ways of thinking. Until now we have hardly developed a feeling for the links that connect our world. Every interference in complex structures results in complex consequences time delays, feedbacks, late sequelae. The intervention, itself carefully planned, can cause interactions that provoke further disturbances or even lead into chaos. Unfortunately, we are even not protected by the huge amount of information that we can access today. On the contrary: they create a deceptive security.

Why do things go wrong?
Because mistakes are made. But mistakes as such are nothing bad - the only wrong thing is not to be aware of them. This is the reason why complex systems created by human beings collapse after a few times of disturbance. Nevertheless, nature shows how to do it properly: Its complex systems or nature as the complex system shows a remarkable favour for mistakes and faults. If a mistake occurs it is not removed with great effort: In every complex system this reaction must inevitably affect or damage other sections. Therefore, mistakes are repaired cautiously swimming with the current. Do it like nature learn connected thinking!

Tick Information
A tick needs ridiculously little information to survive. Objects must have a temperature of 37 °C and smell like perspiration - and its survival in the complex system of nature is at safety. An example that at least questions our strive for information. However the existence of human beings on earth has much more far-reaching consequences than the existing of ticks. We are living in a natural system with limited resources, in which we cannot do anything we like at all. To do or to refrain from doing something on one place of the globe has inevitable effects on other regions. In the "global village" there are no far away problems any more. The exponentially raised "density of human beings" and determined by it, increasing interference in nature’s balance and in human’s quality of life because of technical developments, have condensed these interactions. To understand them becomes more difficult every day - despite of all scientific knowledge. It is time for progress to seize thinking.

New thinking
What we need is a new view of reality: The understanding

  • that much is connected what we consider to be separated
  • that the connecting invisible strings behind things are often more important for occurrences in the world than the things themselve

"He who wants to rule nature must obey it" Francis Bacon

As nature more frequently repulsed in the past decades, the meaning of an intact environment already worked it` s way through into public consciousness. Still, practice is a sorry sight. Under the pressure of short-term decisions our political and economical leaders do not seem to perceive connected contexts or even include them into their planning and acting. But connected thinking is learnable.

The complexity complex
Complexity has very much to do with connections, it is even achieved only by them. Complex proceedings therefore demand thinking in contexts, which is orientated on the structure of organized systems and their special dynamics. Many people already fear this complexity which they are not up to. But as pre-school children we already had a good command of connected thinking and forgot it when the world was divided into several subjects.

In a complex system the removal of a problem on the spot instead of considering the context of the system often leads to two other problems. This explains the fact that in more and more parts of the world the economical and ecological situation collapses despite of many serious but unlinked efforts to find solutions. And as one has to deal with mostly indirect effects, which only occur with time delays, the causes are often not obvious. We look for them in the wrong place. And the spiral keeps on twisting. We are always perpetrator and recipient with time delay. Today’s change in climate, the exponential increase of disasters caused by hurricanes, flooding, droughts and burning of woods do not show what we do today. They are probably the effects of our mismanagement in the seventies and many effects of today’s operations will be experienced by our grandchildren - maybe even more dramatically.

Science of systems
To meet the situation an advanced education in the science of systems would be necessary. At school it would already be trained to embed the respective special field in the general field of the belonging sphere of activity and sphere of life.

But it is also necessary to transform these attempts of thinking into the practice of planning and to transfer them into action. Therefore new tools are necessary. Here again we meet a great inhibition. The expenditure of methods available up to now is huge and time-consuming. One is afraid of drowning in facts and being still not able to consider them in their necessary completeness to say nothing of the legion of crosswise relations. The argumentation normally ends with the opinion: "Yet in my special field I can’t cope with the fullness of facts of modern development. How am I supposed to manage when psychology, techniques of communication, traffic or construction are added?"

Hellish details
As soon as one goes into detail, sooner or later one is showered with facts even in a limited special field. As one does not perceive the quality of the system, one does not find the adequate level of aggregation. One includes higher levels of the system into consideration just as indications from subsystems. Where can we draw the line of detailing? To understand the breeding behaviour of a certain kind of water bird it is not necessary to know exactly the number of feathers, the functioning of blood pressure and kidney, the size of faeces and the interlocking of the material for nest construction. And even if one includes all that, this degree of fineness would still be chosen arbitrary. One could as well determine the chemical composition of the egg shells yes, even go down to the atomic level. The splitting into details would be actually never-ending and the possibilities of interaction would reach ad infinitum.

The idea of the information society begins to become a great absurdity. As the belief is still widely spread that one’s knowledge increases with the level of information, the dread of the expenditure of facts leads to an even greater expenditure of facts.

Patterns of data
A further insufficiency when trying to understand complex systems lies in the one-sided choice of system components. As we rely on "secure" data and adequate modern techniques, in the first place (accidentally) measurable data are available - the "hard" facts. Qualitative factors, so called "soft" data are left behind, although they play a big role for the behaviour of a system, as well. They are often even more important for the understanding of processes within a system. The effect is that a system perceived in this way is generally described distorted, only because great parts of the system (as reference dimensions) are missing.

This focuses on a further cardinal fault: Considering the treatment of complex systems the recognition of patterns is important- a way of processing information that still is very difficult for computer programs. For the pattern recognition, reference dimensions that are represented by figures are not helpful at all. Instead of believing in them as safeguards you should better beware of them. They pretend reliability although they only play a temporary role because they are reference dimensions of permanently changing variables in a dynamic, open system. Since they are reference dimensions that are observed in an isolated manner, they can be obsolete in the next moment. They can get wrong and - taken as a firm value - perpetuate mistakes. More reliable statements are the relationships between the components of a system.

 

Contradiction

Data collection of citizens of Switzerland

Person A

  • Chairman of a left-wing committee of soldiers
  • aborted his studies after 3 semesters
  • until now more than 10 residential places
  • ideals: Lenin, Trotsky
  • member of the board of the communist party

Person B

  • lance corporal in the army of Switzerland
  • city president of Schaffhausen
  • critic of operas
  • ideals: Rodin, Beethoven,
  • member of the governing board of the new Schauspiel AG

These data seem to belong to two persons with absolutely different traits - but far from it: They come from the same person, the former national governor Walther Bringolf - from the same year, 1938. A remarkable example for the possibility of manipulation by selective registering of data.

Horror cabinet
Some examples how linear attempts of solutions for complex problems lead to catastrophe:

  • The fight against the sleeping sickness of cows as a development project in Africa lead to huge populations of cows, which resulted in overgrazing. Furthermore whole areas turned into steppe
  • The construction of deep water fountains caused a falling of the ground-water level and therefore a lasting dryness in many parts of the world.
  • Carefully calculated quotas of fishing still ruined the Peruvian economy because they did not include the circumstances of climate.
  • A typical feedback was also the explosion of the Hedge-fund in autumn 1997. Its losses suddenly amounted to more than $100 Million. Only a great effort of the American central bank prevented the whole banking system from rocking.
  • Even numerous military operations - recently the NATO mission in Kosovo - regularly cause a great number of insoluble problems.

The human model
Why does nature not have any problems with the vast number of data in its complex system? A main task of processing information in living systems is not the processing of all data that is received through sense organs - but drastic reduction. The aim of the human brain is a minimization of data- but not the processing of as much data as possible.

So the stream of information is unconsciously - reduced to one millionth and then completed again with the brain’s own information by procedures of association and resonance. The present structure of our computers and even the Internet (falsely described as "net") heads to the opposite direction.

 

Definition

At the beginning of any reflection on connected systems, one has to find out whether it is a complex system, parts of a system or several mechanisms.

  • Like any organism a complex system consists of several different organs which are located in a certain dynamic order and that are sometimes linked to a network of interaction. In this we cannot interfere without changing the relations of the parts to each other and therefore the whole character of the system.
  • Even parts of the system can make up a system or subsystem the other way round new, higher systems can develop when several autonomous systems get into close relations.

Tanaland
In 1975 the system-psychologist Dietrich Dörner created "Tanaland", a fictive African region on the computer. Twelve persons with different special fields were supposed to increase lifestyle with world bank credits. The realistic simulation game allowed all usual measures like construction of fountains, dams or industry, medical care, education etc. The result was shattering. Instead of an improvement of the people’s situation, after a short time famines and catastrophes occurred.

Mistakes of the well-meaning experts were:

  • Wrong description of aims: Instead of striving for improvement of the viability of the system (complex procedure) they tried to solve single problems (linear procedure). The system was scanned until a deplorable state was found, etc. This is called " repair- service-behaviour".
  • Unconnected analysis of the situation: Often huge masses of data are collected which cannot be evaluated properly (Feedback circuits, limiting effects). It was done without measuring the cybernetic character of the system.
  • Irreversible formation of focal points: A single focal point became a favourite. This way, serious consequences of acting in other fields or other existing problems and deplorable states remained unnoticed.
  • Unnoticed side effects: Biased in a linear-causal way of thinking, the analysis of side effects was regularly ignored. Possible consequences were not checked before acting.
  • Tendency to oversteering: If little interventions did not change anything within the system the next step were powerful interventions. But as the first little steps accumulated unnoticed because of time delay, one had to stop the process powerfully, after the first unexpected reactions showed up
  • Tendency to authoritarian behaviour: The power to change the system and the belief to see through it lead to a dictatorial behaviour, which is absolutely inappropriate for complex systems. It would be most effective to make corrections swimming with the current - not against it.

Complex tourism
Undesirable developments evolve when - ignoring the laws of the system - the phase of growth is overestimated, for example in areas of tourism. In Leukerbad, Switzerland the community had to sell its entire property values including sports arena, car parking, thermal bath and community centre to escape from bankruptcy. The reasons were excessive investments in the year before. In the beginning the attraction of a holiday area increases proportionally to the development of an easy reachable infrastructure. The better the infrastructure, the more people want to go there. Not before passing the optimum, the repercussions occur: increased traffic, annoyance of noise, disfiguring and loss of the original charm are brought up. And then attraction deteriorates rapidly.

New view of reality
Instead of observing the system from inside, you must from now on leave it and cast light on it from outside.

  • Linear (obsolete) view of businesses
    Normally, the point of reference is the competitor what does your neighbour do, what do the Japanese do, what’s the exchange rate of the dollar - the cybernetics of the own system remain unknown. The aims are sales maximisation, short-term profit maximisation, increase in production, a bigger share of the market.
  • Systemic (new) view of businesses
    You primarily examine your own system and its behaviour. In this respect, you ask totally different questions: where are the critical and where are the buffering fields, what kind of lever can I use to control the system and what kind is useless. The aims are: strengthening of the system’s viability and the possibility to navigate the company. One doesn’t strive for states but abilities.

As a result: The technocratic model comes to an end. Just like the uninhibited growth and the boundless consumption come to an end. We need a new and ecological way of thinking.

If we do not want to destroy the biosphere we must pay attention to certain basic rules of the system while managing our affairs. Anyway the result of disregarding it was not the creation of viable "ecological systems" of economy but increasingly sick creations which are in a coma.

In many fields the previous phase of aggressive technology and mismanagement has been replaced by a repairing phase with e.g. sewage works, desulphurization plants or catalytic converters. But this phase of repair can again only be a transition stage heading for a bio-cybernetic technology and way of management.

Enterprise biosphere
With its huge annual turnover of many hundreds of millions tons of material, the biosphere still shows no increase of biomass and stayed the course for aeons. And moreover with an enviable variety of products: with a maximum of creative development and an abundance of life forms. The reason: nature’s management follows a handful of cybernetic basic rules these principles are ancient and highly up-to-date at the same time. It is a company without worries about resources and unemployed people, without distribution problems and debts. It is a rich source of technical refinement, energy saving tricks and elegant combinations of high-developed technologies. To study this system and copy it in an intelligent way could become the real question of survival for us.

 

8 Rules of Bio Cybernetics

1. Negative feedbacks must dominate positive feedbacks:
Negative feedbacks imply self-regulation by circuits, e.g. the autonomous nervous system controls the concentration of hormones; the carburettor controls the petrol supply. Self-regulation is the most important principle of organization of a subsystem the controller is included in the system, too. Or: everything that keeps on growing will swallow everything around one day and consequently kill itself. This was perhaps the reason for the extinction of the prehistoric tiger whose giant teeth did not release any prey. As the tiger’s population was growing unstoppable, one day there was no prey left. As the immediate regulating circuit was burst, a higher regulating circuit intervened and eradicated the species.

2. The vitality of the system must be independent from quantitative growth:
If a system wants to grow and survive it will have to go through metamorphoses. At a certain size a caterpillar would not be viable anymore. So it switches to zero growth in the nick of time, becomes innovative, pupates and becomes a butterfly. A good example for the fact that sheer growth cannot replace metamorphoses and restructuring this is also valid for complex systems. The amount of connections is essential for the stability of a system. With unstopped growth and a higher amount of connections - that could even lead into chaos stability declines again. Best example: the human brain. A few months after birth it is full-grown: growth can be disturbing where it is important to function.

3. The system must work function-oriented and not product-oriented.
This rule guarantees the necessary flexibility of a business or a regional business site in times of change. For example, the breakthrough of Volkswagen’s beetle in those days was not achieved by the product itself but by unique, global service. Rationalisation and location advantages do not help much, if one does not dare to question the product itself.

4. Use of existing forces (principle of jiu-jitsu) instead of fighting (boxing-method):
Because they make use of the leverage effect, Asian martial arts like judo or aikido only need a very low steering energy compared to the energy needed for other sports. Natural systems work correspondingly. The same way we use energy generated by sun, water or wind, we could also use every incline in temperature or waste heat instead of fighting against them with air-conditioning systems that have further energy demand.

5. Multiple usage of products, functions and organisational structures:
Systems that are fit for survival prefer products and processes, they can kill two birds with a stone with. A way of realizing such ideas would be compound technology, e.g. force-heat coupling, energy boxes, utilization of biogas, insulating material and fuel made from natural fibres etc.

6. Recycling cycle processes for the utilization of waste and sewage:
The principle of recycling is no old hat. Especially for middle-class companies and the trade sector it carries some very attractive possibilities. Nature does not know any "waste" every product has its enzyme. We, on the other hand, are different, as we tend to consider production more important than recycling of waste.

7. Symbiosis reciprocal usage of difference by the employ of coupling and exchange:
The best example is the mitochondrion, a relict of a prehistoric bacterium. Provided with nutrients by cells, they manage the cell’s energy-supply. The advantage of symbioses is a considerable saving of energy, transport and raw material for all participants.

8. Biological design of products, procedures and forms of organizations by feedback planning:
Everything that contributes to the survival of our species has to be compatible with human beings and nature. A deterring example is the Internet that connects anything with anybody without structure here dangers lurk because of the unrestricted transfer of interference and faults.

 

The Sensitivity Model

This model was developed by the author and has become integral part of software that has been used frequently with great success. In 1984 it was awarded with the "Philip Morris research prize". In German language the word "Sensitivität" means even more sensitivity than " Sensibilität" (in German the model is called "Sensitivitätsmodell"). This means a very big sensitivity of a complex system even to the slightest internal or external impulse. A sensitivity-model describes not only the dynamics connected to system development it is also a kind of seismograph that is capable of describing its inner cybernetics. As this procedure shows the flows of effects, the user is able to set a new course for them. Furthermore, he can foresee the behaviour of the system, including all feedbacks, by means of simulation.

Fighting against diseases
As all planning is ultimately an intended change of existing systems (with the objective to make them more viable) one could also consider the necessary actions as a diagnosis of a "patient" and the following therapy.

  1. Description of the system: Using the analogy mentioned above, the basis of the system-approach is also the first level of the sensitivity-procedure: it’s the reduction of the "patient’s data" to obtain a clear and still relevant set of influences. Because of its structure the special feature of the system model is, that every level even the description of the "patient" is open to changes. This makes permanent updating possible.
  2. Pattern-recognition:On the second level of the procedure the interrelations in the existing system are examined and visualized in a graph. We want to recognize the different roles of parts with their influences in the system and we want to characterize the system’s behaviour.
  3. Therapy:On the third level the bio cybernetic evaluation is carried out. This means the assessment of the analysed system with regard to the improvement of its viability. Important points are its flexibility and capability of self-regulation.
  4. Strategy: In the model the chosen therapy can recurrently be tested for its suitability, e.g. by means of simulation.

Interlinkage
When describing a system, there is always a delicate question regarding its dimensions and borders. On the one hand every complex system is part of an even bigger system. On the other hand it contains subsystems. Therefore the terms that will be used for the key-variables later on should have quite the same dimension. At this time the classification information shows to advantage. Very soon it will be noticeable, that some terms are too detailed whereas others rather represent aggregated terms. The former should be united in generic terms; the latter should be subdivided. One should never use more than 100 terms or relations.

As connecting always results in overlapping, the border area between systems of the same extent cannot be very precise. A usable borderline is drawn best where only few flows of matter, energy or information exist.

 

A new culture of learning

Even the description of a system, which depends on the co-operation of many dedicated volunteers, can be very helpful for solving a problem. Example: In a project of town planning in Jena (Germany) for the first time co-operation on a complex topic was made possible with the help of careful preparation. The organizers succeeded in bringing together officials, representatives of the industry, trade, public transportation, regional planning and conservation in order to discuss the future of the town in Thuringia. A remarkable impulse of a new culture of learning.

Face
In order to obtain the necessary key-variables for a significant cybernetic model, the infinite amount of data must be reduced to its indispensable components similar to the permanent work of the brain. We have to sketch the essential patterns, the "face" even bigger systems have their "face". The respective name of the variable is always just a short term of a system component. That’s why every variable needs a description of its indicators that specify it and that should always be kept in mind during work. For example the "number of members in alternative automobile associations" is an indicator of the qualitative main variable "criticism of technology".

All collected influences and relations (of material, energy or communications) between the organs are classified and structured in this way. This is made possible by means of subdivision or grouping, examination of similar contents and exact description of meanings in order to recognize overlapping effects. One or another variable will turn out to be unnecessary for the description of the system or it is already included in another.

The set of variables must cover all important system criteria. Therefore every variable must be examined which criteria it fulfils. The seven fields of life, matter, energy and information, the four aspects of system dynamics and four kinds of system relations of a variable: all of these belong to essential parts of a system. Altogether, eight criteria make up the set of variables of a model that is relevant for the system.

Definition of the seven fields of life exemplified by structures of a company

  • The persons involved (Who is there?): Customers, visitors, supervisory board, employees, assistants, shareholders, members of the works council.
  • Activity (What are they doing?): Turnover and proceeds, jobs, service, purchase/sale, production, investment.
  • Space (What happens where?): position and size of working places, storekeeping, distances.
  • State of feelings (How do they feel?): motivation, identification, competition, ideas, creativity, number of sick persons.
  • Environmental relations (How does the distribution of resources work?): consumption of raw materials, energy and water, recycling, waste, waste gas, harmless products.
  • Internal circuits (What ways of communication do exist?): transport and access roads, processing of communication and information.
  • Internal order (How is everything regulated?): management, hierarchy, legal form, house rules, salaries, corporate identity, agreements.

Physical criteria

  • Matter: e.g. buildings, raw materials, means of production, people, animals, plants, vehicles.
  • Energy: e.g. consumption of electricity, employees, energy carriers, financial strength, power of decision.
  • Information: e.g. media, decisions, explanation, exchange of information, orders, perception, acceptance, attraction

Dynamic criteria

  • Flow items: e.g. energy consumption, traffic, commuters, orders, attraction
  • Size of structures: e.g. park area, population density, traffic system, accessibility, diversity of jobs, central and peripheral distribution, hierarchy.
  • Time: e.g. seasonal business, election meeting, climate factors, schedules, taxation
  • Space: e.g. volume of traffic, sewage, nature reserve, structural improvement.

System relations

  • Enter the system by "input" (variables that open the system by influence from outside): e.g. rainfall, refuse dumps, imports, tourism, supraregional decrees, subsidies.
  • Enter the system by "output" (variables that influence surrounding parts of the system): e.g. flowing offs, commuters, exports, supraregional taxes, image, advertising.
  • Can be controlled from inside: variables that can be controlled by decisions that are made inside the observed system. They are a measure of the system’s autarky.
  • Can be controlled from outside: variables that can be controlled by decisions that are made outside the observed system. They are among other things a measure of the system’s dependence.

Frederic Vester: "In the global cyclic process man always is cause as well as receiver"

Connections
The strength of the connections between variables is rated with numbers between 0 and 3. In this way the distribution of variables gives an immediate impression of the whole system. It can turn out to be rather vulnerable or the other way round it could also be very inert.

EXAMPLE 1: Abattoir in Munich
The question was whether the slaughtering of cattle, which cost about four million German Marks every year, was to be maintained by the city of Munich, shut down or sold to a private company in the meat industry. In the opinion of the local government an examination of the abattoir without consideration of the surroundings was not sufficient. The actual problems of an abattoir like the rate of capacity utilization, demand of investments and competition were outshone by typical subjects like BSE, diseases and hormone scandals. There was also the changing attitude of consumers towards battery farming, cattle transports and pollution and the generally reduced consumption of meat.

Together with all people involved, a system model was developed, which revealed the connections that went beyond the limits of the mere abattoir. It became clear that shutting down the abattoir would have meant Eliminating all other activities of the abattoir and the adjoining stockyard and damaging neighbouring trade industries.

Privatization would have had secondary consequences, too:

  • short-term profits for the public finance
  • Increasing social costs
  • Decreasing quality of life in the district
  • Neglect of local trade because of outside contracts
  • Closing down of the associated cattle market
  • No proof of origin

Further "If then" simulations with alternative possibilities showed that the whole thing would turn out differently, if the city sold to a private company but also gave a guarantee of stock and took on certain controls.

EXAMPLE 2: Ecological country workshops
Also related to meat processing was the project of the proprietor of HERTA - sausage factories, Karl-Ludwig Schweisfurth. In his opinion his company, which was capable of processing 300 pigs per hour, had become too big to produce meat products in an ecological way and with the quality he required. A system model showed how the expenditures of in-process storage, cooling, preservation, packing and transport could be reduced. Due to the mono structure of the large-scale enterprise the above-mentioned actions deteriorated quality and boosted running costs without helping to improve the product.

Hence the concept of a new type of small, decentralized "country workshop" was originated. These workshops cooperated with the farmers around and were managed with the help of cybernetic compound solutions based on the eight basic rules.

Some positive results of the so-called "Hermannsdorfer Landwerkstätten" (country workshops in Herrmansdorf):

  • Decentralized production and small areas promote symbioses with the surroundings.
  • Compound solutions connect production and waste disposal, e.g. production of biogas from dung and liquid manure.
  • Communication between producers and consumers allows mutual support and creative interaction with regard to biological food, environment and conservation.
  • Direct-Marketing and natural procedures like the processing of "warm meat" and proofs of origin bring farmers and consumers together.
  • Combinations of greenhouses make symbioses of recreation, herb gardens and keepings of small domestic animals possible.
  • Mutual strengthening of psycho-biologically reasonable animal keeping and nature redevelopment, waste disposal, quality-improvement, animal welfare and reduction of costs for keeping and veterinary consultations.
  • Eco-friendly style of architecture and plants on buildings support a balanced climate and the use of regenerative energies. That’s why both conservation and profitability are increased.
  • Cybernetic structure of production "demands" and "waste" of different workshop components benefit from each other.
  • Internal system connection is made possible by cooperation between production, distribution, management, small brewery, cheese production and other non-meat producers.
  • External system connection: social acceptance of the workshops supports acceptance of products and vice versa supply and exchange of waste with farmers.
  • Decentralized marketing promotes advantages of symbiosis because of small areas. This reduces transport, storage, preservation and packing.
  • Compound systems with adjoining companies and services for recycling, utilization of energy and exchange of manpower.
  • Cooperation with communities, public authorities, associations. Because of that: stimulation of workshop activities with consolidation of a positive image, access of the public and media.

All simulations of complex systems reveal that we should stop concluding the whole state of a system from one variable. By the way, this reduces the temptation to change the model deliberately in order to manipulate a system analysis. A good or a bad condition of variables can be either good or bad for the system, depending on the whole constellation. But it is different with real subsystems of the entire system. If they are intact, this will stabilize the entire system and vice versa.

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