Relevance of Systems Thinking to a Project and an Organisation

This article discusses the importance of systems thinking in project and organisational management. It covers topics such as assets and resources management, organisational structures, forms, and culture, engineering risk and risk management, portfolio alignment, business value, and organisational maturity.

1
SYSTEMS THINKING
RELEVANCE OF SYSTEMS THINKING TO A PROJECT AND AN ORGANISATION
(Author)
(Institution)

2
SYSTEMS THINKING
Introduction
Systems thinking is an analytical approach focusing on how a systems’ constituent parts relate to
each other and how systems work over a period of time and in larger systems context (Leveson,
2011). Approach to systems thinking contradicts the traditional analysis which looks at systems
by subdividing them according to their separate units. For example, in the field of medicine,
efficient treatment of patients is directly related to the diagnosis. Likewise, systems thinking is a
problem examining disciplined approach which examines problems deeply, wholly, completely
and accurately before taking any action, hence allowing people to gain a holistic view of
situations before making any conclusions (Kerzner, 2013). Generally, systems thinking increases
the number of available choices for solving problems hence expanding our thinking capacity,
therefore, assisting people in problem articulation in different and new ways (Dym, et al., 2005).
Systems thinking principles, therefore, enable us to become aware that there are no any best
solutions to problems and to the fact that our choices impact other system parts. The objective of
this paper is to define systems thinking and classify the tools and techniques related to systems
thinking.
Relevance of Systems Thinking to a Project and an Organization
General Systems Management
Knowledge about systems engineering management (SEM) helps in assets and resources
management, mainly in the service and project context and periodically in a less well-defined
activities context (Sharon et al., 2011). Systems engineering management differentiates from the
general management of projects through its focus on the engineering and technical project
aspects. Consequently, SEM covers development and exploratory research activities in
government or commercial operations at the level of enterprise. Coordination of managerial and

3
SYSTEMS THINKING
technical endeavors is required in the implementation of systems engineering. Technical success
is impossible in the absence of the managerial aspect. Management provides a collaborative
environment, the planning, program controls and the organization structure in order to ensure
that the needs of stakeholders are met. SEM thinking showcases that different functions are
managed in systems engineering while the rest are managed by the overall project, systems
management and systems implementation (Kumar et al., 2008). Systems thinking in-company
organizations do not have their own system of accounting but rather relies on the organization of
corporate management for that SEM aspect. Companies performing SE do not include the
functions of accounting to be part of SEM. Systems engineering managers should be involved
actively in managing all activities under the boundary of the SE system, as well as working
towards the collaborative arrangements fitting their situation best.
Organisational Structures, Forms, and Culture
According to Flood (2010), organizational strategies in order to conduct systems engineering
activities are vital to the organizations’ effectiveness. For example, each enterprise is led by a
context, scope, and purpose determined by a group of the stakeholders and changed over a time
period so as to improve the enterprises’ value to them. Few enterprises provide businesses that
are for-profit whereas other enterprises are not-for-profit businesses and usually work for the
good of the public. Non-traditional businesses are also run although they are not tightly
structured hence lacking a legal structure, for example, like a system of national health care.
While the location of some enterprises is based on a single site, some are far-flung world
empires. While some enterprises work inside industries like the medical industry which is highly
regulated, other enterprises work with minimum oversight from the government and are free to
adopt a wide range in business practice. The above-mentioned variations generally give the

4
SYSTEMS THINKING
strategy used to perform systems engineering a shape. The systems engineering strategy is
guided by the goals and business culture, resources, forms, and available constraints in order to
be in a position of achieving those goals. Lack of a single and coherent systems engineering
context, forms and culture common throughout the business depends on how the business
approaches systems engineering (Chang & Lee, 2007).
Engineering Risk and Risk Management
Effective management of engineering risk is important and proactive as opposed to it being
reactive, as it seeks to minimize the occurrence probability of an adverse event and the impact
magnitude. The process of engineering risk management involves five important aspects or
components that may be necessary to have their own headings in planning for project
management (Modarres, 2016). According to Van (2009), the components include risk plan, risk
identification, risk analysis, risk response strategy development, and risk monitoring and control.
Risk plan requires the engineer or project manager to develop and write down a strategy for
managing the risk that should include all methods used in the execution of the projects’ plan for
risk management. Risk identification involves the examination of project risks to a detail level
that allows the evaluator to understand different risks and their threat. Risk analysis allows for a
systematic estimation of the risk level for approved and identified risks. Risk response strategy
development is incorporated into the management plan for dealing with all risks and is
categorized into acceptance, avoidance, control, and transfer. Risk monitoring and control, as
well, is incorporated within the plan for risk management, with provisions being kept in place for
a systematic tracking and evaluation of the risk response actions’ effectiveness against metrics
that are established (Cardona, 2013).

5
SYSTEMS THINKING
Portfolio Alignment
According to Reyck et al., (2005) organizational business strategy alignment and its relevance to
project portfolios have been playing an important strategic role in the management of systems
engineering management portfolios. One in every three implementation strategies fails, as
innovative or project activities have not been separated from activities that are routine as wells
because the portfolio of the project is not aligned to the organizational strategy. Project
deployment of many projects fails as there are hordes of projects that have been selected for
available resources that are limited, and still because project priorities change. Research
performance and project development are influenced by a good alignment between
organizational strategy and individual initiatives (Kaiser, et al., 2015). However, an
implementation of portfolio management that is successful is not a hard task since it is comprised
of market and technological uncertainties, the negotiation of resources that are always tight in
diverse company areas, the adoption and usage of enough classification criteria, prioritization,
selection, and project sequencing aimed at aligning the portfolio with the strategy of the
organization. Blocking of projects that do not interest the organization and periodic evaluation of
portfolio alignment is important for a successful management of project portfolio. Analysis of
various portfolio management methods is important in the research and implementation of
portfolio alignment.
Business Value
The business value of using the portfolio management approach is to ensure improved resource
allocation, improved work scrutiny, improved authorization process openness, reduced work

6
SYSTEMS THINKING
authorization ambiguity, improved work alignment, improved work balance, changed focus from
investment cost, increased collaboration, enhanced communication, and elevated focus on
deciding the appropriate time to stop a project (Brady et al., 2005). Several portfolio
management implementations begin directly from trying portfolio work identification and
prioritization, obviously because it’s clear where there is the greatest value. However, the direct
start may bring a group to a disagreement over what is expected to provide the highest value. The
value brought to the organization by that work is not necessarily but typically based how the
implications of cost and benefit align with the goals, strategy, and objectives of the organization.
Strategy alignment is not an easy task to achieve without prior preparation. According to Jugdev
& Müller (2005), corporate strategy is mostly expressed as a heavy statement that describes what
the organization is anticipating to achieve through objectives and goals and the plans on how the
organization will achieve its objectives and goals. Putting the necessary processes and
organization is important. Defining the goals and objectives involves developing a corporate
strategy of where to start from, what to expect, and how to achieve the expectations.
Portfolio Management Process Cycle
According to Cooper et al., (2006) the proposed portfolio standard of management is aligned into
two process groups, that is, monitoring and control, and alignment. The group of process
aligning is comprised of seven processes which are identified, categorization, evaluate, select,
prioritization, balancing of portfolio and authorization, while the controlling and monitoring
process group consists of periodic portfolio reporting as well as strategic change and review.
Strategic implications of selection of portfolios are complicated and are different in various
organizations, as they involve the consideration of both internal and external factors to the firm,
which includes marketplace and the strengths and weaknesses of the company (Turner, 2008).

7
SYSTEMS THINKING
Strategic alignment is intended to eliminate all non-starters projects that lack conditions on
portfolio integration as well as to reduce the projects which are set for consideration in the
analysis stage. The evaluation of project phase is for assessing the result expected to impact the
portfolio by use of methods whereby every project’s contribution to the objectives of the
portfolio is determined. The portfolio selection stage involves a consistent projects comparison
to identify competing projects. Portfolio selection techniques include comparative approaches
(Q-sort, analytic hierarchy procedure, and pairwise comparison), ad hoc approaches, scoring
models, optimization models and portfolio matrices that are mostly used for strategic decision
making.
Organisational Maturity
Understanding organizational maturity facilitated the identification of gaps in performance,
indicating huge realistic targets of performance, and reasonable path suggestions for
improvement. Five organizational levels of maturity have been put into place and identified.
However, the identification is not supposed to suggest that every organisation should strive for
top-notch performance. The five levels of organisational maturity include foundation, basics,
value management, optimization, and core competency, respectively (Tapp et al., 2008). Level 1
organizations are dealing with and viewing projects and managing them in isolation from each
other, subject solely on their competition on resources that are shared. Level 2 organizations
begin implementing elements of management of project portfolio, although just a minor real
opportunity fraction is realised. Level 3 organizations showcase their commitment to
standardized, proactive portfolio and project management. Decisions to select products are based
on a value-creating principle where each project is evaluated and re-evaluated using a defensible
and consistent logic. Level 4 organizations use quantitative measures and analysis to acquire

8
SYSTEMS THINKING
controllable, efficient and predictable portfolio and project management. Level 5 organizations
obtain the most possible maximum value from the portfolio management of a project. The
organizations are flexible and therefore free their employees in becoming increasingly innovative
and creative hence achieving the success of the business.
Conclusion
In conclusion, systems thinking is important in project management and to organizations at large.
Without complicating the aspect of systems thinking, organizations can gain a lot in project
management, development, and management of product portfolios, through the development of a
simple perspective on reality. The perspective should be able to sharpen an organization’s
awareness of a holistic system thinking and of how different areas among those holistic relate to
each other. The greatest challenge in systems thinking is when an organization tends to
oversimplify complex aspects so that they can fit into evident and binary terms instead of trying
to understand how complex the aspect is, at a deeper level. Therefore, as long as organizations
hold onto the stereotypes, myths, and perspectives existing about systems thinking and the
management of projects, it will be hard for the organizations to view project management in a
positive perspective.

9
SYSTEMS THINKING
References
Brady, T., Davies, A., & Gann, D. M. (2005). Creating value by delivering integrated solutions.
International Journal of Project Management, 23(5), 360-365.
Chang, S. C., & Lee, M. S. (2007). A study on relationship among leadership, organizational
culture, the operation of learning organization and employees' job satisfaction. The
learning organization, 14(2), 155-185.
Cooper, R. G., Edgett, S. J., & Kleinschmidt, E. J. (2006). Portfolio Management for New
Product Development.
De Reyck, B., Grushka-Cockayne, Y., Lockett, M., Calderini, S. R., Moura, M., & Sloper, A.
(2005). The impact of project portfolio management on information technology projects.
International Journal of Project Management, 23(7), 524-537.
Dym, C. L., Agogino, A. M., Eris, O., Frey, D. D., & Leifer, L. J. (2005). Engineering design
thinking, teaching, and learning. Journal of Engineering Education, 94(1), 103-120.
Flood, R. L. (2010). The relationship of ‘systems thinking’to action research. Systemic Practice
and Action Research, 23(4), 269-284.
Jugdev, K., & Müller, R. (2005). A retrospective look at our evolving understanding of project
success. Project management journal, 36(4), 19-31.
Kaiser, M. G., El Arbi, F., & Ahlemann, F. (2015). Successful project portfolio management
beyond project selection techniques: Understanding the role of structural alignment.
International Journal of Project Management, 33(1), 126-139.
Kerzner, H. (2013). Project Management: A Systems Approach to Planning, Scheduling and
Controlling. 2006. Editorial John Wiley, Hoboken, New Jersey, ISBN, 471225770.

10
SYSTEMS THINKING
Kumar, V., Smart, P. A., Maddern, H., & Maull, R. S. (2008). Alternative perspectives on
service quality and customer satisfaction: the role of BPM. International Journal of
Service Industry Management, 19(2), 176-187.
Leveson, N. (2011). Engineering a safer world: Systems thinking applied to safety. MIT press.
Modarres, M. (2016). Risk analysis in engineering: techniques, tools, and trends. CRC press.
Sharon, A., de Weck, O. L., & Dori, D. (2011). Project management vs. systems engineering
management: A practitioners' view on integrating the project and product domains.
Systems Engineering, 14(4), 427-440.
Tapp, L., Edwards, A., Braspenning, J., Eriksson, T., Kuch, C., & Elwyn, G. (2008). Developing
organisational maturity: considering the role of culture typologies for primary care
practices. Education for primary care, 19(1), 1-12.
Turner, J. R. (2008). Handbook of project-based management. McGraw-Hill Professional
Publishing.
Van Lamsweerde, A. (2009). Requirements engineering: From system goals to UML models to
software (Vol. 10). Chichester, UK: John Wiley & Sons.