Systems Thinking: A Requirement for all Employees
Betty Cooper


Systems thinking is fast becoming a powerful tool for decision-making and organizational change. All employees in a company should be equipped with the skills necessary for systems thinking. It is imperative to have some awareness of the origin of systems thinking and how it can be of benefit to various types of organizational change, such as reengineering, systems integration, process redesign, Total Quality Management, and team work. In order to apply systems thinking to challenges that occur in the work place some of the tools and methodologies used in systems thinking should be taught. Some of the best known strategies used to implement systems thinking include systems modeling, simulations, causal loops, archetypes, and scenario planning. To meet the complex changes that are inevitable, systems thinking can no longer be esoteric knowledge held by a few managers, but should be accessed by all.

Systems Thinking: A Requirement for All Employees

No longer can a person feel the safety and comfort of merely doing a day's work for a day's pay. Neither can an employee quietly pursue his or her job, unconcerned about what the other person is doing. That simplicity of organizational life has vanished, never to be felt by the work force again. Combine the increased complexity of jobs with almost insurmountable global competition, advancing technology, and the never ending need to improve performance, and this adds up to a need for change. This is not just change in the way things have always been done, but change in the way things are thought about and viewed.

Now more than ever before, systems thinking is crucial for the entire work population. In the past systems thinking knowledge and the tools to appropriate it were used mostly by higher level management who had received training in the discipline. Mid-managers and supervisors were not exposed to it as a formal process for facilitating decision making and problem solving. Instead they relied on intuitive reasoning. Now as companies are flattening their organizational structure and pushing added responsibility further down the line, it is germane that an understanding of systems thinking be made available to a wider range of employees. This need not involve the mathematical rigor that is typical of much systems thinking, but rather comprehension of the basic concepts, processes, tools, and benefits. As employees begin to see the enormous complexity of their organizations as a system and how systems thinking can diagnose problems, identify consequences, and reveal needed changes, it will emerge as relevant learning that produces greater efficiency.

Understanding Systems Thinking
To understand systems thinking as it is known today, it is necessary to go back several decades and view some of its evolution. General systems theory was introduced in the 1940's by Ludwig von Berttalanffy (as cited in Cummins, 1980), but has been vastly expanded since its inception. It developed as a response to rapid technological complexities that confronted engineering and science. It was a radical departure from traditional science which dealt with cause and effect explanations. Systems thinking viewed an organization and its respective environment as a complex whole of interrelating, interdependent parts. It stressed the relationships and the processes that make up the organizational context, rather than the separate entities or the sum of the parts (Cummings, 1980).

Systems thinking has spawned numerous related academic disciplines and advanced degrees. In the 1960's Jay Forrester developed a branch of systems thinking which focused on organizational change. Hence the field of system dynamics emerged (Senge, Kleiner, Roberts,Ross, & Smith, 1994). The very term implies that constant change within sociotechnical systems is a given. It is this aspect of systems thinking that is so relevant to contemporary organizations struggling to maintain their competitive edge.

It is interesting to note that there are several ways to classify systems. Peter Checkland's classification system (as cited in Richardson, 1991) described the purposeful activity of human beings as human activity systems. This classification includes organizations, industrial activity, and political systems and is the one which is of most interest to managers and employees. These kinds of systems are referred to as soft systems and are usually described by language rather than mathematics. Such systems will include several basic concepts. Because it is a system of purposeful activity there will be goals, objectives, or purpose. Connectivity will exist as systems imply an interrelatedness. Organizational systems must also have some way to measure performance and make decisions, but these processes have control mechanisms which act within certain boundaries or areas of responsibility. If systems objectives are to be met, resources must be available. Finally, a human activity system will be a part of a systems hierarchy. It will be a subsystem within a greater system, or it will be a larger system incorporating smaller subsystems within itself (Wilson, 1984).

Comprehending and acknowledging the theoretical underpinnings for systems thinking is necessary to provide a foundation for methodologies and tools which are transformative, able to change how we think. Otherwise, such tools and strategies may not be generalizable and give no clue into what is causing our problems. Jay Forrester is credited with demonstrating how feedback processes can generate the patterns of behavior seen in large organizations (Senge et al. 1994). The concept of feedback loops helps explain some of the changes that occur within complex systems. Jay Forrester defined "a complex system to be a high-order, multiple-loop, nonlinear feedback structure", where feedback loops were seen as a major source of behavior and policy difficulties (Richardson, 1991, p.300). Patterns of behavior can be detected in feedback structures. Forrester feels strongly that the difficulty with comprehending and handling complex systems comes directly from their multi-loop structure. The system dynamics' thinker tries to see how these feedback loops contribute to different organizational behavior (Richardson, 1991).

Feedback loops are given various labels, from causal loops to reinforcing or balancing loops. These loops represent cause and effect relationships among the elements in the loops. A change in one part of the loop will result in changes in the other parts (Senge et al. 1994). Feedback loops will oftentimes compensate for changes that are imposed on the system. This refers to adjustments that elements within the loop make to counteract the direction of the change (Richardson, 1991). Since feedback loops are a conceptualization of the real system, serious study should be given to how they are constructed and used.

Impact of Systems Thinking on Organizational Change
Traditional approaches to organizational management have emphasized the analysis of individual problems and incremental change, but this will no longer suffice as companies continue to experience complex changes. It is becoming increasingly more difficult to see the consequences of our decisions and to learn from experience. Systems thinking has given companies a tool with which they can better cope with this constant change. It allows individuals to see processes over time and to break away from the assumptions that have prevented lasting results. Systems thinking is now being used in combination with other organizational change strategies (Gardner & Demello, 1993).

Reengineering for Organizational Change
One such organizational change is often called reengineering. Reengineering is not simply an elimination process to gain productivity. Unlike downsizing or restructuring, reengineering requires a reevaluation of assumptions and beliefs about processes, systems, structure, people, culture, practices, and technologies (Moravec, 1995). This rethinking of mental models requires a working knowledge of systems thinking. Reengineering always requires action at the systems level. It involves breaking down a system that appears in many cases to be working just fine. For this reason it is paramount that more than business processes be addressed. The whole sociotechnical system or corporate culture must be considered, making it crucial that all employees understand and use system thinking methodologies (Allee, 1995).

Integration for Organizational Change
Another type of change that organizations are undertaking is systems integration. It does not entail the revamping of every aspect of a company, but rather it "seeks to synchronize processes that share a natural relationship to a common goal" (Cavaleri & Fearon, 1994). Encouraging innovation in work processes is the central purpose of integrating systems. This work improvement strategy focuses on improving these relationships whether they are technical or human. Systems thinking must be employed to bring about this type of integration, because a point of reference for understanding interrelationships is needed. Systems thinking involves learning to learn which is called generative learning. This type of learning helps people discover their own patterns of thinking, which inherently facilitates systems thinking. In turn, systems integration is aided, because employees can increase their ability to see new relationships (Cavaleri & Fearon, 1994).

Areas in need of systems integration may become apparent by using concurrent learning. This type of learning is similar to generative learning. Workers are encouraged to combine their actual work experience with learning to learn. They use systems thinking to view their work in terms of customer satisfaction and adding value to the organization, see how their work is related to the work of other people in the organization, and to identify any patterns or relationships that were previously unnoticed. Employees begin to understand how they are working and how they are being influenced by other people or processes. Through electronic communication individuals can express any unusual conditions that might warrant further attention. As small groups of people express the same concerns, application of systems thinking tools such as causal loops help to show how the system is currently working and if reengineering of the process is needed (Cavaleri & Fearon, 1994).

Total Quality Management for Organization Change
In the 1980's the organizational community made a mad dash to jump on the Total Quality Management bandwagon. The marriage of TQM and systems thinking seems to be an appropriate one, as both involve process improvement, measurement, and a team focus. Both also incorporate graphic techniques for viewing operations (Gardner & Demello, 1993). To be effective this particular type of organizational change requires the wholesale endorsement of systems thinking. The very word 'total' indicates that to have quality management, every system and subsystem in the organization must take responsibility for quality. All inputs for one system are the outputs for another system and vice versa. To see possible benefits or problems it is necessary to move out of the present system and look at other affected systems. In quality management if the outputs from one system do not satisfy the environment, the inputs will stop and the very survival of the organization is at risk. Real quality can only take place when the supplier knows precisely what the user expects. This concept is a judgement that is made at the boundary between systems concerning what may pass across it (Cusins, 1994).

For quality to be managed it must be considered within a system thinking framework. The quality management systems in most companies are viewed as the servo-mechanism of the organization. The quality management system runs counter to the operational systems in the organization. Outputs that come from the quality management system serve as inputs to the operational systems, and information from operational systems about product, services, or processes serve as inputs to the quality management system. The quality management system (QMS) collects information on systems and subsystems concerning user requirements and the system processes which produce the outputs. Quality management activities should also be concerned with involving those people who can make needed changes in the inputs or production processes based on quality judgements about the information that has been collected. Care should be given to plan and implement whatever changes are needed to improve the quality of the outputs and efficiency of the processes. If the quality philosophy is a vision shared by all members in the organization it does not require a separate quality management system (Cusins, 1994).

Teams for Organizational Change
A fourth organizational strategy for change that incorporates systems thinking is the use of teams. The preceding three examples of organizational change also make use of the team concept, so it may be unfair to consider teams as a separate strategy. Team effectiveness is apparent when team outputs exceed the sum of the individual outputs ("Moore New Products," 1995). This can be accomplished whether a company is undergoing reengineering, integration, or Total Quality Management. Teams must see where they stand in relation to the company's other work, especially in cross-functional groups. Seeing their niche in the total environment is one reason why it is imperative for employees to understand systems thinking and apply it to their everyday functions.

Aside from a sense of wholeness that teams develop as they interact with the various parts of the organization, there are other aspects of systems thinking that can affect the quality of team performance and relationships. Senge (1994) reveals four levels of a system working simultaneously within a team. None of these levels should be overlooked when trying to implement change. Qualities of action which are the unspoken actions exhibited by team members is the most observable level within the structure. A second level within the system's structure is the domains of purpose. Each team member may be driven by very different goals or purposes. These goals might reveal a need in the affective domain, a need for power or for meaning. Assumptions about authority and boundaries, as well as, deeply embedded views of oneself form two other levels of system's structure that may need to be examined if teams are going to be able to find solutions to their problems.

Change is an inevitable consequence of organizational life. It is obvious that systems thinking plays a vital role in many types of organizational change, whether it be a total reengineering, integration of systems, Total Quality Management, or teams. As very few things work in isolation, it is key that all employees view their decision making, resources, goals, processes, and consequences in light of the whole environment. Emphasis should be placed on improving the performance of the entire organization rather than single components.

Methodologies and Tools
For systems thinking to become a reality for every employee, it must be expressed in terms that are understandable and usable. Part of the criticism of systems thinking is that many of the approaches and tools are so esoteric that most people can not begin to apply them to their job situations.

Causal Loops
One of the original structures that was used by systems thinkers to view the interrelationships of the organization was the causal loop. Two specific types are used to show the forces at work. The reinforcing loop depicts in graphic representation either growth or decline that occurs at an ever-increasing pace. Every variable that is shown is either a cause or effect of some other variable forming a circle. If a reinforcing loop refers to exponential growth for the company, it may be referred to as a virtuous cycle, but if decline is represented, the loop is a vicious cycle (Senge et al. 1994).

This type of growth or collapse that the reinforcing loops picture can never continue indefinitely. There will always be something that limits it. This limiting loop is known as a balancing loop. Aside from its limiting function, the balancing loop also can provide equilibrium to those forces that may seem out of control. A system or process will find this equilibrium or resistance when it hits a certain goal or constraint which may not be known at first. Senge (1994) says that recognizing this constraint or goal and setting a new goal may help to overcome the limiting effect. In neither of the two types of causal loops do the variables proceed at an even pace. There are often delays that may result in a lot of wasted resources or energy if they are not recognized and accounted for. Causal loops may become extremely complicated making it difficult to wade through the minutiae of details to find the source of problems.

In order to overcome the complicated nature of the causal loops, a classification system was developed which made it possible for an organization to identify its unique situation within a particular category and apply some solutions that are appropriate to it. These categories, called archetypes, are really diagrams that show typical combinations of feedback and balancing loops that often occur in organizations. Archetype descriptions explain common patterns of behavior that organizations can compare to their own circumstances. Once it is clear that a particular archetype fits the actual situation of the company, there are certain strategies that may be used to give the company greater leverage in dealing with their problems. The archetypes provide a basic format with some definite prescriptions, so that interrelationships may be easily seen. Likewise, the various archetypes are related to one another. Identification of one archetype may reveal the need to consider others (Senge et al. 1994).

There is some concern that archetypes may be too complicated for most employees, but there are other helpful tools which can be used to bring systems thinking within everyone's grasp. Russell Ackoff (as cited in Gardner & Demello, 1993) developed "idealized design" which is a planning method that allows all stakeholders to see an ideal version of the present. It attempts to get employees to view this "idealized design" as the present, not an imagined scenario of the future. It allows participants to create a shared vision among different stakeholders, attend to customer needs, and stress the linkages and interdependencies that come into play throughout the organization (Gardner & Demello, 1993).

Systems Modeling
Systems modeling has become another effective tool to help put systems thinking into practice. It provides a practical framework from which to approach changes in organizational processes. Analysis of processes should take into consideration both space and time, so systems modeling combines process mapping and simulation. Process mapping tends to give a rather static look at organizational behavior and to reveal consequences when changes are made within any elements in the system, while simulation observes behavior over time with the idea of process re-design in mind (Wolstenholme & Stevenson, 1994).

Process mapping is usually one of the first things undertaken when laying out the total system. It will show both the external and internal boundaries and interdependencies, along with important linkages. It gives management an opportunity to share mental models and test assumptions. Some frequently used mapping techniques are stock-and-flow maps, interrelationship digraphs, and macro flow charts (Wolstenholme & Stevenson, 1994).

Simulation takes process mapping one step further. It may not require the use of sophisticated computer software, but software programs such as 'ithink', while not requiring programming skills, do make it easy to see the implications of change over time. It is essential to explore the implication of process changes before they are implemented. Systems modeling provides management with the necessary tools to foresee potential consequences (Wolstenholme & Stevenson, 1994).

Simulation has been discussed as a tool to view specific organizational environments, but simulation can also be used to teach systems thinking itself. Some simulations involve the use of computers, while others are behavioral in nature, requiring the participants to act out a scenario. These behavioral simulations create a microworld within which participants can interact with a whole range of business issues. These types of simulations provide a practice field where developing managers can apply systems thinking. Behavioral simulations differ from computer simulations in that individual or group efforts can be examined as if in a managerial work context (Stumpf & Watson, 1994).

One such behavioral simulation game is the Beer Distribution Game developed at MIT. This game dramatically illustrates that systems thinking controls outcomes no matter who is in charge. The point is to show managers how to use systems thinking to their greatest advantage. Concepts that are difficult to visualize or explain are actually experienced through this game. No matter who participates in the game, the same basic behaviors surface. Interestingly enough, players always blame someone else or feel that something outside their control was at fault. Toward the end of the game players are shown how the system caused the erratic results and how their decisions are a part of the system. They saw how some fundamentally bad management practices can impact the whole system. Even though this exercise takes approximately half a day, it provides a realistic picture of the importance of systems thinking and how an individual can impact a system (Goodwin & Franklin, 1994).

Foodcorp and Globalcorp are two other behavioral simulations used to develop managers and corporate leaders. They had similar outcomes to the Beer Distribution Game where players returned to previous mental models and methods of decision-making when faced with intense stress. In each of these incidents the feedback in the debriefing phase of the training brought out new insights into the value of systems thinking and more appropriate behaviors that might have been used. Both kinds of simulations provide opportunities for employees to explore the world of systems thinking and see its potential (Stumpf & Watson, 1994).

Scenario Planning
Strategic planning is nothing new to corporate executives, but it attempts to forecast important business variables with the same assumptions and mental models used in the present. Scenario planning is a tool that will enable people to break out of this mind set and imagine different possible futures. In order to implement scenario planning, systems thinking must be employed. Organizations will need to look at all the changing interrelationships and uncertainties that will be a part of future working environments. Scenario planning forces one into systems thinking. Oftentimes companies are hesitant to think in these terms unless a real crisis arises and all else has failed. In exploring new scenarios, companies can see how their current goals and strategies would work in future environments. It also might be feasible to imagine the existing corporate vision in a different business future and determine what goals and strategies would bring about this vision.

Royal Dutch/Shell is one of the companies that has made good use of scenario planning. Through careful research they foresaw the energy crisis of the 1970's and were able to prepare some "just in case" strategies which propelled Shell to the top of the list of most profitable oil companies. In the 1980's Shell used scenario planning to anticipate the reform movement to take place in Russia (Schwartz, 1991). Other companies have taken advantage of this systems thinking tool and seen the impact on their decisions.

Successful scenario planning sessions are based on certain ground rules. First assumptions about company norms, politics and structure, as well as, "face saving" efforts must be put aside to provide an open, nonthreatening environment. This questioning of organizational norms and assumptions in order to establish new ones is known as double-loop learning. Open communication and continuous questioning will facilitate this type of learning which requires a examination of the underlying values (Hosley, Lau, Levy, & Tan, 1994). Everyone must also be viewed on an equal footing without regard for rank or title. Finally, it is necessary for a facilitator to make sure that the session stays focused on the future that is being planned. Scenario planning becomes like a play where the actors are free to imagine the improbable. With this kind of backdrop it is possible to see how expanded thinking and creativity can take place (Thomas, 1994).

The need for systems thinking is evident and the tools and methodologies are available to place this knowledge within the reach of all employees. As companies rethink their business strategies, it can only be hoped that top management will make this a priority. With systems thinking can come new mental models and a shared vision to take organizations into the next century.


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