Monday, December 24, 2007

Holistic or Systems Thinking for Organizational Growth

Holistic or systems thinking is based on system dynamics and provides ways of understanding practical business issues (example B2B business); it looks at systems in terms of particular types of cycles (archetypes); and it includes explicit system modeling of complex issues. It’s a philosophical approach that shapes the outcome of system design.

System thinking simplifies life by helping us to see the deeper patterns lying behind the events and the details. The essence of the discipline of systems thinking lies in a shift of mind:
  • seeing interrelationships rather than linear cause-effect chains, and
  • seeing processes of change rather than snapshots
Initially, systems were viewed as machines or closed-loop systems whose rigid structure defined their function. Analytical thinking fits this model well. Systems are simply the sum of their parts, assembled in defined ways to create specific behaviors. In the next stage, systems were viewed as biological creations. The biological model views systems as an open loop with single-minded, purposeful behavior. The system responds to instability in the open-loop environment by adjusting its actions to meet its defined goal. A thermostat provides a simple mechanical example of this type of system. The third stage views systems as social entities. The social model views systems as being composed of a voluntary association of purposeful entities that have their own choice of goals and the means to achieve them. But purposeful is not the same as goal seeking. Goal seeking means that you have alternate means of achieving a single goal. Purposeful means you can change the goal as well as the means. In the social model, integration is a continual process. This process requires filling the purpose of the individual entities and aligning their fulfillment with that of the whole. Members are held together by common objectives and agreed upon ways of pursuing them. (example: Cohorts in in a business or project envioronment). Consensus is essential to alignment.

Openness: In his book, Systems Thinking: Managing Chaos and Complexity, Jamshid Gharajedaghi (1999), defined five system principles:

  • Openness
  • Purposefulness
  • Multi-dimensionality
  • Emergent property
  • Counter-intuitiveness

Openness means the behavior of a system can only be understood in the context of its environment. Open systems are guided by a code of conduct, whether that is DNA or culture. When left alone, open systems tend to reproduce themselves. Typically, we evaluate a system’s environment and identify variables that can be controlled and those that cannot. As we look at more open systems we might identify environmental variables that can at least be influenced if not controlled.

Why openness is important: We need to look at business as an open system with different variables. And, the inter-relationship of these variables can be influenced, if not controlled. This is where the openness becomes relevant for the business context. Business undergoes constant changes and that requires more sophisticated systems to meet constantly changing business needs.
Customer relationship context: The openness is very crucial in customer relationship context. Let me explain this with an analogy. Chaos theory states that the fluttering of a butterfly in far away in Asia can influence the weather in America. What this shows the importance of the influence of a smallest event on the final outcome. Customer is a key environment variable in system thinking and can definitely influence the outcome of business.

My organization has an open approach that encourages innovation, creativity, and system thinking. The organization spends substantial sum of money for constantly re-invent itself and system thinking is one of the key aspects of this approach.


Jamshid, G. (1999), Systems Thinking, Managing Chaos and Complexity: A Platform for
Designing Business Architecture. Butterworth-heinemann, ISBN: 0750671637
System thinking, (2005). Retrieved on October 19, 2007 from:
The Fifth Discipline (2005). Retrieved on October 19, 2007 from:

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