FACULTY OF BUSINESS AND

SOCIETY

Module Title:

STRATEGIC SYSTEMS THINKING

Module Code:

ST4S39

Module Lecturer:

BERNARDO BATIZ LAZO

Student Name:

ONAIBE LAWRENCE

Student Number:

R1509D1016434

Assessment Title and Tasks:

“Systems thinking essentially seeks to understand phenomena as a whole formed by

the interaction of parts.” (Stacey, 2011)

Critically appraise the above statement in relation to changing ideas of

strategic thinking and explain how it exists within YOUR company’s approach
to strategic management.
 TABLE OF CONTENT

Abstract

1. Introduction

2. Approach to Strategic Thinking

3. Systems Thinking

4. Complexity Perspective

4.1 Complex Adaptive Systems: Modelling Complexity

5. Strategy-As-Practice

6. Methodologies and Tools Framing Managers’ Strategizing Practice

7. Strategic Leadership

7.1 Leadership for Sustainability

8. Conclusion

Reference
 ABSTRACT

“Systems thinking essentially seeks to understand phenomena as a whole formed by

the interaction of parts.” (Stacey, 2011) is the bases of this paper. Strategy and

strategic implementation are core to any organization's existing and in developing in

new front A system is a whole that contains two or more parts each of which can affect

the properties or behavior of the whole complex adaptive system (CAS) is a reactive

measure that can be applied, emergent, interactive and dynamic in nature which

models the complexity of a system. Strategy-As-Practice requires three components

for effective functionality which are the practitioners, praxis and practice, Engagement

with design and positioning methodologies is consistent which found tools such as

SWOT, PEST, value chain analysis and BCG were introduced in recent strategy

workshops. leadership behavior throughout the organization will be more effective

when it’s not about leadership style but a functionality of the responsibility.
 1. INTRODUCTION

“Systems thinking essentially seeks to understand phenomena as a whole

formed by the interaction of parts.” (Stacey, 2011) is the bases of this paper and in

trying to appraise the idea Stacey (2011) is communicating, this paper will explain

this through the approaches to strategic thinking, systems thinking together with their

components, new ways of thinking about strategy which is a function of complexity

perspective. There is also the need for complex adaptive systems which models

complexity and also important in the narrative - the practice perspective.

2. APPROACH TO STRATEGIC THINKING

According to Johnson et al.’s ‘Exploring Corporate Strategy (2011)’, ‘’Strategy

is the direction and scope of an organization over the long term which achieves

advantage for the organization through its configuration of resources within a

changing environment to meet the needs of markets and to fulfill stakeholder

expectations’’.

The definition of strategy above simply typifies how we applied it at my

workplace. The efficacious characteristics of managers and organizations to be in

the know, to an extent, is required by strategic choices (Mintzberg and Walters,1985)

which leaves strategist to understand that emergent and deliberate strategy are both

relevant and must be considered.

Strategy and its development are an intentional act that is designed to

achieve a goal (Johnson, et al., 2011) which often result in strategic leadership,

planning and implementation. Strategy either falls into a reactive or proactive

process in practice, and in this context, being reactive here is by far having the upper

hand. Mintzberg's (1990) ten schools of thought about strategy formation may have

highlighted the ten different schools but in practice or even in their approach, there is

a distinct line between being reactive and proactive.

 Deliberate and emergent are basically the two major sides to strategic

thinking but the perspective that the schools of thought puts it, is rather

distinguishing to have all ten schools of thought but in carefully considering their

approaches, it distinct that strategic thinking can either be reactive or proactive. One

of the ten schools of thought - the learning school which is an emergent process has

its approach as ''management pays close attention over time to what does work and

what does not work. They incorporate 'lessons learned' into their overall plan of

action. The world is too complex to allow strategies to be developed all at once. as

clear plans or visions, strategies must emerge in small steps as organization adapts

or 'learns’' (Mintzberg, 1990).

Johnson et al' (2011)'s definition of strategy makes it clear, that strategic

thinking tends to be more efficient when its emergent rather than when its deliberate

in the context of organizational practice. This is by no means belittling deliberate

strategy which is efficient in its context - like in military, or in simply task execution,

strategy is more efficient when its deliberate which in his definition: ''strategy is a

plan-some sort of consciously intended course of action, a guideline (or set of

guidelines) to deal with a situation (Mintzberg, 1987)

In managing a department of an ice manufacturing company, a while ago, we

saw ourselves employing both planned and emergent strategy. Of course, it was the

planned strategy in place at the beginning which involved top management in the

formation process, we found out from the processes of daily activities that we could

cut done on expenses if we cut down on distribution cost (Cardoso & Lavarda,

2011). The niche of the market was not pricing or quality (because it’s just frozen

water) but availability. We had to rethink our strategy and emerge with series of

decisions that had to include input from all hierarchy of management and workers

which helped the company develop a design/pattern because our deliberate strategy

have gone bad (Johnson et al, 2011:394).

 During the rainy season, the demand is low and the prices falls, together with

sales; so, we decided to shutdown sales during the rainy season (which is 3-

4months in a year), built a storage system and started production to stock for the

coming dry season that the demand will be high, by so doing, we implemented a

more decentralized strategic process (Mintzberg & Walter, 1985) that paid off

because we took over the market due to the availability of our product. There are

external factors that influence the organization of society in general and makes those

in charge of the business develop strategic practices that support the adaptation of

the company to the environment its founded (Jarzabkowski, 2004) as in our case.

Our strategy then became not to produce to sell, but to produce to have, which is the

participation and involvement of different hierarchical contribution to the emergent

process (Mintzberg & Walter, 1985).

3. SYSTEMS THINKING

Systems thinking is a total concept that includes minimums such as

parts/wholes/sub-systems or subgroup, system/boundary/environment,

structure/process, emergent properties, hierarchy of systems, positive and negative

feedback, information and control, open systems, holism and the observer (Mingers,

J. and White, L. 2010), which Bertalanffy, (1950) recognizes their conceptual

application across many disciplines.

The good way to approach system thinking is to better undertake the

importance of strategy in its implementation be it planned or emergent; the

functionality of one’s strategy is a better understanding of basic properties of a

system were the interaction of the interconnected parts of the system is fundamental

(Vasconcellos, 2002; Meadows, 2008).

A system is a whole that contains two or more parts each of which can affect

the properties or behavior of the whole (Ackoff, 1994) and amazingly, no part of a

system has an independent effect on the whole which depicts that how any part

affects a system depends on what the other parts are doing – interconnectivity. This
makes a system whole which cannot be divided into independent parts (Ackoff et al.,

2007) but its parts can be grouped into subgroups. The interaction of the parts of a

system is the essential properties of any system not on how separately they function

i.e. the cardinal properties of any system are the properties of the whole which no

not one of its parts have (Ackoff, 1994). Interaction or relationship is the first property

of a system (Vasconcellos, 2002; Meadows, 2008), because it differentiates a

system from a cluster of parts and demonstrates how each connection is established

(Kaspary, 2014)

In understanding the core of a system, improving the performance of a part

taken separately will not necessarily improve the whole and most frequently get

worse. When a system is operating as well as possible, none of its parts may be, it’s

the way the parts fit together that determine the performance of a system not how

they perform taken separately (Ackoff, 2015), so, the interdependences inside a

system are one-sided (Vasconcellos, 2002) which is formidable in knowing how to

improve a system with a proper and functional systems thinking.

In Ackoff’s speech on systems thinking, he said ‘’Systemic principle will be

modification of a part only if it makes the whole better’’; so, the impact of the change

on the whole has to be considered, this is systemic thinking. The general and

specific reason Ackoff (2006) mentioned in his research note which are the two

reason most managers and companies do not practice systems thinking is quiet

revealing such that the general reason is one of either error by omission or error by

commission or both (which is devasting for such company), which I find applicable to

most organizations in my sphere of practice; rather than the specific reason which is

a result of revealing reason, that make known the personal performance which is not

seen immediately; this aspect will be discussed later in this paper when addressing

the practice perspective of systems thinking.

4. COMPLEXITY PERSPECTIVE: New Ways of Thinking About Strategy?

A perspective of complex systems is understanding the characteristics or

principles that are common to all complex systems and determine if they are of

relevance to social systems. Nicolis and Prigogine (1989)’s view of complexity is

‘more natural, or at least less ambiguous, to speak of complex behavior rather than

complex systems’ which makes perception of complexity in a complex system, not a

view into complex system in itself but a perception of the complex behavior that

makes up the system (Kauffman, 1993; Holland, 1995). This deals with the

functionality of the parts that make up the whole because all systems, be it complex

or not, has a working design, therefore, understanding this design is understanding

the complexity of the system – perception (Kelly, 2001).

Organizational complexity is associated with the intricate inter-relationships of

individuals with artefacts and with ideas and with the effects of inter-actions within

the organization, as well as between institutions within a social ecosystem (Kelly,

2001). The organizational complexity defined above is the apex to the approach of

complex system as seen or should be seen from the functionality of the interaction of

the parts that makes up the whole (system), with that, the root coherence of the

system can then be determine and adjusted to function better. Complexity arises

from the inter-relationship, inter-action and inter-connectivity of elements within a

system and between a system and its environment (Kelly, 2001).

Complexity is therefore associated with the intricate inter-twining or inter-

connectivity of elements within a system and between a system and its environment

(Kauffman, 1993). In assessing new/better ways of strategy is not by the view of the

whole and one (complex) entity but a breakdown and understanding of the individual

parts that make up the whole, having in mind that improving on a particular part does

not necessarily improve the system but most often make the system worse (Ackoff,

2001?).
 Strategy implementation in its view is not a factor (part) in the system that

need to be changed, but if it needs to be changed, how does the improved part make

the whole better? So, connectivity and inter-dependence of the system needs to be

underlining functions of the system; ''Complexity also emphasizes co-evolution with

rather than adaptation to a changing environment and thus changes the perspective

and the assumptions, which underlie traditional management and systems theories''

(Kauffman, 1997; Maturana, 1997), i.e., efficient strategy looks to evolving on an

original/existing idea or situation in other to improve the outcome together with the

ever-changing environment.

I believe the right complexity perspective influences the way strategy should

be analyzed and picked upon because strategy is a part of the complex system, so

in dealing with strategy, is to understand how improving on the strategy can make

the system better because strategies are dependent on the outcome of the system

not the result of the implemented strategy in itself (Kelly, 2001).

4.1 COMPLEX ADAPTIVE SYSTEMS: MODELLING COMPLEXITY

Complex Adaptive System (CAS) is a reactive measure to the improvement of

a system; In strategic thinking and its perception, adaptive system has to be the

pathways in strategy designs and adaptive implementation. CAS is an emergent,

interactive dynamic complex of interplay from which a collective impetus for action

and changes emerges when heterogeneous (many sided) agents interact in

networks in ways that produce new patterns of behavior or new modes of operation

(Plowman et al., 2007)

Back to the ice manufacturing example at the beginning of this paper, when

the emergent strategy which was applied was designed, CAS was implied as a basic

unit of analysis in complexity of the system and they act as interdependent agents

that held in a dynamic, so cooperative by a common outlook: the improvement of the

system (Uhl-Bien et al., 2007). CAS are capable of solving problems creatively and

are able to learn and adapt quickly (Carley & Hill, 2001; Carley & Lee, 1998;
Goodwin, 1994; Levy, 1992) which makes the efficiency of a strategy solely

dependent on the CAS which is a functionality of the whole.

Our approach to strategy design, implementation, system thinking and its

functionality in the system was not based on leadership style or even management

but it’s a corporate resolve from bottom-up hierarchy (Cardoso & Lavarda, 2011) for

existence and survival. In view of modelling complexity, leadership in a complexity

perspective requires that we distinguish between leadership and leaders, i.e., a

differential between the functionality and the personality were the former is an

emergent and interactive dynamic that is productive of adaptive outcomes (Heifetz,

1994) and the latter is a function of the influence in this dynamic and outcomes.

So, when it comes to efficiency of strategy as it relates to system thinking,

CAS is fundamental through adaptive leadership which is the leadership that occurs

in emergent, informal adaptive dynamics throughout the organization (Heifer, 1994;

Heifetz & Linksy, 2002). In Uhi-Ben et al.(2007) bid to further make understand the

dynamics of CAS, they proposed the Complexity Leadership Theory which is ''Much

of leadership thinking has failed to recognize that leadership is not merely the

influential act of an individual or individuals but rather is embedded in a complex

interplay of numerous interacting forces’’ were ''...embedded in a complex interplay

of numerous interacting forces'' being the functionality of this leadership style.

The underling attribute of CAS will be its originality and unpredictability

(Marion & Uhi-Ben, 2001) because it needs to exist out of the already existing

environment, and its changes occur in unexpected places, their history is said cannot

be revised (Dooley,1996) which makes it an always push to an unending almost

invasive change in trend. CAS are productive of emergent creativity and learning

which occurs when emergence forms a previously unknown solution to a problem or

creates a new outcome i.e., adaptive change (Uhl-Bien et al., 2007). The

functionality of CAS is characterized not by how complex a system is, because the

adaptive nature of CAS is proved in, not only the complexity nature of the system but
most importantly the interaction and interdependence of its parts or agents (Uhl-Bien

et al., 2007).

In view of the whole, a complex adaptive system perception should be

considered due to its emergent and adaptive nature in choosing which improvement

(strategy) is necessary to act upon while putting in focus the interactions of the part

(agents) that makes the system. This is not a function of leadership or management

but system thinking (Jaques, 1989; Phillips & Hunt, 1992; Osborn & Hunt, 2007).

5. STRATEGY-AS-PRACTICE

Chia and Mackay (2007) saw strategy-as-practice as a distinction from

traditional strategy process; Carter et al. (2008) claims was that, its a matter of

adjective choices where practice is interchangeably used for process, but Langley

(2007a) saw s-as-p as a cluster of process while others viewed it as a focus on the

production and reproduction of strategic action. Strategy-as-practice should be seen

as a means of further study of social complexity and constraint in the resource-based

view, unpacking the dynamism in dynamic capabilities theory (Ambrosini et al., 2007;

Jarzabkowski 2005; Johnson et al. 2003, 2007; Regnér, 2008) and explaining the

practice that constitutes strategy process (Johnson et al. 2003).

Strategy-As-Practice requires three components for effective functionality

which are the practitioners, praxis and practice, but the extent to which these

practitioners are understood, the vital their contribution is to the entire process.

Strategy’s practitioners are defined widely, to include both those directly involved in

making strategy – most prominently managers and consultants – and those with

indirect influence – the policy-makers, the media, the gurus and the business

schools who shape legitimate praxis and practices. (Jarzabkowski and Whittington

2008, 101–102)

Praxis is a stream of activity that interconnects micro actions of individuals

and/or groups with the institutions in which these actions (strategy) are located and

to which they contribute over time (Jarzabkowski et al., 2007), this is where
operations and action meets. Trying to piece both the practitioners and the praxis to

fit into practice, there is the need to bring together the interwoven fabric of practices

which is the interrelated elements of activity. Schatzki (2006) saw an organization as

a bundle of practices and arrangement which made organizations ‘'a transpiring amid

interconnected material orders in an interrelated practices''

Reckwits (2002) view of practice was not far from Schatzki (2006) with the

view of interconnectivity of one element to another but introduction an aspect:

''routinized types of behavior: forms of bodily activities, forms of mental activities,

form of understanding'' which make known the emotion and motivation brought into

practice but not really consciously understood by actors (Jarzabkowski & Spee,

2009). So, in bringing all the social, material and embodied ways together, this is the

attempt in translating complex set of concepts into practice (Jarzabkowski and Spee,

2009) as:

''Practices involve the various routines, discourses, concepts and technologies

through which this strategy labor is made possible – not just obvious ones such as

strategy reviews and off-sites, but also those embedded in academic and consulting

tools (Porterian analysis, hypothesis testing etc.) and in more material technologies

and artefacts (PowerPoints, flip-charts etc.)’’ (Jarzabkowski and Whittington, 2008)

6. METHODOLOGIES AND TOOLS FRAMING MANAGERS’ STRATEGIZING

PRACTICE

In Strategy-As-Practice, the emergent phenomenon which is the alternative

dominant model in strategy (Quinn, 1980), views organizations refining their

strategies increasing in the sight of new information and opportunities (Jarratt &

Stiles, 2010)

The first model which is processed-based (Chaffee, 1985, Mintzberg, 1990)

involves the application of tools that structure analysis (Gunn and Williams, 2007,

Pickton and Wright, 1998) while the emergent model views s-as-p reflecting sense-

making and pattern matching with less consideration on the internals of the firm
(Bharadwaj et al. 2005; Weick, 1995). The Traditional tools guiding formal

strategizing (e.g. strengths, weaknesses, opportunities and threats (SWOT) and

political, economic, social and technological (PEST) analyses; and Boston

Consulting Group (BCG), General Electric and Ansoff’s matrices) are considered.

What makes Strategy-As-Practice different? it emphasis on the activities of

strategy knowledge creation and re-creation by those responsible for leading change

(Jarzabkowski, 2005). Jarratt & Stiles, (2010) study on manager's strategy-as-

practice use of tools saw the utilization of SWOT framework early in their strategizing

process (‘‘the past is a great predictor in terms of how that one area of the business

[general market] will grow’ which saw one of the case study – Case 12; indicating

that ‘SWOT analysis, . . . really to gauge a view of where we are right now and to

see where we’ve been’ – Case 15’’). SWOT and/or PEST were generally employed

to define internal and external environments, forming the information platform for

strategizing. Risk analysis, profitability analysis, portfolio analysis, Ansoff’s matrix

and value streaming explored or defined the potential of alternative strategies, and

assured the mix of opportunities in the business portfolio supported growth in the

short, medium and long term, offsetting risk (Jarratt & Stiles, 2010).

Another rationale for using SWOT, BCG and portfolio tools involves forming a

frame of reference for brainstorming, strategy-as-practice tools were viewed as a

mechanism for ‘getting people thinking’ and ‘capturing the environment’; SWOT,

Ansoff’s and BCG matrices all can contribute to the development of strategy

knowledge and analysis (Jarratt & Stiles, 2010). Manager utilizing the SWOT tool

point to the fact that Limitations of SWOT were identified as the lack of emphasis on

the interaction between strengths, weaknesses, opportunities and threats, the scope

of the framework and its emphasis on looking backwards and at the current business

situation. In Jarratt & Stiles (2010) conclusion, Routinized strategizing practice often

meant applying SWOT early in strategizing, adding data generated through the

application of tools such as PEST, McKinsey’s 7Ss, Ansoff’s matrix, value streaming,
game metaphors, and/or resource and performance benchmarking to generate a

knowledge base to identify potential options, and then employing risk analysis and

portfolio analysis to assess options. Engagement with design and positioning

methodologies is consistent with Hodgkinson et al.’s (2006) quantitative research,

which found SWOT, PEST, value chain analysis and BCG were introduced in 62%,

17.2%, 15.1% and 8.6%, respectively, of recent strategy workshops (Jarratt & Stiles,

2010)

7. STRATEGIC LEADERSHIP

Top executives of large and small organizations alike have an amplified

challenge as a result of globalization resulting from complex network of relationship

across country borders with enhanced interdependencies among organizations in

many parts of the world while simultaneously enhancing their opportunities for

growth and development (Hitt et al., 2010). The now-business environment has seen

proactiveness as a niche to get over the bar in this high-staked field, with the

growing emphasis on price, quality and customers’ satisfaction, along with the

enormous increase in competitive rivalry and technological innovations as a way to

achieving efficiency while simultaneously differentiating products and services has

led organizations to develop an integrated low cost-differentiation strategy (Hitt et al.,

2011) is definitely the path for strategic leadership.

In as much as the methodologies and tools are available to use, increase in

knowledge is a major source of competitive advantage which enhances the

importance of continuous learning (Hitt et al., 2010) which is an ever-unending

mechanism of the system. This places emphasis on the ability of a strategic leader to

be able to develop and communicate a vision, build dynamic core competencies,

emphasize and effectively use human capital (an organization's knowledge largely

resides in its human capital (Hitt et al, 2001, Hitt et al., 2006)), invest in the

development of new technologies, engage in valuable strategies, build and maintain

an effective organizational culture (which is key to healthy workplace), develop and

implement balanced controls and engage in ethical practices (Hitt et al., 1998 and

Ireland & Hitt, 1999). In all, the basics of this leadership type as being strategic will

more inclusion of long-term performance than short-term returns amongst other

factors (Hitt el al, 2010).

''In looking towards the success and benefits from the opportunities available, strategic

leaders must carefully manage resources and build effective human and social capital

to create a nimble organization that is able to shift strategic actions quickly to stay

ahead of competitors, such flexibility is required to be proactive, rather than reactive

to others' competitive actions.’’ (Hitt et al., 2010)

7.1 LEADERSHIP FOR SUSTAINABILITY

Sustainability is a function of organizational leadership to recognize that these

organizations function in a wider complex adaptive system(s) which is a complex

interconnected and dynamic environmental and social system within which

businesses are enclosed as agents (Metcalf and Benn, 2012). The interpretation of

roles in a complex adaptive system is the responsibility of the leader and leadership

which is cardinal to the success or failure of the organization in its adaptivity to

complex adaptive system(s) that surround and interact with it (Metcalf and Benn,

2012). Given the level of complexity, some are of the view that it seems unlikely that

a single leader will have sufficient information to develop correct decisions for the

organization; Some scholars suggest ‘shared leadership’ as the preferred model,

arguing that leaders encouraging leadership behavior throughout the organization

will be more effective in this type of environment (Ireland and Hill 2005; Pearce and

Conger 2003) but it’s not about a leadership style but a functionality of the

responsibility.

Sustainability which is subject to leadership is more than organization

financial sustainability (Metcalf and Benn, 2012) but sustainability that is interested in

'people, planet, profit' (Cramer et al, 2006).

''Given that sustainability as ‘People, Planet, Profit’ requires adapting one complex

system to the needs of many other systems surrounding the organization, this may be

a specific human ability to encourage and evolve in order for human society (and

human systems) to reach sustainability.’’ (Metcalf and Benn, 2012)''

8. CONCLUSION

Strategy and strategic implementation are core to any organization's existing

and in developing in new front with the emergent approach seeming to be more

relevant in today's corridor of business, strategy must be thought in an wholistic

manner - systems thinking which is a total concept but seeks to understand strategy

in its implementation which makes strategy a part of the whole where improving a

part must be consist in making the whole better (Ackoof, 2015) because there is an

interdependence of the parts in the system (Vasconcellos, 2002). This could make of

a system a complex one but the complexity of a system is not a view of the complex

system in itself but a perception of the complex behavior that makes up the system

(Kauffman, 1993; Holland, 1995) which deals with the functionality of the parts that

make up the system because all systems has a working design therefore,

understanding the design is understanding the complexity of the system (Kelly,

2001).

For the need of system improvement, complex adaptive system (CAS) is a

reactive measure that can be applied, emergent, interactive and dynamic in nature

which models the complexity of a system (Plowman et al., 2007). CAS is a basic unit

in the analysis of complexity where they act as interdependent agents that are held

in a dynamic by a common output of improving the system (Uhl-Bien et al., 2007).

With several views on strategy-as-practice, I am of the view that, it should and can

be seen as a means of further study (an ever-dynamic process) of social complexity

and causal hedging in the resource-based view revealing the dynamism in the ever-

changing capabilities theory (Johnson et al., 2003; Regner, 2008; Ambrosini et al.,

2007)
 Strategy-as-practice emphasizes the activities of strategy knowledge creation

and recreation (Jarzabkowski, 2005), using traditional tools guiding formal

strategizing such as SWOT, PEST analyses, BCG, General Electric and Ansoff's

matrices. The success and benefit available is credited to strategic leaders on how

they manage resources and develop human and social capital which creates an

agile organization able to move strategic actions quickly in staying ahead of

competitors (Hitt et al., 2010), where the sustainability of the organization is also

leadership in functioning in a complex adaptive system (Metcalf and Benn, 2012)

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