We are very good at planning. We plan our commute to work, our shopping, our holiday or our pension investment but when we make a plan in a complex and uncertain environment, the results are not always what we expect. This is because we are using the wrong tools to manage this complexity.
In the business environment, we usually make decisions using a linear cause-effect way of thinking. We expect that after every decision or action there will be a logical consequence. For instance, when we want to increase our customer base, we invest in marketing to let people know about our services or product and we expect to get a proportional increase in the number of customers and sales. But it doesn’t always happen it that way. Sometimes our marketing campaign doesn’t have any impact or sometimes we are lucky, and it exceeds our expectations for no apparent reason. These non-linear outcomes are because both ourselves and our business are a part of an interdependent and complex system.
Today, technology, the Internet, communication, and globalization have exponentially increased the complexity of the way we do business. We are still using the same way of thinking as we did at the beginning of the Industrial Revolution when everything was mechanical, from the supply chain to the economic transactions. Today our business environment is no longer like a perfect clock mechanism, instead, it is a hyper-connected and interdependent complex social system.
To be able to deal with this complexity, we only need to update our way of looking at reality. To do that we don’t need big data or complicated algorithms, we only need to stop concentrating on the events and start looking at the relationships. For instance, a decrease in the productivity of our employees is usually perceived as a personal incapacity, a lack of understanding, or dealignment. We tend to look for a direct and simple cause for the event we perceive. Instead we can choose to look at it in a different way. The event we perceive; low productivity, is the consequence of the relationships between the processes needed; the business structure, the flow of information, the culture and values we operate with and in our style of making decisions. All these elements condition the business at the same time, reinforcing or balancing its behaviour. Systems Thinking allows us to reveal these forces to enable us to solve the problem sustainably. Linear thinking gives us a static picture of our business, we have to try, wait, measure and makes sense of the data to be able to make a good decision, but trial and error can be very costly.
Systems Thinking makes the invisible forces of our business become visible, facilitating our understanding of its dynamics. This systemic approach can deal better with the ever-changing and uncertain environment in which we have to plan. It allows us to figure out where the leverage points are to solve the problems and removes the limits of growth on our business model, creating a responsive framework to manage our day to day challenges.
As an analogy; linear thinking would be like going from South to North London on the underground with no signals, signs or map. You know how it works, trains come frequently, there are junctions to change lines, and you can guess the direction trains are going to, but the only way you will get to the destination you planned is by time consuming trial and error. In contrast Systems Thinking is like taking the tube with a real-time map that allows you to know the direction of the trains you have to take, how engineering works are causing delays, when you should change the train to save time and money, and to understand the behaviour of the underground rail network as a whole and make the decision to take a bus if necessary.
Peter Senge said: “The harder you push the system, the harder the system pushes back”. Sometimes we are putting pressure on our employees, cutting production costs or investing too many resources in opening a new market without having a real understanding of how the systems work. Over time the system pushes back with burnout teams, quality stagnation and delays or costly nil returns for our marketing campaigns. Systems Thinking is the appropriate mindset to connect and understand our business. It is a holistic approach that gives you a broader perspective of how your business works and how to make strategic planning simpler and more effective.