System Thinking vs. Strategic Thinking

You cannot have a strategy without first understanding the system, and you cannot have a system without first developing a strategy.

Enterprise is a complex business system, so system thinking looks at business holistically with an in-depth understanding of interconnectivity and relationships; today’s business is dynamic and volatile, so strategic thinking is imperative to connect the current state and “to be” state, to bridge the difference in gaining competitive advantage. More specifically:

System thinking is integral thinking of analytics and synthesis. Systems thinking look at things by looking at the whole, where the parts are never as important and should always work to benefit the whole. System thinking informs strategic thinking: How do things work and fit together vs. where should you go and how can you get there. Whereas systems thinking is more synthetic, descriptive and dynamic, strategic thinking is more analytical, decision-oriented and directional. A strategy would be enhanced by system thinking because it looks at each part of the business (business lines or functional areas like IT) in relation to the profitability and long-term success of the whole organization.

Strategic thinking is the ability to think on a temporal plane; whereas system thinking is the ability to perceive things from different dimensions. Strategic thinking is more about making decisions directly towards achieving defined outcomes as a purposive activity, whereas system thinking is more about looking at the system and wondering if it can work differently; understanding the interactions and perceptions with a view towards driving change in a more purposeful way. Can events propagate through the system in different ways, and what are the effects of an event on different parts of the system.

Systems thinking as a practice promotes a better strategic awareness: It encourages looking at the wider aspects around any problem space (where the problem does not necessarily equate to a bad thing, you can have good problems as well), and then understanding the effect of imposing boundaries within that space. Strategic thinking is about why and what you want to achieve in a particular context and the whole configuration of interconnected and continuous interacting components and systems.

Strategic Thinking = Systems thinking (holistic/broad/synthetic) + Creativity (reframing /imaginable/non-linear) + Vision (Insightful/directional/temporal). At a high level, system thinking is an awareness of an entire system, and how changes to any part of that system impact the other parts of the system and the whole. As a result, systems thinking can be analytical or synthetic, more often the integral thinking of analytics and synthesis. At the higher level, strategic thinking is about where you are, where you want to be, and how to close the gap. In order to operate most effectively, systems thinking should be a part of every step of a strategic process.

You cannot have a strategy without first understanding the system, and you cannot have a system without first developing a strategy. The essence of systems thinking is to observe and analyze the actual patterns of interaction, without judgment of the interconnected components or systems in a particular context, in order to understand what happens more objectively. Strategic Thinking looks at the business goals and how to reach these goals. While Systems Thinking looks at the overall picture, cause, and effect as it were. The test of good leadership is to know what approach to take and when. Think of the system as nodes along a timeline, a change in each node will have some effect both internally on that node, but also with other nodes along the same and even other timelines. In systems, clusters and networks are all about interaction and relationships.

In conclusion: Strategic thinking is about where you are, where you want to be, identify the gap and create the alternate approaches to anticipate and provide solutions; whereas system thinking looks at the whole pictures, the interaction and relationships holistically, and involves the sequential alignment of a series of steps in already identified strategic approaches. They are the complementary thinking processes in running today’s over-complex and hyper-connected digital business.