What Does Systems Thinking Involve?

Why Use Systems Thinking?

Systems thinking expands the range of choices available for solving a problem by broadening our thinking and helping us articulate problems in new and different ways. At the same time, the principles of systems thinking make us aware that there are no perfect solutions; the choices we make will have an impact on other parts of the system. By anticipating the impact of each trade-off, we can minimize its severity or even use it to our own advantage. Systems thinking therefore allows us to make informed choices.
Systems thinking is also valuable for telling compelling stories that describe how a system works. For example, the practice of drawing causal loop diagrams forces a team to develop shared pictures, or stories, of a situation. The tools are effective vehicles for identifying, describing, and communicating your understanding of systems, particularly in groups.

When Should We Use Systems Thinking?

Problems that are ideal for a systems thinking intervention have the following characteristics:

• The issue is important.
• The problem is chronic, not a one-time event.
• The problem is familiar and has a known history.
• People have unsuccessfully tried to solve the problem before.

Where Should We Start?

When you begin to address an issue, avoid assigning blame (which is a common place for teams to start a discussion!). Instead, focus on items that people seem to be glossing over and try to arouse the group’s curiosity about the problem under discussion. To focus the conversation, ask, “What is it about this problem that we don’t understand?”

In addition, to get the full story out, emphasize the iceberg framework. Have the group describe the problem from all three angles: events, patterns, and structure (see “The Iceberg”).
Finally, we often assume that everyone has the same picture of the past or knows the same information. It’s therefore important to get different perspectives in order to make sure that all viewpoints are represented and that solutions are accepted by the people who need to implement them. When investigating a problem, involve people from various departments or functional areas; you may be surprised to learn how different their mental models are from yours.

How Do We Use Systems Thinking Tools?

Causal Loop Diagrams. First, remember that less is better. Start small and simple; add more elements to the story as necessary. Show the story in parts. The number of elements in a loop should be determined by the needs of the story and of the people using the diagram. A simple description might be enough to stimulate dialogue and provide a new way to see a problem. In other situations, you may need more loops to clarify the causal relationships you are surfacing.

Also keep in mind that people often think that a diagram has to incorporate all possible variables from a story; this is not necessarily true. In some cases, there are external elements that don’t change, change very slowly, or whose changes are irrelevant to the problem at hand. You can unnecessarily complicate things by including such details, especially those over which you have little or no control. Some of the most effective loops reveal connections or relationships between parts of the organization or system that the group may not have noticed before.
And last, don’t worry about whether a loop is “right”; instead, ask yourself whether the loop accurately reflects the story your group is trying to depict. Loops are shorthand descriptions of what we perceive as current reality; if they reflect that perspective, they are “right” enough.

THE ICEBERG

How Do We Know That We’ve “Got It”?

Here’s how you can tell you’ve gotten a handle on systems thinking:

• You’re asking different kinds of questions than you asked before.
• You’re hearing “catchphrases” that raise cautionary flags. For example, you find yourself refocusing the discussion when someone says, “The problem is we need more (sales staff, revenue).”
• You’re beginning to detect the archetypes and balancing and reinforcing processes in stories you hear or read.
• You’re surfacing mental models (both your own and those of others).
• You’re recognizing the leverage points for the classic systems stories.

Once you’ve started to use systems thinking for inquiry and diagnosis, you may want to move on to more complex ways to model systems-accumulator and flow diagrams, management flight simulators, or simulation software. Or you may find that adopting a systems thinking perspective and using causal loop diagrams provide enough insights to help you tackle problems. However you proceed, systems thinking will forever change the way you think about the world and approach issues. Keep in mind the tips we’ve listed here, and you’re on your way!

Michael Goodman is principal at Innovation Associates Organizational Learning

The post Systems Thinking: What, Why, When, Where, and How? appeared first on The Systems Thinker.

In the world of big data and high-stakes, disruptive change, learning becomes essential for leadership. Reason may have been concerned with high-risk leadership situations, but he could have easily been referring to any leader. In fact, contemporary leaders in business organizations share many of the same challenges faced by well-known high-stress and high-consequence positions such as pilots, surgery teams, and military quick reaction forces.

The Shift from Traditional to Learning-Directed Leadership

Traditional approaches to leadership focus on power, influence, and position as the sources of leadership. No doubt, these are important factors. However, they prove less important in a complex and dynamic world where disruptive change is considered normal. Leaders working in the world of “big data” engage learning rather than power, knowledge rather than influence, expertise rather than position. Learning-directed leaders see continual learning, not the hoarding of power and resources, as their primary advantage. At their core, learning-directed leaders work to be open to new information and ready to revise past assessments of a situation, cultivating knowledge, learning, and expertise along the way as described by psychologist Theodore Mills (1967).

Leadership requires a shift in understanding about the nature of problems and how these problems are solved. The study of knowledge distinguishes between ill-structured and well-structured problems. Well-structured problems require time, patience, and persistence. Given enough time and resources, leaders can always solve well-structured problems. An example of a well-structured problem is reducing a budget by 15 percent. On the other hand, determining a new strategic direction in a fast-changing marketplace is an ill-structured problem.

Well-structured problems are the work of traditional leaders. Learning-directed leaders, on the other hand, work to solve ill-structured problems. No matter how much time, persistence, and patience a leader puts into solving an ill-structured problem, it can never be fully understood, and people will never fully agree on one right decision. In fact, there is no single best solution for an ill-structured problem. “Moving from Traditional to Learning-Directed Leadership” represents the shift in thinking required for a leader to be successful in this context. The shift, although difficult, is essential for leading, as an example from the medical profession illustrates.

CHARACTERISTICS OF A COMPLEX LEADERSHIP ENVIRONMENT

Eliminating Infections in Critical Care Medicine

Medical personnel insert or replace thousands of central line catheters each day. These catheters, which are inserted into veins in the neck, groin, or chest, dispense medications or fluids and can be used to measure blood volume. In the most trying cases, a central line catheter can save a life or limit pain. Inserting one of these devices is a common procedure. Unfortunately every year, an estimated 80,000 patients contract an infection that could have been avoided. Between 30,000 and 50,000 of these patients die as a result (Landro, 2010).

The procedures involved in changing a central line catheter may seem simple and routine, but learning to do something other than the existing procedures is much more difficult. In reality, improving the process of inserting or changing central line catheters has proven particularly challenging. Changing a well-established procedure involves monitoring hundreds of pieces of information, coordinating complex processes, and overcoming deeply ingrained cultural barriers.

MOVING FROM TRADITIONAL TO LEARNING-DIRECTED LEADERSHIP

Several factors contribute to the problem. A medical professional may care for hundreds of patients a month. The human mind is only capable of remembering a limited amount of data at any one time and so keeping track of each procedure becomes difficult. Further, many professionals don’t have direct access to the correct supplies. Changing a catheter may prove a challenge because resources come from different locations and quality is difficult to assess. Adding to the problem, changing and inserting a catheter requires coordination among various professionals.

A group of physicians sought to change the way medical professionals go about inserting and changing catheters in patients to decrease the high rate of infection and death. Led by Dr. Peter Pronovost of the Department of Anesthesiology and Critical Care Medicine at the Johns Hopkins Hospital, they tackled the problem by turning learning into action (Pronovost & Vohr, 2010). They began by reviewing prior research on catheter-related infections and related topics. From this research, they identified five practices that showed promise in limiting infection.

First, they introduced an educational program to teach physicians, residents, nurses, and other medical professionals about the existing procedures and how small changes might reduce infections. Second, they created a central cart that included all the materials needed to conduct the procedure with a greater degree of safety. In the past, medical personnel might have to search for the proper equipment, losing valuable time and focus in the process. Third, they instituted a daily care plan meeting that addressed whether patients needed a new catheter. Fourth, and most important, they implemented a checklist procedure, adopted from preflight checklists used by airline flight crews. The process, led by the bedside nurse, ensured that personnel followed proper and safe procedures. The checklist was to be used each time a new catheter was inserted or rewired. Fifth, they called on nurses to stop the process if any care provider failed to follow the guidelines as stated on the checklist. The steps on the checklist were clear and concise. When inserting a catheter, the professionals were to wash their hands; clean the patient’s skin with a disinfectant; wear a cap and gown and use a surgical drape; insert the catheter through parts of the body other than the groin; and remove any unnecessary catheters.

The physicians achieved a successful result by almost any measure. Researchers estimated that, when adopted in 50 intensive care units in Michigan, the procedure might have prevented 2,000 infections, reaching an infection rate of near zero (Landro, 2010). The procedures demonstrate the power of learning-directed leadership. Learning-directed leadership impacts organizational effectiveness through five processes: increasing awareness of a problem or system, learning from (rather than simply repeating) experience, facilitating behavioral change through coordination, improving judgment of individual employees, and breaking down hierarchy to transfer knowledge across levels of the organization. We present each of these in turn.

Increasing Awareness. Like most successful organization-wide learning initiatives, the catheter safety effort began by focusing attention on the general problem. The hospitals that adopted the catheter safety process implemented a training course for the general population and garnered the support of management. Frontline employees, those who were responsible for insertion and replacement of catheters, received additional training that focused on the specific elements of the problem. Increasing awareness stands as the first step in learning by focusing the attention of the entire organization on an otherwise misunderstood or overlooked problem.

Learning from Past Experience. One reason that the intervention proved so successful was that it relied on a comprehensive review of existing knowledge. The researchers didn’t start from scratch; they sifted through years of studies, in fields from medicine to flight crew operations. They identified ways to put these research findings into action. But they went further by culling best practices. They identified what practices were cursory and which were central to success. Much of the success could be attributed to the fact that these techniques had been used before, and only the most successful processes were adopted.

The researchers went beyond use of existing experience; they made gains in applying the model to a new situation. No one could logically accept that a flight crew checklist would be appropriate for a hospital. The researchers knew they had to adapt the checklist for their own unique purposes. The process of adaptation cannot be underestimated, for it seems that many best practices go unused because organizations fail to adapt them to the specific circumstances they face.

Facilitating Behavior Change. The central line catheter awareness program also involved behavioral change by encouraging medical professionals to consider small changes in how they work. Behavioral components included adoption of a common cart, institution of a checklist to detail critical procedures, and establishment of standardized review procedures for each patient.

These changes help medical professionals focus on the processes most important to achieving the goal, in this case infection-free catheter insertion. At the same time, the professionals develop a clearer picture of the larger task, seeing how their individual actions fit into the larger treatment plan for the patient. Learning occurs through the constant monitoring of patient treatment as given by other caregivers. Thus, this approach engages the best element of goal setting. It helps to simplify a complex process by focusing attention on key aspects of a task while simultaneously allowing for learning about the implications for the larger task. The most important behavioral change may not be the actual medical procedures itself, but the improved coordination that results.

We know that learning involves collective rather than just individual processes. Yet, the role of coordination in learning is often characterized as mysterious and therefore often overlooked. Perhaps this is because coordination can be difficult to observe and capture. Psychologist Daniel Wegner (Wegner and Wegner, 1985) has taken some of the mystery out of coordinated learning with something he calls “transactive memory.” His early research was largely confined to laboratory studies. In one study, pairs of individuals who had been in a relationship more than three months were better able to recall words than those who were not in these relationships. Over the last few years, the notion of transactive memory has been confirmed in dozens of studies in real-world settings. These studies largely confirm Wegner’s findings – teamwork matters. The catheter safety program demonstrates the role of transactive memory in learning. Teams that demonstrate transactive memory share three characteristics.

First, team members believe in the credibility of the information shared by other members. The catheter safety program appears to increase credibility because it provides a shared template, common repository, and agreed-upon procedure for documenting knowledge. Essentially, the shared checklist replaces individual memory with a team memory. Credibility increases because the checklist serves as a shared and likely more credible source of memory, so that memory is no longer assigned to the more fallible process of individual cognition.

Second, transactive memory involves effectively coordinating actions. Coordination means that information moves across and between individuals in a way that contributes to the team’s overall performance. The catheter safety program encourages coordination by helping teams establish a common set of procedures that guide action. The development, implementation, and integration of a checklist fosters learning because coordination becomes an everyday practice, not an abstraction. Coordination leads to learning because it necessitates an agreed-upon procedure, standardizes routine processes, and creates a template for improving processes.

Third, the common checklist improves coordination among a group of specialized professionals. Organizations manage complexity by distributing labor. Nurses, physicians, and residents each perform a specific duty. This division of labor helps the organization but creates challenges for coordination. Learning occurs when team members understand, respect, and utilize the unique expertise of these diverse roles. The catheter safety program provides evidence that when learning becomes a daily practice, it improves performance.

Improving Judgment. In addition to creating awareness and making incremental changes to behavior, lessons from catheter safety checklists point to the importance of improving professional judgment. The checklist implementation process marks an important shift from institutionalizing organization-wide policies to allowing experienced professionals to exercise judgment. For example, the development and implementation of a checklist is not abstract but part of the daily routine of professionals. For sure, implementation requires a coordinated effort at all levels of the organization, including strong support from management, but ultimately, the change occurs at the most direct levels of patient care, not policy. The program success results from the learning that occurs as professionals exercise autonomy and judgment unencumbered by overly burdensome institutional rules.

Improving professional judgment is an important part of learning. In a 1986 study, Vimla Patel and colleagues found that experienced physicians saw medical situations in a more holistic and complete way than did residents. In other words, physicians relied on a greater source of data, including patient histories and lifestyle data, to make a diagnosis. In non-routine cases, experts rely on “flexible reasoning” to generate alternatives, revise hypotheses, and develop meaningful courses of action. Judgment and its cousin learning require adapting, looking at a broad range of information, challenging, and understanding context.

Breaking Down Hierarchy. The cornerstone of the catheter safety program can be found in the introduction and use of a common checklist. However, from a learning standpoint, the checklist itself serves simply to facilitate a larger psychological purpose. It facilitates the breakdown of traditional organizational and professional hierarchies.

Medicine’s adoption of checklists builds on a legacy established by commercial pilots. Studies of numerous air tragedies and near misses have revealed that all too often, dysfunctional power dynamics among the flight crews contributed to the disaster. Overly authoritarian cockpit captains ignored the insights and warnings of copilots, leading to a crash or near miss. The checklist serves to neutralize traditional forms of power such as rank or profession because authority no longer rests in the rank of individuals but in their knowledge, and this paves the way for learning. Nurses and residents gain the authority to stop a procedure if it doesn’t conform to guidelines.

Each of these five processes underscores the importance of learning in improving organizational effectiveness. The initial experiment for catheter safety has been adopted by other hospitals around the US. It stands as a remarkable example of learning in organizations. We can’t emphasize enough that the learning from such an effort occurs on two levels. The first level is the learning that occurs from engaging in the process of building the procedure. The second level of learning occurs as an outcome of the continued engagement in the process itself.

A successful program can tell us something important, but an overt collapse of learning can tell us something else. Next we turn to the case of Lehman Brothers and the failure to learn.

Failure to Learn at Lehman Brothers

As one way to understand just how the catheter safety program invokes learning, we can contrast it with an organization that failed to learn. Lehman Brothers can be described as a collapse of learning because it had, at the time of this writing, the largest bankruptcy in the world’s history, topping an estimated $639 billion in assets.

Over years, Lehman grew into a rigid culture, where it enforced strict informal rules for behavior. The culture served the company well at times, but the same rigidity also restricted its ability to learn and adapt. During the mortgage crisis of 2007, the managers at Lehman needed to assess and change their behavior and respond to the need for new direction. Rather, as former chief talent officer Hope Greenfield indicated in Leader to Leader, managers “stood in the sidelines waiting to see who was going to take the reins next” and occupied themselves with “finger pointing and blame.” The culture did not change behaviors even when the company needed that change to survive.

Lehman found itself plagued by widespread turnover, which resulted in continual loss of talent. These trends meant that professional judgment was constantly under threat. As Greenfield pointed out, managers who tried to exercise their professionalism found themselves sidelined and ostracized, and many eventually left the organization. As a result, the culture at Lehman restricted independent professional judgment in favor of rigid thinking. Learning ultimately became stifled.

Team coordination, another hallmark of learning, is built on a foundation of credibility that allows individual team members the freedom to act. However, in cultures that breed a strong sense of competitiveness among managers, it is difficult to build credible, trustworthy teams in which members place the team’s interests and welfare above their personal interests. In this “underdog eat underdog world,” managers prided themselves on their work ethic and fierce competitive spirit rather than good leadership.

This competitive spirit often overshadowed level-headed thinking. The head of Lehmann was bound for retirement, and his number two in command was not a likely successor. This dynamic enhanced the spirit of competition, since according to Greenfield, “any newcomer was regarded as a potential rival and there was smug satisfaction in seeing peers falter.” Although some competition can be a good thing, too much competition can lead to wasted resources, knowledge hoarding, and lack of cooperation. Eventually, problems go unaddressed because leaders lack the information and perspective necessary to overcome them.

Lehmann Brothers had a strong belief in the firm as a family. While this is generally a positive attribute – with, for example, the firm rushing to help when an employee had an ill family member – too much of a family culture means that the hierarchy is rigid and unyielding in decision making. When the firm had 8,000 employees, having only a handful of people at the top making the key decisions may have worked, as these were the handful that Lehmann believed really understood the business. By the end of 2008, the firm had grown large and complex, but the hierarchical family decision-making structure had not changed. The executive committee briefly tried to expand its membership, involving more in the decision-making process, but this effort was short-lived and threatened those in power. The case of Lehman shows that when organizations fail to break down rigid hierarchies, learning and adaptation are the primary victims.

Lehman Brothers’ ultimate bankruptcy stands in sharp contrast to the organizational learning demonstrated by hospitals that adopted the catheter safety procedures. The contrast cannot be overstated: Leaders who foster learning in organizations perform better, provide better work environments for employees, and stand a stronger chance of survival in the face of threats or challenges, as the next example confirms.

Learning-Directed Leadership in Consulting Firms

Whether the organization is involved in healthcare, professional services, or other fields, learning provides an advantage. A recent study by Richard Boyatzis (2006) of Case Western Reserve University illustrates how learning connects to revenue. The study involved a professional service firm with more than 3,000 partners worldwide. Professional service firms serve as a good proving ground for the advantage of learning because they typify the kinds of problems commonly faced by knowledge workers. Only partners and those who ranked at the top of the firm based on quality of client relationships, performance in growing the business, and strength in managing the practice were included. Thirty-two of the top-ranked performers met the benchmark as the best of the best. On average, the partners billed $2.4 million annually and produced a gross margin of 57 percent.

The study first gauged the behaviors and attitudes of the senior partners using a 360-degree feedback process, with five of the partners’ peers, five of their subordinates, and their boss completing a survey. Each partner also completed the survey. The survey sought feedback on 20 different competencies considered important by the organization. One cluster of competencies involved leadership, initiative, and planning. The second included knowledge-based competencies such as pattern recognition, systems thinking, and general knowledge of the job. A third cluster measured the degree to which senior partners valued learning and facilitated learning in others.

Just over a year and half later, the researchers looked at the relationship between the competencies and the partners’ performance. Performance was measured using two clear, agreed-upon measures: revenue, or how much money the partners brought into the firm, and gross margin, or how well the partner utilized the organization’s resources. Once the researchers collected this data, they then conducted various analyses on the relationship between these two performance measures and the 20 competencies.

The results resonate with learning-directed leadership. While several competencies showed value for performance, only two correlated significantly with both revenue and gross margin: valuing learning and facilitating learning in others. We estimate that the competency of valuing learning accounted for almost $800,000 in additional revenue. Facilitating learning accounted for an additional $1.6 million! Performance on gross margin was more than 10 percent higher for those senior partners who valued and facilitated learning.

As with any study, this one had limitations; however, it provides evidence of a clear relationship between desired performance outcomes and the value of learning-directed behaviors. The study not only shows the importance of learning in knowledge work, but also provides solid evidence of how important it is for leaders to facilitate learning in others.

Identifying new problems faced by clients, forging new relationships, and building new business lie at the heart of consulting work. Recall the distinction between ill-structured and well-structured problems. A second consideration for learning involves learning in the face of both complexity and novelty. “Learning Situations Based on Complexity and Novelty” plots these considerations along two dimensions.

Leaders in the medical profession and consultants share something in common: learning in the face of complexity. For the medical professionals, the situation involved routine. The physicians involved in the effort to decrease catheter-related infections learned by focusing on the most important issues and standardizing procedures. The consultants, on the other hand, learned to identify novel situations and new business opportunities. The physicians and consultants both employed learning to improve organizational performance, but learned different things. Of course, the nature of learning is constantly shifting. The consultants will at some point need to learn under routine, just as the medical professionals will also face novel problems.

Conclusion

Through the examples above, we can begin to see how the demands of novelty and complexity shape leadership. The stories of learning in this article highlight the remarkable link between leadership, learning, and organizational performance. We provided examples of how expertise, knowledge, and creativity hold a clear advantage over position, influence, and authority. Ultimately, leadership is embedded in learning-directed actions.

LEARNING SITUATIONS BASED ON COMPLEXITY AND NOVELTY

© 2011 Anna B. Kayes and D. Christopher Kayes

Anna B. Kayes (EdD, the George Washington University) is Associate Professor of Business in the School of Business and Leadership at Stevenson University. She is author of articles on learning and leadership in outlets such as the Journal of Managerial Psychology and the Journal of Management Education, and is co-author of the forthcoming book, The Learning Advantage: The Six Practices of Learning Directed Leadership.

D. Christopher Kayes (PhD, Case Western Reserve University) is Dean’s Research Scholar and Associate Professor of Management at the George Washington University. His article, “The Destructive Pursuit of Idealized Goals,” was recognized as the most significant contribution to the practice of management by the Organizational Behavior Division of the Academy of Management. He is the author of “Destructive Goal Pursuit: The Mt. Everest Disaster” and co-author of the forthcoming The Learning Advantage: The Six Practices of Learning Directed Leadership.

References

American Management Association. How to build a high performance organization, 2007. [link]

Boyatzis, R. E., “Using tipping points of emotional intelligence and cognitive competencies to predict financial performance of leaders,” Psicothema, 18, 2006.

The Economist, “Data, data everywhere. A special report on managing information,” February 27, 2010).

Greenfield, H., “The decline of the best: An insider’s lessons from Lehman Brothers,” Leader to Leader, 55, 2010.

Landro, L., “Building team spirit: Nurses hesitate to challenge doctors even when doctors are ordering the wrong drug or operating on the wrong limb,” Wall Street Journal Online, February 16, 2010.

Mills, T. M. The Sociology of Small Groups. Prentice-Hall, 1967.

Patel, V. L., Groen, G. J., & Frederiksen, C. H., “Differences between students and physicians in memory for clinical cases,” Medical Education, 20, 1986.

Pronovost, P., &Vohr, E. Safe Patients, Smart Hospitals: How One Doctor’s Checklist Can Help Us Change Health Care from the Inside Out. Hudson Street Press, 2010.

Reason, J., “Safety in the operating theatre — Part 2: Human error and organizational failure,” Current Anesthesia and Critical Care, 6, 1995.

Wegner, T. G., & Wegner, D. M., “Transactive memory,” in A. S. R. Manstead & M. Hewstone (Eds.), The Blackwell Encyclopedia of Social Psychology, Blackwell, 1995.

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I suspect you may be feeling uncertain about the current economic climate, rising layoffs, and critical strategic decisions being made without adequate time and information. In challenging times like these, it is crucial that we remember, and practice in our organizations, the unique strengths of systems thinking and organizational learning. As a subscriber to The Systems Thinker, you already understand, better than most, how valuable it is to develop skills in these disciplines:

• During a downturn, it’s tempting to “firefight” in very unproductive or even harmful ways. By taking a deeper view, both you and your organization can “keep your heads” and not resort to ill-considered, knee-jerk reactions that ultimately make things worse.
• Thriving economies mask counter productive practices, just as hard economic times reveal them. Now is the chance to spot what has worked and what hasn’t, and to know that you’re really firing on all cylinders for the next upturn.
• Economic slowdowns can heighten stress in organizations and contribute to breakdowns in communication or conflicts between departments and individuals. Having productive conversations and high-quality interactions during this time can help you manage the emotional rapids and maintain the processes of team-building and continuous learning.

As those who have cultivated a systemic view of the world know, reacting to events is a low leverage approach to problem solving. Quick fixes to reduce expenses, for instance, such as reducing staff, might temporarily cut costs in the short run, but in the long run, they often decrease quality in products and customer service.

Since we’ve weathered times of recession and times of seemingly endless economic growth, what can we do differently during this downturn in the economy? There have been signs that some brave souls have been bucking the trend, ignoring conventional wisdom, and breaking free of reactive behavior. For example, even as Intel is eliminating 5,000 jobs; delaying raises; and reducing spending on travel, overtime, and consultants by 30 percent, it’s still continuing to invest in training and outreach—to insure it has skilled workers when it resumes hiring again. And while its competitors are cutting back on advertising, John Hancock Financial Services is adjusting its brand image and boosting ad campaigns to reach new customers. Bold executives who use economic transition to innovate can gain market share.

During tough times, when a mistake can cost you your business, it’s crucial to understand the long-term consequences of decisions and how to be more strategic about developing your organization. Now is the time to make sure you’re doing all you can to protect yourself in the present as you prepare for the future.

Ginny Wiley is President of the Systems Thinker and president of Pegasus Commincations, Inc.

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Over the years, universities have tried to address these concerns. To provide some real-world context, many business schools use case studies and require class projects. To help students see the interconnectedness of the business functions, some programs have integrated two or more course topics (such as finance and marketing) into one class. Unfortunately, there is little evidence that these or other actions have significantly improved how students perform once they graduate.

Of course, graduating from a business program is not the end of a manager’s education, but the beginning. New hires are trained by their employers and given opportunities to learn on the job. In addition, virtually all large organizations have some form of management development program. In fact, it can be argued that business schools provide a broad foundation in general management skills and organizations provide the finishing touches as they groom middle- and upper-level executives to suit their company’s specific needs and corporate culture.

Teaching students about systems is not the same as teaching students to think systemically!

Unfortunately, based on empirical evidence, company-run management development programs do not perform much better than business schools in educating managers in the nuances of organizational life. Every day, financial reports come out showing that companies are failing to perform as expected. Poor performance has resulted in a high turnover rate among upper-level executives. In 2000 alone, 40 CEOs of Fortune’s top 200 companies were fired or asked to resign. A recent study of firms listed on the Fortune 500 showed that about 30 companies drop off the list every year. The average life of firms on the S&P 500 is only a paltry 25 years.

There are many explanations for the phenomena described above. The rate of change in business has accelerated at an unprecedented rate. The product life cycle in most industries is rapidly decreasing. A company’s innovative ideas are quickly copied by its competitors and just as rapidly become the industry standard. Given these circumstances, it is not surprising that businesses have short lives, and more and more upper-level managers are making bad, even illegal, business decisions.

This brings us back to the original question—Are we failing to adequately prepare our business leaders? If the answer to this question is yes, as the evidence seems to indicate, then we must ask two more questions: How are we failing? And what exactly do we need to change?

This study hypothesizes that, at least in part, the answer to both questions is related to the development of systemic thinking skills. During the last decade of the 20th century, several well-respected management experts, including Peter Senge, Russell Ackoff, W. Edwards Deming, and Jay Forrester, published books and articles emphasizing that businesses are complex social systems, and management practices must change to be effective in this environment.

At first glance, it appears that universities have embraced the experts’ recommendations. In fact, the word “systems” has become omnipresent in business programs. Students are taught about production systems, accounting systems, information systems, financial systems, and so on. In addition, the quality movement introduced the need to manage processes, which by their nature cut across functions. Consequently, managers must learn to manage crossfunctionally. As a result, many business curricula teach these concepts.

But are these actions adequate to prepare managers to be successful in what some are calling the Systems Age? We would argue that teaching students about systems is not the same as teaching students to think systemically!

We don’t mean to indict current teaching practices. There is no question students must learn about systems. Studies have shown that a student’s acquisition of operational skills is heavily dependent on the conceptual knowledge they are provided at earlier stages of their education. For that reason, students must first be made aware of how businesses fit the systems paradigm and what types of subsystems are embedded within them. They also need to learn about the various elements that make up the different types of subsystems in a business, along with how they work and interact. Similarly, working on cases and projects helps students better understand the idea of systems. Nevertheless, none of these activities is the same as helping managers to think systemically.

Defining Systemic Thinking

What exactly does it mean to think systemically? Unfortunately, there is no simple answer to this question. Ackoff acknowledged this difficulty when he provided the following definition:, “Systemic thinking is holistic versus reductionistic thinking, synthetic versus analytic.” While this definition is accurate, it is not precise. It provides a correct definition of the concept, but it doesn’t help us understand what cognitive processes are involved in thinking systemically.

Undoubtedly, when experts such as Ackoff define systemic thinking, they are implicitly including these processes. However, implied skills are of little use from a teaching perspective. If educational programs are going to help students learn to think systemically, they must make these cognitive processes explicit and teach techniques for developing the skills associated with them. Therefore, we developed a specific operational definition of systemic thinking for this paper. This definition is based on the integration of ideas from several researchers in systems theory. The focus of the definition is on the cognitive processes necessary to gain holistic insight into a situation and the implications of making changes to the status quo.

Synthetic Thinking. In part, the difficulty in defining systemic thinking lies in the fact that it encompasses multiple skill sets; therefore, we have developed the definition in parts. The first segment focuses on the concept of holistic/synthetic thinking included in the definition provided above by Ackoff. In a 1981 publication, Ackoff explained that for the past 400 years, we have been trained using the analytical paradigm. Consequently, we view the terms “analysis” and “thinking” as synonyms. In reality, analysis is only one method of perceiving the world around us.

Ackoff goes on to differentiate analytical thinking and synthetic (holistic) thinking. Analytic thinking attempts to understand a system by breaking it into its smaller parts and studying these parts in isolation. Once the analyst understands the parts, he or she tries to explain the behavior of the whole based on the behavior of the parts. In contrast, synthetic thinking starts by trying to understand the larger context that the system operates within. Once the individual understands the role of a system within its larger context, he or she tries to explain the behavior of the system based on that role.

Looking at the two types of thinking from a different perspective, analytical thinking helps people understand what the parts do and how they work, while synthetic thinking explains why the parts do what they do. Ackoff points out that when a system is disassembled, it loses its essential properties and so do its parts. Furthermore, a crucial factor for understanding system behavior is observing how the parts interact. Consequently, he maintains that it is impossible to truly understand a system through analysis, thus making the case for developing synthetic thinking skills.

Synthetic thinking is particularly important in today’s businesses, which have evolved into multi-minded, multi-purpose social systems. We now recognize organizations as being part of a larger purposeful system (society) with many subsystems (functional areas and/or teams) and parts (employees), all seeking to fulfill their own individual purposes. Ackoff and Jamshid Gharajedaghi (2003, http://www.acasa.upenn.edu/System _MismatchesA.pdf) assert that many of the problems we currently see in business and other social systems are, at least in part, due to our managing social systems as if they were mechanical or biological entities. If leaders don’t properly recognize and manage the various purposes held by the business, its subsystems, and its parts, organizations will experience high employee turnover, functional infighting, and a whole host of other problems.

To manage a multi-minded, multi-purpose social system, managers must understand why the various elements of the system behave as they do so they can acknowledge, prioritize, and subordinate these objectives as necessary over time. In short, a holistic approach to decision-making is necessary. Consequently, the first part of the definition of systemic thinking used in this paper is synthetic or holistic thinking.

Characteristics of Complex Systems. While holistic thinking is an essential part of systemic thinking, it does not sufficiently describe all of the cognitive processes necessary for thinking systemically. Forrester noted that social systems are a particularly complex kind of system. In addition, he identified several characteristics of complex systems that make it difficult for people to understand and work with them. These factors include:

• Cause and effect are often separated in terms of both time and space.
• Problem resolutions that improve a situation in the short term often create bigger problems in the longer term and vice versa.
• The subsystems and parts of a system interact using multiple, nonlinear feedback loops. This complex flow of interactions often results in counterintuitive behavior.
• Due to the time delays between cause and effect, people become accustomed to situations. They then reduce their goals and objectives to accommodate what they originally viewed as an unacceptable situation.

Notice that two of the factors identified by Forrester focus primarily on time and two focus primarily on complex interactions. Consequently an operational definition of systemic thinking should include capabilities related to understanding behavior over time and interactions between the parts of the system.

Most people learn the concept of cause and effect at an early age through simple situations. If I touch a hot stove, I get burned. If I don’t watch where I am walking, I’ll stumble over something, and so on. John Sterman points out that these simple situations teach us to have an eventoriented view of the world. Under this view, people see the world as a series of simple cause-and-effect relationships, where an effect has a single cause that occurred shortly prior to the effect. This perception prompts us to treat problems as isolated incidents and view solving them as a discrete, linear process: We recognize a problem, identify alternatives, select and implement solutions, and resolve the problem. While this belief holds true when working with simple systems, it creates serious problems when dealing with complex social systems.

Peter Senge succinctly articulated the common misperception of eventoriented thinking in his classic book, The Fifth Discipline:, “Today’s problems come from yesterday’s solutions.” As stated previously, the parts in a social system all have objectives and are constantly interacting. Because of the interdependency of the parts, we cannot make changes in isolation. There are always feedback loops that create unintended consequences, and they commonly include time delays.

Dynamic and Closed-Loop Thinking. Barry Richmond used the term “dynamic thinking” to describe a decision-maker’s ability to see a phenomenon as the result of behavior over time rather than as a reaction to an isolated event. Dynamic thinking also includes viewing the structure of a system as contributing to the problem rather than merely attributing it to outside forces, as we often believe. Richmond referred to the capability to understand how the interactions of the parts of a system and its environment feed back to shape the ultimate result of any intervention as “closed-loop thinking.” The definition of systemic thinking developed for this study is the combination of these three cognitive processes:

• Synthetic Thinking–studying the role and purpose of a system and its parts to understand why they behave as they do
• Dynamic Thinking–examining how the system and its parts behave over time
• Closed-Loop Thinking–investigating how the parts of a system react to and interact with each other and external factors

Because people generally have an event-oriented view of the world, they do not readily apply these skills. In fact, Forrester asserted that the human mind is incapable of truly understanding the behavior of complex social systems without the assistance of tools and technology. In 2000, Linda Booth Sweeney and John Sterman tested this claim. Administering an exercise to graduate students at MIT, they found that people have difficulty conceptualizing the behavior of even simple social systems. This difficulty appears to transcend age, national origin, educational background, and other demographic variables. Because most people don’t have the ability to think systemically, in order for us to understand and work effectively with social systems, we must be trained in systemic thinking tools and concepts.

“Today’s problems come from yesterday’s solutions.”
—Peter Senge

Do our education systems provide this training? The next section provides initial results from a survey of faculty working in business colleges at several major universities in the U. S. The survey focused on the teaching of systemic thinking in academic business programs.

Teaching Systemic Thinking

Despite the evidence that systemic thinking is a necessary skill for managers and that they need training to develop that skill, we found that management educators are still uncertain about the role higher education is playing, or should play, in facilitating this task. A quick exploration of various business curricula revealed that relatively few programs offer a course that explicitly refers to systemic thinking.

The purpose of our study is to provide some initial insights into this issue and stimulate further research and discussion on the topic. Here we present some preliminary results from the survey related to the following questions:

• How do faculty define the concept of systemic thinking?
• What level of importance do faculty assign to systemic thinking skills relative to other curriculum objectives?
• To what extent is systemic thinking taught in graduate business schools?
• Do faculty differentiate between teaching about systems and teaching systemic thinking?

The data used to answer these questions was obtained from a webbased survey that was distributed electronically to approximately 2,900 randomly chosen faculty members teaching at the top 63 business schools in the U. S. Over a period of about four weeks, 297 responses were received. The following sections provide the basic statistics from the survey results related to the four questions above.

How Do Faculty Define the Concept of Systemic Thinking? Respondents were provided five different options for defining systemic thinking and asked to select the one they felt best described the concept. In addition, they were given space to supply their own unique definition or supplement/combine any of the available definitions. Since the purpose of the question was to ascertain how respondents defined systemic thinking, it was important not to provide an obvious best answer. Consequently, none of the definitions incorporated all three of the elements discussed above. The specific question, the alternatives available, and the resulting selections made by respondents are provided below.

Which of the following best describes how you would define systemic thinking?

• 16% – Eliciting inputs from multiple disciplines and perspectives to develop a more complete understanding of a situation
• 13% – Identifying the optimal combination and arrangement of resources needed to achieve a desired outcome
• 19% – Studying how the different parts of an organization interact to achieve a desired outcome
• 7% – Mapping work flows to determine how information and material cut across an organization to create value
• 35% – Understanding how different parts of an organization interact, react to changes over time, and send feedback to affect performance
• 10% – Other
• 6% – Never heard of systemic thinking/have no idea how to define it
• 3% – All of the above
• 1% – All of the above plus an understanding of how it interacts with the environment

What Level of Importance Do Faculty Assign to Systemic Thinking Skills?

There were three questions in the survey related to this issue. The first two questions asked the respondents to rate how strongly they agreed with the following statements:

Teaching students to think systemically is an essential part of a graduate business program.

• 33.7% – Strongly Agree
• 40.7% – Agree
• 20.2% – Unsure
• 3.0% – Disagree
• 1.6% – Strongly Disagree
• 0.7% – No response

Systemic Thinking should be part of every class in a graduate business program.

• 12.8% – Strongly Agree
• 39.0% – Agree
• 24.6% – Unsure
• 12.8% – Disagree
• 3.0% – Strongly Disagree
• 7.7% – No response

The third question asked the respondents to rate how important systemic thinking was relative to other thinking skills. The thinking skills were: Critical Thinking, Analytical Thinking, Systemic Thinking, and Creative Thinking. In addition to the four choices, a space was provided for them to write in a different skill that they felt should be included. They were then asked to divide 100 points across these skills, based on how they perceived their relative importance. The only restriction on the allocation of the points was that the sum across all the skills had to equal 100.

Please allocate 100 points across the following thinking skills, according to how you perceive their relative importance.

• Critical Thinking 27.14 (Average score across all respondents)
• Analytical Thinking 26.35
• Systemic Thinking 22.01
• Creative Thinking 21.14
• Other (Communication skills, Core business knowledge etc.) 3.22

It is interesting to note that a majority of faculty believes that systemic thinking is an essential part of a business education, but it is still ranked significantly below analytical thinking in relative importance.

To What Extent is Systemic Thinking Taught in Graduate Schools of Business? The survey included several questions related to this issue, but most of them dealt with how the different disciplines (Accounting, Finance, Marketing, etc.) addressed the topic.

The first question simply asked the respondents if systemic thinking was taught in their curriculum; 42% answered “yes,” 18% answered “no,” and 40% were “not sure.” The followup questions were then directed to the 42% who answered “yes” to the initial question. The follow-up question and responses are shown below.

Does the program at your school do an adequate job teaching systemic thinking?

• 9.7% – Strongly Agree
• 36.3% – Agree
• 39.5% – Unsure
• 12.9% – Disagree
• 1.6% – Strongly Disagree
• 0 – No response

Do Faculty Differentiate Between Teaching About Systems and Teaching Systemic Thinking? If respondents said that they taught systemic thinking, they were referred to a list of systems-related topics that were unique to their chosen field and asked to identify which of the items they used in their teaching. For example, in operations management, the list included Lean Production Systems and Supply Chain Management. In addition, some items were listed that could be used to provide a more holistic view of an event but were not related to behavior over time or feedback loops. In operations, these included Value Stream Mapping, Fishbone Diagrams, and the DMAIC Cycle.

Finally, all the lists had tools specifically designed for systemic thinking. These included causal loop diagrams, stock and flow maps, and system archetypes. The intent of the question was to differentiate those teaching about systems from those teaching tools that could be used to think systemically. We haven’t yet completed a detailed analysis on this data. However, preliminary results appear to support our hypothesis that the majority of faculty are teaching about systems and not teaching students to think systemically. This belief is based on the fact that few of the faculty that identified themselves as teaching systemic thinking used traditional systemic thinking tools. In fact, most said they taught systemic thinking by covering various systems concepts and teaching about different types of systems.

Conclusion

There are two huge ironies related to this study. First, we used an analytical process to define systemic thinking! Second, we used survey methodology to study the teaching of systemic thinking. Surveys are a research methodology in which findings are based solely on correlation, while systemic thinking is about understanding causation. Perhaps this is a necessary transition from one research paradigm to another (that is, you use elements of the old paradigm to define the new). At least that is the excuse we are giving!

Despite these ironies, we hope that this study will stimulate serious discussion on this topic. Several experts have predicted a growing need to think systemically, and empirical evidence supports their predictions. It is our view that we are at a point where systemic thinking should no longer be viewed as merely an interesting concept, but that it has become a necessary managerial skill. As such, those responsible for grooming the next generation of managers must incorporate the tools and techniques designed to develop these skills into their training programs and curricula. If we don’t, can we really expect better performance from future managers?

J. Brian Atwater (batwater@b202.usu.edu) is associate professor in the College of Business at Utah State University. Vijay Kannan (vkannan@b202.usu.edu) is professor in the College of Business at Utah State University. Alan A. Stephens (alans@b202.usu.edu) is department head and associate professor in the College of Business at Utah State University.

This article is adapted from a “Thought Piece” written for the In2: InThinking Network, February 2, 2005. It was developed using material from an ongoing research project being conducted at Utah State University. The authors welcome any insights readers may want to share on this issue.

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Elements of the Language

Systems thinking can be thought of as a language for communicating about complexities and interdependencies. In particular, the following qualities make systems thinking a useful framework for discussing and analyzing complex issues:

• Focuses on “Closed Interdependencies.” The language of systems thinking is circular rather than linear. It focuses on closed interdependencies, where x influences y, y influences z, and z influences x.
• Is a “Visual” Language. Many of the systems thinking tools—causal loop diagrams, behavior-over-time diagrams, systems archetypes, and structural diagrams —have a strong visual component. They help clarify complex issues by summing up, concisely and clearly, the key elements involved.

  Diagrams also facilitate learning. Studies have shown that many people learn best through representational images, such as pictures or stories. A systems diagram is a powerful means of communication because it distills the essence of a problem into a format that can be easily remembered, yet is rich in implications and insights.

• Adds Precision. The specific set of “syntactical” rules that govern systems diagrams greatly reduce the ambiguities and miscommunications that can occur when tackling complex issues.
  Example: In drawing out the relationships between key aspects of a problem, causal links are not only indicated by arrows, but are labeled “s” (same) or “o” (opposite) to specify how one variable affects another. Such labeling makes the nature of the relationship more precise, ensuring only one possible interpretation.
• Forces an “Explicitness” of Mental Models. The systems thinking language translates “war stories” and individual perceptions of a problem into black-and-white pictures that can reveal subtle differences in viewpoint.
  Example: In one systems thinking course, a team of managers was working on an issue they had been wrestling with for months. One manager was explaining his position, tracing through the loops he had drawn, when a team member stopped him. “Does that model represent your thinking about this problem?” he asked.
  
  The presenter hesitated a bit, reviewed his diagram, and finally answered, “Yes.”
  
  The first man, evidently relieved, responded, “After all of these months, I finally really understand your thoughts on this issue. I disagree with it, but at least now that we are clear on our different viewpoints, we can work together to clarify the problem.”
• Allows Examination and Inquiry. Systems diagrams can be powerful means for fostering a collective understanding of a problem. Once individuals have stated their understanding of the problem, they can collaborate on addressing the challenges it poses. And by focusing the discussion on the diagrams, systems thinking defuses much of the defensiveness that can arise in a high-level debate.
  Example:When carrying on a systems discussion, differing opinions are no longer viewed as “human resources’ view of our productivity problem” or “marketing’s description of decreasing customer satisfaction,” but different structural representations of the system. This shifts the focus of the discussion from whether human resources or marketing is right to constructing a diagram that best captures the behavior of the system.
• Embodies a Worldview that looks at wholes, rather than parts, that recognizes the importance of understanding how the different segments of a system are interconnected. An inherent assumption of the systems thinking worldview is that problems are internally generated—we often create our own “worst nightmares.”
  Example: At systems thinking courses, participants often play a board game known as the “Beer Game,” where they assume the position of retailer, wholesaler, distributor, or producer. Each player tries to achieve a careful balance between carrying too much inventory or being backlogged. When things go wrong, many people blame their supplier (, “I kept ordering more, but he didn’t respond”) or the buyers (, “fickle consumers—one day they’re buying it by the truckload, the next day they won’t even touch the stuff”). In reality, neither the buyers nor the suppliers are responsible for the wide fluctuations in inventory—they are a natural consequence of the structure of the system in which the players are functioning.
  
  The systems thinking worldview dispels the “us versus them” mentality by expanding the boundary of our thinking. Within the framework of systems thinking, “us” and “them” are part of the same system and thus responsible for both the problems and their solutions.

Learning the Language

Learning systems thinking can be likened to mastering a foreign language. In school, we studied a foreign language by first memorizing the essential vocabulary words and verb conjugations. Then we began putting together the pieces into simple sentences. In the language of systems thinking, systems diagrams such as causal loops can be thought of as sentences constructed by linking together key variables and indicating the causal relationships between them. By stringing together several loops, we can create a “paragraph” that tells a coherent story about a particular problem under study.

If there were a Berlitz guide to systems thinking, archetypes such as “Fixes that Backfire” or “Shifting the Burden” would be listed as “commonly used phrases.” They provide a readymade library of common structures and behaviors that can apply to many situations. Memorizing them can help you recognize a business situation or problem that is exhibiting common symptoms of a systemic breakdown.

Of course, the key to becoming more proficient in any language is to practice—and practice often. When reading a newspaper article, for example, try to “translate” it into a systems perspective:

• take events reported in the newspaper and try to trace out an underlying pattern that is at work,
• check whether it fits one of the systems archetypes, or if it is perhaps a combination of several archetypes,
• then try to sketch out a causal loop or two that captures the structure producing that pattern.

Don’t expect to be fluent in systems thinking right away. Remember, after your first few Latin classes, you still couldn’t read The Odyssey. For that matter, you probably knew only a few key phrases and vocabulary words, but you improved your skills by using it as often as possible. The same holds true for systems thinking.

When sitting in a meeting, see if you can inform your understanding of a problem by applying a systems perspective. Look for key words that suggest linear thinking is occurring— statements such as “we need more of the same” or “that solution worked for us the last time this happened, why not use it again?” You can also create low key practice sessions by working with a small team of colleagues to diagram a particular problem or issue.

Becoming Fluent

We say that someone is fluent in a language when they begin to think in that language and no longer have to translate. But fluency means more than just an ability to communicate in a language; it means understanding the surrounding culture of the language—the worldview. As with any foreign language, mastering systems thinking will allow us to fully engage in and absorb the worldview that pervades it. By learning the language of systems thinking, we will hopefully change not only the way we discuss complex issues, but the way we think about them as well.

Michael Goodman is a principal with Innovation Associates Organizational Learning. He is an internationally recognized speaker, scholar, and practitioner in the fields of systems thinking, organizational learning, and leadership.

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