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
- click on the
picture for
more details
John
Sterman -
click on the
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

For SoL Guide to the Beer Game click here.
People
playing the
game
Typical Results!