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PROFESSOR: This is a
full semester class

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divided into two
half semester pieces.

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15.871 is the six
unit H-1 class.

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That's what probably most of
you are thinking about doing.

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What I would urge you to
do is to take both halves,

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because you and I will
co-teach the fall semester.

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The second half
is called 15.872.

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And although we think
this first half is good,

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the real value in
terms of developing

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a meaningful capability
for you to be

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able to use system dynamics and
systems thinking effectively

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will come if you take
the full semester.

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You don't have to exercise
that real option today.

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You can wait make that
decision a little later.

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But think about it for right
now for your semester planning.

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There are five assignments over
the course of this semester.

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So the good news is
there are no exams.

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The bad news is that
there are five assignments

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and this class has a
reputation that I believe

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is reasonably well deserved
for having a heavy workload.

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The reason for that is clear.

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I can't teach you anything.

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I know you're
giggling over there.

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But it's absolutely true.

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I can't teach you anything.

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All that I can do--
all that we can do

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is create an opportunity for
you to learn for yourself.

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You have to do it,
try it, practice it,

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if you're going to
develop the capability.

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That is not going to
happen by coming to class.

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Now, you need to come to
class, and participation

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is part of the grade.

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But that's not sufficient.

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It's also necessary for
you to try everything out.

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And that is why we
have those assignments.

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You also are going to need
to read the textbooks.

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So this is the book.

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And it's pretty fat and heavy.

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You're not going to be asked
to read the whole thing.

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The bad news on
that is I wrote it.

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So I can tell you that it'll
definitely cure your insomnia.

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I don't care if you buy it.

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Although I always
say, if you buy two,

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then you can kind of
go like this all day,

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and you can save money by
quitting your gym membership.

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But I don't care if you buy it.

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I do care that you read it.

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You can't do well
on the assignments

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unless you read the material
in the book carefully,

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and work through some
of those examples.

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Chapter one is what you
need to be reading first.

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The syllabus tells you
what to read for every day.

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In addition, from
time to time, we

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are asking you to read
a couple of short case

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studies or other material.

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And we'll provide
follow up articles

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from the professional literature
from time to time as well.

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So the question is why?

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Why do we need something like
system dynamics and systems

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thinking?

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And I think the
answer is not simply

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that the world is changing
faster and faster.

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Things are accelerating.

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Everybody knows that.

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That's kind of the price of
admission to the world today.

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It's that, despite all the tools
and methods that we've got,

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all the analytic power
and our cleverness,

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things are getting
harder and harder.

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And more and more of the
policies that we implement

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are failing to solve
the pressing challenges

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that we face.

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And this is not
what I'm saying this

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is what the senior leaders and
organizations with whom I work,

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what they tell me.

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And the thoughtful ones--
the most thoughtful ones--

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they say it's not
just the things

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are getting harder
and more difficult,

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despite our cleverness
and our analytic power,

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but because of it.

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That we're too clever
for our own good.

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And I illustrate this
traditionally with this picture

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of one of the leaders
of an organization

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that I've worked with.

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And here is the poor
guy in this office.

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Now many of you have
seen this before,

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but I think it's just a great
representation of what's

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going on.

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Like most senior managers
or lower level managers,

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he is completely squeeze
by pressures on all sides.

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Can't breathe.

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Claustrophobic.

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And what you're asked to do as
a manager is to be decisive.

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You've got to make decisions.

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Boo.

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Things are now much
better for you.

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Now you can begin to
breathe more easily,

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see out to the side.

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Relief.

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Things are great.

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But as you may
suspect, there could

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be some unanticipated
side effects.

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Now, the reason I like
this and the reason

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I'm showing it to
you again, so I

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think it's a great way to
capture the core of what

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a lot of systems
thinking is about.

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Why does this happen?

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Why does this happen?

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And why don't people learn?

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So it's not just
that it happens once,

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but people do it
over and over again.

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So why?

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That's a real question for you.

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So what do think?

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Why might this happen?

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And why might this
phenomenon persist?

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Yeah go ahead.

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AUDIENCE: It's only
in the short term,

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and the short-term
implications of that action.

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PROFESSOR: Great.

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So short-term time
rise and not thinking

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about what might happen later.

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So apres-moi le deluge.

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I don't care.

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I'll do what's good for
me in the short run.

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I don't care if it
destroys the world later.

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OK great.

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What else?

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Yeah go ahead.

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AUDIENCE: Feedback loops.

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So you would get some
feedback and you won't really

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consider it the way
that it really is.

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PROFESSOR: So there's definitely
a feedback loop here, right?

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And the problem is that
it takes too much time

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for that to happen.

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So the time delay in
getting the feedback-- maybe

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missing feedback-- is connected
to the short time horizon.

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In fact, what's going to
happen in most organizations

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to this manager right about now?

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He solved the problem, right?

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So what happens to him.

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AUDIENCE: He gets promoted.

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PROFESSOR: Of course.

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He gets promoted.

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You get to sit in the chair.

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It's a combination of
short time horizon,

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and not only by that
guy, but the people

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who are evaluating
his performance

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and maybe encouraging him to
have a short time horizon.

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That's not going to be good
for anybody in this situation.

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What else?

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What else might be going on?

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We get somebody
over on this side?

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[? Argoff, ?] what do you think?

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AUDIENCE: I think it's
also, like you said it was,

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when you're thinking
only short term,

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you find that can you make
a decision without thinking

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about what the impact of--

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PROFESSOR: This is a
really important point.

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And let me put it
into our terms.

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When people say, it wasn't my
fault, the reason we failed

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was some outside effect, some
unanticipated side effect,

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something that came
from out there.

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It wasn't my fault.

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They're trying to persuade
you that they, in fact, are

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great managers and shouldn't
be held responsible

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for the bad outcome.

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In fact, almost all the time,
it is at least partially

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the result of their
own past decisions.

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Feedback they didn't understand
and didn't recognize.

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And what they're
actually trying to do

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is persuade you that
it wasn't their fault.

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But what they're
really communicating

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is how narrow and
blinkered and inadequate

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is their understanding of
the system in which they're

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embedded, what we would
call their mental model.

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I think that's where
you were going.

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So that's a really
important idea

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in what we're going to be about.

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So one of the mental
models that I think

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is the most damaging out there
is this open loop mental model.

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And here's the question.

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In a project that
you've been involved in

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or that you were
reviewing, how many times

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have you seen this picture?

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Can I see hands?

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Who's seen it?

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Almost everybody.

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Who's drawn it in one of
their project proposals?

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About 3/4 of the same hands.

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This is a very interesting,
unintended revelation

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of mental models
that people hold

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about complex dynamical systems.

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And it basically says, there's
a beginning and middle and end

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to the project.

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We're going to
identify the issue.

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We're going to gather the
data, evaluate our choices,

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select the optimal solution,
and then implement.

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And of course, the students
in the last class when I said,

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what's wrong with this picture?

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They all said, oh well.

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You know.

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You're a professor.

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So you've never implemented
anything in your life.

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OK.

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Now, in fact, a
lot of my research

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is devoted to the
question of why

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implementation so often fails.

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We're going to talk about that.

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System dynamics isn't useful
unless you can actually

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make things different.

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If you can't catalyze
change in your organizations

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in which you're engaged,
none of this is meaningful.

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You might as well
become a professor.

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So we're going to
talk a lot about--

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and I mean that in all
the negative senses

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that you're laughing about.

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We're going to talk about
system dynamics in action,

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especially in the second
half of the class.

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You're going to see a lot of
case studies of how people have

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been able to use these
tools effectively

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in difficult political
organizational settings.

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So that's an issue.

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But it's not the real problem.

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The real problem with this
is that it has this open loop

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one-way sequential
perspective that

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says there's a beginning,
middle and end to the project.

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I don't know about you, but no
project I ever been involved in

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has ever gone that way.

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There's always
iteration, feedback.

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We have to go back to the
beginning, almost always

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unintended, unplanned
iteration, because we go through

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and we find out as
we gather the data,

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we interview the folks
that are engaged.

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And we evaluate
our technologies,

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supply chain for the new
product or whatever it is.

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We really didn't
understand the situation.

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We really didn't understand
what the real problem is.

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We have to loop back
to the beginning.

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This happens continually all
the way through the project.

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And it's that feedback
that's critical here.

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So this is the metaphor that I
want you to fix in your mind.

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You make decisions.

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Your decisions change the world.

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And then that creates
new information

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which changes your next decision
in a continual, emergent,

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iterative set of
feedback processes.

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Now let me make this
a little more formal.

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Again, this is a slight
review for those of you

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who have had me in orientation.

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But it's worth it,
especially if you

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haven't seen this for awhile.

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So here's that open
loop perspective.

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People say, I know my goals.

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I want better market share.

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I want more profitability.

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I want a bigger house, or a
nicer car, whatever it is.

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That's going to
motivate my decisions.

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And then my decisions
are going to change

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00:10:17,130 --> 00:10:20,710
the state of the world, state
of the system, problem solved.

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That's wrong.

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00:10:21,940 --> 00:10:24,840
I can't know what
decisions to make

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00:10:24,840 --> 00:10:27,430
just because I know
where I want to be.

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00:10:27,430 --> 00:10:30,470
I have to also know
where I am right now.

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There has to be a feedback.

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So the example I always give is
that, I'm a bicycle commuter,

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and as I was riding
into MIT from Lexington

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00:10:38,140 --> 00:10:41,200
this morning, as
every day, I must

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keep my bike on the right
hand side of the path.

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If I don't, I'm going
to have a crash.

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00:10:45,680 --> 00:10:48,220
So just knowing that I need
to be on the right hand side

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is not enough for me to know
how to turn the handlebars.

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I have to have the feedback
from where my bicycle actually

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is in order to know which
way to turn the handlebars.

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00:10:57,540 --> 00:11:01,990
It is the same for you, driving
your car or flying an aircraft.

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Now if flying your organization
through hostile skies, dog

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00:11:06,690 --> 00:11:08,980
fighting with the
competition, keeping investors

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00:11:08,980 --> 00:11:11,080
happy and calm in the
back, and serving them

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00:11:11,080 --> 00:11:15,700
nice drinks and hors d'oeuvres--
if flying your company

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was just as easy as
flying an aircraft, which

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00:11:17,620 --> 00:11:18,744
isn't that easy by the was.

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00:11:18,744 --> 00:11:22,850
It doesn't take much bad
weather, fatigue, or substances

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00:11:22,850 --> 00:11:25,310
in your bloodstream to
degrade your abilities so

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00:11:25,310 --> 00:11:27,795
much that you're going to crash
the plane, crash your car,

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or crash your bicycle.

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00:11:30,680 --> 00:11:33,800
But if it was as easy to
run your company as it

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00:11:33,800 --> 00:11:35,930
is to ride a bike, no problem.

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We wouldn't need this class.

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But it's not.

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00:11:38,250 --> 00:11:41,710
And it's not easy in part,
because that feedback loop,

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which represents the intended
effects of your decisions,

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00:11:46,580 --> 00:11:49,490
but doesn't capture
the unintended effects.

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It's only piece of the system.

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So you're embedded in a much
more intricate complex system

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in which that's what's
going on for you.

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00:11:56,870 --> 00:12:00,300
That represents mental models
of what you ought to do.

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00:12:00,300 --> 00:12:02,200
But mental models are limited.

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00:12:02,200 --> 00:12:05,650
And all the impacts of your
decisions-- all the effects

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00:12:05,650 --> 00:12:08,040
of your decisions that you
didn't think about in advance,

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00:12:08,040 --> 00:12:09,790
and that aren't part
of your mental model,

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00:12:09,790 --> 00:12:12,670
they're going to manifest
as so-called side effects.

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00:12:12,670 --> 00:12:15,750
Remember there's no such
thing as a side effect.

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00:12:15,750 --> 00:12:18,400
There's just the effects
that are in your mental model

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00:12:18,400 --> 00:12:21,020
that you were counting
on and everything else

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00:12:21,020 --> 00:12:24,879
is going to manifest as
a so-called side effect.

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00:12:24,879 --> 00:12:26,420
And they're usually
going to feedback

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00:12:26,420 --> 00:12:29,860
in a way that's
opposite to your goals.

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00:12:29,860 --> 00:12:31,710
Much more interesting,
you're not

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00:12:31,710 --> 00:12:32,950
the only player in the world.

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00:12:32,950 --> 00:12:34,980
So there's all the
other actors out there,

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all the other agents out there.

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And they have their own
goals, which are typically

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different from your goals.

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00:12:40,016 --> 00:12:41,640
You want more market
share, so do they.

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00:12:41,640 --> 00:12:44,750
There is only 100% to divide up.

315
00:12:44,750 --> 00:12:46,460
And every time you
make decisions,

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00:12:46,460 --> 00:12:48,710
even if they're
efficacious that pulled

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00:12:48,710 --> 00:12:50,940
the world closer to
your goals, they're

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00:12:50,940 --> 00:12:53,190
necessarily going to be
pulling the world farther

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00:12:53,190 --> 00:12:55,390
away from those
other folks goals--

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00:12:55,390 --> 00:12:58,720
your customers, your suppliers,
your employees, the investors,

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00:12:58,720 --> 00:13:01,590
the competitors, the communities
in which you operate,

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00:13:01,590 --> 00:13:04,900
the natural world in which
all of that is embedded.

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00:13:04,900 --> 00:13:06,330
That's all going to be there.

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00:13:06,330 --> 00:13:11,587
And those goals are going to
motivate them to take action,

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00:13:11,587 --> 00:13:13,170
to try to bring the
state of the world

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00:13:13,170 --> 00:13:15,190
back to what they want it to be.

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00:13:15,190 --> 00:13:17,490
Their mental models
are limited too.

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00:13:17,490 --> 00:13:20,230
And so they're going to generate
unintended so-called side

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00:13:20,230 --> 00:13:21,410
effects.

330
00:13:21,410 --> 00:13:23,870
And now this is getting to
be a fairly complex thing

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00:13:23,870 --> 00:13:26,080
to manage-- not as easy
as riding a bicycle.

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00:13:29,340 --> 00:13:33,080
The whole story here is about
expanding the boundaries

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00:13:33,080 --> 00:13:36,800
of your mental models so that
more and more of this structure

334
00:13:36,800 --> 00:13:39,430
is something that you can
begin to think about and try

335
00:13:39,430 --> 00:13:41,700
to take into account
when you make decisions.

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00:13:41,700 --> 00:13:43,350
You're never going
to get it all,

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00:13:43,350 --> 00:13:45,980
because all models are wrong.

338
00:13:45,980 --> 00:13:48,080
Model is not the real system.

339
00:13:48,080 --> 00:13:49,830
Only the reality is the reality.

340
00:13:49,830 --> 00:13:55,220
And everything in your head is
a limited, filtered, imperfect

341
00:13:55,220 --> 00:13:56,390
representation.

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00:13:56,390 --> 00:13:58,540
But we can do a lot better
than the mental models

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00:13:58,540 --> 00:14:00,180
that we have now.

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00:14:00,180 --> 00:14:02,280
So what are we going to do?

345
00:14:02,280 --> 00:14:04,010
What we're going to
do is develop tools

346
00:14:04,010 --> 00:14:06,510
in this class to elicit
your mental models,

347
00:14:06,510 --> 00:14:09,310
articulate them, and do that
in the context of busy people

348
00:14:09,310 --> 00:14:10,570
in organizations.

349
00:14:10,570 --> 00:14:13,210
We're going to explicitly
account for feedback,

350
00:14:13,210 --> 00:14:16,480
and stocks and foils, and time
delays, and non-linearities,

351
00:14:16,480 --> 00:14:19,270
and the other elements of
complex dynamical systems.

352
00:14:19,270 --> 00:14:21,620
And then we're going
to use simulation

353
00:14:21,620 --> 00:14:23,260
to figure out what that means.

354
00:14:23,260 --> 00:14:26,870
Not because the model is
going to give us the answer--

355
00:14:26,870 --> 00:14:30,690
all models are wrong-- because
the simulation models are going

356
00:14:30,690 --> 00:14:34,180
to give us insight that
improves our mental models

357
00:14:34,180 --> 00:14:35,805
and the mental models
of all the people

358
00:14:35,805 --> 00:14:38,840
who need to be involved in
order for change to happen,

359
00:14:38,840 --> 00:14:42,150
so that people are empowered
with high leverage,

360
00:14:42,150 --> 00:14:46,300
effective policies to go out
there and make a difference.

361
00:14:46,300 --> 00:14:49,020
You can read in the syllabus
how we're going to do that.

362
00:14:49,020 --> 00:14:50,730
But I think there
are three core ideas

363
00:14:50,730 --> 00:14:53,340
I'd like to leave you with
before we break for today.

364
00:14:53,340 --> 00:14:56,200
The first is that it's the
structure of complex systems

365
00:14:56,200 --> 00:14:57,910
that generates their behavior.

366
00:14:57,910 --> 00:15:00,130
That structure
consists of the physics

367
00:15:00,130 --> 00:15:06,261
of the system, the information
that's available to you,

368
00:15:06,261 --> 00:15:07,760
and then the decision
rules that you

369
00:15:07,760 --> 00:15:11,720
used to turn that
information into action.

370
00:15:11,720 --> 00:15:14,910
All three of those
are relevant here.

371
00:15:14,910 --> 00:15:16,940
Mental models matter a lot.

372
00:15:16,940 --> 00:15:19,980
It is not enough just to come
up with the right answer.

373
00:15:19,980 --> 00:15:22,820
And it's not enough
just to change

374
00:15:22,820 --> 00:15:26,330
the physics of the system, or
the information with a new IT

375
00:15:26,330 --> 00:15:28,780
system, or the incentives
that people face.

376
00:15:28,780 --> 00:15:30,440
All those are
important, but they

377
00:15:30,440 --> 00:15:32,170
aren't generally sufficient.

378
00:15:32,170 --> 00:15:35,520
And one of the very powerful
mental models that's out there

379
00:15:35,520 --> 00:15:38,030
is what we call the
fundamental attribution

380
00:15:38,030 --> 00:15:39,610
error in psychology.

381
00:15:39,610 --> 00:15:43,060
And this is an idea you should
have learned at the beer game.

382
00:15:43,060 --> 00:15:46,260
And it's the idea that if you
ask me why I've screwed up,

383
00:15:46,260 --> 00:15:50,390
I've got reasons
known as excuses.

384
00:15:50,390 --> 00:15:51,830
It was the customer's fault.

385
00:15:51,830 --> 00:15:53,140
It was somebody else's fault.

386
00:15:53,140 --> 00:15:54,420
The sun was in my eyes.

387
00:15:54,420 --> 00:15:59,090
But if I'm asked to
explain why use screwed up,

388
00:15:59,090 --> 00:16:01,660
It's because you're not capable.

389
00:16:01,660 --> 00:16:05,390
You don't have what it takes,
you and everybody like you.

390
00:16:05,390 --> 00:16:08,060
And that is almost always wrong.

391
00:16:08,060 --> 00:16:09,350
And it's low leverage.

392
00:16:09,350 --> 00:16:10,880
It doesn't help.

393
00:16:10,880 --> 00:16:13,700
So to put that into
practice in this class, when

394
00:16:13,700 --> 00:16:16,400
we come in here, and you
work with us this semester,

395
00:16:16,400 --> 00:16:19,320
we're going to make the
following basic assumption.

396
00:16:19,320 --> 00:16:23,390
We believe that everybody
in this room is intelligent,

397
00:16:23,390 --> 00:16:28,970
is capable, cares about doing
their best, and wants to learn.