Contemporary Approach to Systems Thinking Strategy - Term Paper Example

Contemporary Approach to Systems Thinking Strategy s 30 March Contemporary Approach to Systems Thinking Strategy1.0 Introduction Today, the world has become quite complex especially with the ever growing global economy and advancements in technology. This has spread to the business world and organizational management, in general, which calls for a brave decision-making capability of anyone entrusted with management duties. One of the models that enables the management in making such wise and bold decisions is referred to as the systems thinking approach. This approach serves as an essential tool especially in facilitating changes to take place smoothly in an organization. Primarily, systems thinking is a learning component through which an organisation (management) employs in facilitating the learning process for the entirety of the organization in an attempt to transform it and enable it adapt to changes (Haines 2007). The aim of this paper is to critically evaluate various literary works regarding the field of systems thinking approach and all concepts involved in the same. The paper will, however, begin by providing the background information on what systems thinking entails. 2.0 Systems thinking- Background Information As a typical definition, system thinking is a method used in an organization that employs critical thinking and through which the management uses to critically analyse the existing relationship between various parts of a system in an attempt to understand the current situation and this facilitate making sound decisions (Jackson 2003, p. 6; Mingers 2006). A system in a business or organizational context is composed of the basic unit that comprises of various entities such as people, organisational process, policies and common practices in a business. In some cases, the systems can be closed (having external boundaries) while they can also be described as open (having links with their environment). The systems in an organisation can be broken into sub-systems or defined at various levels that operate on a mutual or hierarchical basis, for example, the accountability system, finance system and decision-making system among others (Jackson 2000). The success of systems thinking as an approach to organisational management depends on how well the various parts of the system are handled. A performance management system facilitates the coordination of all system’s components by rising beyond the individual systems in an organisation and their functional leadership. A successful system employs various strategies such as the provision of incentives, goal-setting, good communication, provision of rewards and feedback and upholding accountability among others. On the contrary, poor management of a system leads to a failure in the systems thinking approach in management. This is referred to as the systemic failure where the management fails to counter weaknesses in an organisation such as the systems’ design, roles and responsibilities and resources management (Maani and Maharraj 2004). 3.0 Systems thinking as a management tool for strategy planning and formulation in an organisation While some scholars and management analysts claim that systems thinking is an old method of strategic management (Mella 2012, p. 13), others opine that it holds the future of strategy analysis (Flood and Romm 1996). To some, systems thinking provides an escape route from the old and outdated ways of decision-making processes in an organisation where a system is broken into various parts, and the analysis of each part performed separately. The supporters of this system assert that by examining the interactions in their entirety in a system, then larger and clearer patterns are easier to be unearthed. Systems thinking is seen as a powerful tool for strategy analysis, where the management is capable of determining all connections in the organisation and how each affect the running of the organisation towards enabling it to compete in its marketplace. A typical systems thinking approach in the context of an organisation management would entail various parts (stages) such as planning, outlining the organisation’s ideal future, formulating goals and objectives, assessing the current state of the organisation, developing a strategy for the achievement of organisational goals, outlining the operational plans, budgeting, formulating the method of plan implementation and plan review and update (Jackson 2000). Having a clearly outlined systems thinking model to follow is quite essential in meeting organisational goals that ultimately determine the success of the strategy in place. For example, it enhances the effectiveness of the management and people in leadership positions into thinking strategically and good planning. Additionally, it allows for a whole integration of all the components of an organisation (system) such as the business units, employees and teams, all of who form the basis of strategy formulation and planning. A well-formulated systems thinking approach is also essential if an organisation is to achieve a sustained competitive advantage in its market. This is achieved through facilitating the necessary strategic change that effectively enables formulation of a well-coordinated plan for the change. A systems thinking approach is also effective in increasing the employee level of productivity, trust and engagement, all of which facilitate to fuel the organisation toward reaching its strategic goals (Haines 2007). 4.0 Literature review As earlier mentioned, systems thinking may be categorised as an old concept especially considering that it was incepted over fifty years ago. However, the concept is increasingly growing in popularity, and even attaining a new description as the new form of thinking. Systems thinking has in the recent past been employed to various complex issues pertaining to the environmental protection, management, decision-making, agriculture, sustainability and human resource management among others (Waring 2007). A popular framework for systems thinking approach known as the Four Levels of Thinking has been analogised using an illustration involving an iceberg. In the illustration described as the Iceberg approach vs the systems approach, an iceberg approach explains how most decisions and interventions by the managements today are only dependent on only what is visible and not what lies underneath a problem (Maani and Cavana 2007). It is common practice for people to procure only the ‘quick fixes’ which is an easier method towards approaching various underlying issues. However, there is always that deepest level of a problem that can only be resolved by engaging the mental model (systems thinking concept) if the management is to unravel the deeper and more complex issues and relationships. The four various levels represents exactly what the systems thinking paradigm entails which involves participation of all stakeholders involved in an organisational handling of issues. For example, the decisions in an organisation should be made based on moving stakeholders and the respective decision makers from an events level through to the deeper levels of thinking while following a systemic framework to help deal with the complex problems (Maani and Cavana 2007). 4.1 Reasons why an organisation is regarded as a system As earlier mentioned, any system is made up of parts, all which rely on one another and whose contributions determine how the whole system works. For traditional management, the concept of visualising an organisation as a system may be a big challenge for them. For example, the traditional way of management has always dictated that each part or department of an organisation (e.g. sales, logistics, marketing etc.) should be managed separately. This kind of management allows for sub-optimisation of various parts which in most cases leads to some of the parts (sections) achieving their goals at the expense of the organisation in a whole. This compartmentalisation kind of logic in this traditional management thinking then spreads to other parts of the organisations such as division of tasks among others. In most cases, these leads to loss of motivation and productivity of the employees as well as causing conflicts. This is especially true where the management places conditions that seek to limit other people’s behaviour thus resulting in sub-optimisation (Maines 1998) Poor management of an organisation (system) leads to poor production and vice-versa. The role of the management, therefore, cannot be undervalued in improving the performance of the organisation. The effect of good management runs through the whole organisations system to bring about customer satisfaction, high productivity and enhanced integrity among the general workforce. On the other hand, the traditional management of an organisation means that the management largely focuses on individual sections performances thus values such as output data and standards are of very high worth to them. This ultimately boils down to sub-optimisation which is a relatively wrong approach of approaching management (Gharajedaghi 2011). In handling these challenges of sub-optimisation, which is a great impediment towards achievement of a systems thinking approach to management, it is important to first understand the existing hindrances such as activity measures, lack of budgeting and making arbitrary targets. Through this, managers are able to achieve their goals through cutting costs incurred in sub-optimisation process (Mella 2012). 4.2 Systems thinking framework and its use in strategy formulation It is common knowledge that leaders (managers) who fail to seek new opportunities or try out new things are often limited by the way they think. In strategic management, the notion of systems thinking comes into play as one of the founding pieces. In order for management to create a successful change, it has to embody both the art of good planning and strategic management. The concept of strategic management entails both the concepts of strategic planning as well as the strategic change management. If either of them lacks in the mix, then it means that the result is a failure and confusion (Jackson 2003). It is also imperative noting that people in an organisation will always be willing to support what they have created. This reverts to the idea of a system where each part has its role in making the system a success. It is thus the responsibility of the management to ensure that all its staff are allowed to make a contribution and an input towards the creation of organisational goals among other aspects. Failure to do this certainly attracts a lot of opposition and resistance especially where changes are involved. The management has to understand that it must rely on all the stakeholders involved since they serve both the role of the change agents while others are, in fact, the change targets. It is widely accepted that when legitimate opportunities for critique, feedback or input are presented to all stakeholders involved in an organisation, then it becomes easier for the people to accept and perhaps make more sincere contribution towards enhancing creation of the final product. This is quite essential to achieving a successful strategic management through following the systems thinking approach (Mingers 2006, p. 61). 4.3 How systems thinking work The systems thinking as had earlier been described, is a quite an old phenomenon that is typically based on elements of natural science. For example, the planet in which we live is a system composed of various element and which also lies within another system referred to as the solar system. This is only one of the numerous examples of how the analogy of systems is used to describe various other systems as used in the world today. For the systems thinking concept, the system comprises of five main parts; the input, the throughout (process of change), the outcome, the feedback loop and finally the environment (Maani and Maharraj 2004). To explain how this works, the discussion will feature the use of planning as a tool for strategic management. An important thing worth mentioning is that strategic planning do not have to be a very complex or confusing process. It is on the contrary supposed to be easy to use tool by the managers and other leaders. Strategic planning can be used to guide the management’s thinking and thus their decision-making processes as well as the process of how to allocate resources. It is also through strategic planning that the staff are able to carry out their plans and consequently provide their services as required in meeting the expectations and demands of the respective management and community (Mingers 2006). The concept of system thinking is applied in day to day activities although sometimes this can go unnoticed. For example, management (and individuals alike) determine the output or the desired outcome from the action being performed. The next step entails formulating the measures of success that are then used as part of the feedback. This step helps to determine if the process is proceeding as expected or planned. The third component of this system entails ensuring that all inputs and resources are assessed in an attempt to manage and control all sorts of concerns, problems and other related issues. From here, the game plan or the actual strategy through which the existing issues are resolved while facilitating the change of position from where the organisation is currently based to where it anticipates moving to. The last step involves implementing the plan where the management is tasked with the responsibility of creating the required change in an attempt to move towards the desired outcome (Maani and Cavana 2007). 4.4 Reasons why businesses (managements) should embrace systems thinking Having looked at the various aspects of systems thinking as a tool for strategic planning and formulation, it is important to outline how an organisation benefits from employing the concept in its operations. First, the use of systems thinking approach can be a cost-effective option for most businesses as well as increasing the premises’ efficiency. Through the provision of room for feedback, the organisation is capable of enhancing service and products improvements that can be of great impact towards achievement of the strategic goals of the business (Waring 2003). Additionally, the feedback directed to the workforce is also important in creating a positive effect on the morale of the employees. The combination of both the systems thinking approach and the human interaction especially involving customers can be of great importance towards achievement of the organisational goal. The provision is also essential in enabling the workforce to understand their responsibilities and how they contribute towards the system’s goals. It is through this contribution that workers can clearly understand and appreciate their input towards creating organisational success. This means that they will be well-versed with the organisational goals and direction which are essential for reduced confusion and an enhanced synergy and collaboration that results in the success of the organisation (Mella 2012; Flood and Romm 2006). 5.0 Conclusion In summary, the concept of system thinking entails all collaborative aspects in an organisation that strives to create an environment that facilitates working together in pursuit of a common goal. A very good example that could easily help to explain this is the functioning of the body where various parts such as the nervous system, organs and muscles among others all function in unison with the solitary goal being to keep one alive. Taking this picture and relating it to an organisation will certainly make it easier to understand how the system thinking concept operates. The paper has outlined various aspects of the field as regards to what various authors have opined about the topic. In general, it is evident that system thinking, despite being a dated concept is still one of the valuable tools for use in strategic planning and management. The approach has various benefits as outlined in the paper with the most prominent being the provision of efficient planning in which entails starting with the vision and thinking backwards to the current state of the organisation. Bibliography Flood, R., and Romm, N. 1996. Critical systems thinking current research and practice. New York: Plenum Press.  Galanakis, K. 2006. "Innovation process. Make sense using systems thinking." Technovation, vol. 26, no. 11: pp. 1222-1232 Gharajedaghi, J. 2011. Systems Thinking Managing Chaos and Complexity: A Platform for Designing Business Architecture. Burlington: Elsevier Science.  Haines, S. G. 2007. Strategic and systems thinking: the winning formula. San Diego: Calif, Systems Thinking Press. Haines, S. G. 1998. The managers pocket guide to systems thinking & learning. Amherst: Mass, HRD Press. Jackson, M. C. 2000. Systems approaches to management. New York, NY: Kluwer Academic/Plenu Jackson, M. C. 2003. Systems thinking: creative holism for managers. Chichester, UK: John Wiley & Sons. Maani, K. E. and R. Y. Cavana. 2007. Systems thinking, system dynamics: Managing change and complexity. Auckland, NZ: Prentice Hall. Maani, K. and Maharraj. V. 2004. "Links between systems thinking and complex decision-making." System Dynamics Review, vol. 20, no. 1: pp. 21-48. Mella, P. 2012. Systems thinking intelligence in action. Milan: Springer.  Mingers, J. 2006. Realising systems thinking knowledge and action in management science. New York, NY: Springer. Sterman, J. D. 2000. Business Dynamics: Systems Thinking and Modeling for a Complex World. Boston, USA: Irwin McGraw-Hill. Waring, A. 2003. Practical systems thinking. London: Thomson Learning. Read More