PRISONERS OF THE SYSTEM OR PRISONERS OF OUR OWN THINKING?

A key conversation that happens each time the beer game is played:  “No, you don’t
understand,” says the retailer.  “The demand never mushroomed.  And it never died out.  We
still sell eight cases of beer – week after week after week.  But you didn’t send us the beer
we wanted.  So, we had to keep ordering, just to make sure we had enough to keep up with
our customers.”

If literally thousands of players, from enormously diverse backgrounds, all generate the same
qualitative behavior patterns, the causes of the behavior must lie beyond the individuals.  
The causes of the behavior must lie in the structure of the game itself.

Principles of Systems Thinking:
When placed in the same system, people however different, tend to produce similar results.  
The system causes its own behaviour.  The systems perspective tells us that we must look
beyond individual mistakes or bad luck or personalities and events to understand important
problems.  We must look into the underlying structures which shape individual actions and
create the conditions where types of events become likely.

The term structure does not mean the “logical structure” of a carefully developed argument or
the reporting “structure” of an organization chart.  Rather “systemic structure” is concerned
with the key interrelationships that influence behaviour over time.  There are not
interreationships between people but among key variables, such as population, natural
resources, and food production in a developing country or engineer’s product ideas and
technical and managerial know-how in a high-tech company.

In the beer game, the structure that caused wild swings in orders and inventories involved
the multi-stage supply chain and the delays intervening between different stages, the limited
information available at each stage in the system, and the goals, costs, perceptions and fears
that influenced individuals’ orders for beer.  But it is very important to understand that when
we use the term “systemic structure” we do not just mean structure outside the individual.  
The nature of structure in human systems is subtle because we are part of the structure.  
This means that we often have the power to alter structures within which we are operating.  
However more often than not, we do not perceive that power.  In fact, we usually don’t see
the structures at play much at all.  Rather we just find ourselves compelled to act in certain
ways.  How can such controlling structures be recognized?  What exactly, does it mean to say
that structures generate particular patterns of behaviour?  How would such knowledge help us
to be more successful in a complex system?

The beer game provides a laboratory for exploring how structure influences behaviour.  The
characteristic patterns of overshoot and collapse in ordering and inventory-backlog cycles
occur despite stable consumer demand.  Initially after the game is over, many believe that the
culprits are the players in the other positions.  This belief is shattered by seeing that the
same problems arise in all players of the game, regardless of who is manning the different
positions.  Many then direct their search for a scapegoat toward the consumer.  “There must
have been a wild buildup and collapse in consumer demand,” they reason.  But when their
guesses are compared with the flat customer orders, this theory is a show down.  Such
assumptions of an “external cause” are characteristics of non-systemic thinking.

Once the team see that they can no longer blame one another, or the customer, the players
have one last resource - blame the system.  "It's an unmanageable system," some say.  "The
problem is that we couldn't communicate with each other."  Yet this too turns out to be an
untenable position.  In fact, given the "physical system" of inventories, shipping delays, and
limited information, there is substantial room for improving most team's scores.

Redefining your scope of influence

Success of the beer game requires a shift of view for most players.  It means getting to the
heart of fundamental mismatches between common ways of thinking about the game - our
mental models of it - and the actual reality of how the game works.  Most players see their job
as "managing their position" in isolation from the rest of the system.  What is required is to
see how their positions interact with the larger system.  What the typical "manage your
position" view misses is the ways that your orders interact with others' orders to influence
the variables you perceive as "external" and most perceive dimly.  To improve performance,
players must redefine their scope of influence.  As a player in any position, your influence is
broader than simply the limits of your own position.  In turn, your success is not just
influenced by your orders; it is influenced by the success of everyone else in the system.  
Moreover, each player must share this systems viewpoint - for if any single player panics and
places a large order, panics tend to reinforce throughout the system.

There are two key guidelines for players of the Beer Game:
    o        Keep in mind the beer you have ordered but which, because of the delay has not yet
    arrived.  "Take two aspirins and wait" rule.  Avoid ordering beer every week until your
    inventory discrepancy goes away.  But that will overshoot orders and backlog cycles thereby
    achieving as much as one-tenths of the typical costs.  This guideline comes from
    understanding the delay embedded in the response of your supplier's shipments to changes in
    your orders placed.

    o        Second don't panic.  When your supplier can't get the beer you want, take the discipline
    to contain the overwhelming urge to order more when backlogs are buildings and your
    customers are screaming.  This guideline comes from understanding the vicious cycle created
    when your orders placed exacerbate your supplier's delivery delay.

Learning abilities and our ways of thinking

All of the learning abilities operate in the beer game
And so long as they persist in focusing on events (week-by-week events and getting
overwhelmed by shortages of inventory, surges of incoming inventory and disappointing
arrivals of new beer), they are doomed to reactiveness
The systems perspective shows that there are multiple levels of explanation in any complex
situation and in some sense, all are equally “true”
Events explanations:  “Who did what to whom” – doom their holders to a reactive stance.  
Event explanations are the most common in contemporary culture, and that is exactly why
reactive management prevails.
Patterns of behaviour explanations:  These focus on seeing longer-term trends and assessing
their implications (e.g. production / distribution systems are inherently prone to cycles and
instability and becomes more severe the further you move from the retailer.  Therefore
sooner or later, severe crises are likely at the brewery).  These explanations begin to break
the grip of short-term reactiveness.  At least they suggest how over a longer term, we can
respond to shifting trends.
Structural explanations:  This is the least common and most powerful.  It focuses on answering
the question, “What causes the patterns of behaviour?”  It must show how the various parts
of the system (orders placed, shipments, inventory, delays):
    o        Interacts to generate the observed patterns of instability and amplification
    o        Take into account the effects of built-in delays in filling new orders placed
    o        Vicious cycles that arises when rising delays lead to more orders placed
    Though rare, structural explanations when they are clear and widely understood, have
    considerable impact
The reason that structural explanations are so important is that only they address the
underlying causes of behaviour at a level that patterns of behaviour can be changed.  
Inherently, structural explanations are generative.
The deepest insight of the beer game is when they realize that their problems, and their
hopes for improvement are inextricably tied to how they think.  Generative learning cannot
be sustained in an organization where event thinking predominates.  It requires a conceptual
framework of “structural” or systemic thinking, the ability to discover structural causes of
behaviour.  Enthusiasm for “creating our future” is not enough.
As players come to understand the structures that cause its behaviour, they see more clearly
their power to change that behaviour, to adopt ordering policies that work in the larger
system.
They also discover a timeless wisdom: “We have met the enemy, and he is us
Jay Forrester
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picture for
more details
John
Sterman -
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picture for
more details
Guide to web-based Beer Game, click here:  http://beergame.mit.edu/guide.htm

Purchasing Beer Game sets: http://www.albany.edu/cpr/sds/Beer.htm
People
playing the
game
Typical Results!