Friday, May 15, 2015

Five Aspects to Leverage Systems Thinking in Digital strategy Making

The real challenge for digital strategy planning is not in simplifying by ignoring the complications, but to simplify by including the compilations.

Digital organizations are complex systems that are dynamic, self-evolving, and somewhat self-perpetuating, they are a dynamic living organism and should be viewed from systemic perspectives. The fact is that change is happening at a much faster pace than ever before, requiring a much more rapid response in order not only to succeed but to survive. However, do business executives have enough information & insight to design long-term strategies? Are numerical data enough for that? Can they deal with complexity? How many business strategists understand Systems Thinking, concepts of emergence, requisite variety, relationships and boundary critique? How many managers understand the difference between open and closed systems? To put simply, how to leverage Systems Thinking in digital strategy making?



The degree of strategic planning has a positive correlation with degree of uncertainty and unpredictability. Global business is complex and that complexity varies with industry, highly complex and dynamic environments or systems demand a greater understanding and application of systems thinking and living systems - a natural and holistic way the world, and all its systems and subsystems works. Thus, the degree of planning has a positive correlation with degree of uncertainty and unpredictability, making long-term strategic planning a must do 'thing' in uncertain times. At best, it keeps us on track and achieve desired outcome and at worst, it helps in minimizing the pain or loss. Strategic Planning without defining Strategy first is not strategic at all. The idea of strategic planning is to identify some of the uncontrollable elements of the external environment and make some 'educated guesses' as to the impacts of these and emerging elements into the future (typically 3 - 5 years). Long term strategic planning in a dynamic and unpredictable environment makes a lot of sense when you can identify trends, possible scenarios and the most valuable: to identify the key actions to counteract the threats or profit from the opportunities. From there some scenario planning can take place to figure out how best to respond to those identified elements that will have the biggest impact (opportunities and threats). Through this process of preparing for the likely future, the behavior of the organization becomes more deliberate and, therefore, less random. Of course, this does depend on the quality of the strategic thinking that has gone into the process and that continues to be applied, and the quality of the implementation processes.  


The real challenge is not in simplifying by ignoring the complications, but to simplify by including the compilations. Highly complex and dynamic environments or systems demand a greater understanding and application of systems thinking and living systems - a natural and holistic way the world, and all its systems and subsystems works. The shear thought of controlling all is a pipe dream. Understanding the dynamics, working to influence the dynamics and shaping a good digital strategy takes attention and energy. However, many leaders in organizations do not understand complexity and non-linearity and are looking for quick fixes to the problems they perceive. It's a symbiotic relationship. The only way that will change will be as more organizational leaders begin to understand the ramifications of complexity theory, and become students of systems theory.


Most strategies fail to take into account the human element within the organization: Not only the need for them to share and understand the strategy but need for building the internal capability to make it happen. Strategic thinking implies a holistic view of the organization. An organization can be described as a system made up of its internal processes, people, culture, technologies, knowledge, resources, etc, as well as the interactions among them and with the external world. Both strategic planning and managing change are about the same thing - remaining agile in complex changing times. They are both about action (hence the "ing"), the continuous iterative journey, rather than the destination (doc on the shelf). They are an outlook, a perspective, not a committee. Digital enterprises are complex systems, as the name implies complex. A well formed adaptable strategy that understands this and is based on a systems approach helps to dictate the form, pattern, and distribution of the events or behavior of a system. The better we understand the interrelationships and interactions of the different parts of the whole, the better we can craft the strategy. Emergence is a characteristic of such digital ecosystem.


The strategy is both art and science, and analytics is the tool of the strategist. The art of strategy is asking the right questions, and then letting the scientists come up with some answers. The problem is, the answers normally arrive long after the situation has changed. That's why the strategic process is important, as the end of one planning process is merely the start of another. The first step of strategy is to diagnose the real business problems. And there is the difference between problem setting and problem solving. Problem setting is defining the organizational problem that needs to be solved. More often, people are really good at defining symptoms, but not so good at defining the root issues at play in a complex adaptive system. The art of strategy is discerning patterns within the complex environment, and then postulating plausible futures emerging from those patterns. And nonlinearity is a key concept. Too much planning is based on a linear progression of now to future when in fact very little in systems thinking is linear. The patterns will be very difficult to perceive because we as humans tend to try and fit emerging events into patterns that mirror what has happened in the past, instead of looking for new patterns.


Strategic planning is an ongoing process, it never ends. It is an iterative process that needs to be monitored and controlled (inside vs outside, internal vs external factors). There are just results that need to be under control. Highly complex and dynamic environments or systems demand a greater understanding and application of systems thinking and living systems - a natural and holistic way the world (and all its systems and subsystems) works. Thus, the degree of planning has a positive correlation with degree of uncertainty and unpredictability, making long-term strategic planning a must do thing in uncertain times. At best, it keeps you on track and achieve desired outcome and at worst, it helps in minimizing the pain or loss. So the challenge is to evaluate the complex real-world in order to decide on, take simple actions and to then monitor the potentially complex impacts of those actions, so you can decide how to modify the actions, where necessary, to achieve the desired outcomes. Stretching the mind then to explore what is plausible, possible and probable can provide much utility. Supported by the insights of exploring these alternatives, one then is better positioned to act when the unexpected occurs.


Good strategic thinking is temporal in nature. It looks beyond the immediate causal relationships to the more difficult second and third order effects of changes to organizations’ operating in open systems. A good strategy will, influence the probabilities, but certainly not guarantee an outcome. Of course living in the ever-changing world, you do need to constantly question if the vision and strategic direction being chosen. And the days when businesses spent months doing all sort of analysis and preparing detailed plans are gone. Today is about being prepared and having the organizational capability to deal with the unexpected digital disruption, without losing sight of the business objectives and priorities. Systems Thinking allows studying "forest" in order to be able to see "the trees in their context." Hence, it is critical to leverage Systems Thinking in digital strategy making, to make it an ongoing journey and dynamic continuum.


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