“Society currently faces many complex global challenges, including economic crises, social unrest, and climate change, all of which are interconnected systems that require a different perspective in order to solve.”
“However, widespread application of systems thinking to the design of products, processes, systems, and sub-systems seems to have lagged behind. There are many examples of how the failure to consider the larger system when designing subsystem elements has resulted in unintended and undesirable consequences, including the current climate crisis.”
“In addition, it is clear that many of the individual design decisions in the mortgage-finance supply chain were focused on optimizing the individual components and participants versus the overall system performance to create value for the multiple stakeholders and society.”
“It seems the lack of a comprehensive set of requirements was a main cause of new products and services that failed to meet the long-term needs of all the stakeholders or even the intended primary beneficiaries, low-income families.”
“The lack of a long-term stake in the success of the loans led to incentive schemes based on volume versus quality. With volume as the only criterion for success, it is not surprising that lenders failed to focus on the long-term quality of the loans or, in many cases, even the short-term credit worthiness of the borrowers.”
“The parallels and connections to the current economic, societal, and environmental crises is striking and it will take as Senge et al. (2008) propose, in a book by the same title, a “necessary revolution” in the way people think and act to address the current and future crises in order to survive and hopefully thrive in the coming decades.”
“While systems thinking might be essential to help solve the problem, it may not be sufficient to address the current and future economic, environmental, and societal challenges.”
“Consequently, it is critical that ethical principles are incorporated in the decision models of business leaders. In fact, as Khurana (2007) suggests, it might be time for a shift in the management profession itself and the rejuvenation of leaders both “intellectually and morally.””
“In the future, leaders must evolve beyond being merely leaders of their particular organizations with a few stakeholders to become “stewards” of the system creating value for multiple stakeholders.”
This article is one of four commentaries on Paul Zipkin’s article “Quality Snags in the Mortgage-Finance Supply Chain” all found in the 2009 Quality Management Journal 16(3). This commentary offers several thoughts on some of the systems issues associated with implementing and sustaining the changes that Zipkin recommends. The commentary is divided into three main sections: (a) system design issues; (b) regulatory and market failures; and (c) leadership and learning. | Download Article
Latham, J. R. (2009). Complex system design: Creating sustainable change in the mortgage-finance system. Quality Management Journal, 16(3), 7.
Khurana, R. (2007). From higher aims to hired hands: The social transformation of American business schools and the unfulfilled promise of management as a profession. Princeton University Press.
Senge, P. M., B. Smith, N. Kruschwitz, J. Laur, and S. Schley. (2008). The necessary revolution: How individuals and organizations are working together to create a sustainable world. Doubleday.
Zipkin, P. (2009). Quality Snags in the Mortgage-Finance Supply Chain. Quality Management Journal, 16(3), 12.