This blog is cross-posted on the University of Michigan Erb Institute’s “Erb Perspective” blog.

By Sunmin Kim, Erb Doctoral Candidate

This is the first part in a two-part series on the role of systems thinking in business solutions for sustainable development.

For most of us, it is rare to go through a single day without hearing the words “sustainability” or “green” applied to anything from Apple products to Zinfandels. The widespread use and the trendiness of these terms by businesses have evolved them into almost catch-all phrases that seem applicable to any sector. Nevertheless, the underlying ideas and needs are common. We need to consider and act beyond our time, our borders and our own needs.

As Tom Gladwin, Max McGraw Professor of Sustainable Enterprise at the University of Michigan, has repeated stated, the critical state of our environmental, economic and social system is further reinforced by increasing complexity, velocity and uncertainty. However, despite the popularity and trendiness of sustainability, we have hardly managed to make the progress required for global sustainable development. So how do we capture these inter-connected, complex sustainability challenges in a practical, and solution-based approach?

Systems thinking is a trans-disciplinary “framework for seeing interrelationships rather than things, for seeing patterns of change rather than static snapshots” (Peter Senge). Therefore, a systems thinker frames a problem in terms of a pattern of behavior over time, instead of focusing on particular events. Instead of microscopic, they strive for macroscopic, seeing beyond the details to the context of relationships in which they are embedded. Today, it is used by academics and practitioners alike to address sustainability challenges.

However, like with any new problem-solving approaches, the systems approach has its criticisms. There is an assumption that systems thinking is too fundamentalist, “epitomizing an essentially technocratic view of business problems.” Its dependency on models and lack of actual solutions threatens its legitimacy in corporate boardrooms and management education. But, as the engineer in me strives to approach problems by 1) diagnosing the problem in order to figure out how to fix it and  2) implementing solutions with known outcomes, I believe systems thinking is necessary for sustainability challenges.

In this first of a two-part series, I show how systems thinking can be used in diagnosing the challenges of global sustainable development. Next, I will discuss ways in which systems thinking can be used for various types of organizations in the private sector, and its role in the Rio+20 dialogues.

The Diagnosis

Click to zoom

Consumption is well-known to be a critical hindrance to sustainable development. Therefore, we* identified key variables that drive consumption and brainstormed the links among them. For example, if consumerism grows, it causes business activity to grow also. The above causal map was the result. Even though at the first glance, it may seem overwhelmingly confusing, this exercise teaches us some key behaviors of the system.

If we rank variables in order of the number of causal links, we see that economic development and business activity are the two biggest drivers of consumption, which is no surprise. More importantly, most of the causal links are in the same direction, meaning that they either grow when other variables grow, and decline when other variables decline. At the same time, resource scarcity has the strongest “opposite direction” causal change, implying that in the current system, it is most effective in slowing down economic growth. This begs the question: must we consume resources to the point where it becomes scarce for the sake of economic and business growth?

Another point of concern is the fact that the state of the environment is easily degraded but doesn’t cause change in many other variables. Biodiversity and waste (solid waste accumulation, greenhouse gas emissions) result negatively from many variables, but does not affect changes in as many others.

When we follow a path of a variable, we also see causal loops present in the system. Causal loops are an important learning tool in systems thinking and shows how some variables can continuously reinforce, or balance each other in a loop. For instance, if technology efficiency increases, resource use decreases. Unhindered by resource availability, business activity grows and more investments are made in technology efficiency – thus putting these variables in a reinforcing loop. This seems like a good thing, since, after all, efficiency is often tooted as the “low-hanging fruit” of sustainability strategy. However, the increase in overall resource use due to higher business activity can overcome the initial decrease gained from efficiency (this is also known as theJevon’s Paradox. See more concrete examples here).

“Society is always taken by surprise at any new example of common sense.”

– Ralph Waldo Emerson

So now what? We saw very broadly that in our current system, 1) economic growth is heavily dependent on our natural resources, 2) the state of our environment (as long as resources are not scarce yet) doesn’t slow down economic growth, and 3) technology efficiency, which businesses are so dependent on today, can actually lead to an increase in resource use. But now with a better understanding of how this system behaves, we know how and where to implement solutions that can have a ripple effect for a systemic change.