What is a system? Take a few simple examples: The cars we drive are systems and they are also components in other systems (our nation’s transportation system, the air we breath, and our economy in terms of jobs created here and elsewhere to manufacture cars). Your company is also a system in itself and part of the economic system. Systems are, in short, sets of processes in which both independent and interdependent elements interact to form a complex whole generating one or more outcomes. The outcomes of a system depend upon how the parts (e.g., with the market for locally grown food) interact and influences from the containing system (e.g., the overall economy).
When systems become complex, their outcomes are harder to predict. We can measure probabilities of different outcomes in a simple or even complicated system but not a complex one. (A car therefore is far more predictable than a human!) In complex systems, small changes in one variable can set off huge and unanticipated changes in outcomes when the underlying system is not stable.
While complex, unstable systems are the hardest to track, they are filled with significant innovation opportunities.
While complex, unstable systems are the hardest to track, they are filled with significant innovation opportunities. Let’s look at one – the U.S. health care system. Connect the following dots and you’ll understand the status quo is unstable, i.e., not sustainable.
As more care is uninsured and government provider payments grow more slowly or decline, providers shift costs to private sector employers, inducing even more dropped coverage. More people are on government-paid insurance at a time when government can least afford it.
As upsetting as unstable systems can feel, and as uncertain as future outcomes become, they create opportunities for innovation. Anything a company or individual (or policy maker) can do to address opposing trends – to let steam out of the system, so to speak – will generate tremendous value. In essence, the unstable system works like a magnet, attracting needed innovations to how the system operates.
Use mind mapping to identify variables impacting the system (e.g., a market) within which your organization operates. Then, identify trends underway in these variables. ID those trends that are in opposition. Then ask, what innovations might deal with two or more opposing trends? Those are your dig sites to unearth new ideas for your organization.
By Kay Plantes
MIT-trained economist Kay Plantes is a strategy consultant and author of Beyond Price: Differentiate Your Company in Ways that Really Matter (Greenleaf Book Group, 2009). She writes a blog on business model innovation at plantescompany.com/blog.
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