Importance of systems thinking in organisations today

By on April 22, 2014

In contemporary dynamic business scenario, the inter-dependence of organisations and influence of external & internal environmental factors on trade and organisational practices has intensified manifolds. The resulting complex trade and financial practices and enhancing intersection between various global  economies warrants more complex organisational structures.

Need for systems thinking

The demand for newer structures require systematic skills that are competent enough to provide  suitable advises of organisational management. It is high time that organisations go beyond the linear perspective of models and algorithms for business operations. Managers need to develop the art of proactive thinking which will enable them to intuit about circumstances and make rational plan of actions rather than classifying the events as per pre-determined linear patterns of thinking. In other words, managers need to widen their horizon and plan what is possible in future and how emerging phenomenons can be tackled to leverage benefits. The top management of the companies need to adopt a preemptive approach towards planning of organizational activities in purview of business environment. This is possible only through continuous and righteous deciphering  of continuous change and making swift moves to be able to cash on the opportunities. Thus arising and also combating threats, if any (Dominici, 2012). This strategic thinking process from a holistic perspective and seeking lessons from mistakes of the past is known as “systems thinking”. Apart from business complexities, the ever-changing consumer behavior theories like hedonistic consumption, consumer culture, consumer identity project etc. also build pressure for “out-of-box” thinking and management techniques. Also, to be better equipped for alarmed emergencies and ensure long-term sustainable competitive advantage. There is an ardent need for thnking beyond linear business decision making models and adopting systems thinking (Dominici and Levanti, 2011).

Applying systems thinking

Systems thinking can be understood as the capacity of viewing things holistically encompassing all types of different inter-relationships between the existing elements in a complex system. Senge (2010) defined it as, “Systems thinking is a sensibility – for the subtle inter-connectivity that gives living systems their unique character”. Systems thinking perceives the world as systemic with emergence and inter-connectivity being the founding rocks. Systems thinking is instrumental in developing a simplified thought process which is a prerequisite for effectual accomplishments in the prevalent complex world. However, systems thinking is more layered than the mere usage of “casual loop diagrams”. In fact, it instigates a model conceptualization. Managers can utilize systems thinking to be able to view a clearer, better “larger picture” without segregating the phenomenon based on functional orientation  (Flood, 2010).

The vital tool for systems thinking is computer software programs which enable integration of learning pertaining complex team interactions and business interactions. Following is the diagrammatic representation of adoption of systems thinking in research prior to decision making.

Adoption of systems thinking. Source: Woodside,(2006)
Adoption of systems thinking. Source: Woodside,(2006)

Approach to systems thinking

There are many approaches for systems thinking which help managers to take better researched and structured management decisions. Following is the tabular presentation of the various approaches.

Adapted from: Halecker and Hartmann (2013)
Adapted from: Halecker and Hartmann (2013)

In the present competitive business landscape, innovation is the key to sustainability. Halecker and Hartmann (2013) advocate systems thinking for business model innovation. Following diagrams clearly explains the impact of systems thinking:

Impact of systems thinking. Source: Halecker and Hartmann (2013)
Impact of systems thinking. Source: Halecker and Hartmann (2013)

Thus, it can be concluded that systems thinking is a formidable means of rational thinking which can be invigorated in multiple economic endeavors to device newer ways of confronting challenges and strengthens the business understanding of the managers. This is possible through radical re-engineering initiatives and positive support of the top level management.


  • Dominici, G. (2012). Editorial Note: “Why does System Thinking Matters?”, Business Systems Review,1(1), Pp. 1-2.
  • Dominici, G. and Levanti, G. (2011). The Complex System Theory for the Analysis of Inter-firm Networks: A Literature Overview and Theoretic Framework, International Business Research,4(2), Pp. 31-37.
  • Flood, R. (2010).The Relationship of ‘Systems Thinking’ to Action Research, Systemic Practice and Action Research, 23(4), Pp. 269-284.
  • Halecker, B. and Hartmann, M. (2013). How Can Systems Thinking Add Value to Business Model Innovation? XXIV ISPIM Conference – Innovating in Global Markets: Challenges for Sustainable Growth in Helsinki, Finland on 16-19 June.
  • Senge, P. (2010). The Fifth Discipline: The Art & Practice of the Learning Organisation, New York: Crown.
  • Woodside, A. (2006). Advancing systems thinking and building micro worlds in business and industrial marketing, Journal of Business & Industrial Marketing, 21(1), Pp. 24-29.


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