Revenue Operations should be using Systems Thinking 🤔

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If we imagine a business is a living breathing organism, a system if you will, then doesn't it also mean we could optimize said system to be high performant? We'll, here's the horn tooting: ENTER REVENUE OPERATIONS.

The latest book I've been reading is Thinking in Systems by Donella H. Meadows. It's what inspired this article. I've always preached that RevOps has four pillars:

• Process

• Enablement

• Advisory

• System

This is where strategy and execution become “PEAS (acronym ☝️) in a pod”. But maybe my thinking insufficiently encapsulates our environment and the desired outcomes. Thinking of a business as a system makes more sense.

Let's repeat.

A business is a system. To tune it, the system requires Systems Thinking.

What is systems thinking?

Systems thinking is a problem solving method by looking at it as a complex system of interconnected parts. This approach can be used to solve problems by identifying the underlying causes and relationships between different elements.

Systems thinking can be applied to any type of system, from a small group to a large organization or even the entire world. It can be used to understand how systems work, how they change, and how they can be improved.

There are many benefits to using systems thinking. It can help you to:

• See the big picture and understand how different parts of a system interact.

• Identify root causes of problems and develop solutions that address them.

• Think creatively about how to improve systems.

• Communicate effectively about systems with others.

Here are some key concepts of systems thinking:

• Interconnectedness: Everything in a system is connected to everything else. This means that changes to one part of the system can have effects on other parts of the system.

• Feedback loops: Feedback loops are processes in which the output of a system is fed back into the system as input. This can lead to positive feedback loops, which reinforce the system's current behavior, or negative feedback loops, which help to stabilize the system.

• Equilibrium: Systems tend to move towards equilibrium, or a state of balance. This means that changes to a system will eventually be counteracted by other changes that bring the system back to equilibrium.

• Boundaries: Every system has boundaries that define its limits. These boundaries can be physical, such as the walls of a building, or they can be conceptual, such as the boundaries between different departments in an organization.

Without systems thinking, teams may set narrow goals that could harm other teams or the company as a whole.

For example, a team may set a goal of increasing sales by 10%. However, if this goal is pursued without considering the impact on other teams, it could lead to a decrease in customer service or an increase in costs. In the long run, this could actually hurt the company's bottom line.

But first! What the heck is a system?

A system has the components:

• Elements - parts of the system

• Connectors - relationships between elements

• Purposes - one or multiple desired outcomes

One thing to note is that Elements can also play the role of Connectors. For example, sales reps serve as an element while compensation plans (incentives) serve as connectors. Clarity of roles and responsibilities is also another very important connector.

In fact, I'd argue that changing out the Elements (replacing the sales team with a “better” sales team) will not yield the exponential improvement you're hoping for. Changes to the right Connectors will. For example, changing either the processes or incentives will likely yield better outcomes for the business.

Lastly, the stated purpose of a system may not actually be the true purpose. Many businesses will have stated social, mission driven goals. “Serving the customer.” “Change the world.” While those are great north stars, a cynic could fundamentally say the goal of a business is to enlarge itself to provide wealth and influence to its owners. I'm neither here not there but I am a mission driven professional. It's difficult for me to get out of bed and grind if I can't give a damn about what we're trying to do. Personal choice! What a beautiful thing.

When to use systems thinking

• Big, important issue(s)

• The problem is persistent, not a one-time event

• Previous attempts to solve the problem have failed

That third point is the most important in my mind. You may not need to use systems thinking for EVERY problem. You may choose to use other methods such as good ol’ Trial-and-Error. Ain’t nothing wrong with that in my humble opinion.

Where Should We Start?

The VERY first thing to do with any systemic problem is to clearly define what the problem is. It’s hard to get to a destination if you don’t already know where you’re going. Same goes for solving big, hairy problems. For example, if someone were to try to solve decelerating revenue growth that may be too generic to start. Try using the Iceberg Problem framework. Describe the problem from there angles:

• Events: what just happened? how are we reacting?

• Patterns & Trends: what has been happening? what are the trends?

• Structure: what has influenced the change? what are the relationships between the parts?

Source: Daniel Stillman

Now that we’ve identified and clearly identified the problem it’s time to start leveraging solution tools.

When we start to solve, there are several problem solving archetypes that inevitably appear in our feedback loops. There are classic types of feedback loops:

1. Accelerating feedback (positive feedback loops, negative feedback loops)

2. Balanced feedback (a mechanism that resists further changes in one direction. It counters change in one direction with a change in the opposite direction. It seeks to stabilize a system)

Everyone loves a positive feedback loop since it yields exponential positive gains. But just as dangerous is the concept of a negative feedback loop. Failure begets more failure and so on. For the paid subscribers, we’ll explore the balanced feedback loop in more detail below.

But back to the behavioral archetypes!

1. Archetype #1: Escalation

2. Archetype #2: Fixes that fail

3. Archetype #3: Shifting the burden (addiction)

4. Archetype #4: The limits to success/growth

5. Archetype #5: Growth but under-investment

6. Archetype #6: Drifting / Eroding goals

7. Archetype #7: Tragedy of all commons

Here’s a diagram that shows these feedback loops and outcome archetypes.

Source: Wikipedia

Thank you for reading this far. I’m developing a new lecture/module on Incorporating Systems Thinking into Revenue Operations. If you’re interested in that go ahead and hit the subscribe button below.

For my paid readers, let’s keep going into more detail on behavioral archetypes. After all, changing behaviors is what drives change. So here’s to becoming a change agent.