Encyclopedia of Leadership

To illustrate systems thinking, we use the example of a car as a system. If you consult an

automobile repair manual, a car is composed of dozens of subsystems—motor, electrical sys-

tem, transmission, sound system, steering system, braking system—and hundreds of parts—

radio, CD or DVD, speakers, and wiring (also part of the electrical system).

A typical organizational system can be illustrated, at a high level, as:

SECTION 2 TOOLS FORBIG-PICTURETHINKING 41

➠A system—the car—is much more than the sum of

its parts. One could put all the parts of a car into a

garage and not have a car. Often, with the

breakdown of a single part, the whole system breaks

down.

➠Each system is a subsystem of a larger system. A car

would not be a useful system without a system of

roads and fueling stations. For example, one

difficulty with electrical cars is the lack of recharging

stations.

➠Each subsystem of a great car is actually

suboptimized! For example, the world’s best

transmission would be too big, too heavy, or too

expensive for the world’s best car. The trick is to sub-

optimize each subsystem to optimize the whole

system.

➠To change one subsystem of a car—for example, to

change from two-wheel to all-wheel drive—requires a

number of changes in other systems, including

transmission, wheel assembly, brakes, and so on.

✔The whole organizational system is greater than the

sum of its parts. The interrelations and interdepen-

dencies are as important as the parts (the subsys-

tems). A single poorly integrated subsystem weakens

the whole organization. (People systems are more

robust than mechanical systems, because people can

and will work around poor systems).

✔As leader of a subsystem, remember that you are

always part of the larger system, which alsoincludes

external systems of suppliers, customers, clients,

competitors, consultants, governments, and society.

✔ The need for suboptimized subsystems is at the heart

of many leadership problems. Each leader has to sub-

optimize his or her subsystem if the whole organiza-

tion is to be optimal. As Peter Senge puts it, “...in

systems ...in order for you to succeed, others must

succeed as well.”

✔ Any major change requires changes in many other

interacting systems to make it work. Change more

often sputters or fails because it conflicts with exist-

ing systems set up to support another result!

[☛4.1 Organizational Design]

The car-as-a-system example Some implications for leaders

Purpose

A system is driven

by its purpose

and goals. (A car

designed for fuel

efficency would

need quite

different system

thinking than

would a racing

car.)

Inputs

Every system

depends on

quality inputs—

suppliers, services,

and raw materials

from other sys-

tems.

Value-Adding

Processes

An organization,

team, or business

unit must have its

internal systems

fine-tuned to add

value to the

inputs and

produce results.

Results

Results are

measured against

targets, customer

acceptance,

quality standards,

competitors, and

so on.

Benefits to

Stakeholders

Stakeholders can

include clients,

customers,

employees,

investors, the

community,

the country, and

so on.

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