“The dogmas of the quiet past are inadequate to the stormy present.”

 Abraham Lincoln

“The future ain’t what it used to be.”

Yogi Berra

Thriving in business at any level is tougher now than any time in recent decades, and the challenges to individual business leaders are increasingly daunting. While it used to be argued that “change is the only constant,” even that is no longer true. Change occurs at an ever-accelerating rate, making it anything but a constant. The ability to anticipate and adapt to it has never been more essential.

What does it take to successfully anticipate the demands and directions in today’s complex and changing markets? It would be unrealistic to try to offer an exhaustive list, but key among the many elements it takes to do so is a rather rare ability often referred to as “systems thinking.”

Systems thinking vs. myopia

Systems thinking is the ability to comprehend the big picture in relation to business, that is, a functional appreciation for complexity and its consequences. One way to grasp its nature is to contrast it with what might be called “myopia” or nearsightedness — the ability to apprehend only those things that are immediate and proximal. This distinction is a little oversimplified, because systems thinking is also about seeing possibilities and having a heightened awareness of cause-effect. 

In many ways, it is as much about questioning as it is about knowing. Those who are good at it are those who actively ask themselves, “What am I overlooking?,” and “What else do I need to take into account?,” rather than assuming that their understanding of a situation is complete. Success often stems as much from asking the right questions as it does from coming up with answers.

Respecting the complex and diverse chemistries that must be negotiated in order to make sound predictions and run a business profitably is what systems thinking is all about. What is important to note is that this ability occurs across individuals with as much variation as differences in visual acuity, and this has serious consequences for survival in the business world.

The advantages of systems thinking

Business leaders who are high in this capacity will always have an edge on their more myopic competitors for a variety of reasons, a few of which are summarized below:

• They see past, present, and future events as intimately related, allowing them to anticipate circumstances before they arise.

• They are much more aware of how social, political, and economic trends are likely to affect their businesses, making them more effective strategic planners. 

• They therefore can take charge and create their futures, while their less gifted counterparts are stuck reacting to shifts in markets, technology, or economic conditions.

The above list only scratches the surface. Each item on it is itself a key to countless additional advantages. What is clear is that this kind of thinking defines one of the differences between those with the ability to work smarter and those whose only hope is to work harder.

Systems thinking and managing your organization

The advantages listed above pertain to anticipating and planning for the complexities of the environment in which your business is embedded. Equally important is appreciating the complex chemistry between the elements within your organization.  This includes potential “domino effects” and “chain reactions” that often occur in response to what appear to be simple changes. The key term that applies here is the alignment of or coordination between various aspects of your organization, some of which are tangible and readily observable, and some of which are less so. 

Alignment:  Coordinating the key elements

Many businesses under-perform because of inconsistencies and conflicts between the elements that make them up. Imagine an army whose training, equipment, and battle plan are not in alignment confronting a foe that has all three of these ready to deploy in a highly coordinated way. The ensuing military rout would be quite predictable. 

A similar situation pertains to survival in a competitive business environment.  A short list of elements that must be in alignment within an organization appears below:

Strategy:  Your overall plan for success, which articulates your vision, your values, and your mission.  This generates your formula for success and how it is to be executed.

Structure: How your organization is put together in terms of divisions of labor and responsibility for specific tasks and functions.  If it’s organized by departments, their responsibilities need to be coordinated.

Processes: The “how’s” of your organization — what is required to accomplish the strategy, including procedures, facilities, or any technology to be involved.

Reward systems: Means by which employees are compensated and held accountable.

People: Attitudes, skills, knowledge, and any training by which employees are prepared to fulfill their functions.

Why are so many organizations out of whack?

A lot of the dysfunctions we observe in business systems stem from various misalignments between the elements listed above. Often the most observable challenges (e.g., excessive costs, poor sales, low customer satisfaction) are reflections of deeper problems stemming from misalignments between key elements.  

This brings us back to the topic of effective leadership, which would include assuring that an appropriate strategic plan is in place and that the rest of the organization is a reflection of it. Systems thinking is essential for planning effectively and seeing that all of the components of the organization are aligned.   

Distinguishing symptoms from root causes

More often than not, immediate and observable problems are symptoms of deeper, less tangible issues that need addressed. Identifying misalignments between the strategic plan and the various elements that must be coordinated to implement the plan is one of the best starting points for improving results. Leaders with an appreciation for the complexity of systems will invariably be those best equipped to oversee efforts to get things moving in the right direction.

Developing systems thinking

Systems thinking comes more naturally to some individuals than it does to others, and does not necessarily characterize the mindset of top executives. People ascend to leadership positions by various means, many of which are irrelevant to their capacity for systems thinking. Some of these are their superior technical expertise or a charismatic ability to influence others.  Some gain their positions through inheritance.

The history of business failures includes innumerable cases of individuals who became heads of organizations but whose cognitive styles simply did not equip them for the dynamic complexities that they were attempting to negotiate. Such failures can be averted by enlisting the advice of others who are good systems thinkers, but it always makes sense for you to sharpen up your own ability through active effort regardless of how naturally it comes to you.

One tactic for doing so is engaging in a rigorous review of your strategic plan and its relationship to your current business results. All aspects of your business operations and outcomes should be direct reflections of your strategic plan in identifiable ways, so take a serious look at how they match up. If you find that these are out of sync, it’s time to initiate a formal reworking of your plan. This will stimulate your thinking about the complex chemistries that operate between various aspects of your business and how all of its parts fit and work together.

Continuous self-improvement

Another means of improving your ability to manage complexity is to enlist the services of an effective executive coach. A good coach can help you to develop your potentials for systems thinking through rigorous questioning of the assumptions that you bring to your work and facilitate the identification of factors that may be limiting your ability to perform at levels that you are capable of.

Given that none of us will ever be perfect, the best that any of us can do is engage in a continuous process of self improvement. In fact, specialists in personal growth and development warn us that if we’re not improving, we’re probably backsliding. Feeling as though you are “good enough” without thinking of ways to improve is a sign of complacency, a common predictor of decline.

Assessing your capacity for systems thinking

My firm makes active use of a number of validated assessments that help professionals to understand their strengths as well as areas in which they may want to further develop their capacities.  Systems thinking is one such area. Much in the way that athletes use videos of themselves in action to identify strengths and target areas for improvement, assessment tools provide useful feedback that guide programs for continuous personal growth and better decision making.

Warren Buffett:  The ultimate systems thinker  

It’s generally agreed that one of the best business minds of all time is that of Warren Buffett. At the time of this writing, the price of a single share of his company, Berkshire Hathaway, Inc. was approaching $125,000.00! Given that “Berkshire” is a holding company that doesn’t offer any particular product or service, that’s quite a commentary on Mr. Buffett’s ability to understand what businesses are worth buying into.

While he would be the first to insist that his success reflects a team effort, it is his personal vision that is the driving force behind this incredibly successful enterprise.  It enables him to integrate astounding amounts of information and formulate decisions that are ultimately right in the business sense of the word. His more than uncanny capacity for integrating views of the past and the present into visions of the future make him my candidate for the ultimate master of systems thinking.

Systems thinking as vision

Among the few things of which we can be sure of is that increasing complexity and accelerating rates of change will characterize the future of business. Adapting successfully to such a future will take more than hard work.  It will require the ability to anticipate both of the above and adapt to them in creative ways.  Those whose business mindset is characterized by myopia will be increasingly disadvantaged relative to those with a highly developed capacity for grasping the big picture. As songwriter Dave Mason once warned, “When you can’t see past your nose, nothing flowers and nothing grows.”