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6 Min. Read

What Is Systems Thinking?

What Is Systems Thinking?

When you are running your own business, there are a number of different ways to approach management and operations. 

We all know that making decisions can be difficult. This is even more evident if you’re running a business that has a number of people who will depend on the decisions that you have to make. 

So when it comes to making the right business decisions, you will want to implement a way of thinking that helps you to avoid any waste. That includes wasted time, money and any number of other resources. That’s where systems thinking comes into play. 

But what exactly is systems thinking? 

We’ll take a closer look at the systems approach to business and management. As well as see if this way of systemic thinking can help you to improve your business operations.

Here’s What We’ll Cover:

An Introduction to Systems Thinking

What Is the Systems Approach to Management?

What Are the Advantages of Systems Thinking?

Key Takeaways

An Introduction to Systems Thinking

The idea of system thinking is a different way of approaching systematic or methodical behaviour. It’s essentially a way of changing how we see or talk about the reality that we live in every day. 

By shifting your mindset and thinking in this way, the aim is for you to be able to see things from a different perspective. This will then enable you to create a new way of approaching problems. 

Created in 1956 by Professor Jay Forrester, systems thinking is a more holistic approach to decision making. 

Traditionally, when you’re looking at a problem or trying to analyse it, you only look at separate elements in a system. But when you’re utilizing systems thinking, you can understand the balancing and reinforcing processes behind everything. 

What Is the Systems Approach to Management?

Systems thinking can be used in management and operations to help you to make the right business decisions. 

Essentially, you can use this way of thinking to analyse each business decision that you make. This is according to the systematic consequences that it may have. 

So if you’re looking to invest in a new business software, you may use systems thinking to analyse the cost of retraining your employees. Or perhaps the infrastructure and any delays to the business processes that this may incur. 

One of the key concepts of systems thinking is that you pay close attention to the feedback loops that you receive. 

So for example, let's say that you are working on a business project that is running behind schedule. You may be tempted to bring in more project team members to speed up the process.

But by listening to feedback from your team members on previous projects, you’ll know that adding workers has previously slowed down the project. This is as the incoming team members had to be trained and brought up to speed first. 

So instead, you can look to perhaps remove a number of steps in the process. Or you could schedule more hours, or utilise a different technique with the aim of finishing the project on time. 

The systems approach also involves integrating the goals and objectives from each part of your organisation into the entire organisation. This allows your system to maintain a balance, an equilibrium, and a common driving force. You can then incorporate goals for the system if you plan on growing. 

You can also use the system approach to look at the impact of future and current activities. As a business owner, you have to change and respond to any internal and external factors. So by utilizing systems thinking, you can make sure that you are a market leader by being open to change. 

What Are the Advantages of Systems Thinking?

Before we get into the wide range of advantages that come with adopting a systems thinking perspective, it’s important to touch on the drawbacks. 

As it is a theoretical approach, it can be hard to define the exact relationship between the different components in a real organization. As it is such a specific system, it is impossible for the exact system to exist in different businesses or even departments. 

It therefore doesn’t offer a uniform, one size fits all concept which can be implemented in any business. 

However, there are a number of advantages including:

Greater Confidence

When everything is viewed as a system, there is less blame apportioned to workers when something goes wrong. It will be the system that has temporarily failed, not you or your organisation. 

This means that failure can often be seen as a good thing, meaning that you can grow and learn from the mistakes that are made. This can lead to greater all round confidence within your business where people aren’t afraid to take risks and make mistakes. 

Greater Optimisation

By knowing how your employees interact and how your system works, you can optimize your entire business processes. 

By using systems thinking, you can understand the entire business system. This enables you to make changes to simplify each of the steps involved.

Removing unnecessary steps and finding effective shortcuts can save your company time and money. This in turn then leads to a better all round business approach. 

Creating a Business Wide Process

When a builder sees a problem, they reach for a hammer. When an accountant sees a problem, they reach for a calculator. 

When you work in a specific department with specific processes, you can end up seeing problems in your own way. But as the owner of a business, you may not want to have such department-specific problem solvers. 

So by taking a step back and looking at the entire system, you can unlock the creativity within your business and find new ways to achieve your goals. This then allows you to put a business wide set of guidelines that allow for more integration between departments. 

Key Takeaways

No matter what size your business is, it will most likely include a number of different complex systems that work together to achieve goals.

But when you’re only looking at one part of the problem, you may never find a long term solution. 

However, when you adopt a systems perspective on your business, you can discover better ways of conducting your business. Therefore finding a way that works for all aspects of your organization. 

Are you looking for more business advice on everything from starting a new business to new business practices? 

Then check out the FreshBooks Resource Hub.