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7.2 Systems Thinking and Organizational Change

Peter Senge was a pioneer in helping us to apply systems thinking to organizational change. He emphasized the central role of organizational learning, and created frameworks and tools for diagnosing organizational dysfunction and enhancing organizational functioning. In particular, he emphasized some of the organizational learning disabilities, or delusions, that must be acknowledged if the organization wants to change and survive.

The Delusion of Mental Models

Senge emphasizes that we all have mental modelsDeeply ingrained assumptions, generalizations, or pictures or images that influence how we understand the world and how we behave. In an organization, capital is often tied up with particular models. of how things work. When our organizations are not functioning properly, he suggests that we need to reconsider our individual and collective mental models. This is not easy to do because

mental models are deeply ingrained assumptions, generalizations, or even picture or images that influence how we understand the world and how we take action. Very often, we are not consciously aware of our mental models or the effects that they have on our behavior.Senge (1990), p. 8.

Therefore, change-capable organizations are conscious of their shared mental models, and are adept in revising those mental models when they no longer work properly.

The Boiled Frog Delusion

The boiled frog delusion is a commonly told story, but rarely do living systems learn from its message. If you place a frog in a pot of boiling water, it will immediately hop out. But if you carefully place the frog in a pot containing room-temperature water, and gradually raise the temperature of the water, the frog will not notice the temperature increase and will stay in the water even though he is free to jump out. The reason for this is that the frog’s internal mechanism for survival is geared to deal with sudden changes to his environment, not gradual ones. The same applies to our organizations.Senge (1990), p. 23.

In many ways, our organizations change dramatically and well when the environment shifts in radical ways. Think of how individuals and organizations in New York City demonstrated magnificent performance in the advent of the 9/11 terrorist attack, which was violent and sudden and dramatic. However, creeping problems like slowly eroding market share, insidious environmental pollution, steady quality declines, and turnover by some of the key employees of an organization are often not noticed. The environment is turning up the heat slowly but surely on many of our organizations, but it is happening so gradually that we do not notice or take action to correct this trend.

The Delusion of Learning From Experience

Most learning for individuals, organizational units, and overall organizations comes from reflection on the experienced effects that are the result of certain actions. For example, a common lesson learned within organizations is “When I deliver requested results on time and within budget, my project continues being funded.” Or at the subunit level, “When our sales unit aggressively pursues new customers, sales grow for the company.” And at the organizational level, “When our organization hits its earnings per share goal, our stock price rises.”

However, what happens when there is not a direct effect of our actions on organizational outcomes? Many individuals recognize that they can do their best, but the project gets canceled for other reasons. And some sales units pursue customers aggressively and sales still fall. And some organizations hit their earnings guidance, but the stock price still continues to fall. When learning from direct experience doesn’t work, Senge suggests that we need to think more systemically about cause and effect. He states, “Herein lies the core learning dilemma that confronts organizations: We learn best from experience but we never directly experience the consequences of many of our most important decisions.”Senge (1990), p. 25.

The Delusion of Individual Initiative Within a System

When an individual or subunit within an organization is not meeting performance standards, the traditional response by the individual or subunit is to “work harder.” Sometimes this works; often it does not. When this does not work, Senge points out that often the system is the problem, rather than the individual or individuals who are working within the system. Specifically, he states,

The systems perspective tells us that we must look beyond individual mistakes or bad luck to understand important problems…We must look into the underlying structures which shape individual actions and create the conditions where types of events become likely.Senge (1990), pp. 42–43.