If a strategic leader wants to be successful they have to understand the system they are working in and they need to be system thinkers. So what is system thinking in this context? Peter Senge, in his book the Fifth Discipline wrote that businesses and other endeavors are systems and are bound by invisible fabrics of interrelated actions. He describes system thinking as a conceptual framework, a body of knowledge and tools to make the full patterns clearer and help see how to change them effectively. Finally, he makes the point that you can only understand the system by contemplating the whole, not individual parts of the pattern. When considering an organization, system thinking takes into account the whole organization, the interdependencies and interconnections within the organization and its external environment.
Optimizing the effectiveness of organizational interconnections and interfaces
Russell Ackoff illustrates this point with the car example. There are a large number of cars available and if you take the best parts from these cars, i.e., the best engine may be Ferrari, best transmission from Rolls Royce, best brakes from Porsche, etc., and put them together you will not have the best car. The parts will not fit together and have not been designed to work together. In other words, even if you have the best parts they still will not have functionality unless they are designed to be part of an overall system. This concept applies to building an organization. We can have the best individual departments but the whole system will not produce the most productive organization unless they are designed with the overall functionality in mind. The challenge here is not how good the individual parts are but how they are put together and work as a whole system to deliver the optimal result. Even if the parts are designed in that way, we still have to optimize how they work together. In the case of organizations this comes down to how they interact and interconnect. This is, what I call, optimizing the effectiveness of organizational interconnections and interfaces.
Understanding the full picture
System thinking, for strategic leaders, is taking into account the full patterns that exist within a whole system including internal and external environments. A strategic leader should be conscious of the whole system when formulating strategic goals and strategic plans. Understanding a system brings the “right context” to a strategy, i.e., it gives an understanding to the current and possible future states of an organization and the external environment. It should be noted that in the fast changing environment of today, that the system is not static and is dynamically changing and an effective strategic leader should be constantly monitoring their system and make adjustments to strategy in real time.
System thinking is primarily an analytical way of thinking and involves obtaining data about the internal system and the external environment. It involves looking for patterns and trends in this data to define the best strategy to deliver on an organization’s strategic intent and goals. Some aspects of the organizational system that strategic leaders should consider include the following:
Current organization including organizational history, context, characteristics, culture, and readiness to change.
Current approaches to organization design and development– talent and leadership; skills, competencies and technologies; organization structures (including matrices); processes and decision-making.
Current partnering strategies and alliances
Important ongoing change initiatives.
In my experience great leaders are System Thinkers – they analyze the system they are part of and frame their strategic plans and actions in the context of the whole system not individual parts. They understand both their internal and external environments and recognize patterns, trends, challenges, interconnections and interactions in their system.
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Transformative Leadership Through Astute Insights