## Home Heating System

This example was selected because of its common occurrence and characteristics which may serve as parallels to organizations.

In its simplest form the thermostat influences the furnace, which influences the thermostat. The system adjusts to the temperature indicated by the thermostat.

System diagrams are models, simplified representations of the real system, with sufficient relevant detail to enhance understanding of the real system. A system is both a subsystem of some larger system and composed of subsystems. The question is, to what level of detail we model the system to understand it. Often this answer comes through trial and error. Modeling the system too narrowly has a tendency to omit some of the relevant influences. Modeling the system too broadly may make the model too complicated to promote understanding. There is always a trade off.

The assumption is that the outside temperature and the current temperature are below the thermostat setting. The initial example can be expanded by considering a number of subsystems that interact. These subsystems will be considered independently and then combined to depict the larger system.

### Thermostat

This is a balancing loop. The thermostat interacts with the current temperature producing a gap. The gap influences the furnace, which influences the current temperature. Increasing the thermostat increases the gap, causing the furnace to run more, increasing the current temperature, thus reducing the gap. The system will adjust until the current temperature agrees with the thermostat, reducing the gap to zero.

### Desired Comfort

My desired comfort interacts with the current temperature producing a gap. This gap influences me to increase the thermostat, influencing the furnace which influences the current temperature, thus reducing the gap. Desired comfort is an element of some other subsystem not considered here.

### Acceptable Cost

In heating my home I have an idea of what is an acceptable cost. The interaction of the actual cost with the acceptable cost produces a gap which influences me to turn down the thermostat. This in turn causes the furnace to run less reducing the energy usage and the resultant cost. This part of the system is not easily controlled because I don't see the cost until at least a month after the energy was used. Acceptable cost is part of another subsystem (income) not considered here.

### Outside Temperature

The outside temperature interacting with the leakage factor influences the current temperature which influences the outside temperature. The leakage factor determines the rate at which this influence takes effect. Also, the degree to which the inside temperature affects the outside temperature is considered to be minimal. Leakage is part of another subsystem not considered here.

### The Composite System

When these subsystems are integrated into a single diagram one begins to appreciate the complexity of the system. This is an open system because there are other factors which are not taken into account, such as the energy usage influence on total available energy, and the leakage being influenced over time by the internal and external environment. The acceptable cost and desired temperature are also elements of other subsystems.

Now that we have a composite system there are several points of understanding we can develop.

The system exhibits a characteristic of stability. The system has its own agenda defined by the desired comfort and acceptable cost which affect the thermostat setting. The system will adjust to maintain the temperature indicated by the thermostat. If the outside temperature declines the system adjusts. If you open a window the system adjusts. If you build a fire in the fireplace the system adjusts. If you turn on an incandescent light near the thermostat the system adjusts. If the thermostat or the furnace fails, the whole system fails.

Organizations have a tendency to maintain their stability in the same way. If you attempt to change things, the system adjusts to maintain things as dictated by control variables.

This system has two goals, desired comfort and acceptable cost, which are mutually exclusive and create oscillations. If I want reduced cost I turn the thermostat down and must tolerate less comfort. If I want increased comfort I turn the thermostat up and must tolerate increased cost.

If you desire to improve the system, where do you take action? You could improve the efficiency of the furnace or you might improve the thermostat. Neither of these actions will have any major effect on the system.

The concept of leverage is based on the idea that there are points within systems where small changes can have a major impact on the entire system.

The real leverage in this system is the leakage. By reducing the leakage we can limit the effect the external temperature has on the internal temperature. This might be done by adding storm windows, better insulating the house, and other such actions. This action also has a cost, yet in the long run what it saves in energy costs should more than pay for the leakage reduction cost.