Hunting for Leverage Points in Partnerships
How Systems Thinking can be used to hunt for leverage points and improve partnerships. Abbreviated version available over at PartnerHacker!
Key Points:
· Dana Meadows of the MIT Systems Dynamics Group presents a novel vocabulary to understand Systems as Stocks, Flows, and Feedback Loops
· Leverage Points such as Information Flows, incentives, paradigms, and mindsets are powerful approaches to enact change
· These powerful tools are specifically useful for optimizing the vast sub-systems across Strategic Alliances and Partnerships
The book Thinking in Systems: A Primer had been on my reading list for a long time. It’s a part of Pariveda’s unofficial canon of reading materials, and you‘ll find a copy in every one of our offices across North America.
Let’s be honest, the title itself sounds marginally more interesting than watching paint dry. I had expected it to be dense and overly abstract. However, the reality is that it was a digestible read that leverages visuals to explain complicated subjects.
Thinking in Systems: A Primer was originally written by Donella (Dana) H. Meadows within the MIT Systems Dynamics Group. Born in Elgin, Ill., she graduated from Carleton College in Minnesota in 1963, received a doctorate in biophysics from Harvard University in 1968, and is cited as a a top Sustainability thinker by the Post Growth Institute. Meadows illustrates the fundamental concepts in a non-technical fashion by detailing perhaps the most complex, global systems that we know of. She inspects the interplay of population health, pandemics, drug development, addiction, and the spread of disease. She also uses a systems lens to pose some heavy “what if” questions about the dynamics of politics, oil consumption, global economics, and of course sustainability.
At Pariveda “Systems Thinking” is a core to what it means to be an Architect. It represents the competency to discover, break down, arrange, design and manipulate components and dependencies. Projecting forward to the end of this article, my day-to-day focus is to lead our alliances & ecosystems. This arena is far more bounded and straightforward than the above metasystems that Meadows focuses on. However, she created some fantastic tools that we’ve used to shape our approach here at Pariveda.
In the following article, I’ll lay out Meadows’ core concepts, define the systems in play, and share some results about how we hunt for Leverage Points to improve our Partnerships. The set of systems which I’ll reference in this article consists of generally five primary enterprise sub-systems in the world of services and consulting — Marketing, Sales, Project Delivery, Solutions & Offers (Product), and Talent Development. In the wild, most alliances & partnerships focus is on the Marketing / Sales / Product trifecta. For this article I decided to switch it up a bit and shine a light specifically on the interplay within Talent Development through Certification Programs. For the most part, Software / SaaS Companies do not participate broadly in Certification programs. Instead, they create them! On the flip side, Agencies / Consulting / Systems Integrators are often the biggest participants. Hence, these are undoubtedly a core focus for us and we believe they are a differentiator for us in how quickly and effectively we can grow and deploy the highest-caliber talent for our customers at scale. So, throughout this article you’ll see me refer to Pariveda’s Certification systems as the primary example. However, I encourage you to apply these concepts to whatever systems you primarily operate in or own.
Core Concepts (Stocks, Flows, Delays, and Constraints)
All of these resources — originally created by Meadows — are available over at https://donellameadows.org/.
Stocks and Flows are the foundation of any system. Stocks are the elements of the system that you can see, feel, count, or measure at any given point in time. The most common examples are typically water in a bathtub or the temperature in a room. Differently, a Flow is something either tangible or intangible that changes over time by coming into or leaving a Stock. In the bathtub example, it would be the inflow of water from the faucet or the outflow through the drain.
An applied example of Stocks and Flows is how we manage Partner Certifications and Learning Programs. These are validated achievements that individuals study for and earn by passing exams for Microsoft Expert DevOps Certification, or an AWS Certified Cloud Practitioner.
Certified, knowledgeable teams are the lifeblood of our ability to design and build software systems for our clients and are generally table stakes for a strategic alliance. Firstly, our employees see Certifications as an opportunity for personal growth and learning. Our clients also demand these deep skillsets from us as architects, implementers, and advisors. So, you can imagine this is something we pay close attention to and monitor to make sure we have the right balance of supply and demand. The two main inflows of this type of Stock are experienced hires with existing certifications, and net-new certifications that employees study for and earn.
On first pass, this should seem straightforward with predictable behaviors… and that’s true. However, complexity arises because of scale and magnitude. Certifications come in different tiers and difficulties, which require different training plans. A more realistic look at how you would measure Certification Stock might look like this, representing multiple practices and multiple categories.
Now, I wish I could snap my fingers and have folks learn as fast as Neo learns kung fu in The Matrix. But this is where Constraints and Delays come into play. Constraints are simply limitations, either virtual or physical, like warehouse space. With Certifications, for example, we will never have more Certifications than the number of employees. This may seem inconsequential. However, technology companies will often create what are called “precious metals” Bronze / Silver / Gold programs to tier partners in terms of their depth of capability. They will require a minimum number of obtained Certifications (sometimes 25+ Certifications for the highest tier). This becomes a bigger challenge for smaller / niche partners.
Slightly different, Delays are also critical determinants of system behavior. For our ongoing example, it takes much longer to study for and pass an exam for a Professional-grade Certification than an introductory exam like the Cloud Practitioner. An introductory Certification like the AWS Cloud Practitioner can be passed after about 20 hours of self-study. However, achieving a Professional Certification can take years, and requires hands-on experience. No doubt this is again easy to recognize, but it makes planning and forecasting surprisingly more complicated with diverse skillsets.
There are many scenarios where inserting and controlling Delays can be a huge benefit to the overall System by preventing overcompensation and knee-jerk reactions. This is particularly true with phenomena like the bull-whip effect, a challenge within inventory and supply planning where there can be wide, inefficient swings in inventory based on delays in demand / forecast signals.
Go figure that Jay Forrester, the founder of systems dynamics, was also at MIT Sloan and the Systems Dynamics Group. He coined this term and was a significant influence on Meadows as a mentor. Small world!
Here’s a visualization of Pariveda’s internal training plans we’ve created to guide employees through these different learning journeys. As you can see, there is a wide range in time / effort to complete different Certifications, which needs to be accounted for when planning for the appropriate threshold of Certified individuals we should strive for at any given time. While it may not be applicable to Certifications, the notion of intentional Delays by design is a fascinating concept.
But even with training plans defined, what is the correct / appropriate amount of Certifications (Stock) we should have? How often should we even measure it? How should we define what an appropriate threshold of Stock is, in this case for Certifications? Welcome to 200-level Systems Thinking, where Feedback Loops and Leverage Points come into play.
Feedback Loops
According to Meadows, a Feedback Loop is a closed chain of causal connections from a Stock through a set of decisions, rules, physical laws, or actions that are dependent on the level of stock, and back again through a Flow to change the Stock. Recognizing a Feedback Loop would look something like this, where we are comparing our desired Certification Stock with the actual Stock, recognizing the Discrepancy from our Goal, and doing something to create an inflow of new Certifications.
This is an example of a Stabilizing / Balancing Feedback Loop. This type is goal-seeking or stability-seeking. It takes a constant effort or grind to monitor outflows and manage the inflows of our Stock of Certifications. In this case, the Stock can either go to 0 Certifications, or to its Constraint (the total number of employees). This contrasts with a Runaway / Reinforcing Feedback Loop which is self-enhancing, leading to exponential growth or to runaway collapse over time. This type of feedback loop is found whenever a Stock has the capacity to reinforce or reproduce itself. If only Certifications gained momentum like a ball rolling down a hill, or were as contagious as a cold!
Zooming out, our Goal for Certification Stock is dynamic, which changes over time based on multiple inputs which could be internal, external, or both. There is no right answer, but an example is that an ideal Stock level could be informed by Sales Projections / Demand for a specific set of skills. We could also inform this Feedback Loop with external market forces or intel about the competitive landscape. The possibilities are virtually endless, but the important thing is to keep it simple. We could inadvertently create a Rube Goldberg-esque system with too much overhead and intricate Feedback Loops.
Another great question to ask is, how often should we measure against this Feedback Loop? It all depends on the dynamics of the system. Measuring Certification Stock on an hourly or daily basis is probably overkill and a waste of time. However, if we only measure Certifications every month or quarter, we might not have enough time to react because of the Delays present in Training Plans! A key takeaway is that there is no silver bullet here, and it depends on intimately understanding the dynamics and principles in play within our systems and sub-systems. For example, if we are monitoring the Stocks and Flows of Marketing activity such as Impressions, Clicks, and MQLs… we will certainly take a vastly different approach.
Hunting for Leverage Points
This next part is my favorite. Now that we understand the nuts and bolts of Stocks, Flows, and Feedback Loops… there is one last concept to make note of, Leverage Points. Instead of just defining an existing system, leverage points are the tools we have to tinker with and change systems. More specifically, Leverage Points are approaches to intervene in a system so that we can optimize for the outcomes we want while minimizing unintended consequences or byproducts. Meadows argues that there are twelve archetypal ways to intervene in any system through leverage points. There is some language here that I haven’t covered, and may seem less relevant to Partnerships. Keep in mind that while we are learning about these tools for the purposes of improving Partnerships, the original systems lens comes from global metasystems like ecology, population health and global politics. However, give it a read:
Places to Intervene in a System
(in increasing order of effectiveness)
12. Constants, parameters, numbers (such as subsidies, taxes, standards).
11. The sizes of buffers and other stabilizing Stocks, relative to their Flows.
10. The structure of material Stocks and Flows (such as transport networks, population age structures).
9. The lengths of delays, relative to the rate of system change.
8. The strength of negative Feedback Loops, relative to the impacts they are trying to correct against.
7. The gain around driving positive Feedback Loops.
6. The structure of information flows (who does and does not have access to information).
5. The rules of the system (such as incentives, punishments, constraints).
4. The power to add, change, evolve, or self-organize system structure.
3. The goals of the system.
2. The mindset or paradigm out of which the system — its goals, structure, rules, delays, parameters — arises.
1. The power to transcend paradigms.
Boom. Apparently as the story goes, Meadows simply walked up to a whiteboard one day and wrote all this down as a brain dump. Absolutely brilliant thinking. Certainly there is plenty to consider in terms of the “how” do we safely experiment and implement these changes through mechanisms like A/B testing, rollout plans, communication strategies, etc. However, there is so much goodness here to absorb here with the actual “what” side of things.
Taking this a step further, it seems these Leverage Points actually fall neatly into a hierarchy of component-level, sub-system, and systematic approaches.
What’s a better name… A Hierarchy of Leverage Points, or Porter’s Partnership Pyramid of Greatness? I see you Ron Swanson… ;)
In all seriousness, I recommend giving Meadows’ full article on Leverage Points a read for more details. Frankly, there is so much more to this topic. When is a given Leverage Point most appropriate for a scenario? How do we hunt for the best opportunities to apply a Leverage Point? In my mind it’s far more art than science. To round out this article, I’ll make a few comments on the successes we’ve had with a few specific types of leverage points, specifically information flows, goals, mindset shifts, and self-organization.
Information Flows — The Lowest Hanging Fruit
Information flows are the structure of who does and does not have access to information. We found that we were inadvertently missing several key information flows that could have been driving visibility and behavior change with respect to our Certification systems, with minimal effort. So, we focused on a handful of key personas and communication strategies:
Geographical Leadership — Our offices across North America are competitive. When we started showing a simple Certification Report by Office, we found that this immediately drove buy-in from the top down through project leads, mentors, and local Champions who stepped up to help us drive the effort with their presence.
Peer Groups — Peer study groups became a tremendous way for us to instill accountability and get more people through training programs efficiently. A key information flow we created was to give our folks access to a directory of ongoing study groups, target exam dates, and upcoming partner-led trainings. These have been critical momentum builders for our Certification Stock.
In addition, FOMO is a big driver of behaviors. So, we use information flows to our advantage here as well. We give every newly Certified individual the spotlight to share their unique perspective on what motivated them to get Certified, share something new they learned, and how they plan to use their new knowledge in the future. This new information flow not only fosters a culture of learning and celebration, but the proof is in the numbers. Certifications Earned are up 147% year-over-year by making our folks famous for their achievements.
Goals, Mindset Shifts, and Self Organization
Historically we used rewards like ~$500 to achieve a Certification. While we sometimes use these in a pinch, we saw a noticeable improvement when we de-emphasized this incentive and shifted the goals and mindset of our teams towards personal development, cameraderie, and recognition. Getting a Certification is not just a check-the-box effort. Instead, it is a part of your career growth, finding like-minded peers, and achieving your fullest potential.
By far, one of the most powerful forms of system design is to empower self-organization, which is the ability for a system to structure itself, create new structures, learn, diversify, and complexify. With the right metrics defined and information flows established, self-organization promises to help us evolve to the next level. I’ve seen smaller Certification study groups splinter off to focus on Security, Machine Learning, and cross over into new solutions / offer development. The challenge here is maintaining Feedback Loops, and harvesting the lessons learned.
Conclusion — A Fundamental Mindset Shift is Already Underway in Partnerships
It goes without saying that there is so much more to Systems Thinking than this brief article, but hopefully this quick overview of Stocks, Flows, Feedback Loops, and Leverage Points gives you a starting point with tools that can improve Partnerships across not just training / talent development, but also product, marketing, sales, and customer success.
Much of this is already happening though. For example, we are seeing organizations like Crossbeam and WorkSpan reduce Delays and unlock sophisticated Information Flows of Stocks like Accounts, Prospects, MQLs, and Opportunities between companies. The rules are changing too, with sales and customer success executives given goals and directly incentivized to work more closely with partners of different types.
However, most importantly there is already a fundamental Mindset / Paradigm shift happening in Partnerships. Nobody embodies this voice more than the folks at PartnerHacker. Look no further than their PartnerHacker principles of “The First Giver Wins,” “Build Radical Generosity into your Culture,” and of course “Trust is the New Data.” These are fundamental paradigm shifts within the partner community that clearly favor the collective over the individual. This is all happening through a very-fast growing, and self-organizing community of partnership professionals.
With that in mind… happy hunting for the Leverage Points in your own Partnership Systems! I’d love to hear about which ones you find, and the impact you’re able to drive.
Thank you to Emma Ascolese for the editorial support!
