Category Archives: Systems Thinking

Structures Drive Poor Financial Adviser Behaviour

A recent ASIC Report that identified an “Unacceptable level of failure” by the life insurance industry was caused by conscious or unconscious systemic structures that drove the behaviour of the Financial Advisers.

Gary Ryan, Organisations That Matter, Yes For SuccessThe report goes on to say, “Our surveillance results indicate that many advisers . . . may prioritise their own interests in earning commission income ahead of the interests of the client in getting good quality advice.”

Systems Thinking teaches us that organisational structures (rules, policies, procedures and physical structures such as office layouts) influence the behaviour of the humans who operate in that system. The concept is known as Structures Drive Behaviour.

The ASIC Report found that the system provides upfront commissions for Financial Advisers in 82% of cases. The commissions could amount to around 100% of the annual premium and are therefore very lucrative. Unfortunately ASIC has discovered that 96% of the poor advice provided by Financial Advisers was when the adviser was being paid an upfront commission. There appears to be a direct link between the structure of upfront commissions and the provision of poor advice.

Leaders have a responsibility for understanding the behaviours that their structures will drive. I am not saying the leaders in the life insurance industry here in Australia understood the consequences of the structures they put in place because I don’t know.

However, as part of the characteristic of foresight, a leader should consider the intended and unintended consequences of the rules, policies and procedures that they put in place. If you work in a sales environment and you want your sales team members to share information with each other, a commission structures that is 100% based on individual performance is unlikely to drive the sort of information sharing behaviour that you desire. Instead you need to create a system (with input from your sales team members) that provides commissions for both individual and team based behaviours and performance.

Creating a service counter that is only wide enough for one person will create queues. In turn these can block thoroughfares. If you don’t want these consequences then you have to consider how you can physically design and staff your service counter to minimise queues, or you need to design a queuing system that will reduce the clogging of your thoroughfare.

A common error that leaders make is when their team members behave or perform in ways that the leader doesn’t like, the leader blames their people. Systems Thinking teaches a different perspective.

First review the structures that might be causing the behaviours and/or performance results that you don’t like. You can identify when a systemic structure is operating when you have different people come in and out of a system but the behaviours and/or performance outcomes remain the same. Often (but not always) changes to your rules, policies, procedures and/or physical structures will change the behaviours and poor performance results that you are seeing.

Of course, humans are humans and it is possible to have the best possible structures in place and humans can choose to ignore them and do their own thing. But this is a rarity compared to a norm.

If you are experiencing poor behaviour and/or performance results from your team, consider assessing the systemic structures that may be influencing these outcomes before blaming your people. After all, who wants to end up being named in a government report for leading an industry that generates poor outcomes for its customers?

The Ten Characteristics of a Servant Leader

In 1970 Robert K Greenleaf first published his essay, The Servant as Leader. This essay catalysed a world-wide movement for Servant Leadership. I was fortunate to have been exposed to the essay and many other resources associated with Servant Leadership from 1997. As such I have educated my clients about the power of being a Servant Leader ever since.

Throughout the essay, Greenleaf references a set of characteristics that need to exist for a leader to be a true servant. In total there are ten characteristics and each of them are explained below.

An example of a company that practices Servant Leadership
An example of a company that practices Servant Leadership

Listening

True leadership starts with the ability to listen for understanding. This is different to listening for argument. When you listen for understanding you are genuinely interested in understanding where the other is coming from. This does not mean that you have to agree with their perspective, just that you are genuinely interested in understanding it. When you listen for argument, you are listening from the perspective of finding holes in another’s arguments so that you can shoot them down. You are right and they are wrong. Period. A Servant Leader works hard at developing their skills so that they can listen for understanding.

Empathy

Listening for understanding enables leaders to have an increased capacity to relate to those with whom they are interacting. While they might not completely understand the perspective of the people they are working with (there are times when it is not genuine to say I Understand when your life experience is so different from the person’s with whom you are speaking), a Servant Leader has empathy for them and considers the serious impact of their decisions on the people they serve.

Healing

Michele Hunt said that Leadership is a serious meddling in other people’s lives.

Servant Leaders need to be able to both heal themselves and the people they work with. Organisational life can create emotional hurt for people and leader’s need to have the ability to help people resolve their relationships with colleagues, customers and the organisation itself. Often healing is represented by the leader treating all the people they come into contact with in a respectful way. Too many employees have not been respected because of their position in the organisational hierarchy. A Servant Leader treats all people with the same level of respect irrespective of their role. In doing so a Servant Leader helps the people they serve become more whole themselves as they build respect for themselves.

Awareness

Each of the ten characteristics of a Servant Leader is interdependent. A Servant Leader is self-aware, aware of what is happening for the people they serve and aware of what is happening outside their organisation. Being aware does not guarantee a sense of peace for a Servant Leader. In fact it is the opposite. Awareness means that the leader is sharply awake and keenly disturbed at the same time. Through awareness the Servant Leader knows that the world is a not a perfect place but that it can always be improved.

Persuasion

The Servant Leader is able to persuade through genuine listening and dialogue. They use facts, the picture of the future they are creating with others and a clear and shared sense of purpose to help the people they serve to find and create the future they desire. Persuasion is not coercion. Positional authority is not the power that a Servant Leader uses to get their way. Instead a Servant Leader is able to influence those they serve through their genuine practice of the ten characteristics of a Servant Leader.

Conceptualisation

A Servant Leader is able to communicate what possible futures look like. They have the ability to see beyond the day-to-day realities of organisational life to the possible future that they and the people they are serving are striving to create. Most importantly this characteristic is not one where the future they describe is the one that they dreamed by themselves, rather it is the possible future that they are able to articulate on behalf of the collective view that emerges over time.

Foresight

Foresight is the ability to see multiple consequences of both action and inaction. A Servant Leader is acutely aware of the ripple effect of errors of omission. They understand that they have an ethical responsibility to take action when they have the freedom to take action, even if that action is difficult.

Stewardship

Organisations and institutions do not exist to make heroes of their leaders. Servant Leaders understand that they have a duty to serve their organisation so that it is in better hands for the next generation of leaders. The organisation and the institution are bigger than the leader. This mental model is essential if you wish to be a true Servant Leader.

Commitment to the Growth of People

A Servant Leader aims to have the people they serve become more autonomous or at the very least not to be worse off as a result of their leadership. They strive to help people to find and develop their talents and celebrate in their success, even when this may mean (at times) those people leave the organisation.

Building Community

A Servant Leader is acutely aware that humans require a sense of belonging to help maintain their mental well-being. To this end Servant Leaders work at bringing people together and fostering a sense of community and understand that building community is created one person, one-act at a time.

Servant Leadership is not confined to community, not-for-profit and government agencies. Quite the contrary. Many successful for profit organisations are explicit in their application of Servant Leadership. Three explicit examples include Vanguard, Southwest Airlines and TDIndustries.

If you would like to explore how Servant Leadership can be introduced to your organisation please contact me here.

Gary Ryan enables organisations, leaders and talented professionals to move Beyond Being Good.

Gary Ryan

The Ten Characteristics of a Servant Leader

In 1970 Robert K Greenleaf first published his essay, The Servant as Leader. This essay catalysed a world-wide movement for Servant Leadership. I was fortunate to have been exposed to the essay and many other resources associated with Servant Leadership from 1997. As such I have educated my clients about the power of being a Servant Leader ever since.

Throughout the essay, Greenleaf references a set of characteristics that need to exist for a leader to be a true servant. In total there are ten characteristics and each of them are explained below.

An example of a company that practices Servant Leadership
An example of a company that practices Servant Leadership

Listening

True leadership starts with the ability to listen for understanding. This is different to listening for argument. When you listen for understanding you are genuinely interested in understanding where the other is coming from. This does not mean that you have to agree with their perspective, just that you are genuinely interested in understanding it. When you listen for argument, you are listening from the perspective of finding holes in another’s arguments so that you can shoot them down. You are right and they are wrong. Period. A Servant Leader works hard at developing their skills so that they can listen for understanding.

Empathy

Listening for understanding enables leaders to have an increased capacity to relate to those with whom they are interacting. While they might not completely understand the perspective of the people they are working with (there are times when it is not genuine to say I Understand when your life experience is so different from the person’s with whom you are speaking), a Servant Leader has empathy for them and considers the serious impact of their decisions on the people they serve.

Healing

Michele Hunt said that Leadership is a serious meddling in other people’s lives.

Servant Leaders need to be able to both heal themselves and the people they work with. Organisational life can create emotional hurt for people and leader’s need to have the ability to help people resolve their relationships with colleagues, customers and the organisation itself. Often healing is represented by the leader treating all the people they come into contact with in a respectful way. Too many employees have not been respected because of their position in the organisational hierarchy. A Servant Leader treats all people with the same level of respect irrespective of their role. In doing so a Servant Leader helps the people they serve become more whole themselves as they build respect for themselves.

Awareness

Each of the ten characteristics of a Servant Leader is interdependent. A Servant Leader is self-aware, aware of what is happening for the people they serve and aware of what is happening outside their organisation. Being aware does not guarantee a sense of peace for a Servant Leader. In fact it is the opposite. Awareness means that the leader is sharply awake and keenly disturbed at the same time. Through awareness the Servant Leader knows that the world is a not a perfect place but that it can always be improved.

Persuasion

The Servant Leader is able to persuade through genuine listening and dialogue. They use facts, the picture of the future they are creating with others and a clear and shared sense of purpose to help the people they serve to find and create the future they desire. Persuasion is not coercion. Positional authority is not the power that a Servant Leader uses to get their way. Instead a Servant Leader is able to influence those they serve through their genuine practice of the ten characteristics of a Servant Leader.

Conceptualisation

A Servant Leader is able to communicate what possible futures look like. They have the ability to see beyond the day-to-day realities of organisational life to the possible future that they and the people they are serving are striving to create. Most importantly this characteristic is not one where the future they describe is the one that they dreamed by themselves, rather it is the possible future that they are able to articulate on behalf of the collective view that emerges over time.

Foresight

Foresight is the ability to see multiple consequences of both action and inaction. A Servant Leader is acutely aware of the ripple effect of errors of omission. They understand that they have an ethical responsibility to take action when they have the freedom to take action, even if that action is difficult.

Stewardship

Organisations and institutions do not exist to make heroes of their leaders. Servant Leaders understand that they have a duty to serve their organisation so that it is in better hands for the next generation of leaders. The organisation and the institution are bigger than the leader. This mental model is essential if you wish to be a true Servant Leader.

Commitment to the Growth of People

A Servant Leader aims to have the people they serve become more autonomous or at the very least not to be worse off as a result of their leadership. They strive to help people to find and develop their talents and celebrate in their success, even when this may mean (at times) those people leave the organisation.

Building Community

A Servant Leader is acutely aware that humans require a sense of belonging to help maintain their mental well-being. To this end Servant Leaders work at bringing people together and fostering a sense of community and understand that building community is created one person, one-act at a time.

Servant Leadership is not confined to community, not-for-profit and government agencies. Quite the contrary. Many successful for profit organisations are explicit in their application of Servant Leadership. Three explicit examples include Vanguard, Southwest Airlines and TDIndustries.

If you would like to explore how Servant Leadership can be introduced to your organisation please contact me here.

Gary Ryan enables organisations, leaders and talented professionals to move Beyond Being Good.

Do the right thing – even if you are doing it wrong!

The following quote comes from one of my heroes Russell Ackoff, Professor Emeritus of the Wharton Business School. Among the many reasons why I like Russell so much, none the least was that he wasn’t afraid to make up words!

“Doing the right thing wrong is better than doing the wrong thing right. If you do the wrong thing right you just get wronger and wronger and take yourself further away from wherever you want to be.”

I don’t believe that I need to add much more to Russell’s statement, other than to suggest that you stop doing any ‘wrong things‘ that you may be doing ‘right‘.

Gary Ryan enables individuals, teams and organisations to matter.
Visit Gary at http://garyryans.com

The Challenge of Multiple Purposes For Management Team Members

Recently, when talking with a client it became evident that when in Management Team meetings he was first a representative of his department, rather than first seeing himself as a leader of the whole organisation. Below is the dialogue from that conversation.

GR: “How do you believe the other members of the Management Team view their roles?”

Client: “Based on their behaviour, I’m one hundred percent confident that they would have the same perspective as me. None of them would see themselves as leaders of the company first.”

GR: “When there is a problem that exists within the business, how is that problem approached from a Management Team perspective?”.

Client: “Well if there was a problem with my area, for example, I would be asked what I was doing about fixing the problem.”

GR: “What if you didn’t know what to do?”

Client: “I’d have to work it out, or at least that would be the perspective that I would take.”

GR: “Being brutally honest, if your colleagues continued to question you about the problem but you didn’t have an answer, what would happen to your level of defensiveness?”

Client: “Oh, that’s easy. It would go through the roof!”

Gary Ryan, Organisations That Matter, Yes For Success, leaders, leadershipThis conversation highlights a dynamic that exists in far too many Management Teams. The team members see themselves and their colleagues as representatives of departments, not as leaders of the whole organisation first.

Such a view can lead to the following behaviours that can hinder an organisation from achieving high performance:

  • When problems arise they are to be solved from within the area from within which the problem arose
  • Team members wait for their turn to speak to the issues that relate to their department
  • Team members do not actively participate in attempting to solve problems that arise from departments that are external to their own
  • Avoidance of discussing issues that might reflect negatively on the performance of the managers themselves

Senior Managers need to be able to work from the perspective of dual purposes at the same time. While they are responsible for their department they are also responsible for the whole of the organisation as well, including the departments of which they are not directly responsible.

When Senior Managers are able to do this then they are able to genuinely inquire into and offer suggestions for problems that arise from departments outside of their own. In fact, they wouldn’t even see the problem as being, “…out of their area”. Rather, they would understand that due to the interactions and interdependence between departments that they would have an equal level of responsibility with their Management Team colleagues to solve these types of problems together.

This is not to say that Senior Management should abdicate responsibility for the problems within their own departments. Of course they need to be doing everything they can to solve them. At times, however, the problems will be of a type that require the assistance of their fellow Senior Team members if the problems are to be solved and/or effectively managed.

As Russell Ackoff used to say, it is not the efficiencies of the parts of a system that lead to high performance, rather it is the quality of the interactions between the parts of the system that matter the most. At a Management Team level this means that problems need to be addressed by the team as a whole, rather than being pushed back to being solved at the department level from which the problem was believed to have originated. The issue with the second approach is that just beacause a problem appears to have originated from a particular department, doesn’t mean that it actually originated from that department.

What capability does your Manatement Team have to manage the challenge of multiple purposes?

Are problems at the Management Team level in your business addressed as team problems, or are they addressed as problems for the respective departmental managers to solve?

Gary Ryan enables talented professionals, their teams and organisations to Move Beyond Being Good.
View a TedX Talk by Gary here.

Systems Thinking Explained by Dr Peter Senge

Peter Senge, Senior Lecturer at Massachusetts Institute of Technology (MIT), and Founding Director for the Society of Organisational Learning explains, in simple terms, what “Systems Thinking” is and how to use its principles for solving complex problems.

According to the Employability Skills for the Future report by the Australian Government (2002), Systems Thinking is considered a critical leadership skill. Yet it isn’t being taught to leaders.

Understanding this skill and developing it as one of your leadership capabilities is a high leverage activity that will enahnce your career. This short video is a terrific way to commence your understanding of this topic and you can also access other articles I have posted here.

Gary Ryan enables individuals, teams and organisations to matter.
Visit Gary at http://garyryans.com

Russell Ackoff on “Beyond Continuous Improvement”

Over time I like to share insights on Systems Thinking and there is no one better than the late Russell Ackoff to learn from. He is humurous (his introduction is a classic) and has a way of explaining Systems Thinking that makes it accessible.

In a world where continuous improvement is a maxim of most organisations, enjoy this short speech.

Gary Ryan enables individuals, teams and organisations to matter.
Visit Gary at http://garyryans.com

Systems Thinking – The story of stuff

If you would like to gain a quick understanding of how Systems Thinking works from a practical perspective, watch this short animated video hosted by Annie Leonard.
It explains why things are designed to be replaced relatively quickly, and what can be done (and is being done) to improve this situation.

What are your thoughts on the system as it is described here?

Gary Ryan enables individuals, teams and organisations to matter.
Visit Gary at http://garyryans.com

US Postal Service decline highlights why Systems Thinking is critical

‘Systems Thinking’ is a critical leadership skill according to research by the Australian Government that included the Australian Chamber of Commerce and Industry (ACCI) and the Business Council of Australia (BCA). Yet Systems Thinking is only taught in two of Australia’s universities – Monash University and the University of Queensland.

According to a US Government report, The US Postal Service is in peril. In simple business terms its expenses consistently outweigh its income and the gap is getting wider, not smaller.

When the researchers asked for the organisations 10 year plan none was forthcoming. Let’s put the size of this organisation into some perspective. It has 571,566 employees. Imagine the economic and social impact if the US Postal Service was to shut down.

I share this example because it highlights the importance of Systems Thinking. In simple terms Systems Thinking is about understand how everything is connected, that the world does not operate in straight lines and that all systems have limits.

Systems Thinking also teaches us that small changes in one part of a system can have an enormous affect on other parts of the system. We only have to consider our global financial markets to see how this occurs on a daily basis.

In terms of the US Postal Service rather than being proactive regarding significant systemic changes, such as email, they have been reactive. As an example they have consistently relied on ‘First-Class’ mail to subsidise their losses from traditional mail services. Yet their ‘First-Class’ services have been declining at an alarming rate over the past 6 years.

With no plan in place or capacity to ‘see what was coming’ the US Postal Service leaders have failed.
In terms of your development as a leader it is critical that you expose yourself to learning about Systems Thinking, even if you have to lead your own development on this topic. It is one of the reasons I included two chapters specifically on Systems Thinking topics in my book What Really Matters For Young Professionals!
As a start, you might like to review the articles that I have posted on this topic over time. You can access the articles here and here.

Gary Ryan enables individuals, teams and organisations to matter.
Visit Gary at http://garyryans.com

Russell Ackoff shares the fundamentals of Systems Thinking

Russell Ackoff is a champion of Systems Thinking and one of the most respected experts on this topic while he was alive.

The Australian Government recognises Systems Thinking as a critical skill that relates to leadership. Yet very few people know what Systems Thinking is.

In the two short videos below, Russell explains the history and fundamental principles of Systems Thinking.

After viewing the videos, consider how Systems Thinking affects how you see the world and how it works, particularly with regard to how organisations work.

Part 1

Part 2

Gary Ryan enables individuals, teams and organisations to matter.
Visit Gary at http://garyryans.com