Systems Thinking Explained

Understanding proceeds from the whole of its parts, not from the parts to the whole as knowledge does." ~ Russell L. Ackoff

What comes to mind when you hear, "systems thinking"? For many it might prompt thoughts of process, procedures, routine, checklists, complexity, bureaucracy, constraints, and maybe even reducing individual initiative. This is not wrong, just incorrect, and incomplete. Think about dominos lined up as in the picture provided. Each domino is part of the system: by working together, each domino has a role to play in ensuring the goal of the system is fulfilled. In this case, if one domino fails in its' individual role to fall into the next, other dominos are impacted. A similar analogy applies to businesses or organizational functions. Human and business systems allow us to reach goals we could not do on our own efficiently and effectively.

A "system" can be defined as a collection of elements or components that are organized for a common purpose. Systems are all around us. Workplaces, families, government, sports teams, businesses, community groups, climate, the internet, relationships all involve systems, often in multiple forms.

"Systems thinking" is when you start to look beyond the simple cause and effect relationships we generally learn to make sense of the world. Cause and effect evolved from the physical sciences where relationships between things are simplified into the most basic elements to determine what action directly results in a corresponding effect. Once proven, these often become rules or laws and are repeatable. Beyond the physical sciences, this approach is much less applicable yet has permeated approaches in social sciences and business. This undermines common assumptions and approaches in businesses and organizations.

In Simple Habits for Complex Times, authors Berger and Johnston relate systems to teamwork. As they highlight, we often say, "teams are more than the sum of their parts". There are cause and effects aspects such as experience, resources, tools, time which when changed, can directly impact team success. Yet from a systems perspective, there are other aspects that indirectly influence or impact team success such as values, gossip, gridlock, trust, and commitment. The authors suggest rather than focusing on the cause and effects aspects, which is where our human, rational thinking usually goes, to instead "focus on what the system is currently producing" and influencing its' emergence.

You may be wondering what the difference between strategic and systems thinking might be. Strategic thinking defines long-term success which can be communicated out broadly. This is more common in organizations than systems thinking yet powerful strategic thinking will incorporate thinking about systems. Without changing existing systems in some way, too often the status quo is the default. Therefore large-organization transformation programs are often necessary. Ever try to implement a new IT system for work without fully considering the impacts on employees or engaging them in designing it? Strategic thinking is impacted by systems thinking.

Here are 5 benefits to building systems thinking skills:

1. Ability to take a big-picture approach to tackling workplace problems

2. Identify problems quickly

3. Helps in making the right business decisions

4. Learning from failure

5. Avoid wasted time, money, and resources

Here are 3 ways to start becoming a systems thinker:

1. Know what factors drive your business to success - map these system relationships and economic engine

2. Learn how decision choices have both direct and indirect impacts

3. Identify feedback loops and use them

For Small Medium Enterprises (SMEs) to embrace the power of systems starts with defining key processes which are core to the business. Marketing, Customer Service, Production, Delivery, are often a good place to start. Keep it simple and just outline in simple one-page flowchart the high-level steps involved from start to finish (or handoff) of that function. This normally provides clarity to how the business actually operates and identifies gaps in the "system" to deliver to customers what is promised. This system clarity is also a wonderful visual tool for discussions and training new staff as the business grows.

In The 7 Attributes of Agile Growth, authors Cupp and Warren suggest a simple seven step process beginning with identifying your, "top five to ten Core Processes". Further, they suggest,

most often, the pursuit of growth distracts from the identification and optimization of the Core Processes

and this gap undermines improving workflow, profitability, efficiency, teamwork and customer value. They suggest that the best places to start thinking about systems are in:

1. The acquisition and development of talent;

2. The delivery of brand promise to customers;

3. Financial measurement and reporting.

For larger organizations, systems are often so complex that they are either not documented or not talked about. This encourages the shift to "silos" as few people, other than maybe some senior leaders have a good understanding of how different segments of the operation function together to deliver the value of products or services as customers expect. Incorporating the key or core processes into new hire onboarding could help clarity how value is created and delivered to customers, reducing build up of bureaucracy and enhancing employee engagement.

Further to this, in his book, SYSTEMology, David Jenkins points out that most methodologies for understanding and improving business systems have been geared toward larger businesses. And he's right, 6 Sigma, Lean, process mapping, have primarily been developed and devised by and for large organizations. Jenkins outlines his own seven-stage process including defining, assigning, extracting, organizing, integrating, scaling and optimizing which is proven to help SMEs scale growth effectively.

In today's fast changing operating environment, bringing systems thinking into focus is powerful and not nearly as complicated as one might expect. Take the first steps today and watch how the value being lost today can grow your business.

Jerome Dickey, MA, ACC, CPHR, Q.Med