Prime Minister’s Strategy Unit System Thinking and System Dynamics in public policy making: some experiences of the Prime Minister's Strategy Unit Nick Mabey (Senior Advisor, UK Prime Minister’s Strategy Unit)
‘There is nothing a government hates more than to be well-informed; for it makes the process of arriving at decisions much more complicated and difficult’ John Maynard Keynes 26 July 2004 Systems Thinking in Government 1
Context • Governments’ primary concern with systems thinking methods is to deliver insights that lead to better decisions; map unintended consequences of actions; and counter tendencies to silo/departmental thinking. • State of social science – including limits on fundamental understanding of human behaviour - reduces scope for methodological purity; reflexivity of political processes has same effect making processes truly “complex”. • So the variety of systems tools – quantitative and non-quantitative – are best seen as ways of underpinning judgement and action in conditions of uncertainty and complexity. Rapid nature of decision making means that a broad understanding of systems concepts by policy makers is often more useful than fully worked up models/analysis 26 July 2004 Systems Thinking in Government 2
Governments often work in complex domain Systems thinking works best in the knowable domain Complex Knowable Cause and effect only Cause and effect coherent in retrospect separated in space and time and do not repeat Known Chaos Cause and effect No cause and effect relationships are clear, relationships perceivable repeat and can be predicted (Source: IBM Cynefin Framework, 2004) 26 July 2004 Systems Thinking in Government 3
...But even in complex domain systemic understanding can help underpin decision processes • Large proportion of key problems are systemic and dynamic: social exclusion, environment, economic growth, crime. • Most vital problems involve multiple departments/disciplines and involve investment decisions over the long term System thinking and tools brings….. • Common language for bridging different disciplines (nearly 1000 social researchers, economists, OR and statisticians) • Tools for engagement of stakeholders – understanding scenarios New UK machinery for strategic analysis and design across government: central strategy unit and strategy units in all departments; growing use of modelling and other tools 26 July 2004 Systems Thinking in Government 4
Government decisions can be usefully split into three levels Major choices and objectives to follow key strategic directions: wealth creation policy; High Strategy service liberalisation; contestability; defence stance; road strategy. Defining key targets and policy directions: Defining Objectives instrument choice; speed of progress and Policies towards objectives; route maps; risk management Details of policy implementation and Implementation, evaluation: how to implement policy; prioritisation and instrument design; institutional issues allocation and control; financing and project management. 26 July 2004 Systems Thinking in Government 5
Example: Climate Change High Strategy Climate Change is a key UK priority 20% reductions by 2010; 60% goal for Defining Objectives 2050. Near term focus on increasing energy and Policies efficiency, emissions trading and 10% renewable energy supply. Design of energy efficiency commitments; UK Implementation, and EU ETS; climate change levy; capital prioritisation and grants and price support for renewables; R&D allocation programmes. 26 July 2004 Systems Thinking in Government 6
Different levels use different analytical methods • Narrative/compelling stories/simple offer High Strategy • Political philosophy/values (e.g. pro-market) • Broad perceptions of cost and benefits • Tractability/deliverability Defining Objectives • Assessment of costs and benefits and Policies • Finance availability • Outcomes and delivery Implementation, prioritisation and • Fit with institutions and actors allocation • Detailed CBA and system analysis 26 July 2004 Systems Thinking in Government 7
In Government today economics plays more strongly at higher levels Systems Thinking Economics Strong grip on Few high level thinking e.g. picking High Strategy standard stories winners; govt failure (virtuous circle etc) Strong theories for System solutions often policy choice Defining Objectives look complicated to implement – need and Policies Price only solns parallel tracks etc attractive – if rarely used in practice Weak tools for policy Good fit with level of Implementation, design – except for detail and problems - prioritisation and specific instruments. especially institutional allocation Institutional economics design. Lack of not understood well. familiarity with Econometric models modelling techniques still used extensively 26 July 2004 Systems Thinking in Government 8
Thoughts • Empirical basis of system dynamics is a strength and a weakness • Strength allows application to real and complex problems – but often can only be justified in time and expense during implementation phase • Weakness is a lack of well known theoretical insights which can be routinely applied to new problems at an early stage, for example: » A system model for organisational change » A system model of future investment routemaps » A system model for compliance with laws • Time and resources are often most limited for the largest decisions – so people fall back on what they know - which is often simple economic logic. 26 July 2004 Systems Thinking in Government 9
Prime Minister’s Strategy Unit PMSU: Range of Systems Applications
Analytical frameworks: Innovation Chain Model Government Policy Interventions Market Pull Consumers Basic Applied Demon- Commercial Business Diffusion R&D R&D stration -isation Product/ Technology Push Investments Investors 26 July 2004 Systems Thinking in Government 11
Understanding demand: Courts are the key demand drivers for correctional services DRIVERS OF DEMAND FOR CORRECTIONAL SERVICES The number of offenders within each service may influence a sentencer’s decision. For example, prison overcrowding may reduce demand for custody, or sentencers may lose confidence in an over-stretched probation service. FACTORS INFLUENCING SENTENCING PRACTICE Prison population Work of Police and CPS Legislation and Number guidelines Sentencing under decisions supervision Public and politicians’ perceptions Number of Confidence in delivery fines/ organisations discharges 26 July 2004 Systems Thinking in Government 12
Diagnosis: for correctional services outstripping supply which results in vicious circle of crisis SHORT TERM “FIRE FIGHTING” VICIOUS CIRCLE OF INCREASING PREVENTS LONG TERM SENTENCING SEVERITY PLANNING • We are spending £1bn more on Resources of correctional services than ten years system Early release stretched ago, but there is no evidence that this is the best way to reduce crime • If demand for services continues to outstrip supply, there will continue to be Reduced a disjoin between what we are saying Increased public/ and what we are doing sentencing sentencer severity confidence • Similarly, there will be a reduction in the effectiveness of any interventions 26 July 2004 Systems Thinking in Government 13
Build system descriptions which are useful to senior decision makers and analysts External shocks e.g. natural disaster, global/regional financial crisis Country capacity Structural and resilience External drivers of e.g. stabilising weakness and - Civil society factors - Governance capacity to instability provide security, legal and economic institutions, public e.g. aspiration for goods e.g. history of conflict, bad membership in regional - Internal and international regional neighbourhood, and global institutions, legitimacy availability of conflict external security guarantees - Other intangible factors, e.g. financing good leadership Political instability, violent conflict and economic decline - emerge when country capacity is weak, structural and proximate drivers of instability exist, and external stabilising factors are limited - feed back into structural drivers of instability, creating vicious circle 26 July 2004 26 July 2004Source: SU analysis Systems Thinking in Government 14
Can add dynamic factors in simple ways 1. Stable Country 4. Post-Crisis with International Stabilisation Shocks Shocks Country External Risk factors capacity Country Risk External stabilising for and capacity factors for stabilising factors instability resilience and instability factors resilience Violent Conflict, Political instability, Loss of Territorial Control, Economic Crisis 2. Pre-Crisis, instability increasing 3. Crisis Emerges Shocks Shocks Country Country External External Risk capacity Risk factors capacity stabilising stabilising factors for and for instability and resilience factors factors instability resilience External Intervention to Halt Crisis 26 July 2004 Systems Thinking in Government 15
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