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The essentials of systems thinking and why leaders and managers should take note

picture: Anthony Scanlon

Systems thinking is something of an ugly duckling, it’s one of those ideas that you feel you know but can’t quite put your finger on. You might have come across it in management literature, mentioned on a course or from an informed colleague after all it unpins some of the key management concepts of our time such as lean and six-sigma. However comparatively few management resources look at the concepts and techniques of systems thinking directly. Which is a shame because when the ugly duckling sheds its feathers, systems thinking reveals itself as a completely different way of seeing problems and finding solutions.

It’s true that appreciating systems thinking feels rather like mountain walking. When you set off, the summit is there in front of you, but as you climb you of course realise that the summit isn’t in fact the summit but just one summit in the foothills, and now the real summit lies just beyond. Except it isn’t, because once again that summit also turns out to be just one of the foothills. I’m not suggesting the foothills of systems thinking are a bad place to be, but rather that systems thinking is more demanding and has a greater depth (but is of infinitely more use) than a typical “Fix Your Organisation in 10 Days” business book.

Here then is our introductory guide to systems thinking: just some of the essentials to whet your appetite for one of the greatest but least well understood ideas to emerge from organisational science over the last 5o years. We’re on the approach to the mountain!

What is systems thinking?

How then can we describe systems thinking? Well for most of us we reach for the ideas we already know – we know about using a ‘healthcare system’, being moved by a ‘transport system’, or paying money because of a “tax system”. Extracting meaning from these contexts we can guess that the word ‘system’ indicates:

  • a collection of elements
  • that the elements are joined together in some way
  • they exist in a relationship for a specific purpose
  • and are collected inside a boundary that separates them from elements in other systems

How can this apparently simple recipe help solve complex organisational problems?

These are pretty much the basic characteristics of a system as would be defined by a systems thinkers. A pertinent question now then is how can this apparently simple recipe help solve complex organisational problems and under pin advanced concepts such as Lean?

The answer is that systems thinking is a simple idea – it is simply seeing in terms of systems. Once you build the capability to see systems, potential systems become visible everywhere.

See those wheels, chain, pedals, handlebars and saddle? That’s a system, one that’s more usually called a bicycle. See those seats, windows, doors, engine, brakes, lights, cup holders, gearbox… that’s another system, more usually called a car. Our bodies are systems as well and the elements are heart, lungs, limbs, brain but also consist of sub-systems such as the digestive, blood and nervous systems.

Neither a car nor a bicycle have a physical boundary around them in real life but we know conceptually that there is a boundary. We don’t confuse road signs and bicycles. A bicycle is a bicycle and a road sign is a road sign. They are separate in our minds; there is a mental boundary separating our understanding of the system of ‘road sign’ and the system of ‘bicycle’. But our bodies do have a physical boundary of sorts in the form of skin that wraps our organs and skeleton. You can discover just how important that boundary is if you puncture it!

Boundaries

“Boundary” is a systems concept that can throw up some interesting ideas and challenges. Our ‘skin boundary’ makes much practical sense in terms of our physical bodies but what about our mental processes that in a sense inhabit our bodies? Where is our body boundary in terms of our thought and emotion? In that context few of us would feel our boundary is our skin, rather we have a sense of a ‘personal space’ beyond our skin and we could say that that is the boundary of our system.

In respect of organisations boundary is also an important concept. We could have a debate about where we would put the boundary around a school (e.g. are parents and carers inside the conceptual school boundary or outside?) or around an organisation (is the local community inside the boundary or outside?).

What I’m trying to illustrate is that once you see the world in terms of systems, systems concepts can be used to understand situations in a very different way to our usual approach. The concept of a boundary is not going to be useful in all systemic investigations but in areas such as to do with organisational design, the scope of management, lean culture, social justice in organisations and many others, it almost certainly will.

We return to our simple bicycle example to explore another systems concept.

Emergence

We are so familiar with the system of a bicycle that if we saw just the components laid out we’d likely think “Ah-ha there are the bits of a bicycle”. But if you were visiting earth from Mars and there were no bicycles on Mars you’d look at the bits and see things shaped like a saddle, wheels, chain, brake levers etc. but the idea of a bicycle wouldn’t occur to you. If you didn’t know what a bicycle was you wouldn’t see in those components the use for a bicycle as a means of transport. This brings us to another key idea of systems thinking the idea of emergent properties. Emergent properties are:

  • qualities or outcomes of a system that are not elements of that system and only exist if the system’s components are present and are connected as intended

Return to the car system mentioned earlier, the emergent property of a fully assembled (connected) range of car components is something like: ‘a personal means of road transport for driver and passengers’. Compare that emergent property of the entire car system with what we’d have if we abstracted one element, say the gearbox. If our system only consisted of a gearbox we’d be unlikely to look at it and think “wow what a great means of transport – I can go on holiday now”. Similarly a car that’s complete except for a gearbox also isn’t going to take us very far. In either case the emergent property of the car is lost when the system is changed.

There is a connection between car, bicycle and body systems and organisations

So we’ve talked about pretty obvious stuff – literal systems of cars, bicycles and bodies and interesting though it is hard to see how they have much to do with management and leadership of organisations.

Here then is the giant leap in thinking that we need to make (we’re getting pretty high up in the foothills now!) – a system is whatever we make it out to be – whatever we see in the real world that functions as a system can be analysed using the systems concepts we’ve touched upon and the many others that we haven’t had time to explore. What does this mean for leadership and management practice? Well, in our organisations we can identify many different systems, we might see a ‘reward system’, we might see a ‘new product development system’ or we might even see a ‘staff rest area cleaning system’. The systems we see may have been created deliberately as a system, but just as likely is that we identify systems operating that may not have had a purposeful design.

The exhilarating point is that although these systems are very different in nature to the car and bicycle systems, we can examine these organisational systems in the same systemic way:

  • we can explore their boundaries
  • look at the elements contained in each one
  • see how the elements are connected
  • examine the purpose of the system
  • and look for its emergent properties

And here is one of the reasons that systems thinking should become second nature in our organisations – thinking in systems completely sets aside the traditional order by which we manage and lead our organisations and therefore the constraints we’ve traditionally faced.

thinking in systems completely sets aside the traditional order by which we manage and lead our organisations

Let me unpick that big statement a little by looking at some questions a systems thinker may ask when thinking about one of those organisational systems we picked out earlier. Let’s choose as our example the “reward system”. This system, in a typical organisation, rewards staff for their efforts according to principals the organisation sets out, usually including words like “our staff are our greatest asset”. Typically the system will embody the organisation’s pay and conditions policy, but as a systems thinker, rather than accepting that the policy is ‘the system’, I’m going to be asking myself some deeper systemic questions and thinking about the answers that I might find. In doing so I’ll see differently and be able to explore the system in greater depth and form a better understanding of it. So I’m going to ask:

  • what are the elements in this system? Pay checks? Bonus payments? Training and development opportunities? Praise? Promotion? Cultural standing? Recognition for employees? Dress code? Pride in brand? Perceived worth of organisational output to society? Professional standing?
  • how are the system elements connected? Does the sales bonus system affect shop floor operatives? Do the in-house cleaners and maintenance workers get recognised? What are they recognised for? How are managers rewarded? How are non-managers rewarded? What are the perks? Who gets them? What are the retirement terms – for managers, for admin staff, for shop-floor workers?
  • where should I draw the system boundary? Around the pay committee? Around the reward policy document? Around the HR department? Around management? Around the entire business? Around the business and other stakeholders? Around the pay committee and the Union representation? Around the organisation and it’s professional bodies?
  • what is the purpose of the system? Is it to reward hard work? To reward loyalty? Encourage learning and development? Maximise economic return to the owners?
  • what is the emergent property? Compliance with minimum requirements of the law? Staff motivation? Staff demotivation? Excessive staff turnover? Fostering teamwork and commitment? Encouraging older workers to stay and younger workers to leave?

For the time-poor manager and hard-pressed leader this analysis may look like a lot of hard work – and it is. But if the system in question is out of control, is failing or has been implemented or changed without due thought for collateral damage it is probably only the effort necessary to properly understand the system’s behaviour and begin to understand why it is failing. Peter Senge (author of The Fifth Discipline) writes extensively about organisations and system behaviour and says this about organisational problem solving:

“The easy way out usually leads back in.”

He goes on:

“Pushing harder and harder on familiar solutions, while fundamental problems persist or worsen, is a reliable indicator of non-systemic thinking, what we often call ‘what we need here is a bigger hammer’ syndrome.”

A bigger hammer will undoubtedly make a bigger impact but it is one-dimensional problem solving and an approach that we can expect to fail in most circumstances in a world where organisations are increasingly complicated.

We have made good progress through the foothills towards our goal of appreciating the essentials of systems thinking. We’ve looked at some of the characteristics of a system and some of the modes of thinking that help us see through the systems thinking lens. There are many other aspects and tools in the systems thinkers toolbox that we haven’t had time to touch upon. Reinforcing loops, balancing loops, diagramming, systems based organisational interventions – they all await your exploration but all connect with the fundamental ideas we’ve explored here.

What have we learnt?

Let’s wrap up by reviewing the ground we’ve covered:

  • systems thinking is a way of seeing real life
  • it most usefully applies to complex systems
  • systems consist of elements
  • elements are connected together in some purposeful way
  • the purpose of a system is what it does (which is not the same as what we might wish it to do!).
  • systems exhibit characteristic behaviour
  • change the elements in a system or the way they are connected and you change the system and its behaviour
  • systems have boundaries that separate them from other systems
  • change the boundary and you change the system

The key point is that managers and leaders need to see so they can understanding and if they can understanding they can fix and if they can fix then they can build better organisations. Whatever the domain of the system – commercial, voluntary or social, with clear sight and the right tools it can be improved.

Becoming skilled at systems thinking involves learning to use the systems thinking concepts and being willing to practice newly acquired skills. There is no reason why you cannot begin systems thinking today with the ideas you already know. The exciting message of seeing in systems is that you can do it straight away, whatever your context and as you build your capability to see differently you’ll be empowered to do a different kind of problem solving. But be warned, once you start seeing and thinking in systems you can never go back!

At changez.io we run courses on systems thinking and we bring systems based approaches to help our clients build better organisations in commercial, voluntary and social contexts. If you have any questions or comments please get in touch with us.

Select the right team to get the best strategy.

(credit credit)

It’s surprisingly common to find organisations where the strategy lacks any kind of team input having been created by just one or two people. This model tends to be favoured where

  • there is a strong entrepreneur who leads from the front and owns all the strategic thinking or
  • strategy is undertaken alone in a dark corner because it is a good thing but not because anyone thinks it will affect the direction of the organisation.

These approaches loose the many benefits gained from involving a strategy making team. It’s perhaps also worth noting that in those organisations where a team wasn’t involved the strategies often drift downwards into bottom drawer where they lie untouched except for particles of dust.

By contrast we recommend that an organisation’s strategy is worked on by a team. Involving a team leads to a natural process of buy-in so that there’s a ready-made force for implementation when the strategy is completed. The recommendation for a team of course raises a couple of questions:

  1. how large a team?
  2. and who should be in it?

Winners and losers

Given that the result of strategy making usually creates organisational winners and losers, there is usually no shortage of people willing to join the team to have their say. That is excepting of course where the strategy making process is historically a waste of time because of ‘bottom drawer syndrome’ or that the process tends towards a never ending talking-shop. Neither create threat, but not do they create operational strategy.

If we assume then that the strategy making process is robust, who should we invite to the process and should there be some limits on numbers? Number is of course less of an issue in a small organisation or sub-grouping of a larger organisations (a department perhaps) just because the number of people who could conceivably be involved is probably not very many. In larger organisations however choices will have to be made.

The magic numbers five to seven

In numerous studies of group working and decision making a group of 5 to 7 people seems to be a magic number for effective working; fewer and the risk is that there is insufficient variety of thought in the room, many more and opportunities to contribute and be heard become more difficult and chaos can ensue.

We suggest then a strategy group of between 5 and 7, remembering that going to the lower end leaves head room to add more people along the way should that become necessary . How then do we make the important decision of who to invite onto the team? The guiding star here is this – participants are invited for one of two reasons either:

  • they possess information that the group must have to build a robust strategy, or
  • they have an influence in the organisation that could materially affect delivery of the strategy either by creating obstruction or by breaking down barriers.

These two points will of course be influenced by the likelihood of existing local political considerations but the guidelines should be used as a touchstone for moving forward. In other words if someone is appointed for another kind of reason it’s best to know what that reason is from the outset.

Finally there are two other roles it’s helpful to assign:

  1. Customer and
  2. Sponsor

The Customer role

The customer is just as you might expect – the customer for the strategy and therefore by extension they are in agreement with the strategy making process. The customer authorises the resources that will need to be committed to the process and identifies the imperative for the output. Customers may or may not be part of the strategy making team but if they are not then they will stay in close contact with the process and take a keen interest in its progress.

The Sponsor role

The sponsor of the strategy making team legitimises the process within the life of the organisation. They are not directly involved in the strategy making but from their senior position as Chair, Director, Trustee, Department Head etc they provide endorsement of the process and an unwritten support that will help keep the team on track as it is buffeted by ongoing organisational events.

Facilitation

There is one final role to consider and that is in the question whether or not to use a facilitator for the group. Strategy groups often appoint a facilitator from amongst their number. This is a big ask. Participating and facilitating at the same time is nearly impossible and the risk is that neither role is achieved well. A facilitator internal to the organisation who only facilitates is a better idea but then they may lack either a robustness of process to bring to the task or lack the knowledge or status to challenge existing thinking.

Conclusion

Strategy is the primary thinking that moves an organisation forward. Be the challenge lean operations, culture change, efficiency, new markets, new products, it is the quality of the strategy that will be a major determinant of future success. That is why putting together the right strategy making team with the right facilitation is one of the important decisions that an organisation’s leaders must make.

What makes for the perfect strategy-making team?

(credit credit)

Yours may be an organisation that’s disciplined and sets aside time to work on strategy, or you may be in an organisation that sees strategy-making as an activity of last resort, either way a key question is ‘who should be on our strategy-making team?’.

It’s an important question because of the problems that can arise when strategy-making involves an ill chosen or ill prepared strategy-making team. It’s often taken as a given that strategy making is done by ‘the top team’, but this isn’t necessarily the best option. At Changez we’ve seen the kind of problems that can arise when a strategy making team goes wrong these can include:

  • turf wars brought into the strategy making process
  • vested interests in the current arrangements playing out into future strategy
  • under-representation of small but upcoming areas of the organisation
  • over representation of expertise in today’s technology rather than tomorrow’s
  • membership weighted towards those who’s success has come from the current structure and might not appreciate the future is likely to require something different.

The question is also important whatever the level of strategy-making be it for a group, department, division or whole organisation. The same holds true whether it’s a commercial organisation, governmental or third sector.

Of course you may at this point be thinking that strategy in many organisations is the product of individual thought and not a team job at all. The founder entrepreneur who knows best, the busy CEO who doesn’t have time to consult, the MD who knows that there is only one way forward…. They may or may not be right on any particular point but it is our opinion that with very few exceptions a strategy making team is the best structure and within which to create robust and actionable strategy that achieves buy-in.

Strategy pulls some big organisational levers (credit)

Strategy making is not just another instance of problem solving, strategy-making is important because strategy often results in the moving of some pretty big organisational levers. Ones that shouldn’t be moved unless all are pretty sure about the consequences. Which is why we believe a step towards de-risking strategy-making is to put together a broad-based team.

Another reason why the right team is important, is because the natural dynamics of a functional team automatically creates the first step towards buy-in. A team that creates a strategy together is committed and that is the first step to ensuring the strategy doesn’t lie dormant but goes on to drive change throughout the organisation.

Addison and Ackoff in their Mangagement f-Laws put it like this:

The only thing more difficult than starting something new in an organisation is stopping something old

Russell Ackoff & Herbert Addison, Management f-Laws, Triarchy Press, 1988

So far then we have suggested organisational strategy:

  • deserves care in its making because it can make or break the organisation
  • needs to be actionable,
  • is better created by a team than an individual

Who then needs to be on the team for there to be the best chance of delivering the objective of a robust and actionable strategy? The first thing is that the ideal team shouldn’t only be seen as those who will wrestle with the finer details of the ideas, plans and structures, there should be other members who can be considered team members that sit outside the direct process but need to give the inner team support and direction.

In summary then a good strategy making team will address the roles consist of:

  • Sponsor
  • Client
  • Champion
  • Group members

These roles don’t have to be covered by discreet individuals, one person can wear different hats but the hats are different and they need to be worn at different times for the different purposes. Lets take a closer look at the roles.

Sponsor

Sponsor: a windbreak around the flame (credit)

The sponsor sits outside the strategy making process but legitimises it. The sponsor sanctions the use of resources and protects the process rather like a a windbreak around a kindling flame. For a group strategy process the sponsor might be a departmental head, at the other extreme for an organisation it might be the Chair of the Board.

The sponsor is one member of the strategy making team who’s often overlooked. This can be because they are difficult to contact and engage. It can also be because the strategy-making process can get underway without a sponsor but if the process runs into organisational politics or blockages to implementation of the strategy the intervention of a sponsor can be vital.

Client

The client also sits outside the strategy making process but defines the need and sets the boundaries.

Politically the client needs to be in a position to give the final word, to take responsibility and to have ‘skin in the game’ as far as the outcome of the strategy is concerned. In terms of boundary considerations the choice of client should align with the scope of the strategy.   

Although an individual as client is the most straight forward arrangement ‘a client’ could be a small group so long as they are able to express a unified view, they can take decisions and are committed to the process.

The head of this or that may be the best qualified to be the strategy-making client, but cross checking the boundary of the strategy making remit with the support of the sponsor helps identify if a client has decision making power, reason to be concerned that the strategy is successful and of course the commitment to engage fully with the process right to the end.

Strategy group

The strategy-making group are the members who are hands-on creating the strategy. There are two key reasons for inviting someone to join the strategy-making group:

  • they have power to cause things to happen
  • they have useful knowledge

Some members will of course score on both points.

That’s not the whole story of course as picking a strategy-making team has similarities to picking almost any other kind of management team which means there are a number of behavioural considerations to take into account. Having a good balance of characteristics is important. Strategy-making teams also have some particular characteristics that need to be considered including:

  • Winners and losers
    Strategy creates organisational winners and losers and being aware of who is likely to be affected can influence the characteristics of the team. It isn’t just a case of leaving out those likely to be adversely affected. They will almost certainly have valuable knowledge or persuading power to bring to bear, but it is a case of looking for an effective balance between different positions.
  • Can do attitude or resistant to change? Balancing the drive towards change can be an important aspect of putting together a team that creates actionable strategy. It’s easy for ‘go-ahead’ thinkers to become critical of those they consider to be resisting change whilst at the same time those more suspicious of change become critical of others ‘rushing headlong into the unknown’. The situation can develop into a cycle of antagonism that drives entrenched views ever deeper. In reality both parties have much to learn from each other.  Putting together a team representative of both points of view, but one that can work together is a major step towards a team that’s capable of creating the goal of a robust and actionable strategy.
  • Idea generators. Organisations trying to concentrate on the problems of the ‘here and now’ can find blue-sky ideas people uncomfortable colleagues to have around. Invariably just when the organisation seems settled they pop up with a new idea. It’s important for a strategy team to value new ideas. But again, balance is important, not least because ideas people can pursue ideas because they like the ideas and not because the ideas are efficient or effective solutions to current or future needs in the organisation or its environment.

The need then is for a group who are knowledgeable and influential but who have a blend of skills and capabilities whilst able to work together effectively.

The Magic Numbers 5, 6 and 7

With a number of different factors to balance as outlined above, it can be tempting to add more and more people into the strategy-making group in an attempt to flood it with all the skills, knowledge, influence and personalities that might make it successful. Although this approach is understandable, academic research into team working clearly shows that close participation is difficult in teams of more than seven members. In fact it can be a good idea to begin with no more than 5 on the basis that it’s quite likely that extra people will be needed as the process gets underway and it becomes apparent that more knowledge, skills and influence are required.


In conclusion then, when your organisation comes to work on strategy don’t assume that the best group is defined by the organisation hierarchy chart. Time and energy spent thinking through the best people to invite to the strategy-making group and for the roles of client and sponsor will help ensure the creation of robust and actionable strategy. That in turn will help ensure the right levers are pulled for the future success of the organisation.

changez.io helps clients improve their organisations by creating focused strategy, efficient structures, lean operations and great culture.