Competitive Intelligence and Systems Thinking

I have a bulk of my education and training as a systems engineer and systems manager. I have a Maters Degree in Systems Management and have years of undergraduate work in Systems Engineering. I was a Systems Engineer for much of my career.  I am not saying this to impress anyone, not by any means, I just want you to know where I am coming from.  Ever since I got involved in Competitive Intelligence I could not overlook the similarities between Systems Thinking and CI analysis techniques.  For those competitive intelligence professionals that actually might read this blog; systems thinking is a holistic approach to analysis that focuses on the way that a system’s constituent parts interrelate and how systems work over time and within the context of larger systems.  That’s the formal definition.  However, I think you can see that much of what Michale Porter talks about with his Five Forces and his Value Chain analysis are wrapped systems thinking and systems thinking is the foundation for systems analysis.  Did I lose anyone?  Let me explain further.

When you do a full-blown five force or industry analysis you are defining the system and performing systems analysis.  The same holds true for doing value chain analysis, this is classic systems analysis. Let me give you an example of when systems analysis crossed paths with Competitive Intelligence nearly 25 years ago.   When I was a quality adviser I was asked to look at ways to improve our value chain.  This was a time period when the Military was taking the dive into what we called Total Quality Management or TQM. Since I had this assignment from my Directorate I did what I normally do for new things, find people smarter than me and ask them, So I gathered up a group of my quality adviser peers and we came up with a simple systems analysis tool set we called COPIS Focus. This was not a total new creation as others were doing parts of this, we just expanded it and I applied my rules of systems analysis to the mix.  The result was COPIS Foucs ( COPIS standing for Customers, Outputs, Processes, Inputs and Suppliers).  This was a simple value chain analysis where each of the COPIS elements were analyzed for improvement using Statistical Process Control (SPC).  In the quality world you improved processes using SPC as a metric tool. This was a classic systems analysis tool but was also a cousin to Porter’s Value Chain Analysis, which we never heard of back then. Both COPIS Focus and Porter’s Value Chain analysis are classic systems analysis techniques. 

I could go on, but blogs are supposed to be short and to the point, so at this point I want to share with you seven habits of good systems analysis.  I think these are useful for any CI analyst.   As you go through these see how many of them you use in you CI analysis techniques.  I put some of my suggestions in Italics after the initial title.  Let me know what you think; are you a systems thinker?

 

Seeks to understand the big picture (Five Force Analysis)

A systems thinker “steps back” to examine the dynamics of a system and the interrelationships among its parts. S/he sees the forest, rather than the details of any one tree.

Questions to ask…

“How can I maintain balance between the big picture and important details?”

“What time frame should be considered as I view the system?”

“Am I keeping my focus on areas of influence, rather than on areas of concern that I cannot influence?

 

Observes how elements within 

systems change over time, 

generating patterns and trends (Developing Key Intelligence Topics, Setting Alerts, Identifying Strategic Risk)

Dynamic systems are made up of interdependent elements, the values of which change over time. A systems thinker may use a tool such as a behavior-over-time graph to record and observe the patterns and trends those changes generate. The graphs can provide insight into the interdependence of the elements and the structure of the system.

Questions to ask…

“What important elements have changed in the system?” 

“How have the elements changed over time?”

“What changing elements represent amounts and how quickly/slowly are they increasing or decreasing?”

“What patterns or trends have emerged over time?”

 

Recognizes that a system’s structure 

generates its behavior (Five Force Analysis, STEEP Analysis (or PEST))

A systems thinker understands that blame is not an effective practice to bring about lasting change to a complex system. Rather, focusing on the structure of the system facilitates an understanding of the outcomes of the system.

A systems thinker realizes that to effect change within a system, s/he must use knowledge of the system’s structure.

 

Questions to ask…

“How do parts affect one another?”

“How does the organization and interaction of the parts create the behavior that emerges?”

“When things go wrong, how can I focus on internal causes rather than dwell on external blame?”

 

Identifies the circular nature of 

complex cause and effect relationships (STEEP or PEST Analysis, Four Corners Analysis)

 

A systems thinker knows that the cause-effect relationships within dynamic systems are circular rather than linear. Complex cause and effect relationships include balancing feedback, in which the system is trying to reach and maintain a goal, e.g. the heating system in a house. There also may be reinforcing feedback, such that the more you start with the more it increases over time, e.g. population.  

Questions to ask…

“How do parts affect one another?”

“Where does circular causality/feedback emerge?”

“Is one feedback loop more influential over time than another?  If yes, how?”

 

Changes perspectives to increase understanding  (Wargaming and Black Hats)

To understand how a dynamic system actually works, a systems thinker looks at the system from a variety of different angles and from differing points of view, perhaps in collaboration with others.

Questions to ask…

“Am I open to other points of view?”

“How do different points of view influence the way I understand the system?”

“Who should I approach to help me gain new perspectives on an issue?”

“As I learn about new perspectives, am I willing to change my mind?”

 

Surfaces and tests assumptions  (Wargaming, Four Corners Analysis and Black Hats)

A systems thinker will rigorously examine assumptions in order to gain insight into a system. Insight put into action can lead to improved performance. The Ladder of Inference (shown below) is a visual tool that helps people consider how and why assumptions are made, beliefs are developed, and actions are taken based on perceived data.

 

Questions to ask…

“How do my past experiences influence

the development of my theories 

and assumptions?” 

“How well does my theory or model 

match the system under study?” 

“When considering a possible action, do I and those I work with ask ‘What if’ questions?”

 

Considers an issue fully and resists the urge to come to a quick conclusion (Primary job of a CI analyst: Objective Outside view of the Market)

A systems thinker is patient. S/he will take time to understand the system’s structure and its behaviors before recommending and implementing a course of action. A systems thinker also understands that succumbing to the urge for a quick solution can create more problems in the long term. S/he is aware of the tension created when a resolution is not immediately implemented and is able to hold that tension while a deeper understanding of the system is developed.

 

Questions to ask…

“How much time do we need to allow for the consideration of this issue?” 

“How can we manage the tension that exists when issues are not resolved immediately?”

“How can I help others be patient while living with unresolved problems?”

 

Considers how mental models affect current reality and the future ( Four Corners Analysis and Facilitation techniques used in CI sessions: Black Hats, Wargames, etc.)

In any given situation, an individual perceives and interprets what is happening, thus creating a picture, or mental model, of some aspect of the world. Mental models are comprised of assumptions, beliefs, and values that people hold, sometimes for a lifetime. A systems thinker is aware of how these mental models influence perspectives and ultimately actions taken.

 

 

Questions to ask…

“How are the current mental models advancing our desired results?” 

“How are the current mental models hindering our efforts in this area?”

“How am I helping others see the influence that mental models have on our decision-making?”

 

 

Uses understanding of system structure to identify possible leverage actions (Strategic Analysis following Industry Analysis)

Based on an understanding of the structure, interdependencies, and feedback within a system, a systems thinker implements the leverage action that seems most likely to produce desirable outcomes. According to Senge (1990), leverage is “…seeing where actions and changes in structure can lead to significant, enduring improvements.”

Questions to ask…

“Where might a small change have a long-lasting, desired effect?” 

“How can we use what we know about the system to identify possible leverage actions?”

“Are there other small changes that we have not yet considered that could bring us desirable results?”

 

 

Considers both short and long-term consequences of actions (Strategic Analysis following Industry Analysis)

 

Before taking action to change a dynamic system, a system thinker weighs the possible short and long-term outcomes of the action. This practice increases the probability of the chosen action producing the desired outcomes

 

Questions to ask…

“Are we examining the effects of actions within a logical time frame?”

“Are we considering long-term effects even though this long view may seem unimportant?”

“Are we willing to accept ‘short-term pain for long-term gain’ and recognize that short-term gain can lead to long-term pain?”

 

 

Finds where unintended

consequences emerge  (Strategic Analysis following Industry Analysis)

Before any action is taken to change the outcomes of a dynamic system, a systems thinker uses proven strategies (e.g. systems archetypes or a system dynamics model) to anticipate unintended consequences. If it is determined that probable unintended consequences are unacceptable, another course of action is explored.

 

 

Questions to ask…

“What are the possible consequences of the proposed actions?”

“What are the trade-offs of each identified consequence?”

“Are there unintended consequences that could lead to new actions?”

 

Recognizes the impact of time delays when exploring cause and effect relationships (Strategic Analysis following Industry Analysis)

 

 A systems thinker recognizes that when an action is taken within a complex, dynamic system, the outcome of the action may not be seen for some time. A systems thinker will account for the impact these delays may have within the system.

Questions to ask…

“If we make a change to the system, how long before we see the results that we desire?”

“How can we identify the role of time delays in the effects we expect to see?”

“Will the change we propose show immediate results or will we need to wait to see improvement?  If we need to wait, for how long?”

 

 

Checks results and changes actions if needed: “successive approximation” (Revisiting KITs, alerts and analysis, performing updates to STEEP or PEST factors)

Questions to ask…

“What indicators will we expect to see as we look for progress?”

 

“Have we scheduled time to pause, assess the effects of our current plan and take necessary action?”

“When considering changes, are we accessing other systems thinking habits?”

By definition, dynamic systems are constantly changing over time. A systems thinker, therefore, monitors and evaluates the behavior of the system and takes action when needed to assure the system continues to produce the desired results. For example, initially it may be difficult to determine a ‘best solution’ to a perceived problem.

By trying a solution and then assessing the results, understanding of the issue will increase. Over time, each cycle or successive approximation, of checking results and changing actions if needed, will move the system closer to a desired goal.

 

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