Part I Starting a Systems Thinking Consulting Firm: What have we learned, What are we learning!
Kabir Sharma and I registered our firm DESTA Research LLP in April 2018. It has been 4 years and in this first article, I share some reflections from our learning journey.
Beginnings
In January of the year 2017, I embarked on a journey of independently entering the market for providing research and consulting services using systems thinking and system dynamics modeling. It was not clear if there was an established market or what was the size of the market, which institutions could potentially pay for systems thinking, and what kind of results or outputs it could generate that would interest them. But I knew that the time had come when wide-scale applications of systems thinking were required and there was a need to work with multiple agencies and groups if we had to find systemic solutions to our common problems. This necessitated me to leave my full-time job and move out in the open with a vision of creating networks of systems thinkers. To do rigorous on-ground applications for developing evidence that this method has value, especially for decision making and policy planning. Now, this was not easy, because there was no documented evidence base in India that could demonstrate how this method had worked in the past for solving complex problems. And unfortunately, this was the first question most people would ask when introduced to systems thinking and modeling.
Starting a Consulting Firm
When one decides to start one’s own firm the first thing that comes to mind is capital and cash flows. A conventional way of going about this is by getting private equity or venture capitalists investing in your firm and using that money to set up an office and commence operations. We went the other way. We decided to first generate a revenue line and a small customer base and then register our firm. We kind of incubated ourselves. There was a one-year bridge period where we picked up consulting projects without registering an organization. But we both went into it together. Raised money, formed a coalition, and began working. In less than six months we had two paid consulting projects — one was fundraised and the other was consulting. I was already teaching in colleges and had a couple of short, recurring, training programs. The strategy here was to cover our downside i.e. have a business that covered at least 80% of the last drawn annual salary. Now the benefit of going independent is that your upside is practically unlimited. The only limit is time — all of us have 24 hrs. But given that we were one of the very few system dynamics consultants in the market, this limit did not seem like a practical one, purely because the initial market size was extremely small.
When starting a firm what one needs is well-wishers. These could be family, friends, colleagues, former bosses, students, professors, or mentors. We were very lucky to have almost full support from all whom we knew, including the senior modelers in the International System Dynamics Society. One distinct characteristic of the system dynamics community is that one can write to another modeler and be relatively certain to get a positive reply. The spirit of sharing to learn is always there. This is an immense resource base for anyone who is looking to develop a career in system dynamics modeling.
Learning to Model Real-World Systems
Out in the open one never gets a clear understanding of what exactly is the problem. Two key concepts in system dynamics require us to mark the model boundaries — spatial and temporal — and draw reference modes that can tell us what the behavior of the problem/system has been and what it could look like in the future. But while interacting with institutions, farmers, small-scale enterprises, pastoralists, etc. you cannot ask direct questions which make them think about what is their geographical boundary. Because an agriculture field receives water from a watershed, the topsoil gets renewed through water flows coming from ridges, agriculture produce is sold in urban markets (sometimes international), the seeds and fertilizers are bought from shops, and money is often loaned from banks which are all beyond their local boundaries. This means that asking a question and hoping to get a clear textbook answer is a flawed expectation when dealing with real-world systems. What one needs to do is to have these questions in the back of our mind and go around observing and listening to what people are saying. As modelers, we have to make sense of the stories that people tell us. It may sound fuzzy but actually, these are nonlinear stories of their lives (Stroh 2015). We cannot expect order here and hope that they would sequentially narrate to us what is going on in their lives. Hence, in order to model real-world systems, it is important to listen and then make sense of what we hear. It is also equally important to share our understanding with the people who told us these stories and co-create a story that is both plausible and realistically complex.
Partnerships
One challenge of working in a coalition is that very often the partners need to apply the tools of systems thinking to make sense of what they are trying to achieve together. It is not always convenient to continue to act on the same footing and hence it is very important that the coalition speaks with each other and listens to each other on a regular basis. All partners must respect each other for the distinct knowledge, experience, and expertise that they bring. Without respect, one cannot learn. Sometimes the pace of work, especially in a multi-stakeholder modeling project, could be slow. This could be frustrating. One should fall back on the tenets of systems thinking which tell us that sometimes Slow is Fast. Never rush a system dynamics project. One oversight or mistake could cost a lot of time and resources during the course of the project.
Building Trust
Real-world systems are built on trust. We think a consulting firm is no different. Partners need to trust each other and have faith in their ethics. Coalitions need to trust their members and show confidence in their abilities. Consultants need to show trust in clients, including the community with whom they work and for whom they work; these could be farmers, policymakers, etc. The social strength of your consulting firm is your biggest asset. Business conversions and cash flow generation is an outcome of the social strength of your relationships.
In our case, we were blessed to have amazing support from our ex-bosses, and universities who opened doors for systems thinking. They all believed in us and trusted us with our passion and abilities. In a true sense, they are the founders of our firm. I did not meet them just when we decided to go independent. The path of developing such relationships is long and dark. I say dark because you don’t really know what could come out of it or what is the fruitful end. But one should never really worry about the fruitful ends while developing relationships. One should never ever be judgmental about relationships. This way you avoid getting financially attached to your well-wishers. They are here to support you and you are supposed to use their support to fulfill your aspirations.
All information is not data
The field of modeling is obsessed with data. The type of model you develop and its detailing depends on what data is available. This means that the quality and scope of the model is predetermined based on the availability of data. In system dynamics you need to break this stereotype. Absence of data does not mean absence of information and all information is not data. This is especially true while modeling social systems or exploring the relationships between social-ecological-economic systems.
We think one of the biggest challenges in public policy is that we don’t know with certainty how people behave and how their behavior could change in response to a policy. And it is almost impossible to accurately quantify their response. System dynamics has the ability to overcome this challenge to an certain extent. When we were doing our maiden modeling project on urban dynamics, we realized that it is important to model migration and the circumstances under which people would choose to in-migrate or out-migrate (Mathur & Sharma, 2015). Now this meant that we needed to know people’s preferences but it is not always feasible to go about doing a survey of a million people and then analyzing their responses to be able to build modeling equations. Here we have to rely on estimations. Even if we don’t know when would people decide to move in to or out of a city, we could still model it based on general preferences. We decided to capture them through a quality of life index made up of environment quality, job availability, fresh water availability and open spaces. We derived inspiration from Urban Dynamics (Forrester 1969), World Dynamics (Forrester 1971) and Limits to Growth (Meadows et al 1972). Our model was a hybrid of these three. Our model showed that in the long run quality of life would fall in the city due to over pollution and congestion, which would result into reduced in-migration and increased outmigration ultimately leading to a correction in population. In the long run it showed oscillations i.e. people kept coming back, and ending up polluting and congesting the city. While presenting the model results people asked us if this kind of an outcome has been seen before in any other city. These results seemed fascinating to many but almost all were skeptical of their predictability.
One must always remember that system dynamics models are meant to help us learn more about relationships present in a complex system and how they influence the overall outcome. Thus, what our urban model showed was not a prediction but rather explained the dynamics of overgrowth and degrowth and how in both situations people would continue to live in deteriorating quality of life, which is not the goal of sustainable cities. This required a conversation and models should help engage stakeholders in such meaningful conversations. Setting the expectations from system dynamics models is an important task that modelers must perform. This largely determines the usefulness of the model. One cannot sustain a system dynamics consulting firm by just selling results or prescribing the best solutions. It must propagate collective action.
By Mihir Mathur.
This is part 1 of the article series. In the next part, I talk about the importance of making models useful and the ethics of modeling.
