Tuesday, July 12, 2011

What the Heck is Systems Thinking?

Systems thinking is an analysis approach that takes into account the entire organization both internally and externally.  This type of approach looks at the big picture as well as the immediate issue at hand and is different from the traditional approach currently used in most of business and industry.  The traditional approach will look at a problem and solve it.  Some examples of this are:



Problem
Solution
Insects are destroying farm crops
Create a pesticide to kill the insects
The secretary isn’t working out
Fire her
Business is slow, less profit this quarter
Raise prices
Child diagnosed with ADHD
Give Ritalin





The problem with these solutions is they don't look at the entire system or the big picture.  The pesticide works in that it kills off the troublesome insect, but what wasn't considered were the other factors to the environment such as the pesticide absorbing into food, the pesticide creating an imbalance in the ecosystem because the pest killed kept a fungus under control, the pesticide contaminating nearby water supplies, etc.  Although the pesticide solved the insect problem, it created a host of other problems that were worse.  If systems thinking had been used, another solution might have been found that was more ecosystem, water, soil and food friendly.


Firing the secretary may be the correct solution, or the fact that she's not working out may indicate other problems within the company.  Perhaps there is not a good system in place for training employees or maybe the secretary would work fine in a different department in the company.  It might not be the secretary at all, it could be another co-worker surreptitiously causing trouble or even the boss setting up lose/lose situations for the people he supervises.  


When business is slow, one of the first things many companies do is raise their prices.  If business is slow because of bad economic times, that means customers stopped coming because they couldn't afford the product.  How does raising prices help?  This is truly an example of not using systems thinking.  There may be other reasons besides the economy why business is slow.  Now is the time to look at the entire organization and find what and where the weak points are.  Business could be slow because of bad customer service, or poor salesmanship and ineffective marketing.  Maybe business hasn't slowed at all, instead unpaid invoices are piling up in accounts receivable.  When business is slow either because of hard economic times and/or other factors, systems thinking could be the difference whether the company will still be in business three to five years down the road.


Systems thinking isn't just for business and industry, it works in regard to personal and family matters as well.  Giving a child diagnosed with ADHD a drug like Ritalin may calm the child down, but does it solve the problem?  The teacher is happy no longer having to deal with a disruptive child in the class, the principle is happy no longer having to discipline the child every day and call the parents.  The parents are probably happy too that they're not getting called by the school everyday.  Looking at the entire system however, one of the first questions should be: what are the potential long-term side effects of drugging a child?  Another question is whether or not want to teach our children that drugs are an answer to behavior problems.  Traditional thinking does not look at the root causes of the problem because they are hard to determine.  Maybe the child isn't getting enough sleep, or exercise, or ingesting too much sugar and drinking too much caffeine.  Perhaps the child is bored in school because the child is a kinetic learner and the school doesn't address that need.  Maybe the teacher is boring or plays favorites. In spite of what tests indicate, perhaps the student is quite bright and needs to be challenged more in class.  Systems thinking would address these issues and very possibly come up with another solution.


Unlike the traditional approach, systems thinking is not linear.  Systems thinking encompasses the big picture and can help predict and deflect unintended consequences.  Although more challenging because it requires more thought, systems thinking can be an effective tool for providing positive, long-term solutions for almost any problem.

Monday, July 11, 2011

Taming the Business Monster

Business can be as complex as a multi-national conglomerate or a simple as kids exchanging  a candy bar for a piece of gum.  Most business is somewhere in between. Wherever you live, wherever you go, if you are coming in contact with other humans, you are dealing with business in some form.  Every day you conduct some type of business and don't even realize it.  You may work for a business, you may try and do business with other businesses, you purchase from businesses, you may conduct some kind of transaction or exchange -- business is happening all around you and you play a passive or active role.  Even watching television you are participating in the business of advertising and of entertainment.

Business is everywhere and it is what we do to survive.  A lot of people hate business partially because they don't understand it, and partially because they see business as an evil, destructive in their lives and for the planet.  Business can be exactly that, but it is not going away anytime soon, so the next best thing is to understand it.

This blog is about just that:  understanding business.  We will explore every angle of business and share our thoughts and insights with you.  Both authors have MBA's, and one author is completing a DBA.  All of us have worked in business in the corporate world and as entrepreneurs.

We we talk about everything business:  Business basics, starting your own business, networking, marketing, business and sustainability, green marketing, greenwashing, ethics, scalability, economics, systems thinking (that's a big one), getting ahead in business, and much more. Topics will range from the simple to the complex.  Your comments and questions are requested and appreciated.  If you would like to see a specific subject covered, let us know and we will try to accommodate.