Systems thinking is a holistic means of investigating the factors and interactions that could contribute to a potential outcome. It is about thinking non-linearly, and understanding the second-order consequences of actions and input into the system.
- Understanding systems thinking
- Why use systems thinking?
- Six key themes of systems thinking
- Systems thinking examples
- Key takeaways
- Connected Business Heuristics
- Other connected business strategy frameworks
Understanding systems thinking
Systems thinking is based on systems theory and is responsible for one of the major breakthroughs in the understanding of complex organizations.
Systems theory studies systems from the perspective of the whole system, various subsystems, and the recurring patterns or relationships between subsystems.
In general terms, systems thinking considers systems in terms of their overall structures, patterns, and cycles.
This broad and holistic perspective enables organizations to identify solutions that address as many problems as possible.
In systems thinking, these solutions are known as leverage points because they leverage improvement throughout the system. Prioritizing leverage points across an entire system is called whole systems thinking.
The approach differs from traditional analysis methods which study systems by separating them into their constituent parts.
In addition to analyzing organizational complexity, systems thinking has also been used in medical, environmental, political, economic, and educational contexts.
Why use systems thinking?
By considering the system as a whole, systems thinking encourages organizations to broaden their perspectives and consider new or innovative solutions. This is particularly important for problems that are:
- Chronic – that is, they are not a one-time event.
- Familiar – or those that have a known history of repeated occurrences.
- Complex – where people have unsuccessfully tried to find a solution in the past and failed.
Perhaps more profoundly, systems thinking promotes the idea that there is no perfect solution to any situation. Every decision the business makes will impact other parts of the system, so the “right” decision may be assumed to be any with the least severe negative impact.
For project teams, systems thinking diagrams are also important in telling compelling user stories. Diagrams that deal with cause and effect force the team to develop shared pictures and stories that can be understood and communicated by every member.
Six key themes of systems thinking
Here are some of the key themes that comprise a systems thinking mindset:
Systems thinkers understand that everything is connected. Trees need carbon dioxide, water, and sunlight to thrive.
Humans, in turn, can only survive by eating the food and oxygen that trees and other plants produce.
Systems thinkers see the world as a dynamic, chaotic, and interrelated arrangement of relationships and feedback loops.
In most cases, synthesis means the act of combining things to create something new.
In systems thinking, synthesis means separating complexity into manageable parts to understand the whole and the parts simultaneously.
A term used to describe the natural outcome of things interacting with one another.
Key characteristics of emergence include non-linearity and self-organization.
A natural consequence of interconnectedness are the feedback loops which flow between the elements of a system.
There are two main types: reinforcing and balancing.
Reinforcing feedback loops involve elements in the loop reinforcing more of the same, such as population growth in a large city.
Balancing loops are comprised of elements in some form of harmony, such as the relative abundance of predators and prey in an ecosystem.
This is one of the key tools in a system thinker’s arsenal.
There are many ways to map a system, including behavior-over-time graphs, iceberg models, causal loop diagrams, and connected circles.
Whatever the method chosen, it should define how the elements within a system behave and how they are related.
Insights can then be used to develop effective shifts, interventions, policy, and project decisions.
Systems thinking also encourages the individual to consider causality as a dynamic and constantly evolving process.
Most people understand simple cause and effect, but relatively few can apply the concept to gain a deeper understanding of system feedback loops, agency, connections, and relationships.
Systems thinking examples
Japanese car maker Subaru operates the only zero-waste automotive manufacturing facility in the United States.
While the EV revolution is now well underway, car manufacturing itself remains a process with a harmful carbon footprint.
This is mostly because the sourcing and processing of raw materials such as steel, aluminum, plastic, and rubber are extremely energy-intensive.
In a 2018 report, for example, it was estimated that the vehicle industry’s GHG emissions exceeded those of the European Union.
Operating in an industry not known for environmental values, Subaru employed systems thinking to radically rethink its operations.
Over a period of just two years, the company transformed its Lafayette, Indiana-based assembly plant into a zero-waste facility.
With assistance from an environmental consultancy firm, Subaru adopted the three Rs of sustainability: reduce, reuse, and recycle.
Underpinning this effort was the kaizen philosophy of continuous improvement with employees rewarded for ideas that promoted environmental stewardship.
In 2016, Subaru recycled almost 94 million pounds of material which included some 80 million pounds of metal.
The factory itself also sits on an 832-acre site surrounded by forests, prairie grass, and other habitats for some of America’s most iconic plant and animal species.
Collaboration and results
Subaru has not only acknowledged its role in climate change but has also shared its processes with more than 500 companies.
According to executive vice president Tom Easterday, this includes firms outside of the automotive industry:
“We sometimes joke that we’ve had everything from potato chips to rocket ships visit us – from Frito Lay to Raytheon.”
The National Parks Service (NPS) has also turned to Subaru for assistance with its own zero-waste initiative.
Systems thinking has enabled Subaru to frame issues within the broader contexts in which it operates.
Importantly, the company understands the interconnectedness of business, the environment, and society as a whole.
“We don’t need the government to tell us to be good environmental stewards – it’s good for business”, Easterday explained.
To meet increased consumer demand for organic food, Costco started to invest in organic farmers in its supply chain.
The move relates to the key systems thinking principle of causality and has a basic but effective premise: If Costco provides the means for producers to transition to organic, the retailer can enter into “first buyer” agreements with them, stock more organic food in its stores, and increase revenue.
Around the time of the initiative in 2016, organic food sales in the United States had tripled over the past decade to be worth $35.95 billion.
Costco’s role in the industry
To some extent, growth in organic food sales has been stifled by structural issues in the agricultural industry.
Namely, the powerful influence of multinationals who control food supply with vast, monoculture farms and the governments that subsidize them.
However, Costco’s initiative shows that companies can use systems thinking and take a more proactive approach to manage their supply chains. This particular retailer improved its bottom line by meeting consumer demand in a rapidly growing industry.
But in the process, Costco also increased ethical and environmental standards in the food industry and made it more attractive as a potential recipient of investment or subsidization.
- Systems thinking is a holistic means of investigating the factors and interactions that could contribute to a potential outcome. In addition to analyzing organizational and project complexity, it is also used in medical, environmental, political, economic, and educational contexts.
- Systems thinking promotes the idea that there is no perfect solution to any situation. This helps the organization choose the best course of action by anticipating the potential impact of each option.
- The systems thinking mindset is comprised of six key themes: interconnectedness, synthesis, emergence, feedback loops, systems mapping, and causality.
Connected Business Heuristics
Other connected business strategy frameworks