Addressing social and environmental problems through System Thinking: from Praxis to Theory with Social Business

Author- Md Nazmus Sakib Khan

As we conduct and consult impact-driven social business projects amid the current COVID-19 pandemic, we were many times faced with the need to widen our perspective and view the social and environmental problems that we try to solve with social business in a different and deeper way. We as development practitioners sometimes tend to forget how things are interconnected and transcend sectors and areas of work and how systemic thinking approaches are more than ever needed to comprehend the complexities of global and local issues, structures, organizations, and above all of this unique and complex in nature crisis in which we are in.

In this article, we would like to guide you towards some of the systems thinking techniques that we use in our projects to understand complex problems and global issues that our community tries to solve through social business.

Systems Thinking and its applications.

Systems thinking is a fixed set of synergistic and cognitive methods used to enhance the capability of recognizing and comprehending the complexities in structures, forecasting their behaviors, and introducing specific changes to them so that it will produce preferred effects with the most quantity and highest efficiency. Systems Thinking is one of the methodologies that allow practitioners to apprehend how accurately factors or institutions of factors present inside a selected gadget or information set, have an impact on one or any other components present in the system, and the way their respective moves coordinate with each other.

It has been said that skillful use of systems thinking skills could have prevented disasters such as the Second World War, the Great Depression, unique events like the Challenger space shuttle disaster, as well as helped to mitigate the tangible effects of significant major environmentally destructive events and who knows, maybe even the COVID-19 pandemic. In today’s world, systems thinking is being extensively used to increase the quality and efficacy of health care, establishing new methods of sustainability in the global economy, introducing novel usage of advanced technology, regulating and curbing crime through the lens of jurisprudence and law, and improve international and interpersonal relationships between nations and communities.

Systems Thinking has its basis in Bertalanffy’s General Systems Theory. Over the course of time, this principle has been experimented with and carried out in a huge variety of interdisciplinary fields and educational areas. Practitioners within the subject of Systems Thinking agree that the Systems Thinking framework has great potential in fixing complicated troubles that cannot be solved through the usage of conventional reductionist and one-way questioning. It may be used to explain dynamic and non-linear behaviors like marketplace reactions to new product introductions or inter-personal relationships; to understand complicated socio-economic problems; and to interpret the behaviors of individuals, nations, or even big corporate organizations like Microsoft or Google.

At The Grameen Creative Lab, like some academics and practitioners, we have been using systems thinking to introduce new educational systems and to assess the socio and environmental problems that social business tries to solve through the lenses of a set of assessable, interlinked, and comprehensible mechanisms.

One of our latest applications of the method was during a series of workshops that we created for the S?id Business School of the University of Oxford and the Skoll Centre of Social Entrepreneurship for the Map the System Competition and that was presented by our CEO Hans Reitz and Managing Partner Maria Ida Palmieri.

There, we applied different techniques to analyze our social business cases from the Iceberg Model to Behavior over Time, Feedback Loops, and Connected Circles.

The Iceberg Model

In this article we would like to give you some basic knowledge about the Iceberg Model that allows analyzing problems in a systemic and guided way starting from its specific observable event, digging then into understanding associated structures and deep mental models, and decoding numerous transformative answers and patterns over time.

The following 4 simple degrees can guide a systemic analysis:

1) “What happened?” – what is observable approximately the occasion on the pinnacle of the clean iceberg

2) “What tendencies have there been over time?” – what are the patterns related to the specific event observed

3) “What affects the patterns?” – what are the underlying structures behind?

4) “What assumptions, ideals, and values do humans maintain approximately the gadget?" / “What ideals hold the gadget in location“ – what are the mental models and human attitudes influencing a specific problem or behavior.

It can also be useful to move up and down between these levels and improve the model and the analysis throughout the process by understanding interconnected elements and cause and effect relationships among the various events identified at the various levels.

The Iceberg Model applied: The Grameen Bank Case

Let′s adopt our “From Praxis to Theory” approach to guide you in understanding the Iceberg Model through one of the social business cases that we presented during the Map the System competition at Oxford University, the Grameen Bank in Bangladesh.

Let′s start our analysis from the point of view of a resilient woman in Bangladesh in the 70s, named Sofia Begum.

Sofia Begum is a poor woman from the village of Jobra (Bangladesh) who works diligently every day to manufacture beautiful woven stools out of raw bamboo. Despite her diligence and talent, she was living in extremely poor conditions, unable to improve her livelihood by the slightest degree.

So, what is the problem? Obviously, women in particular (in rural Bangladesh and other emerging economies), whether or not they are energetic and talented in their business, can’t escape from a state of poverty and destitution.

Is Sofia an isolated case? Let’s explore the income distribution in Bangladesh at that time. In our case, Sofia was by far not the only one suffering from the effects of poverty. This visualized data from a 1981 World Bank report on Income Distribution in Bangladesh shows that >80% of Bangladeshis, rural and urban, were living with under $1,55/day.

Thankfully, poverty in Bangladesh has been drastically reduced since then. Partly, this is thanks to the efforts of Grameen Bank and NGOs working in the field of financial inclusion to enable economic development from the bottom of the economic pyramid. Let's see how they analyzed and transformed the system that had kept millions of people in the fangs of poverty for too long.

Now we have a vivid picture of the situation of a major proportion of Bangladeshis in the 1970s and the 1980s. But what was the reason for such a massive problem? How are the socio-economic structures that have caused the observed behavioral patterns designed?

We can discover it through searching at what regulations, laws, or bodily systems are in a location or possibly lacking and importantly in trying to define the relationships between various parties.

As we remember our friend Sofia, her craft required to have raw bamboo. But she was so poor that she could not even bring up the 20 cents needed to purchase that on her own.

She could not access usual formal banking systems to get a loan to afford those 20 cents and that is why she had to commit to a dadan arrangement: A Paikar, so-called middleman or loan shark, would borrow her 20 cents so that she could purchase the raw material and pursue her craft of creating bamboo stools. At the end of the day, she would have created another great quality product, but the present arrangement existing within the socio-economic systems would prevent her to sell it to the market herself. Instead, she had to give her product to the Paikar for the settlement of her debt, + 2 cents. Now the Paikar could take the product she created to the market and sell it for multiple.

But why did Sofia need to interact with those predatorial casual cash lenders? What is the basic motive of her misery? Shocked through the absurdity of ways a loss of 20 cents can hold an individual from thriving, Professor Yunus Muhammad, our founder, and social business leader, went to speak to executives of Commercial Banks, explaining the situation of women like Sofia “Why don't you lend money to the poor village people?”, he asked. The bank executive explained to him the policies that formal money lending institutions such as commercial banks had in place, that prevented the banking system to lend money to risky individuals who had no assets to hold as collateral.

The banking system had erected this wall of collateral, an insurmountable structure for the poor, denying them any access to formal credit. This circumstance of financial exclusion forced them to engage with the predatory informal moneylenders, forcing them straight into an inescapable vicious cycle.

To really get to the fundamental core of problems present in a system, practitioners should understand the structures and ask why are the structures built the way they are built? What assumptions, beliefs, and values are at the base of it all?

The conventional money-lending corporations assume poor people to be not creditworthy, considering them to be risky and volatile customers. For such financial institutions, the poor must be lazy. Prevailing prejudice, some of which still exists today: It is their own inability that leads them into a state of poverty, they cannot handle money. But Professor Yunus and his students had seen with their own eyes that poor Sofia worked hard every single day. He recognized that the mental models upon which the whole system was erected were fundamentally flawed.

Performing this reality check after gaining a deep understanding of the system, its components, and their interrelations, enabled Professor Yunus to transform it disruptively based on the firm belief that credit is a fundamental human right, and the greater the need for this credit, the stronger his/her right to receive it; He reversed conventional banking and created an inclusive banking system that would serve the poor, help them escape from poverty by providing loans on terms suitable to them and by teaching them a few sound financial principles so they could help themselves. The Grameen Bank model is replicated and operates today in more than 100 countries worldwide.

Systems thinking models enable us to extend our boundaries and create new links in the analyses of social problems and global issues.

If you liked this article and are interested in knowing more about systems thinking applied to understand these issues, feel free to contact us.

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