System Thinking: Theory, Characteristics, and Managerial Implications

This report delves into the theory of system thinking, emphasizing its importance for organizational managers. It defines system thinking as a holistic approach that examines the interrelationships between different components within a system, contrasting it with traditional methods that break down systems into separate parts. The report highlights key characteristics of system thinking, such as considering the whole system, understanding interconnections, and promoting holistic thinking. It also underscores the significance of system thinking for managers, including its role in problem-solving, setting clear organizational goals, fostering leadership, encouraging experimentation, and improving communication. The report concludes by emphasizing the value of continuous improvement and creating a supportive work culture to enhance organizational learning and competitiveness. The report is a valuable resource for understanding and applying system thinking principles to improve managerial effectiveness and organizational performance.

Systems Thinking

Table of Contents
TASKS.............................................................................................................................................1
SYSTEM THINKING THEORY....................................................................................................1
CHARACTERISTICS OF SYSTEM THINKING..........................................................................2
IMPORTANCE OF SYSTEM THINKING FOR THE ORGANIZATIONAL MANAGER........3
SUMMARY.....................................................................................................................................5
REFERENCES................................................................................................................................7

TASKS
SYSTEM THINKING THEORY
System is an organized structure that is followed in many organizations and elements of
the system can influence to each other. It is a collection of input, output and feedback
mechanisms that are useful for the firm in order to accomplish all the goals. In business, system
comprises of different policies, organizational processes, people and regular practices, etc.
According to Drack and Apfalter, (2007), system thinking is a process that examines and
understands the overall system by clearly establishing linkage link between different components
and elements. Unlike traditional approach that focuses upon separation and breaking down the
whole system into different parts, system thinking analyses and examines the way in which
different components of business are interrelated to each other.
Similarly, as per the viewpoints of Arndt, (2006), system thinking is an essential tool for
the learning organizations that is used to understand whole structure of company in order to
identify interrelationship between different factors of the system. It is different from the earlier
business decision making process because the old process breakdowns system into different
parts. These different parts are analysed separately in order to make a decision. But this new
approach analyses the interaction between different parts within a same system and identify the
concept on which particular organization is based. If that approach is good for the business then
decisions can be made effectively and firm can enjoy the benefits of this concept (Assaraf and
Orion, 2010). If the approach is not good for industry then managers can take decisions to
change the system. It deals with the five factors of organization, that is, environment, input,
throughput, output and feedback. System thinking is focusing on some of the principles and these
are:-
 Independent variables cannot become the part of a system and organization should follow
holistic approach so that they can focus on their important components.
 Every task should be goal oriented and business should determine their inputs and
outputs constantly into the open and close system.
 Transformation of input into output is a process that is used in order to achieve the goals.
 If any disorder occurs in the business environment then it is handled by the new approach
of system thinking.
 Feedback method is important to regulate the business operations properly.
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 They also consider alternative methods in order to achieve the objectives of company.
CHARACTERISTICS OF SYSTEM THINKING
System thinking is a process that deals with different parts of the organization in order to
make decisions. It has been criticised by Wong, Turner and Yee, (2008) on the basis that it is a
powerful method which is used to handle the problems that occur in business in order to gain
success in the marketplace. This approach can be applied to anything, anywhere and at any time
by the manager. Some systems are very simple while, some are complex. So, thinkers have to
deal with the same in an efficient manner so that all objectives can be achieved by the firm.
There are some characteristics of system thinking that help the system thinker in order to identify
relationship between different parts of the same system (Evagorou and et.al., 2009). These
features are:
Consider whole system rather than part: As per the views of some authors, system
thinking is a process that makes decisions on the basis of interaction among different parts of the
same system. New system thinker does not make any decision on the basis of traditional
approach that focuses on the concept of breakdown of a system.
To understand the interconnection and feedback: This approach deals with the interaction
between different parts of the system that helps in order to make some powerful decisions.
Feedback is important to establish good relations with external environment so that company
will be able to make those changes and can grow in the competitive market.
Holistic thinking: This approach is based on the holistic thinking that avoids irrelevant
part that is associated with the current situation and focus on the important components (Bayo
and Mirón, 2006). This helps the managers in order to identify the way in which different
functions are performed in the organisation so that objectives can be achieved.
To solve a problem: Manager follows system thinking approach in order to solve the
problems. The issues can be identified if these parts are interlinked with each other and after
identification, can be resolved. After this, performance will be improved and objectives can be
attained. Companies can use different tools and techniques in order to solve these issues
(Seddon, 2008).
To create a new system: Managers can use this approach to design a new system that will
help the organization in order to set new objectives and through more productive services, staff
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members of companies will be able to provide quality services to their customers. This new
system should be able to improve the growth of firm in external environment so that these macro
factors will not affect the performance of enterprise.
To make predictions of future system behaviour: Changes are occurred in the
environment from time to time because customers needs are changing according to their lifestyle.
According to D’Anna and Cascini, (2011), managers use system thinking approach so that they
can deal with the changing environment. Due to this reason, system thinkers do not break down
the system into sub parts and they examine the whole part. This approach helps the business in
achieving future oriented goals that can improve the performance of company.
To gain understanding of a complex situation: System thinking helps the manager in
order to gain understanding of a complex situation. It has been critically argued by Isaksson,
Hallencreutz and Garvare, (2008) that some situations are very tough to handle so manager can
gather information through different point of views of distinct people together. They can identify
different parts and at the end, they can come together and collectively make decisions.
Sometimes, it is difficult for an individual to examine the different parts because they will not be
able to see those things that can be identified by a team.
IMPORTANCE OF SYSTEM THINKING FOR THE ORGANIZATIONAL
MANAGER
System thinking has a big and clear image of the current business environment so that
manager will be able to achieve the objectives that they want. This approach also gave an
advantage to solve the complex problems and to set long term goals. This is widely spread in the
organizations because it offers a way to the manager to solve issues effectively. On the contrary,
Xu and Meng, (2008) argued that this theory brings a new concept for managers in order to
identify the patterns that help them in decision making process. On the basis of these identified
patterns, he can make quality decisions for the organization. In traditional approach, managers
focused on one part of the system and then they shift to another. Therefore, they didn't make
quality decisions. However, now, people collectively look at the whole system and because of
this, their performance gets improved.
Managers are now more focusing on on-going operations of company and the feedback
process. This feedback process is important for maintaining the relationship between
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organization and external environment. This will lead towards making improvement in the
performance.
Managers are now able to find out large patterns on the basis of interaction that took
place between the parts of system. They also diagnose the problems and solve those issues.
They are now focusing on the results of organization and try to attain all objectives that
they want (Morandi and et.al ., 2014).
There are some aspects that focused on the manager’s potential that how they contribute
towards the organizations learning. These are-
Clarity of organizational goals: Clear and specific organisational goals help the firm in
order to achieve the future oriented objectives. If goals are clear then employees can perform
good work and they can also relate their daily task with the vision and mission of company.
System thinkers believe that system behaviour is getting affected by the structure of company so
every manager should maintain a good structure within firm. Every manager have to set a
direction for the organisation and all the members have to follow the direction so that in efficient
manner goals can be achieved.
Leadership: System thinkers believe that leaders are more important for the organization
than other employees. These people are the one who can motivate others and direct the
employees to do work in a systematic and desired manner (Gharajedaghi, 2011). The person who
adopts this kind of approach should be able to work efficiently and make his members happy and
should also admit his mistakes. A good leader can lead the firm towards success and it is the role
of a leader to direct the organization towards right vision and mission.
Experimentation: Some experiments have to be conducted in the organization because
this will enhance the innovation and creativity among all employees. This may be costly but
beneficial for company. Public industries are not following this kind of experiment in their work
culture. System thinkers also play an important role in the public firm that gives them
opportunity to innovate and achieve the objectives effectively. If the manager start thinking
about the innovation then they will easily achieve the set directions.
Communication: It is an important part of organization in order to maintain their
structure. Communication gap should not be there among all members because this will increase
the conflict and performance would also get affected. Formal and informal; both kinds of
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communication is important in order to ensure an effective and efficient performance (ZHOU
and et.al., 2009).
Team work and group problem solving: In dynamic environment, it is difficult to achieve
the objectives individually so, organization has to focus on the team work. For efficient
performance, organization has to provide proper incentives and compensation because this will
motivate the employees to work hard.
Through all these aspects, managers can contribute towards the organisational learning
and that will lead towards the success. Managers will be able to achieve all objectives by
following the system thinking.
It is important for organizations to remain dynamic and competitive in the environment
and they also have to look at opportunities that can improve their performance. According to the
viewpoints of Jhunjhunwala, (2009), continuous improvement is important for the organization’s
learning. Changes occur at the workplace due to dynamic environment and its factors.
Learning business can deal with the changes effectively and can also built a future vision
that helps the firm in order to achieve objectives. Learning organization can operate effectually
because they perform independently within the work culture, improve their quality services,
increase ability to perform well, develop a good workforce in company as well as motivate their
employees so that they can perform better in the work culture. According to Meadows and
Wright, (2008), work culture is the factor that can hold all employees together and its culture
should be based on the values and beliefs like trust. Managers should be the risk taker so that
their long term objectives can be achieved. To create a culture, the firm should be able to think
that they are the part of environment and they are giving something to the world (Aboumatar and
et.al., 2012).
SUMMARY
System thinking is a tool that helps the manager in order to solve complex situations. It
also focuses on holistic approach that considers the structure of whole organization rather than a
part of that system. System thinker identifies link between different parts of the system. It is also
important for the manager of company who will contribute in learning organization. System
thinking helps the firm in order to reduce gap between standard goals and actual performance.
Communication gap is also reduced between the members of organization and problems also get
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solved due to long patterns that are identified by the thinkers. This will help in creating an
effective work culture within organisational environment.
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REFERENCES
Books and journals
Aboumatar and et.al ., 2012. Republished: Development and evaluation of a 3-day patient safety
curriculum to advance knowledge, self-efficacy and system thinking among medical
students.Postgraduate medical journal. 88(1043). pp.545-551.
Arndt, H., 2006. Enhancing system thinking in education using system
dynamics. Simulation. 82(11). pp.795-806.
Assaraf, O.B.Z. and Orion, N., 2010. System thinking skills at the elementary school
level. Journal of Research in Science Teaching. 47(5). pp.540-563.
Bayo, M.A.A. and Mirón, I., 2006. A flexible framework for regional sustainable development
indicators using system thinking criteria (INSURE).Revista Internacional de
sostenibilidad, tecnología y humanismo. (1). pp.41-59.
D’Anna, W. and Cascini, G., 2011. Supporting sustainable innovation through TRIZ system
thinking. Procedia Engineering. 9. pp.145-156.
Drack, M. and Apfalter, W., 2007. Is Paul A. Weiss' and Ludwig von Bertalanffy's system
thinking still valid today?. Systems Research and Behavioral Science. 24(5). pp.537-
546.
Evagorou and et.al., 2009. An investigation of the potential of interactive simulations for
developing system thinking skills in elementary school: a case study with fifth‐graders
and sixth‐graders. International Journal of Science Education. 31(5). pp.655-674.
Gharajedaghi, J., 2011. Systems thinking: Managing chaos and complexity: A platform for
designing business architecture. Elsevier.
Isaksson, R., Hallencreutz, J. and Garvare, R., 2008. Process Management and System-Thinking
for Sustainable Development. The Theories and Practises of Organization Excellence:
New Perspectives. pp.205-232.
Jhunjhunwala, S., 2009. Monitoring and measuring intangibles using value maps: some
examples. Journal of Intellectual Capital. 10(2). pp.211-223.
Meadows, D.H. and Wright, D., 2008. Thinking in systems: A primer. chelsea green publishing.
Morandi and et.al ., 2014. Foreseeing iron ore prices using system thinking and scenario
planning.Systemic Practice and Action Research. 27(3). pp.287-306.
Seddon, J., 2008. Systems thinking in the public sector: The failure of the reform regime... and a
manifesto for a better way. Triarchy Press Limited.
Wong, M.C., Turner, P. and Yee, K.C., 2008. Involving clinicians in the development of an
electronic clinical handover system-thinking systems not just technology. Studies in
health technology and informatics. 136. p.490.
Xu, S. and Meng, Q.G., 2008. Characteristics of cognitive style of traditional Chinese medicine
based on system thinking. JOURNAL-BEIJING UNIVERSITY OF TRADITIONAL
CHINESE MEDICINE. 31(1). p.26.
ZHOU, Y.Q., LI, F.P., Xue, W. and ZHOU, H.M., 2009. A study on knowledge management
system constructing strategy: application of system thinking in KMS [J]. Studies in
Science of Science. 7. p.014.
Online
System Thinking in Management. 2017 [Online]. Available through:
<http://study.com/academy/lesson/systems-thinking-in-management-definition-theory-
model.html>. [Accessed on 7th January 2017].
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Systems Thinking and practice. 2017 [Online]. Available through:
<http://www.open.edu/openlearn/science-maths-technology/computing-and-ict/systems-
computer/systems-thinking-and-practice/content-section-0>. [Accessed on 7th January
2017].
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