Systems Thinking

Traditional analysis focuses on the individual components, while systems thinking considers how each aspect interacts with other aspects of the system. There are three elements of a system. The first is the individual parts. The second is the way they connect to each other. The final is the purpose. The individual elements can be switched out, and if the connections and purpose do not change with it, the result will be th same, whether success or failure. By reorganizing, a big difference can be made. Just providing more information can be one of the biggest differences.

A system is a group of interconnected and interacting parts with a common purpose. Without a common purpose or relationships, we would have simply a collection, rather than a system. A bowl of fruit, for example, is simply a collection. While they may have a common purpose, the pieces of fruit do not interact with each other in the same way the cook, waiter, customer, and others might interact in a restaurant, resulting in the bowl of fruit being provided for breakfast.

The system must have a purpose, and each component plays its own part in helping achieve that purpose and in supporting the other components. The pieces are organized in such a way that they act efficiently and provide feedback to each other. These feedback loops may be linear where each process or component provides information to be used by its successor task until the process has completed one simple pass-through. They may be circular or recurring loops, however, where each phase or task feeds into another and then repeats back to the original, interating with each run. This would be like the difference between ordering a bowl of fruit to go and eating it at home. No matter what is in the bowl, it's too late to change it. It may change whether you go to that restaurant or order that dish again, but that particular bowl can only be eaten as is or discarded. Eating in the restaurant, however, the server may ask how the food is tasting, and there is an opportunity to add more food to the order or send it back if the fruit is warm or mushy. The second scenario is a more advanced system than the first.

As the feedback loops cycles repeatedly, it can create what is called either a virtuos cycle or a vicious cycle. A virtuous cycle is one where positive results lead to continued growth and positive results. On the other hand, a vicious cycle means negative results will lead to stagnation and losing sales or whatever else we are measuring. A balancing cycle is a self-maintaining loop where as good things happen and growth occurs, the growth will result in a less than idea situation, which results in loss, which then results in a better situation and the growth returns again - kind of like a swinging pendulum. When it is not obvious what is happening, a diagram of the system and results of the processes can help visualize and make clear to everyone what is working well or not.

To me a systems approach means considering all the likely results, putting processes into place to maximize good results and minimize bad results. When there are good or bad results, there should be at that point additional processes to deal with those results as well. The last thing you want to do as a business owner is to make any type of change without having any idea what the likely outcome is going to be. Everything you do should be tested and recorded so that when things get better or worse later, we know what the cause was. Changing too many things at the same time can result in two positive and negative reactions cancelling each other out or not being able to tell which of two things we changed are what created the effect we wanted. We then don't know whether to continue doing what we're doing or if we need to make additional changes. Even if we know the change we made was the sole cause of a given reaction, if that is not recorded and saved for later, years down the road new people may not have learned that same lesson and will need to repeat the same process we thought we already learned from.

As you consider the various stakeholders associated with a company, it is important that all work together for their mutual benefit. If any one stakeholder is focused too much on their own growth at the cost of the others, it will create an imbalance that can potentially lead to the company going out of business. By thinking about what others need and trusting that others will look out for theirs, everyone benefits together. You want to hire employees who are passionate about your company and its products.

“Business is not a game. It is not a math problem. It is not a machine. It is not war. It is one of the most human things we do. It is a living, interconnected and interdependent system, like a rain forest or the human body.”

“Employees and customers are like the two wings of a bird. A business cannot fly with only one.”

Too many businesses with a sole focus on shareholder value or any other individual stakeholder will result in creating chaos, imbalance, and tension. That tension will eventually have to be resolved or corrected. Why not do it right the first time?