Friday, June 12, 2015

Digital Master Tuning #98: How Much Systems Thinking will be a Strategic Skill for Managers or Leaders?

Systems Thinking still lacks acceptance, thus creating cognitive unease, among decision makers at the executive level.

Many organizations reach the inflection point to accelerate digital transformation, and they have gone well past the point at which traditional hierarchical and silo management approaches work. And it’s because the paradigm on which they are built is no longer fit for the complexity and hyperconnectivity of digital dynamic managers face. So they have a whole raft of standard management approaches that basically don't work - the classic approach to strategy, change management, finance management, project management. The failure rates of these approaches are just dismal. But, how to develop a more systematic approach to managing the new normal, how much Systems Thinking will be a strategic skill for the leaders or managers across the industrial sectors?

Leverage Systems Thinking in strategy making: The challenge is to develop systems approaches that allow senior managers to act systemically even if they aren't natural systems thinkers. It is more to do with paradigm shifts linked to systemic thinking that we may see the shifts. Currently social, economic, and environmental sustainability issues being topical and may be a prelude to paradigm shifts supported by System Thinking. Effective senior management leaders are able to comprehend the complexity and the systemic issues they face and be able to consider this in their strategic thinking. Yet the rest of the organization operate remaining on more linear systems thinking and silo management control systems.It is even more important to leverage Systems Thinking in developing business strategies. The strategy is a holistic business plan to achieve a coherent goal through a series of specific actions. This definition clearly suggests the value of Systems Thinking in devising such a strategy.

Elegant Systems Design must begin and end with precise statements. How do you manage the process of establishing a ‘concise’ description, the statement of strategic intent as the foundation for strategic decision making, or simply as systems design, amid the ambiguity of Systems Thinking in today's corporate world. Poor management decisions often arise from unnecessary embellishment of the problem. This can be due to corporate political necessities or ignorance of the problem parameters. Often, precision is lost in a cloud of contingent qualifiers as a management team attempts to find the same page. So, how is discovery possible without variant perspectives? Systems Thinking is a practice, not a solution. If a rate of error is properly described, failure is reduced and decision quality increased. Two approaches provide focus: convergence and divergence; analysis and synthesis. The more you try to build a comprehensive picture of a system, the better adapted your decisions with respect to that system. Poor decision making is, unfortunately, pervasive and caused by factors such as:
-Cognitive Bias: Poor or inaccurate judgment, illogical interpretations, and decisions, characterized by patterns of behavior.
-Strategic Misrepresentation: Deliberate misrepresentation in budgeting caused by distorted incentives.
-Planning Fallacy: Systematic tendency to underestimate how long it will take to complete a task even when there are experiences of similar tasks over-running.
-Optimism Bias: Systematic tendency to be overly optimistic about the outcome of actions.
-Focalism: Systematic tendency to become inwardly focused and to lose situational awareness and appreciation of wider context during times of stress.

The convergence of "hard science" and "soft science": From digital ecosystem or macro-economic system perspective: Economics should include interdisciplinary approaches to engage with other social sciences and the humanities. That issue is perhaps more about Systemic Thinking flowing down into more policy areas in an integrated fashion, and operationally systemic implications and methodologies becoming more embedded practice. Economists should understand that any real economic system is composed of and affected by diverse components such as peer pressure, social structures, globalization, and a host of other factors not normally included in economic thinking. Sustainable Balanced Scorecards and Life Cycle Sustainability Assessments are being examples in the shorter term. And there are the trends with an interdisciplinary convergence of diverse sciences and humanities essential to the evolution toward a circular economy.

Systems Thinking still lacks acceptance, thus creating cognitive unease, among decision makers at the executive level. Therefore, such brainstorm helps how to make Systems Thinking 'socially acceptable' in important decision-making processes and strategic making, it’s all about seeing the trees without missing the forest, to embrace the holism and interconnectivity of digital organization and human society.

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I could not concur more. The acceptance by old school thinkers is putting corporate survival at risk. I have seen and continue to see this. This is what we do for a living with success using a technology to quantify systems of systems (SOS) yet this must be complemented by "Soft Systemic Thinking" i.e. enabling the human factor. Not an easy Task.

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