The Principles of Systems Thinking

Principles of systems thinking as

applied to management and leadership
 Systems thinking is a management discipline that concerns an understanding
of a system by examining the linkages and interactions between the
components that comprise the entirety of that defined system.
 The whole system is a systems thinking view of the complete organisation in
relation to its environment. It provides a means of understanding, analysing
and talking about the design and construction of the organisation as an
integrated, complex composition of many interconnected systems (human
and non-human) that need to work together for the whole to function
successfully.
 Whole systems are composed of systems, the basic unit, which comprise
several entities (e.g. policies, processes, practices and people) and may be
broken down into further sub-systems.
 Systems may be thought about as having clear external boundaries (closed)
or having links with their environment (open). An open systems perspective is
the more common and realistic.
 The boundaries of a whole system may be chosen and defined at a level
suitable for the particular purpose under consideration; e.g. the education
system or a complete school system.
 Similarly, systems can be chosen and defined at different levels and can
operate alongside each other as well as hierarchically; e.g. the finance
system, the decision-making system, the accountability system.
 An organisation as an entity can suffer systemic failure. This occurs in the
whole system or high-level system where there is a failure between and within
the system elements that need to work together for overall success.
 Factors in systemic failure may include confused goals, weak system-wide
understanding, flawed design, individual incentives that encourage loyalty to
sub-ordinate (rather than super-ordinate) goals, inadequate feedback, poor
cooperation, lack of accountability, etc.
 Whole system success requires a performance management system that is
pitched above the level of individual systems and their functional leadership.
Features may include group or team-level goal-setting, development,
incentives, communication, reviews, rewards, accountability. The aim is to
focus on what binds individuals together and what binds systems together
rather than functional silo performance.
 Whole system failure may co-exist alongside functional success. The
leadership of silos may individually be successful but not be sufficiently
integrated into the whole system owing to a shortcoming of systems design,
management or understanding.
 A whole system can succeed only through managers collaborating in and
across a number of functional systems. The whole system can fail only if
leadership at the level of the whole system fails, and where several senior
managers are involved. Hence, such failure may be labelled a systemic failure
of leadership.
 In cases of systemic failure, individual executives who operate at a lower sub-
system level may be free of responsibility and blame. They may argue
(correctly) that it was the wider system that failed. They may claim that
particular systems that integrate with their own work let them down. However,
responsibility and accountability for the successful design and running of the
(integrated) ‘whole system’ should rest somewhere.
 Understanding and anticipating how the whole system is intended to work,
actually works, and how it may buckle under pressure, can practically elude
and defeat most executives. To avoid censure for this tough challenge, they
sometimes seek recourse to the often hollow mantra “lessons will be/have
been learned”. They also try to divert attention and reassure investors by
referring to a single bad apple (e.g. a ‘rogue trader’), behind which usually
lurks a systemic failure.
 The leadership challenge is accentuated by the realisation that for every
legitimate, official or consciously designed system (which is intended to be
and is supposedly rational) there is a shadow system. The shadow system is
where all the non-rational issues reside; e.g. politics, trust, hopes, ambitions,
greed, favours, power struggles, etc.
 The system can confuse, overpower, block, and fail leadership. But
leadership can fail the system. A major failure of leadership within, across or
down an organisation is referred to as ‘systemic’.
What is Systems Thinking?

Founded in 1956 by MIT professor Jay Forrester, systems thinking is an approach to

solving complex problems by understanding the systems that allow the problems to
exist. You have a complex problem when:

 There’s no clear cut agreement on what the problem really is because the context it
depends on evolves over time.
 It’s difficult to assess what the real causes are behind the problem due to many factors and
feedback loops influencing each other.
 It’s not certain what the best steps are to solve the problem because there are many
potential and / or partial solutions that may require incompatible and even conflicting steps.
 It’s hard to pinpoint who has sufficient - ownership, accountability, and authority to solve the
problem, or if there even is just a single individual that suits the criteria — and it’s
challenging to keep various stakeholders from getting in each others' way.

Where traditional analysis zooms into a smaller piece of a whole, systems thinking
zooms out to view not just the whole, but other wholes that are affecting each other.
Through this approach, systems thinking formalizes methods, tools, and patterns that
allow practitioners to understand and manage complex settings and environments. This
is why systems thinking is important — and effective — in solving complex problems.

3 Unique Systems Thinking Benefits

Like other established approaches to solving different kinds of problems, systems

thinking can prove insightful and effective when used properly. Beyond those general
benefits, systems thinking also presents some unique advantages:

Systems Thinking Allows Meaningful Failure

Failure is a discovery mechanism in properly applied systems thinking. It allows you to

learn and improve the design or implementation of your solution. Failure in systems
thinking can:

 Allow you to learn and adapt from small missteps quickly.

 Shows you the right option, or at least reduces the wrong ones, when it comes time to test
hypotheses.
 Only temporarily hamper a system, not completely jeopardize it, in exchange for meaningful
input.

Systems Thinking is Inclusive and Collaborative

Because of the holistic viewpoint taken in systems thinking, it inherently opens up levers
for collaboration across involved parties. It isn’t just nice to gain input from diverse
stakeholders with dynamically interrelated roles and interests — it's required.

Implemented properly, systems thinking encourages a culture of inclusiveness and

collaboration to fix systemic problems that in turn benefit multiple stakeholder teams
simultaneously.

Systems Thinking Provides Actionable Foresight

Part of why complex problems are hard to solve is because each involved party only
ever sees their portion of the issue. Therefore, they typically execute solutions that
resolve parts of the constantly evolving problem, which in the holistic view may even
lead to other issues or complications.

Systems thinking allows you to predict how systems change and how steps within parts
of the system will impact the whole. In applying systems thinking, you analyze causal
structure and system dynamics, assess policies and scenarios, and test action steps
and hypotheses to foresee consequences in order to synthesize long-term strategies.

Solving Complex Problems with System Thinking Frameworks and

Methodologies

So how do you use systems thinking and its frameworks and methodologies in your
organization? Systems thinking is not an instant panacea. Implementing its methods
and frameworks isn’t like applying smart charts to raw data on spreadsheets. Those
aren’t complex problems.

The implementation of systems thinking involves the application of frameworks that

illustrate levels of thinking, and the use of tools to allow people to better understand the
behaviors of systems.

The Iceberg Framework

At a primary level, systems thinking takes a holistic view to try and understand the
connectedness and interactions of various system components, which themselves could
be sub-systems. You can start by focusing on points that people gloss over, and
attempt to explore these issues by focusing on aspects you don’t understand. The
iceberg framework in systems thinking can guide you through this.
The iceberg framework illustrates four levels of thinking about a problem, arranged thus:

 “Events” - Events form the tip of the iceberg. Events that characterize a complex problem
are the most visible, and therefore also the ones that appear to require being addressed in
an immediate, reactionary way. This level of thinking is the “shallowest,” as typically events
are only symptoms of underlying issues.
 “Patterns and trends” - Directly below the tip of the iceberg, the Patterns level is the first one
hidden from view. Thinking deeper about events can lead problem solvers to more insight
into patterns and trends that lead to them. Any approaches to solving patterns and trends
will more effectively resolve events.
 “Underlying structure” - Even deeper below the surface, you’ll find there are underlying
structures that influence the patterns and trends that lead to the visible symptoms of
complex problems. This is where the interaction between system components produces the
problematic patterns that in turn cause the visible events.
 “Mental models” - Finally, the bottom of the iceberg that props everything up are the
assumptions, beliefs, and values held about a system culminating in the inadvertent creation
and maintenance of underlying structures that result in unfavorable patterns within systems,
which in turn bubble up to the surface as symptomatic events.

Once systems thinking practitioners understand this framework, they can employ tools
and technology that allow human perception to genuinely digest the behavior of
complex systems. At this level of systems thinking, qualitative tools generate knowledge
to unravel complex problems.

Causal Loop Diagrams and System Archetypes

Some of the most common and flexible tools in systems thinking are causal loop
diagrams that demonstrate system feedback structures. They show causal links
between system components with directional cause and effect. Causal loop diagrams
display the interconnectedness of system components to serve as a starting point for
further discussion and policy formulation. Naturally, these diagrams can also help
problem solvers identify in which parts of the system they can assert a positive influence
to impact the entire loop favorably. In effect, these diagrams can help prevent poor
decisions such as quick fixes.

Another important tool in systems thinking are the system archetypes that generally
describe how complex systems work. They are generic models or templates
representing broad situations to provide a high-level map of complex system behavior.
Because they have been well-studied and mapped, these models can identify valuable
areas where steps can be taken to resolve complex problems through interventions that
are called leverages.

In general, there are two basic feedback loops (reinforcing and balancing) that identify
nine system archetypes (or eight or ten, depending on who you ask):
 Balancing loops with delays
 Drifting goals
 Escalation
 Fixes that fail
 Growth and underinvestment
 Limits to success
 Shifting the burden
 Success to the successful
 Tragedy of the commons

Each of these archetypes are rarely sufficient models on their own — they merely offer
insight into possible, common underlying problems. They can of course also be used as
a basic structure upon which you can develop a more detailed model specific to your
complex systems.

Adding Advanced Tools into Your Systems Thinking Toolbox

There are several dynamic and structural thinking tools in the systems thinking
repertoire. Causal loop diagrams and system archetypes are dynamic thinking tools.
Graphical function diagrams and policy structure diagrams are structural thinking tools.
All of these can be mapped or used in computer-based tools like a management flight
simulator or learning lab.

Of course, there are tools to what you can achieve with your toolbox.

Causal loop diagrams, for example, are static — they cannot describe the evolving
properties of a system over time. To overcome such limitations, you need to simulate
management issues quantitatively through system dynamics modeling.

Computer models of system dynamics allow you to explore time-dependent complex

system behavior under different states. They essentially enable you to simulate how a
causal loop diagram evolves as it is affected by different assumptions over time.

Solving Complex Problems in Project Management

So should you start learning about causal loop diagrams and begin shopping for the
best systems dynamics computer modeling tools in the market as soon as you find
a project management problem you can’t seem to solve? Don’t jump the gun.

You can implement systems thinking in inquiry and problem diagnosis to great effect
without needing diagrams and computer models. Apply the concept of the iceberg
model and you might already find you’re asking better questions than before, or you’re
catching common quick fix solutions — like needing more budget or hiring more people
— that don’t address deeper problems.

Once you realize that you’ve got a complex problem that requires an in-depth systems
thinking approach, you can then explore your options with your team. The important part
is to embrace the mental models that make systems thinking invaluable for
understanding complex systems and resolving the complex problems that arise from
them.