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7.1 A Primer on Systems Thinking

What Is a System?

W. Edwards Deming, the guru of total quality management, defines a systemA network of interdependent components that work together to accomplish a common goal. as “a network of interdependent components that work together to try to accomplish a common aim.”Deming (1986), p. 32. A pile of sand is technically not a system since the removal of a single component (i.e., a grain of sand) does not change the functioning of the collectivity (i.e., the pile). Furthermore, there is no “aim” designed into or emanating from the pile.

In contrast, a car is a system that comprises thousands of parts that all work together to provide transportation to a driver. If you remove the gasoline tank, then the car fails to perform its aim properly. In this case, the aim is designed into the car by the automobile design team, so the car is a mechanical, not a living, system.

Living systems are the most complex forms of systems. What makes them unique is that they interact with their environment and are self-organizing. As a result, the aim is not designed in but constantly evolving over time. Living systems can be something as simple as a cell, to something as complex as the European Union. Therefore, one of the ways of determining whether a collectivity is a system or not is (a) the interacting parts possess a central aim or purpose and (b) the removal of a component changes the functioning of the overall system.Miller (1978).

What Is Systems Thinking?

Systems thinking builds on our understanding of natural and man-made systems. It emphasizes that we need to understand how the whole affects its parts and how the parts affect the whole. This is different from traditional thinking, which assumes that the parts are independent of the whole. It is a set of techniques and an overarching mind-set that “problems” can best be solved by considering the component’s relationship to the overall system and its environment.

This type of thinking is revolutionizing many fields of study. For example, we now know that the pain that you have in your back may be caused by one leg being longer than the other so that the skeletal subsystem is skewed. In other words, close examination of a person’s back will reveal the symptoms (i.e., back pain), but not the causes (i.e., leg length differences). In traditional thinking, diagnosis of back pain focuses exclusively on the pained area of the body.

Systems thinkers tell us that there are two types of systems—closed and open systems. Closed systemsSystems that are relatively independent of their environment. function as systems relatively independent of their environment; open systemsSystems that are constantly exchanging material, energy, and information with their environment. are constantly exchanging material, energy, and information with their environment. An example of a closed system is the circulatory system of a fish versus mollusks. In fish (and other vertebrates), the blood circulates within vessels of different lengths and wall thicknesses, so its circulatory system is relatively closed to the rest of its body cavities. In mollusks (and most invertebrates), there are no vessels and the blood circulates within the tissues of the entire body cavity. The key notion for our purposes is the fact that system openness is a relative state, not an absolute state.

Sometimes the components or elements of a system function as subsystems within a larger system. A subsystemA collection of components or elements within a larger system that has a smaller aim. is a collection of components or elements with a smaller aim within the larger system. Hence, there are various levels of systems that operate interdependently. A prime example here would be the financial subsystem’s impact on and relationship with the larger national economic system.

The Organization as a Living System

Systems thinking is revolutionizing the organizational sciences, just as it is challenging all the other sciences. If we consider the organization to be a living system, then organizational problems and opportunities are viewed in an entirely new way. For example, a high-performing individual might be creating dysfunction within his or her work group. Similarly, an award-winning department might be the cause of organizational decline. And a financially successful organization could be polluting its natural environment.

Interestingly, systems thinking can lead to principles that transcend a particular area of study. For example, the Japanese often study natural systems (i.e., a river) to guide them in the design and improvement of interorganizational systems (i.e., a supply chain). Similarly, Margaret Wheatley has used systems insights from the study of quantum mechanics to better understand the proper functioning of organizational systems.Wheatley (2006).

Systems thinking requires us to consider the subsystems and components within an organization, and the organization as a subsystem within its larger environment. Organizations vary in terms of their levels of openness to the environment, and systems thinking suggests that a balance must be struck between maintaining some boundaries with the environment and assuring that those boundaries are somewhat porous. A classic systems problem is that the organization is not listening enough to its current customers (it is too closed), or that it is listening too much to its current customers, or what Clayton Christensen calls the innovator’s dilemma.Christensen (1997).

Systems thinking also requires us to consider the aim of the system and to what degree the members of the organization, or larger society, align with the overarching aim. Chris Argyris eloquently describes how individuals often have both espoused aims and actual aims; and how the key to individual health and productivity involves minimizing the distance between what is espoused and what is actual.Argyris (1993).

The stakeholder versus stockholder perspective of organizations also deals with the aim of the organizational system. For some managers and theorists, maximizing shareholder wealth is the sole purpose of the corporation, and by doing so the overall economic system, of which the organization is a part, benefits. However, other managers and theorists suggest that there are multiple social actors inside and outside the organization with a “stake” in the functioning of the organization, and that no one stakeholder is more important than any other. Systems thinking enable managers to sort out this difficult, value-laden issue.