Never having had the chance to study system dynamics at Sloan School of Management (MIT), I was very happy recently to have the opportunity to read Donella Meadows’ “Thinking in Systems”, an excellent primer on the subject – I recommend it highly. Reading the book sparked some thoughts on how system dynamics and the concept of business and IT agility complement each other – and more importantly, how they challenge each other fundamentally.
Let’s start with the similarities. System dynamics says that most systems grow over time; my concept of business agility would argue that growth is a type of change, and agile businesses should do better at handling that type of change. System dynamics says that people have a lot to say about system functioning, and people resist change; I would argue that business agility includes building organizations in which people expect and know how to handle change, because they know what to do. System dynamics says that to change system behavior, it is better to change the system than replace components (including people); business agility says that business processes if changed can increase the agility of the company, even if the same people are involved.
What about the differences? System dynamics really doesn’t have a good analog for the proactive side of agility. They mention resilience, which is really the ability of a system to react well to a wider range of external changes, they mention “self-organization” as elaborating the complexity of systems, and they talk about a system having a certain amount of room to grow without reaching constraints or limits; but there is an implicit assumption that unexpected or planned change is the exception, not the norm. Likewise, according to system dynamics, tuning the system to handle changes better is in the long run simply delaying the inevitable; a more effective redesign changes the system itself, as profoundly as possible. Agility says that change is the norm, that redesign should be aimed at improving the ability to “proact” and the ability to react, and that increased agility has a value independent of what system is being used.
System dynamics poses challenges to the practice of business agility, as well. It says that how agility is to be improved matters: have we found the right “leverage point” for the improvement, have we understood well enough how people will “game the system”, have we anticipated future scenarios in which the “agilified” process generates new constraints and reaches new limits?
To my mind, the key question that system dynamics raises about business agility is, are we measuring it without incorporating the importance of the unmeasurable? Or, to put it in system-dynamics terms, in attempting to capture the business value of increased agility in terms of costs, revenues, and upside and downside risks, are we “emphasizing quantity over quality”?
I think, based on the data on agility improvements I’ve seen so far, that one of the most interesting ideas about business agility is that focusing on agility results in doing better in long-term costs, revenues, and upside/downside risks than a strategy focused on costs, revenues, or risks themselves. If this is true, and if organizations set out to improve agility “for agility’s sake”, I don’t think system dynamics and agility strategies are in disagreement: both want to create a process, an organization, a business built to do the right thing more often (“quality”), not one to improve a cost or revenue metric (“quantity”). Or, as Tom Lehrer the comedian once put it, we are “doing well by doing good”.
So my most important take-away from gaining an admittedly basic understanding of system dynamics is that metrics like AFI (agility from investment, which attempts to measure the long-term effects of a change in agility on costs, revenues, and risks) explain the relative agility effects of various strategies, but should not be used to justify strategies not focused on agility that may improve costs, revenues, and/or risks in the short term, but will actually have a negative effect in the long term. As Yoda in Star Wars might put it: “Build to change or be not agile; there is no accidental agility.”