Systems thinking, people thinking August 25, 2010 at 8:32 pm
I was going to amuse myself this morning taking apart a truly awful Felix Salmon posting on the use of the normal distribution in finance. (That’s what it is really about – it isn’t what Felix thought it was about when he wrote it, which is part of the problem.) But instead I am going to praise an insightful article by Chrystia Freeland in the NYT.
First she highlights an important cognitive bias:
Most of us respond better to personal stories than to impersonal numbers and ideas.
Then she discusses one of the consequences:
that same bias means we are drawn to stories about people, not systems. When it comes to the financial crisis, we want heroes and villains and what-he-had-for-breakfast narratives; we are less enthralled by analytical accounts of the global financial system and the cycle of boom and bust.
Chrystia is nice enough to suggest that this is the age of the systems thinker, that those of us who can do it – and if there is one thing that this blog is about, it is systems thinking – are the new upper class. Sadly I think she is wrong. Systems thinking has the potential to be a very powerful tool, and it has had many successes. But cognitive bias means that it is always fighting an uphill battle against personality-driven narratives. Systems thinking has a marketing problem which it needs to solve before it can become the new black.
Update. This comment from Ashwin is so pertinent that I am going to hoick it up to the main text (and edit it to remove the references).
John Sterman in his book Business Dynamics says the following: “A fundamental principle of system dynamics states that the structure of the system gives rise to its behavior. However, people have a strong tendency to attribute the behavior of others to dispositional rather than situational factors, that is, to character and especially character flaws rather than the system in which these people are acting. The tendency to blame the person rather than the system is so strong psychologists call it the “fundamental attribution error”. In complex systems, different people placed in the same structure tend to behave in similar ways. When we attribute behavior to personality we lose sight of how the structure of the system shaped our choices. The attribution of behavior to individuals and special circumstances rather than system structure diverts our attention from the high leverage points where redesigning the system or government policy can have significant, sustained, beneficial effects on performance. When we attribute behavior to people rather than system structure the focus of management becomes scapegoating and blame rather than the design of organizations in which ordinary people can achieve extraordinary results.”