Why is Systems Thinking Important

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.
  • They also consider alternative methods in order to achieve the objectives of company.

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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 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 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

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