I have been reading the book on system thinking by Gerald Weinberg rather slowly. I have not read more than first few pages and even the first few pages opens up a lot of opportunities for thinking. It makes me to think a lot. I try to apply system thinking theoritically to many aspect of my life. I feel system thinking is a natural thinking. I understand, we, the human being have the capability to be a system thinker. It is purely our fault of not realizing our ability and we prove that "The fish is the last one to see the water". As well pointed out by Gerald Weinberg, the rapid industrialization brought in wealth but hazardous second order effects of pollution and global warming. The rapid development of crops have produced good amount of harvest but gave us inorganic food leading to genetic effects. While the fast paced world is focussing on the first order results, it fails to observe and act on the second and third order effects. This gives us enough evidences that we are not learning from our mistakes and failing to correct ourselves. I strongly believe that when the decision making is good, all the other things will be good. Recently, I have read a short write up about scenario planning or scenario based decision making and how it helps in making wise decisions. I feel that scenario planning is subset of system thinking. Here is my view on both system thinking and scenario planning. Read on.
Amidst the unprecedented recession of our generation, no one will deny that we are witnessing the second order effects high leverage and heavy risk appetite and the first order effects of a systemic failure. No one would have thought that they are merely betting on something which is overvalued multiple times or on things that does not exist at all. I am not sure whether we will learn anything from this recession. I don't deny the fact that some organizations will be creating a document or at best will be writing a software to protect themselves from a failure. However, I seriously doubt whether we, as a human being, will come up with a learning which we can apply the lessons learnt to some other problems and use them for better decision making. I doubt because we fail to appreciate the importance of system thinking and only the system thinkers can stop such failures.
The effects that we consider second order are the effects that are not thought about. The world does not even care about the second order effects and goes to an extent of not giving importance to be aware of those second order effects. But these second order effects reaches a tipping point and becomes much severe. Only then the world realizes its significance like the recent recession. If you want to explain with a real world example, who thought that poverty will to lead emergence of terrorism (I am taking about Naxal in India) . The terrorists are the second order effects of poverty. If you want to fix terrorism, fix the first order effects that is exploiting people and poverty. So, the system thinking should play a pivotal role in any decision making process may it be at policy level or at strategy level. First criteria for a decision maker is to be a system thinker.
The next thing that will be cropping up in upcoming months is the concept of Scenario Planning. I believe the system thinkers and scenario planning experts are likely to play a very crucial role in building a modern society. Scenario planning is a kind of analysis where the future is built and the study will be made on the impact of the decisions in that future. For example, if you are taking a home loan from a bank, the banks will consider what will happen if the person loses the job, what will happen when the land values drops. I believe, when the entire world is newly build and modern economy emerges, the scenario analysis together will system thinking will play a crucial role in making wise decisions. I would like to see a world that thinks. It is the thinking that will bring prosperity not just investments. :-)
