14. Introducing Systems Thinking into Public Sector Institutions: Learning by Doing?

Piret Tõnurist
Elena Rovenskaya
Reinhard Mechler
Fabian Wagner
J. Linnerooth-Bayer

Complexity is the core feature of most policy problems today. Globalisation has introduced new interdependencies in most policy areas, meaning that governments do not have the sole control over the success or failure of policies, or how citizens perceive their actions. Moreover, societies are faced with wicked problems – problems that do not have a single cause or a solution. Furthermore, digitalisation of society and the economy is both creating new business models, services and demands, but also destroying existing practices, skill-sets and thus producing new inequalities that the public sector has to contend with. To put it bluntly, governments are dealing with a volatile and shifting policy context, where interventions that previously worked do not work anymore and where government has to be reactive as policy solutions by default create unforeseen and unintended effects. This means that ‘how’ the public sector works becomes increasingly more important than ‘what’ it specifically does, because the idea of permanence and best practice is disappearing. The ability to adapt to change and see systemic effects rippling through policy domains becomes critical to long-term success. Are today’s public sector institutions and systems equipped to adapt to this change? Probably not.

The public sector management systems that were created over the last decades under the New Public Management concentrated on precision-target systems, focussing on the performance of programmes/agencies from the ‘frog view’, the view from with the system (Bouckaert and Peters, 2002) rather than on the cross-organisation outcome level. Thus, the effects of interventions were analysed within their specific domains or policy silos, while the broader interdependencies and outcomes received little attention. This has provoked a lot of critique with the rise of new mission-oriented policies, which are horizontal by nature and require different capabilities and working methods from the public sector (Kattel and Mazzucato, 2018). Indeed, government capacity should not remain static; it needs to adapt to societal and technological changes (Tõnurist, 2018). Thus, public sector intuitions need to change their working methods and innovate the functioning of the public sector itself. How should the sector accomplish the former and how could systems thinking help?

There are of course diverging capabilities that the public sector needs to cultivate. For example, the Observatory of Public Sector Innovation (OPSI) has proposed a new model for public sector innovation based on the level of uncertainty and directionality of (desired) change (Figure 14.1). The model defines four different facets: enhancement oriented innovation, mission oriented innovation, adaptive innovation, and anticipatory innovation, all requiring different strategies and working methods to be successful. Systems thinking works best in the context of purpose-driven change, when the goals and problems are known or can be collectively defined (OECD, 2017).

Applying a systemic lens to complex problems can help map the dynamics of the system, explore the ways in which the relationships between system components affect its functioning, and ascertain which interventions can lead to better results. Thus, systems thinking can help clarify the need for innovation in the public sector itself and systems thinking tools and methods could be the solution for 21st century missions, where the public problems and purposes are shifting and methods to adapt the institutions need to also reflect the shifts.

While systems thinking as the methodology behind purpose-driven change could be used to deliver on 21st century missions, this does not mean that the public sector is interested or ready to use it for that aim. So far, systems thinking inside the public sector has been used as a ‘sense-making’ tool to make interconnectedness visible (usually with the help of outside experts – see box 14.1) rather than as a day-to-day practice that helps guide everyday action and decision-making.

Yet, sense making or visualisation of the system alone does not a priori lead to more systemic action or increase understanding of what needs to be changed in practice (OECD, 2017). If the systems thinking capacity in the public sector is not high or there is no mandate or window of opportunity to change things, it falls under the complexity-decision making paradox: systems thinking exercises are viewed as ‘interesting’ to policymakers, but not useful for them in their specific context.

Systems thinking becomes a source of innovation in the public sector when there is actually room to change the structures and functioning of government in line with systemic needs. Otherwise, the public sector can only ignore the complexity connected to policy problems, because they do not have means to do anything about it efficiently. Alternatively, public servants start to concentrate heavily on selected technical details – the frog view – that civil servants feel that they can control and deliver on, creating a false sense of certainty and purpose of action. Sometimes a number of incremental changes becomes a source of cumulative change; often however, many-layered policy interventions, well intended though they may be, will not make any difference at all, because they do not address the interconnected issues or the scale of issues adequately. This is not to blame policymakers or civil servants: the existing performance management and budgetary systems influence them to be reductionist in their work. Thus, part of the inability to use systems thinking in the public sector comes from the fact that established systems and government silos are created to deliver on goals and problems defined by a previous mass-production era and they are highly path-dependent in nature. Hence, systemic reform of the public sector is needed towards more adaptive, reflexive processes, so that systems thinking can be effectively applied in specific policy fields.

What makes the application of systems thinking even more difficult in the public sector is that existing systems cannot be turned off, redesigned and restarted, because there is high need for continuous service provision (e.g. healthcare, education). Although an interesting exercise, the public sector does not have the luxury of doing zero-based budgeting with the help of systems thinking every year. Thus, the government needs to learn to introduce change in an iterative manner even if the change itself is contradictory to current practice.

Creating room for open-ended processes and synergistic feedback – more holistic practices inside the public sector – is not easy; yet it is not impossible. The Observatory of Public Sector Innovation has been working with OECD member countries to introduce systems thinking methods in the public sector starting with Slovenia, Scotland, and Finland. The methods have been applied to review existing systemic reforms, for example the introduction and implementation of the National Performance Framework (NPF) in Scotland (Box 14.2). The Scottish experience showed that even if from the top-down the need for systems change is acknowledged and supported, it does not lead to uniform effects if the government and its capacities are not internally reformed to support action in a systemic manner.

The OECD’s practice has shown that making systems thinking actionable in the public sector does not rely on capacity alone. Public sector institutions and their ecosystems need to be adapted to new types of missions/challenges to be fit for purpose (budget cycles, organisational silos, feedback mechanisms etc.). Sometimes there are very concrete issues – such as political mandates, constitutional structures and behavioural influences from political interest (e.g., coalition governments) - that cannot be changed, but influence systemic change profoundly. This does not have to paralyse action, but these should be analysed as boundaries for action that need to be designed around.

Designing cumulative systemic processes becomes even more important when different levels of governance are needed to make interventions effective. The case of air pollution is one of the most indicative here, because its determinants and effects transcend the usual areas of interventions.

Decision processes have often been one-way, meaning experts provide facts and a preferred decision option to responsible authorities, which may be chosen or not. This is opportune when there is a clear societal objective and various methodological approaches for illuminating policy paths to these goals. In contrast, when policy issue are ill-defined, even “wicked” in the sense that there are irreconcilable views on the problem and its solution (what cultural theorists refer to as “contested terrain”) multi-actor involvement can be essential for policy legitimisation and implementation. IIASA has been unique in structuring expert-stakeholder deliberative processes that bridge the gulf between systems models and practical policy options, what has been called soft systems science. The methodological approach encompasses a process of interaction, communication, and policy-making among the complex web of actors involved, including governments, international negotiators, businesses, conservationists, and civil society. As a book IIASA contributed to demonstrated across more than ten cases, policies made without participation from “all the voices” were significantly less robust than those with inclusive deliberation (Verweij, 2011).

This chapter highlights that the public sector itself needs a systemic change to be ready to use systems thinking tools for not only sense-making, but also as a methodology to deliver on 21st century missions. It is not enough to talk about what types of systemic change are needed in different policy fields without connecting it to the ability of public sector institutions to implement the desired changed. As such, systems approaches cannot be introduced in the public sector through theory alone – they need to be learnt by doing and their implementation has to be continuous and inclusive, not ad hoc. This is needed as systems thinking is necessary to tackle complex problems and help reach compromise on complex public sector goals (such as missions) as it helps avoid or deal with unexpected and unwanted consequences. Consequently, systems thinking is a practice, not a theory; hence, civil servants and public sector partners should learn to apply it in actual examples.

Nevertheless, even if policymakers as individuals are systems thinkers, it does not mean that policies they fabricate are systemic; one needs institutions to support systems policymaking. Yet, clearly systems thinking, hard and soft, is and will continue to be an important part of the public sector toolbox in dealing with complex challenges and upcoming missions. OECD’s and IIASA’s work in this field has shown that public sector leaders face an uphill battle: there is little clarity on who should promote systems thinking in public organisations and who should assure their capacity.


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