How Systems Thinking Helped Ivan

Ivan’s Story

Ivan, a former builder, bought a five-vehicle courier business for a bargain during the pandemic. He saw an opportunity. He was hardworking, and it was paying off until...

The Problem

A backlog of just 3 parcels per day didn’t seem like a crisis at first, but over nine weeks, it had compounded and the business had lost an estimated 420 parcels worth of bookings.

Here’s what was happening:

1. The backlog created a daily capacity shortfall.

2. The shortfall delayed fulfilment times and reduced the number of new bookings that could be accepted or fulfilled.

3. As average delays crossed customer tolerance, bookings began quietly falling.

4. The business lost volume, not because people stopped booking, but because he couldn’t say yes without escalating his costs.

5. The decreased volume, hit revenue and then cashflow.

6. The operating budget then came under pressure and fuel costs became an issue.

7. If delivery hours had to be trimmed, he would enter a negative reinforcing loop that would spiral.

Solution – Functional View of The Business

Ivan, like most SMEs, took a functional view of the problem. He went straight after the main problem, fixing the backlog directly.

Here’s what that looks like:

• Increase driver hours or overflowing to catch up

• More kilometres

• More fuel

• Increasing pressure and the risk of losing drivers

• Increasing costs, just to catch up and return to baseline

Result? By week nine, the real cost of the backlog included:

• ~$1,800/week in lost booking revenue due to constrained capacity

• ~$825/week for the cost of extra labour, fuel, and admin to recover capacity

This approach was not a strategy. It was a treadmill running backwards.

How systems thinking helped

Unlike dashboards, standard reports, or spreadsheets, a dynamic model shows how variables interact to drive system behaviour.

It helps you see:

• The interconnections that shape performance

• Where reinforcing loops begin

• How problems compound

• And most importantly, where you can intervene to address an imbalance

The model made it clear: Clearing a backlog without increasing cost is nearly impossible, unless the economics of delivery change.

Here are a few of the strategic options a system view made visible:

1. Prioritise high-value or larger deliveries

   • Same labour, higher revenue to offset booking losses

2. Increase pricing slightly

   • Reduce low-margin volume, increase yield per job to slow the drag

3. Shift the customer mix

   • Focus on clients/routes that earn more per km

Result

After implementing a blended solution:

• Backlog pressure started reducing

• Profit per delivery hour increased

Dynamic models let you shift from asking:

“How do we clear the backlog?”

To asking:

“What needs to be true for 'X' to happen?”

Systems thinking reveals strategic options more effectively than a functional view of challenges.