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Systemic Thinking

Systemic Thinking is a process of understanding and transforming complex situations - these may include water catchments, a client's market, manufacturing and external environment, projects etc. Systems thinking works through enabling all stakeholders to see their role, their responsibilities and the organisation's strategic imperatives as interdependent.

A Systemic Thinking Map

SYSTEMS CHARACTERISTICS

Purpose: A system can only be conceived when there is a clear articulation of an organisational purpose. That is some relationship has to be articulated that allows the issue to be discriminated from the environment. The purpose usually expresses the dimensions of the relationship between the system and its environment. Boundaries: As soon as a purpose has been expressed the boundaries of the system can be identified. In this process the aspects of the environment that are encompassed in the system are articulated. The process of boundary identification also shows what parts of the environment are marginal to the system. That is just included or just excluded. Boundary judgements are an important characteristic of Systemic Thinking.

Obviously there will be some aspects of the environment. which have a close relationship with the system while other dimensions will seem to be totally unrelated. they are the power-house that give life to the system. that is a three level hierarchy�supra-system. The parts are also the only way a system can learn about its environment. Environment: This is a term often given to the supra-system and encompasses all things not included in the system by its purpose. Emergence: A characteristic of systems is that the whole has characteristics that can not be identified from a study of the systems parts. The ability to hold these three levels of hierarchy in your mind at the same time while considering an issue and appreciating the way in which changes at one level affect changes at the other levels is known as systemic thinking. system and sub-system. . The characteristics that arise from wholeness are termed emergent characteristics. Sub-systems: These are the parts of the system that have to interact in an interdependent way for the system to achieve a balance and express its purpose on the supra-system. Searching for emergent characteristics in complex systems is an important area of Systemic Thinking. The key idea here is that systems are whole entities with properties that are different from those of the sums of their (interconnected) parts.Coherence: All the dynamics that exist within a system need to have a coherence (a sense of wholeness) if they are to be a legitimate part of that system. However. A test for coherence is often conducted to assist boundary judgements. Hierarchy: Every issue that is looked at systemically can be understood as having three levels of activity. in Systemic Thinking all aspects have some relationship to the system although it may be very tenuous and the pathway of the relationship almost impossible to discover.

So is way you train an athlete to perform. and about orchestrating the many parts of the whole for optimization. The Seven Habits of Highly Effective People is a system. The house in which you live. programs. methods. Of course the engineers know this. it’s commonly believed that unless you’ve specifically been educated as a systems engineer. organizational. the human mind. mechanical. Systems are administrative in nature. arguably. while others are better at architecting the parts themselves. So is the human body and. it’s also about understanding the whole. in practice. functions. even spiritual in nature. with all its miracles of progress. While leadership is about passion and industry knowledge. That’s why we live in this kind of world. all of business is a function of the connected interplay between strategies. the pattern of threads in your pants – all of these are a product of systematic thought and action. Leadership and managerial systems need to be optimized too. the roads you travel. That’s why certain engineers are project managers and others are technical specialists. you’re probably not a real systems thinker. Really. Maybe this is the attitude we should adopt about leadership: if you haven’t been trained to think and act systematically. chemical. so does the managerial world. In actuality. then it’s not just technical systems that need to be optimized. even though some are better at connecting the parts to the whole. Yet even within the technical community. the roots of any sophisticated way of thinking can be traced to engineering and mathematics. Just like the technical world has managers and detailers. departments. Easy to agree with but. initiatives and a much longer list of organizational parts and pieces. If systems are a universal prerequisite for effectiveness. Someone sees a vision of what the company can be. as the great minds of science have proven. you really don’t know much about how to lead. the process of education. processes. social. the food you eat. how connected really are all the performance pieces? What is the vision for connecting them? With what kind of rigor and predictability does everyone work in lockstep toward that vision? Much has been written about the importance of strategic partnerships and mergers in today’s competitive business environment. Nothing happens by happenstance. and this is surely not a comprehensive listing. And certainly forming such partnerships requires a certain degree of systems thinking.Systems Thinking for Leaders The words “systems thinking” are very familiar to most engineers. electrical. someone architects the management system and others design its parts. products. people. the car you drive. . Systems are everywhere and a part of everything – from a part to an assembly to a product to an organization.

year-over-year depreciation schedules do little to describe the actual dynamics of an operating business. and as a result. and generally sub-optimizes a business. but neither benefits from the other’s presence to the extent possible. upon deeper examination. and the systems thinking that drives it. But rarely does this outwardly focused strategy include a component for driving internal change. And strangely. On the other hand. why not make them into experts at telling you how you can make the business better? Therefore. a business that sells an off-the-shelf software product. if you subscribe to this thinking. While this seems good. When you think about it. when two companies bring themselves and/or their agendas together. by doing so. It’s nuts-and-bolts performance integration we need. whole teams of professionals put on their systems thinking caps. as companies grow. As long as your team is tracking numbers and making reports. Each can optimize its ability to serve customers. Under the rubric of keeping a business “whole. On the one hand. the company separates them into different P&L centers. and for driving their portfolio of businesses. save headcount and resources.” such thinking is about financial engineering. but also sells software development services. each with a senior VP in charge. regardless of how the function is organized. deferred revenue accounts. We can make the detailed requirements and specs for assembling a complex product. keeping it fragmented and localized but intimately connected to business performance. they have a certain capacity too. the associated due diligence usually feeds into the restructuring of business units or profit and loss (P&L) centers to reduce complexity and increase accountability. but at the same time we have no specs for bolting departments together to meet all of our internal customers’ needs. Take. Where are the synergies and how do we build them? How do the strengths of the one organization overcome the weaknesses of the other? Many large companies have a “grand strategy” for customers. for example. you might spend that money to help Accounting truly support the decision-making needs of the business. In the process. the preoccupation with structural configuration is the antitheses of systems thinking. you might spend time and money to reorganize the accounting function and. The tracking and reporting processes not only have a certain capability. accruals. not about effective business architecting. Debits and credits.In fact. the more P&L centers you have the better. not process integration. Because an ivory-tower accounting department won’t tell you much about how things really . The result is organizational fragmentation. not just a tracking and reporting mechanism. So maybe at some point it becomes more important to reengineer the Accounting process. The accounting team can be an analytical force. The problem is that certain attempts at systems thinking can be shallow. Software products and software services are two very different businesses. customers lose a potential value proposition they might have had with better systems thinking and execution. that’s exactly what’s needed to perform better.

and there’s a lot of power in optimizing that. While certain reports will help you characterize the state of the business. they won’t truthfully tell you the state the business is in. . we need better systems thinking when it comes to coordinating operational synergies. This is THE WAY you do business.work where work is done. Even though Wall Street and executives are preoccupied with financial systems thinking.