The Importance of Being A 'Systems Thinker'

Rob Spivey

Let me tell you about this program that helps us with so much of what we do...

We just wrapped up our quarterly performance reviews with the analyst team, particularly with our co-ops, the six-month, full-time interns who attended my alma mater Northeastern University.

Truthfully, they are key cogs in our research engine – helping us research and write our content and developing new tools across our institutional business and Altimetry.

The co-op program is how I came to meet Joel nearly 18 years ago when he ran the Credit Suisse (CS) team that hired me as a co-op.

It's a great program. Almost all of our U.S. employees came through it.

The program offers a great chance for us to work with them before they make major career decisions. We help these interns better understand the world of finance, and it allows us to assess in-depth whether they are a fit for the team after graduation.

If this sounds like an advertisement to hire co-ops from Northeastern University, let me say it somewhat is... It's more of a recommendation that if you have kids or grandkids who are looking at universities, they might consider Northeastern.

The program offers more business experience than most of its peers... starting with a strong business network, which can guide them down the path of making key career decisions.

Since we are constantly working with undergraduates, we can make real building block impacts on how they feel about business and life in general.

In the reviews we recently had, just like in almost every first round of reviews we do, I found myself giving one key piece of advice... you can't solve problems just by fixing what's wrong in your job.

Be a systems thinker...

What does that actually mean?

Imagine you're working on a complex project. Here at Altimetry, that might be trying to fix a complex model like our Uniform Accounting framework or building a data backtest.

As problems arise, it may be tempting to play the classic game of whack-a-mole, keeping yourself busy by just fixing the immediate issues in front of you.

However, more often than not, that creates new problems elsewhere. Systems thinking changes the way you approach problems to avoid this issue.

It isn't a new or revolutionary idea. Forms of it were described by the ancient Egyptians and in pre-Socratic Greeks.

Don't just think about solving the problem at hand. Think about understanding the entire system and the relationships that it involves.

If you can understand the system, then you are no longer fixing problems when issues arise.

You're fixing breakdowns in the system, or if you are fixing problems, you're getting to their root cause quicker based on your stronger understanding of how things are structured within the system.

The modern term "systems thinking" was coined by Austrian biologist Ludwig von Bertalanffy.

Bertalanffy focused on "living systems" and how all the components of a cell interact or how all the organs in the digestive system work together. Instead of focusing on just what mitochondria do, he understood it was more important to understand how mitochondria interact with the other organelles.

The key is that this is applicable in any other field of work or study. Those who troubleshoot by first learning a system can solve problems quickly.

And so I will tell all of you the same advice we regularly give our co-ops. If you want to become a great problem solver and do your job more efficiently, don't just learn that the mitochondria are the cell's powerhouse. Learn how the cell uses that power and why it needs it and view it as one interconnected system.

Don't just solve the problem in front of you. Understand the system in front of you. It will make your life easier and will make you smarter and faster...

And being a systems thinker isn't just something you should do at work.

It's something you should do throughout your life, particularly when thinking about your budget or investments.

If you constantly find yourself not building enough in savings each month, the solution isn't to work harder or just spend a little less. The answer is to sit down, build a real budget, and understand where your money is going and why.

If you feel you aren't on track to meet your retirement goals, the solution isn't to shoot for the moon by putting everything into one option for a stock you think will shoot higher. While there are stories of people making it rich by doing this, especially with the recent GameStop (GME) and AMC Entertainment (AMC) madness, it is probably a losing strategy.

The solution is to sit down and think of your investments as a system of cash into your portfolio, asset allocation, and cash out of your portfolio. Then find a process to make sure you can generate consistent returns. And remember to think of that process as a system too.

The more you act as a systems thinker instead of just putting duct tape over problems, the more you can achieve tangible and consistent results in any part of your life. That applies to your job and your investments.

Regards,

Rob Spivey
October 8, 2021