Systems Thinking to Understand National Well-Being from a Human Capital Perspective

Well-being has become an important policy goal to replace gross domestic product (GDP) as an indicator of national progress. Several multidimensional metrics and indicators of well-being have been developed mostly based on the four-capital model that includes natural, economic, human and social capital. These multidimensional measures of well-being, however, are highly categorical and lack a systems perspective that focuses on underlying mechanisms of the metrics and the interconnections between them. This study aims at bringing a systems thinking approach to understanding and measuring national well-being, particularly from a human capital perspective. For this purpose, we employ a qualitative systems mapping approach and identify the direct or indirect relationships between the well-being indicators related to human capital. The results show that the human capital system is governed by several reinforcing feedback loops through economic progress, health and life expectancy, which gives a central role to human capital to enhance well-being. There are balancing loops, however, that may have adverse effects on human capital formation and well-being, for instance through migration and ageing. Future studies can focus on the other three subsystems in the four-capital model, and on quantifying the relationships between different dimensions of well-being

Organizational Resilience – How Do You Know If Your Organization Is Resilient or Not?

There are two principle ways to approach resilience measurement; either to try to collect information about as many functions as possible in an organization or to use an indicator that will reflect how an organization is going to manage an unexpected event. I will describe both approaches and make a recommendation of their applicability to different situations

Digitalization will transform the global economy

New research has identified several adaptive actions that can both support national economies and prepare countries for a future shaped by digitalization

Scenario-based portfolio model for building robust and proactive strategies

In order to address major changes in the operational environment, companies can (i) define scenarios that characterize different alternatives for this environment, (ii) assign probabilities to these scenarios, (iii) evaluate the performance of strategic actions across the scenarios, and (iv) choose those actions that are expected to perform best. In this paper, we develop a portfolio model to support the selection of such strategic actions when the information about scenario probabilities is possibly incomplete and may depend on the selected actions. This model helps build a strategy that is robust in that it performs relatively well in view of all available probability information, and proactive in that it can help steer the future as reflected by the scenarios toward the desired direction. We also report a case study in which the model helped a group of Nordic, globally operating steel and engineering companies build a platform ecosystem strategy that accounts for uncertainties related to markets, politics, and technological development

A systems description of the national well-being system. Version 1.0

Policymakers are confronted with hard-to-address questions, such as • What is the ultimate impact of very different policies on the well-being of citizens? • How to anticipate, which policies will promote well-being the most and which ones will lead to tough trade-offs? • How to focus scarce resources and maximize the positive impact on the well-being of citizens? Economic growth is ceasing down, and, moreover, in most of the developed countries additional growth does not promote the well-being of citizens as much as it used to. But what is well-being? According to a dictionary, well-being is a state of feeling happy, healthy or prosperous. In 1980s, a group of sociologists, philosophers and economists led by Amartya Sen and Martha Nussbaum suggested a framework to understand well-being beyond the economic indicators , such as the GDP. In fact, in the modern world, wellbeing itself becomes a prerequisite for economic growth and for social and economic stability. Governments begin to focus their attention directly on the multi-dimensional national well-being including and going beyond economic and material aspects. They look for new under-utilized resources that would raise the national well-being even despite weak economic growth. To discover effective and efficient solutions, one needs to maximize synergies and reduce losses from trade-offs . Systems analysis offers tools to do so. This challenge was presented to the International Institute for Applied Systems Analysis (IIASA) by the National Economic Council of Israel in 2018. In response, IIASA developed a pilot version of a systems description of the national well-being system that covers four major subsystems: economic subsystem, natural subsystem, human capacity subsystem, and social subsystem, each described by a set of indicators. This Working Paper presents the results of this pilot work. We rely on the OECD well-being framework as a basis to measure multi-dimensional well-being and work with 68 factors, of which 39 represent the OECD indicators. Based on evidence we collate from solid scientific literature, we connect these 68 factors by causal relationships and obtain a comprehensive systems map of the National Well-being System (NWS) (a causal loop diagram) comprising 208 directed links between factors. This systems map allows to trace all indirect effects and feedback loops between factors in a systematic fashion thus helping acquire a holistic understanding about the national well-being system. Empirical evidence clearly indicates that systems thinking is difficult to practice when causal interconnections become more complex, especially when it involves indirect effects and feedback loops. As a formal tool from qualitative systems analysis, our NWS map can assist policymakers to reveal trade-offs and synergies, reduce the problem’s “wickedness” and discipline a dialogue. This version 1.0 can and should be developed further. This includes expert validation and fine-tuning, as well as customizing it to particular national and policy contexts. Eventually, our ambition is to develop a policy simulation tool that enables comparison of different policy options and their ultimate impact on well-being. We invite interested parties to join us in this endeavour

The Impact of COVID-19 on Well-Being: A Systems Approach

In addition to its health and economic implications, COVID-19 has a widespread effect on social relations, stress, livelihood, and on the environment. However, analyses of the effects of COVID-19 tend to focus on the health and economic implications of the pandemic. In recent years well-being is increasingly promoted as a measure to assess the state of countries and citizens, taking into account a broad set of factors such as social relations, the environment, health, and livelihood. Previous work at IIASA has produced a national well-being map, in which the variables that affect both current and future well-being were spelled out, as well as the relations between them. In the current study, we utilize the IIASA national well-being map as a basis for analyzing the effects of COVID-19 on social well-being, focusing on Israel as a case study. Thus, while the indicators used are based on the OECD well-being indicators, they are contextualized to account for both the setting and for the focus on social well-being of current generations (those that are most likely to be affected by COVID-19). However, the approach we suggest can be useful for other cases, and the results may shed light on the COVID-19 effects elsewhere. To this end, we first identify the direct effects of COVID-19 and the measures undertaken to mitigate the immediate health effects on the variables included in the social well-being map, a modified version of the original national well-being map. These served to identify both the primary and secondary effects of COVID-19. By relating these primary and secondary effects on the variables that affect social well-being, we can identify how COVID-19 affects current social well-being, differentiating these effects by timing. Then we show that there are synergic effects that will lead to long-term implications, also after the pandemic is brought under control. COVID-19 does not affect all population groups equally. We find that the effects of COVID-19 on employment serve as the stratifying variable that differentiates the effects. Hence, we analyzed the well-being effects of COVID-19 on different groups based on the effects the pandemic has had on employment. This analysis shows that while the well-being of all groups is affected, they are particularly wide and strenuous for those who lose their jobs or businesses. Therefore, job retention and mitigation of the job insecurity effects of COVID-19 are found to be of critical importance, more than income maintenance. These variables are also essential for the maintenance of trust in government, as such trust is crucial when the next wave of the pandemic erupts. However, additional measures that may mitigate the effects on other well-being indicators are also called for. Thus, it is advisable to formulate policy packages that will address the multi-dimensional effects on well-being