2.1
INTRODUCTION TO SYSTEMS
THINKING FOR LEADERS
Inspired by Peter Scholtes and Peter Senge.“All the empowered, motivated, teamed-up, self-directed, incentivized, accountable, reengi-
neered, and reinvented people you can muster cannot compensate for a dysfunctional sys-
tem,” says Peter Scholtes, systems thinking proponent. In this book, we choose more middle
ground—although systems are extremely important and the most leveraged place to improve,
we contend that leaders lead much more than well-oiled systems. In fact, most leaders cannot
change most of the systems in which they lead! No one would propose that his or her organi-
zation is the perfect system, because systems are composed of imperfect people. Then there is
the example of motivated, self-directed, accountable people trying to make the best of a bad
system in the TV series MAS*H.
This tool will introduce you to the elements of systems thinking and analysis. As leaders,
we suggest that you look to systems improvement first; however, we also urge you to find,
refine, and use the other tools in this book, as needed.
WHAT IS SYSTEMS THINKING?
A system is a collection of interrelated and interdependent processes and subsystems which,
together, produce a result. Any system, other than perhaps the universe itself, is part of a larg-
er system. What you consider a system is somewhat arbitrary. For example, the Financial
Services department in an organization could be considered a system, with Budgeting,
Reporting, Accounts Receivable, and Accounts Payable as subsystems. Each of these subsys-
tems, Accounts Payable for example, has additional systems within it. It may sound confusing,
but where you draw the line determines the system you want to examine. Where you draw the
line sets boundaries for the system, and makes it what is called a closed system. In the past,
departments acted like closed systems and created what were often called stovepipes or func-
tional silos. Departments that acted like closed systems acted as if the organization was set up
to do accounting, systems, engineering, and so forth. One characteristic of modern leadership
is the opening up of systems to thoroughly consider how one organizational system—finan-
cial services, for example—fits into the larger system. Wal-Mart, for example, revolutionized
the retail business by considering its suppliers part of its customer service system.
Systems thinking is looking for patterns inside and outside the system, then understand-
ing and optimizing the overall system. Your thinking about a system changes depending on
your purpose for examining it. Separating a subsystem from the larger system (drawing a box
around it in order to isolate it) is a useful step in getting a manageable picture of the subsys-
tem itself, before removing the box to see where the subsystem fits into the larger picture.
Seeing and diagramming a system like your organization is a very creative process. Some con-
ceptualizations of systems can lead to better results than others.
40 SECTION 2 TOOLS FORBIG-PICTURETHINKING