Business – Consider the consequences

Peter Senge is an American systems scientist who has lectured at the Massachusetts Institute of Technology for some decades. He is especially famous among management thinkers for a book he wrote in 1990, The Fifth Discipline: The Art and Practice of the Learning Organisation. The book was revised in 2006 and remains a classic – it is even more relevant now, than when it was first published.

I am usually hesitant to wax lyrical about such books that are often only read by management “geeks” like me, but this one is different. It was written in 1990, yet its main message explains the mess we are in locally and nationally, in business and in government infrastructure (both local and national).

Systems thinking is the acceptance that in any organisation, however big or complex, our actions will always have a consequence, often larger than we thought and usually over a greater timescale. A system thinker will consider all consequences, especially the long-term ones, and will see patterns and trends with some clarity. Systems thinking is the antithesis of knee jerk reactions. 

In business, especially during difficult times like these when demand for some of our products has decreased and the cost of living is affecting our wallets, we can be forced into taking short-term decisions that we know will have negative long-term consequences. Sometimes we take those decisions today for survival tomorrow, in the knowledge that we will at least survive to hopefully deal with longer-term consequences later.  

A person is a systems thinker if they are aware of those long-term consequences, but too often, we don’t have that awareness. We boldly go forward and treat symptoms with a multitude of solutions in the hope that one of them will work. Too often short-term solutions only make a situation worse.

For some context, consider the ‘keep rates low’ basis upon which many local body representatives have sought our vote over many years. The size of any rates increase is a key concern for many voters – the lower the better. While our drainage systems are falling apart, our transport systems are struggling to cope, our areas of new housing development put enormous pressure on already struggling infrastructure, we vote (well, 35.5 percent of us do!) for the lowest rate increases. 

If we took the system thinking approach, we would have taken a longer-term view decades ago. Although that would have resulted in bigger rate increases in the short term, the consequences in the long term would have been massive.

I remember looking at the Auckland Motorway Plan of the 1960s, for completion by the end of that decade, which has only just been completed with the joining of the Northern to the Northwestern link. Other examples abound. In business, we have seen our largest public company (Fletchers) take a big profit hit. When you look closely at the reasons for that, the lack of systems thinking is everywhere. 

For small to medium sized local business the principles are exactly the same: the fifth discipline should be the first thought.