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How You Can Apply System Thinking to Your Business

Chris Porteous
Chris Porteous
Co-founder and CEO at Framestr

What is system thinking, and how can it be applied to a wide range of businesses and industries without impacting their efficacy?

System thinking seems like a new buzzword in the world of business, but it's actually complex. Companies can be considered from an abstract perspective. Each of its departments, inputs, outputs and processes can be compared, in analog, to systems. If you attempt to do this, we realize that the generalization can offer us deep insights.

System thinking is, at its core, a method of conceptualization. It's not how we, as humans, typically see things. If we are involved in using it to aid our understanding of business processes, we must first grasp what it is and how it can be applied. This article delves into what system thinking is and how it can be used to benefit a wide range of businesses and industries.

How do you define system thinking?

Depending on whom you pose this question to, the answers will be distinctly different. Biologists view system thinking as to how colonies of organisms arrange themselves to perform tasks that are most beneficial to their ecological niche. Southern New Hampshire University defines system thinking as a way of exploring factors and events holistically that may lead to an outcome. From a business perspective, this seems vaguer than it has to be, but it can be briefly applied.

Businesses are involved in exploring behaviors. Whatever outcome you want from this behavior (a click, for a user to buy, etc.) comprises the outcomes. To fully access this outcome, we must first understand what the user goes through that leads them to that conclusion. These are the factors and events that lead to the click or closing of the sale. In this perspective, a business can figure out how to achieve a goal, given the inputs that make it up. However, these inputs are variable, and there's no telling what they will be. The interaction of these factors and events is what gives rise to the system that we're exploring. So, how does a company apply system thinking to its business?

Learn how to use failure as a springboard

Systems are prone to having breakdowns. All business processes are designed to be perfect in the sterilized back rooms of corporate offices. Unfortunately, the world isn't sterile and far from perfect. As a result, the systems break and become inefficient. For systems thinkers, this isn't proof that the system can't work, but it's a challenge to figure out how to optimize the system and develop failsafes. Harvard Business Review mentions several ways that businesses can learn from their failures.

For a system thinker, it's about making the system functional, then iteratively building upon its success. System thinking is such an essential tool for business because it doesn't throw out ideas that could work. It just recycles them until it finds a working model. There are pitfalls to this strategy of considering business processes, but the positives far outweigh the negatives.

Continual optimization drives success

When you examine successful businesses, their processes are ideally optimized between inputs and outputs. There are hundreds of holding company examples, where efficiency between one business entity and another is optimized.

From a business perspective, optimization drives production. However, this optimization is more than just about making products and offering services. Even things like how employees interact with each other and the business (the study of organizational behavior) can increase their efficiency. Seeing these things as a system has its merits, since it offers a new way to conceptualize drawbacks and improvements.

Look at problems in depth

When you typically look at the processes within a business, you might see things in a simplified manner. There may be inputs, processes, outputs and many things in between that affect the success or failure of these enterprises. However, system thinking makes you look at things from a three-dimensional perspective. Instead of just inputs, processes and outputs, you review the behavior that fuels these results.

The holistic approach to problem-solving that system thinking brings to the table drills down into the actions and elements that make up the inputs and processes. Instead of seeing these as solid blocks that can't be subdivided, we can now look at them as small machines or systems in their own right.

The more you step back, the more you realize that a business is in essence and living, breathing entity, made up of several interconnected systems working towards a single goal. From there, problems can be isolated and dealt with as you figure out which parts of a subsystem are broken.

Interconnectivity is at the core of things

Just like an ant colony can't survive without workers, eggs, and the queen, so, too, a business can't survive if one of its component parts is taken away from it. Interconnectivity between different systems allows for communication and the transfer of products back and forth. For many businesses, this is the art of their competitive advantage. But scaling vertically, companies can utilize raw materials faster than if they had to acquire them from outside the business. Interconnectivity happens between systems as well.

Everything within a business is interconnected. Even elements like customers make up an indelible part of the business. Relying on others should be built into the company's culture to ensure that it preserves and enhances this interconnectivity. Similarly, the company's marketing efforts should connect to customers, funnel them into buying the company's products, and interact within their shared media channels. Seeing this interconnectivity holistically enables businesses to figure out where bottlenecks exist and help them clear a path to allow seamless integration.

Implicit complexity

Businesses try to take complicated things and make them simpler. Simplification is what drives innovation in many companies. Unfortunately, when it comes to business management, simplification is like the Holy Grail. Businesses are implicitly complex, but that's why system thinking works so well to conceptualize them. Instead of simplifying a business, a system thinker needs to accept its complexity and then start finding where its problems are.

To be a system thinker in a business means having a love for finding and fixing issues within its structure, no matter how complex it might be.

Adopting a systems approach can make for interest development

System thinking is unique in how it sees the world around it. It starts with defining the systems that make up the workplace and all the subsystems that function under its umbrella. Each system has its own factors and interactions internally that carry repercussions to each other system that it interacts with. In a simple company of just a few workers, the exchanges can be few and far between. However, as businesses scale up, these interactions can be vast and have far-reaching consequences. The interconnections between these systems, as well as their internal tasks, are crucial in understanding problems that exist within these systems.

It's here that system thinking needs the insight that only critical thinkers can provide. A system that functions may not be doing so optimally. It's up to someone who understands the inherent interconnections to figure out how it can be improved and implement those changes.

As more businesses adopt system thinking, it may come into standard usage among companies with time. For now, companies that have a system thinker in their ranks are way ahead of the curve in optimizing their business structure and efficiency.

 

Image Credit: fizkes / Getty Images
Chris Porteous
Chris Porteous
business.com Member
I'm a serial entrepreneur and owner of three internet ventures, including My SEO Sucks. A contributor to ZeroHedge, Entrepreneur.com, Forbes, Inc.com, and dozens of other media outlets, I believe in SEO as a product. I developed a proprietary technology fueling the #1 rankings of My SEO Sucks clients. In guest speaking ventures across North American, I advocate for organic search traffic as the backbone of any comprehensive digital marketing strategy.