Systems thinking and change management are inseparable
The imperative for change managers to be system thinkers
We are experiencing the most change of any generation that has been before us. This state of ‘hyper-change’ has been profiled in numerous forums, articles, books and more. It is almost impossible to attend a conference on business or technology that doesn’t have this topic front and centre.
We know that although change is a constant part of human life, what’s unique and different now is the rapid convergence of many change drivers - technological, political, economic and socio-cultural - happening all at the same time. Rapid overnight innovation, globalization, extreme shifts in political thought and perspectives, environmental degradation and the ensuing impact on business and human life are a few change drivers that come to mind.
In the middle of this changing dynamic, it’s getting harder to stay ahead of the convergence of change drivers and the potential effects they have on the growth and viability of organizations. This means that leaders everywhere will have to solve increasingly complex challenges. It is therefore critical for change leaders to revisit how they solve challenges and manage change in their organizations. The approach needs to move from simply being ‘strategic’ to being more ‘system-aware’.
In this article, we argue for the opposite to the reductionist approach to managing change and more for an inductive, systems thinking approach to change. The goal of this article - for the sake of brevity - is to link systems thinking and change management and the crucial role the two play for any change leader. This is not a detailed treatment of systems thinking. (Michael Genovese’s ideas on systems thinking for example, would be recommend reading on that topic).
- First, we define a system and the systems thinking approach.
- We then examine key drivers in organizations that make the case for a systems thinking when dealing with change.
- Finally, we will outline tactics for leaders to apply systems thinking while leading change.
What is a System?
Before diving into Systems thinking, lets take a closer look at the term ‘System’. A system is defined as an entity of constituent parts. The very existence of such a system depends on the existence of its parts. Further to this definition, a key attribute of a system is the interplay and the interaction between those constituent parts.
Using this definition, it is clear that a system is not unlike any organization - a startup, a massive industrial conglomerate or a not-for profit. For example, finance, sales, customers and suppliers each serve a function and are key parts in any organization. The parts interact and have interplay through internal business processes.
What is Systems Thinking?
Next, let’s define the approach. Systems thinking encourages us to perceive situations, problems and challenges inductively, in full context. It also asks that we view variables and components in any system from varying perspectives. It also asks for awareness and a deep understanding of the interrelatedness of these variables.
Systems thinking is the opposite of the reductionist approach to problem-solving. So, as opposed to breaking a system down into its component parts and solving for each independently, you instead look at the whole system.
You are probably thinking, how is Systems thinking different from the other management problem solving frameworks? Management frameworks very often focus on problem-solving within some part of a system, often leading to sub-optimal results. For example, a process re-engineering exercise may focus on a small group of processes in one part of the organization with the goal of making them more efficient. Once re-engineered, the changes in that part of the organization may potentially lead to negative consequences in another part of the organization.
Systems thinking is a means to avoiding such scenarios.
What are the drivers for Systems Thinking in organizations?
Jamshid Gharajedaghi’s book, ‘Systems Thinking’, explores scenarios that organizations face today that unserscore rapid change. Lets take a closer look at these trends:
- Organizations who dominate a specific industry, or have a strong market presence are least likely to have a rapid respond to change.
For example, the larger an organization, the harder change becomes. Similarly, the more complex or geographically distributed an organization, the tougher it is to change. Cases in point are IBMs displacement by Microsoft as well as Blockbuster’s ‘invalidation’ by Netflix and other streaming services.
Most organizations tend to focus on a single ‘strategy’ as a means to maintaining dominance. A singular strategy leaves the organization exposed to incumbents. Our previous IBM example also mirrors this trend. Although the outcome was different with IBM transforming itself into a more consulting-focused organization. Blockbuster on the other hand, perceived that the strategy that had worked for decades, would continue to work. We all know how that turned out.
The notion of a competitive advantage is an elusive end-state. When an organization becomes good or is successful at something, that something becomes susceptible to imitation - very quickly.
As Gharajedaghi put it, ‘once a problem is effectively dissolved, the concerns associated with that problem are irreversibly affected’. In other words, once a problem is ‘dissolved’, it transforms the problem thereby creating a new set of concerns, an almost never-ending loop.
These observations reinforce the importance of managing change in a systematic, trend-seeking, implication-assessing and big picture approach. And this applies to almost every organization in a competitive setting. This is where Systems Thinking comes in.
Systems Thinking in Organizational Change?
The following are some typical steps in a typical Systems Thinking exercise:
Step 1: Clarify the problem/change
Step 2: Identify the relationship between the variables in the change domain
Step 3: Formalize the relationships into a model or simulation
Step 4: Validate/compare the outputs of the model to real world performance
We will focus on the first two steps for the purposes of this article.
Step 1: Clarify the problem/change
Peter Senge in his very popular book titled ‘The Fifth Discipline’ makes reference to the ‘Shifting the Burden’ archetype in systems thinking.
Shifting the burden happens when an underlying issue generates symptoms in an organization, but the underlying problem is complex or difficult to address. The organization then focuses - almost exclusively - on solving the symptoms. This leaves the underlying challenge unsolved in essence. This approach to change is unfortunately rampant across many organizations.
An interesting example of this is often seen in turnaround efforts. When an organization starts losing market share with it’s customer-base, it takes quick, some times radical steps to cut its workforce, increase its prices and get back to being competitive.
The issue with this approach is that the underlying factors that led to the decline in performance are never addressed. Issues such as quality of the product, inventory levels or even its website. You get the idea. Shortly after the turnaround is complete, the organization must still address the underlying issues or risk returning to the state it was in.
We can borrow a Systems thinking to clarify the root cause of a business problem by asking questions such as:
“Where have we seen this challenge in the past?”
“What types and how much data do we have about the challenge?”
“What are the variables in the current state causing this behavior?
“From what other perspectives or angles can we look at the problem from?
In organizations, when faced with a challenge or change, it is common practice to be quick to action and to start working on a solution right away. We should instead think strategically about the business challenge, to delibrately shift the focus from how to why.
Using a systems thinking approach, the shifting the burden structure can be mitigated by addressing the responses to business challenges and reducing the emphasis on trying to treat symptoms alone. The outcomes and answers from this clarification should be shared within the organization through a structured communication plan. It would also be helpful to develop a shared vision of the future as a means of clarifying that the correct issues are being solved.
The absence of systems thinking princples in organizational change is not sustainable. We must shift focus from managing change that addresses symptoms to managing change for the long run, with an emphasis on root cause. The focus on symptoms may be beneficial in the short term, but it will most likely create challenges in the long term.
Step 2: Identify the relationships between the variables in the change domain
Once the change efforts in an organization begin, it often creates desired (first-order) as well as inadvertent (second-order) effects. The latter type may affect the success of the change program.
In The Fifth Discipline, Senge tells the story of an innovative engineering organization that grows rapidly because of its ability to introduce great products. As its offering of products grew, its revenues and its R&D budget grew, and in turn its engineering and research staff expanded in headcount.
Over time, the large staff became more complex and difficult to manage. The responsibility of managing this large group fell on senior engineers, who in turn started spending less time on engineering and more time managing. This slows down the introduction of new products, severely affecting the performance of the organization - many variables, cause and unanticipated effect.
If you are leading change, start by put your systems thinking cap on. You can make use of a common change management tool called the impact analysis. Completing this analysis early in the process will help you identify these types of outcomes before the change begins. In this particular example, a potential solution would have been to simplify or automate some management tasks for a select group of senior engineers, giving them back the time to remain productive. Doing this type of analysis will deepen a leaders’ understanding of the relatedness of variables in the change environment.
This systems thinking approach is more time intensive and requires a lot of effort however, an early, proactive impact analysis using a who, what, why and how approach will unearth and help prevent undesired second-order effects. Use the impact analysis to gather information (the what), seek knowledge (the how) and gain understanding (the why).
Conclusion
Change management using a systems thinking approach creates an understanding of the relatedness of variables in the environment of a change taking place.
As a leader, you don’t have to become a systems thinking expert to lead change. You can borrow from the time-tested principles of systems thinking to achieve better outcomes. Think strategically, focus on root cause and keep an eye out for unanticipated side-effects. More than ever, systems thinking is becoming a core skill and applying it will reap many benefits for your organization.
Sources:
Senge, Peter M. The fifth discipline: The art and practice of the learning organization. Broadway Business, 2006.
Jackson, Michael C. Systems thinking: Creative holism for managers. Chichester: Wiley, 2003.
APA
Gharajedaghi, Jamshid. Systems thinking: Managing chaos and complexity: A platform for designing business architecture. Elsevier, 2011.
APA
https://thesystemsthinker.com/systems-thinking-what-why-when-where-and-how/