Systems Thinking.

Doing business involves many decision-making and problem-solving processes. Although some problems are foreseeable and more easily prevented than others, there are various issues that often arise and require business leaders' immediate attention.

When dealing with problems at-hand, business leaders often choose to approach those problems on a case-by-case basis instead of viewing them as part of a system. This often leads to poor decisions and missed opportunities.

By introducing 'Systems Thinking', we can arm decision-makers, and indeed entire teams, with a stronger perspective. To define Systems Thinking, many would default to such a definition:

Systems Thinking is a holistic approach to analysis that focuses on the way that a system's constituent parts interrelate and how systems work over time and within the context of larger systems.

To better explain this, we should break it down even further by asking: 'What exactly is a system'? defines it as this:

In the most basic sense, a system is any group of interacting, interrelated, or interdependent parts that form a complex and unified whole that has a specific purpose.

So why might this be important?

Well, imagine a set of Christmas lights stops working... we've all learned that this is usually just due to a single bulb being faulty and halting the entire circuit from completing. This example illustrates that one individual component can have a huge effect on the entire system it belongs to, and highlights that decisions made (whether to investigate the set, find the fault bulb, and replace it) can have a huge impact on the outcome (buying one single bulb replacement, or an entire new set of 100 bulbs on a new circuit at a much higher cost).

While this example may seem crass compared to complex business decisions, the principle remains the same.

Business Applications.

It is important for businesses to apply systems thinking in their business methodology because it can help them make effective decisions that save time and money.

Becoming a system thinker is not so distant from the concept of first principles. First, you acknowledge the overall system, then you break apart all the components that comprise it. For example, we could take a car to be a system. The car doesn't operate based on the engine alone, yet the engine is certainly a key component to making sure the car can fulfil its specific purpose of transporting the user. Although the engine plays a crucial part, there are thousands of other smaller components that are mandatory for success.

Generally, people tend to focus on the problems that are on the tip of the iceberg but sometimes the bigger problems have deep roots underneath the surface. It's therefore sensible to identify whether a particular problem is an isolated problem, or a systematic problem.  

An organization is made up of many departments and sub-units working together to achieve the organizational goals. If a business failed to meet their sales quota for the quarter, the boss might instantly scrutinize a particular underperforming new sales team member... but the problem could be with many other components. It could be the on-boarding process and quality of the HR team, the training and quality of the trainer, the available resources assigned to the sales team, the brand perception and positioning—and indeed how their designated target market reacts to this—or any wider range of variables relating to this system for sales operations.

By acknowledging and adopting Systems Thinking, businesses are able to:

Gain A Three-Dimensional Outlook.

In general, people view and approach problems differently. Likewise, when you are in a specific department, it is almost inevitable for you not to perceive the problem based on your department.

For example, the design team will have a different approach from the accounting team when it comes to solving the same problem. Eventually, it could lead to a seemingly endless discussion which drains productivity from everyone involved.

In this situation, a systems thinker would apply a holistic approach to this problem. They would evaluate all of the components to fully understand the system before they make any decisions. This allows them to look at the entire ecosystem instead of jumping to the decision-making process with limited knowledge or perspective.

Embrace Interconnected Culture.

Different roles focus on different tasks, therefore, employees tend to focus on what is assigned to them.

A business leader with a system thinking approach challenges their employees to understand how the business works and encourages them to help improve the processes to meet the corporate goals.

This culture promotes collaboration and strengthens team bonds by highlighting the interconnected nature of all departments and roles.

Champion Long-Term Thinking.

There is a famous saying about whether you fight fires, or prevent fires. Perhaps your business currently solves problems individually as they arise, and that works fine for you. However, by taking the time to reframe business components as part of larger systems, you can improve processes and prevent potential future problems.

In a way, systems thinking could essentially become the champion of your contingency planning. This holistic mindset goes beyond the direct results of an action, and explores the connected variables and rippling effects made elsewhere.

Invite Problems.

Problems can be troublesome roadblocks that slow progress and irk morale. If we reframe our thinking, we can seek out problems to view them as opportunities for improvements.  After all, many great products and services exist because a great thinker analysed a problem and found an ideal solution.

By becoming an active problem solver and decision maker, you might not only strengthen existing business practices but also find new opportunities altogether to grow or solidify your brand, your team, and your processes. The perspective of a great systems thinker is also undoubtedly improved with shared knowledge and insight, so aim for your workplace to become a breeding ground for great, collective, thinking:

Make your problem-solving mentality contagious.

Analysis vs Synthesis.

As a final consideration, let's outline the key difference between analysis and synthesis within Systems Thinking—and why they're important.

The analysis refers to how a complex problem is broken down into individual or separate components of the larger system. Synthesis focuses on how each element combines and connects to make up the whole system.

Systems thinking focuses on synthesis. It focuses on the relationship between the dispersed elements that reflect the whole system.

For example, imagine your business was considering a new computer software package for the marketing team. Typically, the decision-maker might analyse the cost of the package, the capabilities of the software, and the likely quality of the output. With Systems Thinking, to ensure the software actually generates the desired output there would be a synthesis of all connected variables such as employee retraining, time required, and even any differing computer requirements for new software.

Again, we find this links beautifully with thinking in first principles.

If you discover a problem, analyse the troublesome components to pinpoint the issue. Then, take time to address any synthesis issues—to ensure that your system as a whole is considered and addressed.

Further Reading.

To complement this insight, we recommend exploring 'Thinking in First Principles'.