Ackoff Center Weblog

What is systems thinking?

April 10, 2023

by editor

 

Find out what it is for, how it works, and why it’s so important for businesses.

 

Systems thinking is fundamental to understanding complex environments and proposing solutions to the challenges of our time. Changes in thinking and practice are fundamental, and understanding them is the first step toward systemic practice.

Everything is interconnected in one way or another, as our society has organized itself in a systematic way. This observation has caused systems thinking in organizations to gain prominence in the business world.

A system is a set of components that interact in an organized way – one part influences the other in a reciprocal way. These systems also relate to one another. For example, departments in business work in an interrelated way and need to be aligned if the organization is to achieve its long-term goals and objectives.

What is systems thinking?

Systems thinking is the ability to understand facts not only in their own right but as they relate to other relevant people and instances. By practicing systems thinking, we are able to grasp the implications of an event for those directly or indirectly involved.

Systems thinking considers several aspects in order to carry out certain actions assertively and effectively, working together towards a single purpose and prioritizing what is good for the company as a whole. Such a “systemic view” is important for considering and enacting improvements.

Professionals who can see the relationships between different departments make decisions based on what is best for the company as a whole, anticipating the possible consequences of each choice for the different sectors and deciding which path will best direct the organization toward its goals.

In other words, systems thinking engenders a global perspective, which doesn’t distinguish sectors or treat processes individually.

The discipline seeks to understand structural elements via complex models. Interpreting reality systemically means seeing circles of influence instead of straight lines. Tracing the flows of influence reveals patterns that repeat themselves over and over again, for better or for worse – you can make a flowchart to have a better understanding of the flows of influence.

Systems thinking in organizations is the opposite of linear thinking – a line of reasoning which considers companies as assembly lines: taking one step after the other, with sectors working more or less independently, resulting in the final product.

Differences between systems thinking and linear thinking

Systems thinking allows teams to look at problems as a whole, understanding the impacts which each action may cause. Alterations within a certain company sector often affect other sectors, and once this is understood by all collaborators, problems can be properly resolved as soon as they arise.

Linear thinking, on the other hand, focuses on just one task at a time and solving a specific problem, often disregarding the latter’s impact elsewhere.

Why is systems thinking important?

An Introduction to the Systems Approach

By H. William Dettmer

There is no question that in our age there is a good deal of turmoil about the manner in
which society is run. Probably at no point in the history of man has there been so much
discussion about the rights and wrongs of the policy makers...[Citizens have] begun to
suspect that the people who make the major decisions that affect our lives don’t know
what they are doing... They don’t know what they are doing simply because they have
no adequate basis to judge the effects of their decisions. To many it must seem that we
live in an age of moronic decision making.
—C. West Churchman

The Systems Approach (Introduction) [1:vi]
Sounds like Churchman is talking about us today, doesn’t it? The preceding quotation comes from the
introduction to his seminal book on systems thinking, The Systems Approach, written in 1968. That’s sad
testimony to the fact that few decision makers in the world have learned much about complex systems in
the last 37 years. In the immortal words of Winston Churchill, “Man will occasionally stumble over the
truth, but usually he just picks himself up and continues on.”
We’ve been “continuing on” for four decades. It’s time to go back and revisit that truth we stumbled over
in 1968. We can snicker at the fact that life seemed so much simpler then. The world has “gotten smaller” as travel,
communication, the information age, and the Internet have combined to connect people and societies as never be-
fore. As economies have evolved from regional to national to transnational to global, our organizations have grown
in size and complexity. It is nearly impossible for the people running them to fully understand what goes on
“where the rubber meets the road” in nations, governments, and companies.
Analysis versus Synthesis
Since the turn of the century (the 20th century, that is), the accepted approach to dealing with increasing com-
plexity is to try to reduce it into manageable “bites” and address them in isolation. This approach is referred to as
analysis. We analyze a complex situation or issue by trying to break it down into component pieces and consider
each in isolation from the others. This kind of thinking has its roots in analytic geometry, where one basic axiom is
that the whole is equal to the sum of its parts. Think about that for a moment. The underlying assumption behind
this conclusion is that all of the parts are essentially independent of one another.
But although this mathematical thinking might apply to bricks and other inanimate objects, it fails when ap-
plied to dynamic, homeostatic, or cybernetic systems [2:28-31]—which generally include any organic systems, or
those where human beings have a role. And unfortunately such systems are the ones that exert the most influence
on our lives. We see the failure of the analytical approach all the time: The Rohr Corporation’s Riverside, Califor-
nia, plant recorded a 55% increase in profits in 1996. Great news, if all you focus on is short-term profits. When
you look at the larger system, you see the reason for that increase is better “efficiency” (meaning cost cutting) tem-
porarily had a greater impact than the 3% decline in sales. Or, as the corporate treasurer enthusiastically observed,
“Costs have come down quicker than our revenue has decreased.” [3:G-1]. (I’m sure the 3,500 people laid off at
Riverside by Rohr in the preceding few years are immensely gratified to know that!) The Rohr story is a classic
example of self delusion by analytical thinking.
If an analytical approach to management is counter-productive, what should we be doing instead? A holistic,
or whole system approach is considerably better suited to the kinds of complex organizations we usually encounter
today. What’s the difference between an analytical and a systems approach? The systems approach represents syn-
thesis—thinking with an integrated perspective about the whole enterprise.

An Introduction to the Systems Approach

 

 

Evading the Success Trap

By Gordon Institute of Business Science  

07 Nov 2022

Most companies accept that innovation is essential to ensuring long-term sustainability, but most struggle with the practicalities of integrating innovation into their ‘business-as-usual’ mantra.

One of the many paradoxes of business is that success exposes a company to the risk of ultimate irrelevance. Companies that are conscious of this risk avoid the success trap by integrating disruption or innovation into their business models. The trouble is that it is fiendishly difficult to do, and many fail to get it right. As always, understanding the problem is the first step in solving it.

It’s easy to see why success can act as a trap. While business success is typically built on the back of innovation, the reality is that when it all pays off, the focus shifts from thinking out of the box to creating an institution – the focus shifts to putting in place the processes to maximise profits and minimise costs. Conceptually, the business’ mindset moves from how to get ahead to how to stay ahead. The two can seem mutually exclusive, especially if, as is almost inevitable, the company structures itself in traditional ways.

 

To cite one glaring example: the typical corporate structure of business units focused on meeting targets can work well in the short term, but it actually militates against innovation. This article aims to understand why that should be so and how to put a company into a stronger position to build innovation into its “business-as-usual” structure and mindset.

First, one needs to understand how innovation works. Then, based on this basic understanding, we can begin to extrapolate some principles for how a company could integrate innovation into the way it does things. At the same time, it will become clear how traditional ways of doing business are often inimical to the development of innovations.

 

Workplace design

Steve Johnson’s insight about the English coffee house as the epitome of a space that nurtures design suggests how inhospitable to innovation the industrial design of many workplaces is. By contrast, the “cool” workplace of the archetypal technology company, with its chill rooms and campus atmosphere, starts to make more sense. Such companies depend on par excellence in fostering innovation.

But for more conventional companies, all is not lost – Johnson cites the work of researcher Kevin Dunbar, who filmed how work was done in several science labs around the world. On analysing the videos, he found that the most important ideas did not emerge from the classic lab environment. Almost all of the breakthrough ideas emanated from the weekly lab conferences. Everybody got together to share their latest findings and thoughts – often, it was sharing mistakes or frustrations that sparked the innovative thought. Johnson calls this environment in which different people from different backgrounds and interests come together to share what they are doing during a “liquid network”.

So it might not be necessary to spring for acid-green beanbags and a ping-pong table – the good old-fashioned conference table with everybody around it regularly will work just as well. It’s all about creating a semi-chaotic environment that allows people to see how seemingly disparate things could collide and create that spark of something new.

Organisational design

Equally important is organisational design. The typical organisational design tends to create silos (business units, functions like marketing, sales or IT), making it very hard to create the kind of physical environment, as described above, in which a wide variety of ideas, data, and interests can fruitfully collide. The silos (inadvertently) created by typical organisational designs also prevent people from seeing the company as a whole. Useful insight comes from Dr. Russell Ackoff, an organisational theorist: “In any system, when one improves the performance of the parts taken separately, the performance of the whole does not necessarily improve and frequently gets worse.”

Great innovations in marketing, for example, do not necessarily translate into innovation that makes the company more competitive or serves its customers better. One should never forget that most of the important business processes are horizontal, and that way of thinking needs to permeate the organisational design.

It’s no exaggeration that this problem of silos and the negative impact they have on all aspects of a company’s performance, not just its ability to innovate, is one of the perennial business challenges. The often-heard desire for as flat a corporate structure as possible is essentially a wish to solve the silo problem.

One way to encourage employees to see the company as a whole, as a codependent and interdependent system, could be to look at how performance is measured. Too often, performance measures mirror the organisational silos or the crude bottom line, but careful design could link them to common goals and objectives. This approach could nudge people to think about running the business better and how to change it for future relevance.

Corporate culture

Culture is a notoriously slippery concept and difficult to change, but it is a potent force in any organisation. A company that wants to integrate innovation into its DNA certainly needs to take steps to promote a culture of reinvention. As discussed in the previous point, rethinking how performance is measured will lay the groundwork.

Another important foundation for a culture of reinvention would be to change how failure is viewed. As Steve Johnson argued, it is often when people discuss their failures with colleagues that connections are made that spark innovation. One of the things that people have always noticed about the business culture in the United States, compared with that in the United Kingdom or South Africa, is the diametrically opposed way that failure is viewed. Typically, in the United States, failure is seen as a learning experience that makes entrepreneurs better able to succeed; here, it is something to be swept under the carpet. In the corporate environment, in particular, failure is very much a dirty word. In contrast, in the United States, it can be seen as identifying an individual prepared to try new things. (I suppose the quantum of failures would be important!)

To read the rest of the article click on the following link:

Evading the Success Trap

 

On the Use of Models in Corporate Planning’ by Russell Ackoff- and Why Militaries Should Read this.

Ben Zweibelson, PhD

 

Image source: https://twitter.com/reuterspictures/status/1623019893720248320/photo/1

When the military thinks “problem”, what is the very next word associated? 100% of the time, it is “solution.” We correlate a “problem-solution” formulaic arrangement through our particular doctrinal, linear-causal, systematic manner of pairing a managerial decision-making methodology (called JPP, MDMP, MCPP, and a host of cloned equivalents) with a mechanistic, Taylorism inspired and Newtonian styled frames (paradigms) for interpreting reality. But is there more than “Imagine goal, find problem preventing said goal (ends), identify solution, direct ways and means to solve problem, achieve predetermined goal, rinse, repeat?”

Okay, I just tossed out a bunch of concepts that either cause readers to say “what the hell is that”, or for some, a fierce crossing of the arms and a “harumph, that is not true! Military doctrine is the best. Have you read the new FM 3–0?” If you are still reading, rest assured, I can provide links and sources to these important concepts. But let’s get to Ackoff and this nice, short article that is pound-for-pound, one of the most powerful articles I use in design education. Ackoff delivers in a mere 8 pages some mind-blowing content, all conveyed in non-academically dense sentences. This article should be read by everyone involved in military education, particularly at the cadet and basic levels in my opinion- as this would help confront the complete dominance of our ancient Greek logic that posits “individual plus designed action leads to planned result”, or “it is better to do anything rather than nothing”- the basis for our legends and lore of heroic action, our basis for leadership, and our basis for “ends-ways-means is the best framework for appreciating complex reality and simplifying it so we can observe, orient, decide, and act faster and better than a rival”- hence the Boydian priests that overlap with the High Priests of von Clausewitz (they share common ground in ancient Greek logics).

On the Use of Models in Corporate Planning’ by Russell Ackoff- and Why Militaries Should Read this.

A Collaborative Business Culture Is a Must-Have for Transformational Change

By Myles Suer

October 26, 2022

CMSWire - The Leading Community of CX Professionals

 

Collaboration & Productivity

 

With a culture of collaboration, everything is easier. Can you use some of these collaboration strategies for your teams?

In my discussions with CIOs over the last several years, they have repeatedly stressed the importance of considering people and processes before technology. The transformational change CIOs are leading needs to fit with their organizations.

After reading "Smarter Collaboration" by Heidi Gardner and Ivan Matviak (the book reaches shelves on Nov. 1), I think collaborative business culture is a must-have for organizations needing transformation change. This culture should, as a goal, put IT into a team that is creating the corporate future. For this reason, I recommend "Smarter Collaboration" to business leaders and CIOs. With a culture of collaboration, everything is easier.

Why Collaborate?

Gardner and Matviak start their book by asserting that competition moves faster in the digital era. Speed can be a competitive edge or deterrent. The authors argue firms that succeed at transformation figure out how to collaborate across silos and build teams with complementary skills. And this is increasingly the essence of competitive advantage. While technology and the ability to “sense that the snow is melting at the edge” still matters — without collaboration, some organizations can have a "Kodak moment" where the middle of the organization rebels against corporate strategy.

For this reason, businesses today need contributors that can build networks across boundaries and then invoke those networks to deliver value to their companies. The author’s research shows collaboration accelerates innovation, increases customer satisfaction and enhances employee engagement. And these result in higher revenues and profits, greater market share, improved efficiency, accelerated growth and improved transparency and risk management. To prove this point, they provide case studies from multiple industries.

Importantly, smart collaboration also impacts employee engagement. Today, 30% of employees worldwide and 67% in the US say they are not engaged. Expectedly, working remotely tends to increase worker isolation. Given this, CIO David Seidl said in a recent #CIOChat that “today, we're focused on how we build connections and communities for new hires and maintain it for everyone.”

This matters, the authors say, because today’s business uncertainty and complexity are best tackled by a diverse team with complementary talents. The reference to complexity is similar to Professor Russell Ackoff, who suggested, “our environments have become larger, more complex, and less predictable — in short more turbulent.” (“Creating the Corporate Future,” Wiley Press, page 4).

A Collaborative Business Culture Is a Must-Have for Transformational Change

 

 

Susanne Kaiser on DDD, Wardley Mapping, & Team Topologies

"Wes Reisz: Great. There's so many things that are in software. What made you decide to bring these three things together to kind of a story?

Susanne Kaiser: Yes. So for me, the combination of Wardley Mapping, Domain-Driven Design and team topologies evolved naturally over time, but it was at its core driven by system thinking. So, Dr. Russell Ackoff, one of the pioneers of the system thinking movement, he stated that a system is more than the sum of its parts. It's a product of their interaction. So the way parts fit together, that determines the performance of system, not on how they perform taken separately. So, and when we are building systems in general, we are faced with the challenges of building the right thing and building the thing right. Right? And building the right thing addresses effectiveness, and addresses questions such as how aligned is our solution to the users and business needs. Are we creating value for our customers? Have we understood the problem and do we share a common understanding and building the thing right?

Focuses on efficiencies, for example, efficiency of engineering practices, and it's not only crucial to generate value, but also being able to deliver that value. How fast can we deliver changes, and how fast and easy can we make a change effective and adapt to new circumstances. So, the one doesn't go without the other, but as Dr. Russell Ackoff pointed out doing the wrong thing right is not nearly as good as doing the right thing wrong. So, by considering the whole, and having effectiveness and efficiency in mind to build the right thing right, that we need a kind of like holistic perspective to build adaptive systems. One approach out of many is combining these three perspectives of business strategy with Wardley Mapping, software architecture, and design was Domain-Driven Design, and team organization was team topologies. So, in order to build and design and evolve adaptive socio-technical systems that are optimized for fast flow of change."

Susanne Kaiser on DDD, Wardley Mapping, & Team Topologies

“Systems Thinking” announced as 2022-2023 Common Experience theme

The Common Experience at Texas State University has announced that the 2022-2023 theme will be "Systems Thinking." Texas State presents an engaging academic theme each year, providing numerous opportunities for everyone — students, faculty, staff, and community members. Systems Thinking was chosen as the Common Experience theme for 2022-2023 because students are made of, surrounded by, and embedded in systems from the moment they enter the world. When they choose to attend Texas State, they choose to insert themselves into one of the most impactful systems of their lives — one that will allow them to change the world.​ When one understands a system, one can better navigate it.​ When one can navigate a system, one can advocate for change.​ As part of the Common Experience, all incoming first-year students receive a critically acclaimed book related to the year’s theme. Students discuss the book in their University Seminar class and other courses. The 2022-2023 Common Reading book is Weapons of Math Destruction: How Big Data Increases Inequality and Threatens Democracy by Cathy O'Neil. First-year students will receive a free copy during Bobcat Welcome Week. The Common Experience team encourages and welcomes interdisciplinary collaboration. To discuss the theme, events, and activities planned for the 2022-2023 academic year, contact (512) 245-3579 or [email protected]. 

Julia Brodsky

Contributor

 

I inquire about the meaning of education in our fast-changing world.

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Nov 9, 2020,04:34pm EST

Primary school students enjoy discovering interdependencies in the world around them.

getty

We live in a world of complex, interconnected systems. They range from big corporations and the Earth’s biosphere to social networks and our own bodies. Complex systems have many components that interact with each other in dynamic patterns. They chug along quietly and uneventfully until, one day, they unexpectedly turn our world upside down. Hurricanes and pandemics, elections and market crashes - all inevitable products of complex systems - ceaselessly remind us of our limited understanding of the world. What’s missing is the ability to notice and comprehend the counterintuitive nature of complex systems. This ability, called “systems thinking,” is recognized by educators, scientists and entrepreneurs as one of the most valuable skills for the 21st century.

 

 

The concept of systems thinking was introduced several decades ago by the late Jay Forrester of the MIT Sloan School of Management, who founded the field of systems dynamics to describe economic behavior and advance management education. Forrester recognized that systems thinking could, and should, be taught to students starting at an early age. Dr. Tracy Benson, the President and CEO of the Waters Center for Systems Thinking and one of the international leaders in the field of systems thinking education, is helping to implement Forrester’s vision. The Waters Center provides training in habits, strategies, and tools of systems thinking to educators and entrepreneurs around the world. 

 

A recent longitudinal study conducted by the Waters Center explored the benefits of systems thinking in schools. The study found that systems thinking helped students connect their learning to real-world problems, improve their decision-making, and consider the unintended consequences of their choices. Likewise, a framework for K-12 Science Education developed by the National Academy of Sciences recommends the incorporation of concepts such as “stability and change” and “systems models” into the science syllabus. The framework, which informs state-level educational decisions, draws on the most recent scientific research on the best ways for students to learn science. However, systems thinking has yet to become a backbone for a modern school curriculum.

Why Students Should Be Taught Systems Thinking Starting In Kindergarten

Doing management the wrong way

In the UK, the supposed panacea of good management has proved to be a chimera. The country has been training managers in the discipline of managing for decades, but very little good has come of it.

If one looks at the public and private sector one sees more bureaucracy, greater intensification of work in which fewer people have to cope with downsized operations to deliver greater shareholder value, while the public sector is not improving in spite of huge cash injections and the UK falls behind Germany, the US and France in productivity.

According to the National Audit Office, the public sector in the UK spent £7 billion on consultancy in the past three years to little effect.

Management itself has become the problem. The reason for the failure is complex. In a nutshell, it is because the UK has been following the wrong way of doing things and constantly trying to get it right. But as the systems and management theorist Russell Ackoff said: "The righter we do the wrong thing, the wronger we become. When we make a mistake doing the wrong thing and correct it, we become wronger. When we make a mistake doing the right thing and correct it, we become righter. Therefore, it is better to do the right thing wrong than the wrong thing right."

The wrong thing managers have been doing is central planning, a command-and-control management model reminiscent of the Soviet Union. On top of this essential wrongness are a host of service companies and consultancies from IT to PR who reinforce the model with their own additions and refinements.

Doing management the wrong way