Over the duration of my career, I’ve noticed that system thinking is a unicorn skill. Almost no one seems to have it, and the ones who do, can’t or don’t practice it. In 2017, I wrote a short LinkedIn article about my frustration with this lack of perspective: Is System Thinking Really that Difficult?
In this segment, I share my perspective on system thinking. Let’s start with some definition.
System thinking is the process of understanding how things influence one another within a whole. It’s a holistic approach to analysis that focuses on the way that a system’s constituent parts interrelate, and how systems work over time and within the context of larger systems.
Organisations are systems, and systems are systems. Systems have components or dimensions. But systems are more than components. There need to be interactions and processes. Systems have boundaries. When tuning or optimising a system, how the boundaries are defined is important.
Let’s consider the bicycle as a metaphor for a commercial organisation. Like an organisation, a bicycle has parts—components. Imagine that you are a competitive biker and you are trying to optimise your bike.
As a bicyclist, you may think of your bike as a system. If you are trying to optimise it, you know you need to think of it holistically, which is to say, as a system the same is true for an organisation. Any system is only as strong as its weakest link. You can have the best drive train, but that won’t help you win if you’ve got flat tires, bent rims, a rusty chain, a missing seat, or any number of other component deficiencies.
You can think of an organisation in terms of a bicycle. You can have the best sales and marketing technology, operation, and people on earth, but if you don’t have reliable supply chain operations, it won’t make much difference. Now imagine this combination with mediocre customer support, a website with sub par content and user experience design, and an inadequate operating and governance model to respond in a timely and otherwise appropriate manner. Putting more money into marketing would be a ridiculous choice, and yet I’ve seen something like this.
I once had a consumer packaged goods client who was transitioning from catalogue sales to direct commerce. They also sold through retailers, but that’s not my focus here. Through interviews with the various functions, I discovered that the marketing component had periodic promotions—seasonal specials, holiday specials, and events like this. Some of these were known to be ineffective promotions, and yet they would implement them without adjustment year after year. I also learned that Marketing would run promotions without the necessary inventory on the shelf or in the pipeline. At the start of the promotion, if it were to meet target projections, there was no way to logistically meet demand. And, since many promotions failed for other reasons, the warehouse managers didn’t want to get left holding a lot of unsold inventory. As an imperfect analogy, this is a top-notch sprocket gear set and a rusty chain. It is not a winning proposition.
Imagine you’ve got a race coming up, and you’ve got a budget to upgrade your bike. If you were like me, you wouldn’t have a bike. But stay with me . You’d think of the entire bike. What is good enough, and what is a liability? Maybe you don’t have the budget to upgrade all of the components of your bike, but to at least be competitive, you’d probably focus on the weakest links, starting with the weakest.
Maybe you’ve wanted to get a lighter frame, but this may not be the best bang for your buck given your budget—even if this relegates you to a second place finish. That’s fine. Make that your goal, and worry about placing first next time around when you can afford to make that investment. You could borrow money or parts for sure, but let’s keep this scenario simple for the purposes of this illustration.
As it happens, your budget allows you to upgrade your entire bike. No component was left untouched. You managed to procure the lighter frame, the best technology the biking industry has to offer. Winning is just a forgone conclusion. Right?
Let’s revisit this from a system thinking perspective. Bonus points if you anticipate where I’m going next. We’ve defined the bicycle as the system, but this is not the correct frame. It doesn’t cover the entire domain. The boundaries are misspecified. We need to consider a larger solution set. The most obvious is the rider. If we aren’t in shape to ride or haven’t trained, the best bike in the universe won’t help—Tesla bikes not withstanding. The bike is a system, but it’s also a subsystem. A subsystem can be optimised, but this might or might not affect the parent system. We’ve just optimised a system. But in isolation, it’s not enough.
The terrain is part of the system. Is the race on-road or off-road? Is this on a track or La Tour-de-France? Are we racing in the mountains or BMX. These are part of the system.
Is this part of an even larger competition—Perhaps a triathlon? Would you choose different options?
What’s the environment expected to be—sunny, rainy, windy? What’s the actual environment on race day? Would you choose different tires? Would you inflate them differently? Can you make ad hoc adjustments?
We could continue, but the point is that we need to take the entire system in place. Let’s return to an organisational setting, and let’s talk about transformation.
In my experience, too many organisations put too much emphasis and attention on technology. This technology is important, but only when considered as an equal partner in the solution set. It’s not that organisations don’t know this. While important, technology is the easiest piece of the puzzle. Procure it. Install it. Interface and integrate it. Configure it. It’s a stepwise process. Insert tab A into slot B. Rinse and repeat.
Yes, there are architect and design choices. Yes, there may be complexities and complications. But these are relatively simpler than the People and Process pieces. I should do a segment dedicated to adoption strategy and organisational change management approach, two major deficiencies that I’ve noticed. On the topic of systems, many organisations confuse the element of training—an important element—with adoption. Training—and perhaps even re-training—is their change management strategy. This is maybe twenty-five to thirty per cent of the adoption solution. This helps to explain why so many transformations fail.
Concerning systems, transformation needs to give equal attention (and perhaps budget) to each of people, process, and platform or technology. If you are the controller of budgets and feel viscerally that this doesn’t feel right, you need to reconsider and reframe your mental model. With your million dollar platform license and million dollar implementation, you should expect to spend another million on people and organisation, and perhaps a little less on process, though maybe not. But the difference would be absorbed by strategy and approach.
As with the bike racing example, your new system is more likely a subsystem, and it consists of more than the platform, people, and processes. It probably integrates with other systems that have adjacent processes and people considerations. These need to be considered from beginning to end. And, if there are external systems, parties, or processes, these need to be considered as well. I add that all of this process and org design work should be done or at least substantially complete before any platform licenses are signed or development work commences.
Just so you don’t think this is tech-bashing, here’s another example. A typical scenario is that a certain department has budget and interest in transforming, so it takes steps to advance itself. A lot of times this is the Marketing department. Without trying to diminish the marketing function, let’s say for the purpose of this example that Marketing is the bell that sits on the handlebars. We all know that this is not a feature of a racing bike, but stay with me for a few moments more. You might have enough budget to buy the best wax to produce the shiniest, most aerodynamic bell, but the pedals department has no budget to replace the broken pedal, where the time, money, and effort would be better spent.
So before you spend any more time polishing that shiny new bell, consider if this is the activity you should be performing now or if value might be better realised elsewhere.