Problem-solving is a vital soft skill in business, yet some aspiring leaders may need to learn how to apply various strategies when resolving conflicts and developing innovative solutions for their organizations. Systems thinking is a problem-solving approach that requires people to think beyond the symptoms of the problem itself in order to identify the relationships and links that may exist between the problem and the system as a whole.
What is systems thinking, exactly, and how is it relevant in today’s business climate? This guide walks through this philosophical framework, helping you understand the benefits of systems thinking and how to become a systems thinker.
What Is the Concept of Systems Thinking?
Approaching business problems as if they are isolated incidents may attempt to address the issue and alleviate the immediate symptoms, without recognizing that the problem may be related to the entire system. Business professionals who can view problems as interconnected parts of a system are described as systems thinkers.
The Alliance for Health Policy and Systems Research defines systems thinking as a strategic approach to problem-solving in which problems are viewed as key parts of a larger business system. In other words, through systems thinking, individuals are able to study the connections that exist within central components of a system, identify patterns and relationships, and determine how those components influence one another. It is a holistic approach to problem-solving that has been proven highly effective across a range of industries and specialty areas.
Key Principles of Systems Thinking
By exploring the core concepts that define systems thinking, you may begin to develop a comprehensive understanding of this holistic problem-solving approach. According to Six Sigma, the following are notable principles of systems thinking:
Interconnectedness
The philosophy of systems thinking is formed on the basis that all components within a business system are somehow interconnected and related. When using systems thinking as a problem-solving approach, business professionals need to be able to identify the central problem, plus the links between that problem and the rest of the business system. Focusing on interconnectedness, business leaders can develop a stronger understanding of the underlying factors that influence the system as well as how it functions overall.
Feedback Loops
Feedback loops play a pivotal part in the systems thinking process — particularly in complex systems — as they provide visual data about patterns and relationships within them. Within a feedback loop, the output of one system may become the input of another, thus highlighting the interconnectedness of the system at large. Understanding feedback loops allows business leaders to evaluate and examine the impact that one decision or solution may have on the entire system.
Causality Over Time
While feedback loops identify the relationships within a system and enable people to develop a more holistic understanding of it, causal loop diagrams identify the variables within a system and the relationships between those variables. Through causal analysis, systems thinkers can begin to understand how one solution will influence the system in both the near future and long term. This helps them make a decision that will lead to the best possible outcome while reducing unintended consequences.
Holism
Rather than taking an analytical look at each component within a system, a systems thinker will employ the principles of holism. As an interdisciplinary theory, holism emphasizes that a system is greater than the sum of its parts and, in turn, the interconnected nature of complex systems. The approach goes a step further to piece together the components, which are “not decomposable,” in context of the whole.
Emergent Behavior
Emergent behavior occurs when two interrelated components of a system interact with one another. Systems thinkers must have an advanced understanding of emergent system properties within an organization. In addition to identifying and evaluating the relationships among all key components of a system, business professionals should be aware of the byproducts of those interactions in order to make sound decisions and resolve problems.
Benefits of Systems Thinking
By its very nature, systems thinking allows an individual to see the larger picture more clearly. Systems thinking is advantageous because it:
- Identifies root causes – Through systems thinking, one can identify the underlying factors that influence a system and better understand the root cause of an issue.
- Encourages long-term solutions – Relying heavily on causal analysis, systems thinking can help create and implement lasting, long-term solutions for an organization.
- Promotes holistic understanding – Feedback loops and causal loop diagrams allow you to uncover the patterns and relationships within a system, promoting a deeper understanding of the system as a whole.
- Reduces unintended consequences – This problem-solving approach enables you to identify both immediate and long-term outcomes — thereby avoiding unintended impacts on the system.
- Enhances collaboration – As an interdisciplinary approach to problem-solving, systems thinking requires all involved parties to work together and effectively analyze the situation.
- Improves adaptability – With a deeper, more holistic understanding of the entire system, you can become a more agile and adept problem-solver and potentially enhance organizational resilience.
Common Applications of Systems Thinking
The systems thinking framework is an interdisciplinary approach to problem-solving that is applied in numerous fields — including business, healthcare, environmental science, and education. According to the Alliance for Health Policy and Systems Research, systems thinking is used widely in the healthcare field especially to evaluate and analyze the complexity of health systems as well as make decisions that will elevate operational efficiency and patient outcomes.
Systems Thinking vs. Design Thinking
Though the value of employing systems thinking and design thinking in tandem has become more widely recognized, the latter is a distinct, strategic approach to decision-making and problem-solving. According to the American Marketing Association, design thinking is a user-centric problem-solving approach used to create new and innovative solutions. One primary difference between the two approaches is that systems thinking focuses on understanding the system that currently exists, whereas design thinking imagines what could be in the future. Additionally, design thinking emphasizes people’s needs and experience within the system (which might not necessarily align with organizational needs).
Despite inherent challenges of balancing and leveraging these two complementary approaches to problem-solving simultaneously, doing so could help you become a more holistic innovator.
Examples of Systems Thinking in Action
Most recently, systems thinking took center stage during the COVID-19 global pandemic, when businesses across all sectors and industries had to quickly shift processes and develop innovative ideas. According to the World Economic Forum, the banking industry took the unprecedented pandemic as an opportunity to evaluate consumer patterns and better understand their preferences. During this time of significant social change and development, banking industry thought leaders relied on systems thinking to consider:
- What influenced consumers’ desire for online banking services and digital experiences?
- How were those factors interrelated?
- As banks changed their processes and digital services, how would the entire system be affected?
After careful analysis and strategic planning, leaders at many banks realized that these were online experiences that consumers craved. As a result, even in the post-pandemic era, most banks offer more virtual services than they did prior to the onset of the pandemic.
How to Develop Systems Thinking Skills
Although it’s possible to develop systems thinking skills through on-the-job experience, pursuing a formal education is one way to become a systems thinker. Degree programs like a bachelor’s in business administration or a Master of Business Administration (MBA) may be able to help you:
- Learn to see connections.
- Leverage tools and models.
- Ask bigger questions.
- Reflect and revise.
Become a Systems Thinker at Johnson & Wales University
Systems thinking is a valuable transferable skill, making it an important leadership skill in today’s dynamic business landscape. At JWU Online, our business degree programs are designed to help students develop a solid foundation in academic theories, principles, and practices while allowing them to build their practical and applied business skills. Both our online Bachelor of Science in Business Administration and online Master of Business Administration degree programs incorporate soft skills into their curricula — preparing graduates to successfully navigate a variety of business settings.
For more information about completing your degree online, complete the Request Info form, call 855-JWU-1881, or email [email protected].