Systems Thinking, Revisited

During a meeting in July 2019, I aimed to explain the concepts of a system, leadership, management systems, and process management to the participants, as there were certain improvements that needed to be made within the company. To support my presentation, I drew the diagram on the left side of the whiteboard, always emphasizing that all organizations are systems. Fortunately, one of the participants took pictures of the diagrams, as seen here. Now, it is time to shed more light on this framework.

For those interested in “Systems Thinking,” I recommend exploring the scientific literature, particularly the works of R. Ackoff. Systems can be classified in various ways based on their purpose. Ackoff categorizes systems as deterministic, ecological, social, and organic (living) systems. However, this article primarily focuses on the so-called “organization or organizational” systems within social systems.

There are several similar definitions of a system. The definition that resonates with me the most is as follows:

“A whole comprising interconnected parts (sub-systems) that operate in alignment with a defined purpose. A system both influences its environment and is defined by its boundaries, structure, purpose, and function.”

According to Ackoff, a system is composed of the functions of one or more subsystems, and each system consists of at least two essential parts (subsystems). Furthermore,

1. Each essential part of the system (subsystem) can impact the behavior or properties of the entire system.
2. The way a subsystem (mandatory part) affects the properties or behavior of the whole system depends on the state or activity of at least one other subsystem.
3. Groups of essential parts (subsystems) can also influence the properties and behavior of the entire system, and none of them has any independent influence over the system.

Based on this definition, some important features of a system follow:

1. When a system breaks down, it loses its mandatory core features.
2. None of the system’s parts can fulfill the function that defines the system.
3. Essential parts of the system lose their ability to perform their functions in the system as a whole when a breakdown occurs.
4. Improving the performance of any essential part of a system individually may not necessarily improve the performance of the entire system.

To illustrate this concept, let us consider a notebook computer as an example of a deterministic system. A notebook has a defined purpose, is used for that purpose, and consists of interconnected sub-systems that affect its performance. If a key falls off the keyboard, it becomes impossible to write, and if the charging adapter is broken, the notebook will not function at all.

In contrast, an organization or company is a social system that may share some characteristics with a deterministic system like a notebook computer. However, there is a fundamental difference. In a deterministic system, neither the parts nor the whole system has a choice. All mechanisms in deterministic systems, such as vacuum cleaners, notebook computers, or automobiles behave according to their internal structure and their environment. On the other hand, an organization, being a social system, comprises both deterministic subsystems, like production lines, computers, and machines, which lack any free will or choice, as well as living subsystems with free will, capable of making choices with intentionality.

Companies make choices to survive in the business world, and they have the ability to create subsystems. Similar to automobiles or humans, a company consists of subsystems that depend on each other. Just as a car battery cannot charge itself continuously, and a human heart cannot beat at a constant rate, a production process cannot autonomously initiate production. The subsystems within the system (company), such as sales, purchasing, production, maintenance and repair, human resources, etc. must work in harmony. The structure that facilitates this coordination is known as a management system, which represents the way an organization manages its interconnected parts to achieve its goals.

There is no difference between the process definition and the system definition in the process management literature. Let us also remember the definition of a process: All activities that affect each other and transform inputs into outputs. Considering a company as a gearbox consisting of various sizes of gears. At the least, the following are quite important.

1. Compatibility of the tooth size of each gear with its mating gears.
2. The gears are machined in such a way that they do not harm themselves or the other gears with which they are in contact.
3. The rotation speed of each gear is in accordance (harmony) with the speed of the others.
4. Same wear rate is achieved at each gear, leading to uniform aging.
5. Ensure that each gear is well lubricated during its operation.
6. The gearbox is in an environment suitable for the intended operation.
7. The gearbox is operated in the presribed operation for which it is designed.

The diagram above was drawn to represent the firm, which is a system, a set of activities —process— that transforms inputs into outputs. The triangle in the diagram represents the organizational structure, the large circle represents the whole system, and the small circles represent the subsystems (processes), the thick arrow from left to right represents the supply chain process, and the small arrows represent the subprocesses that make up the supply chain process. The requirements written above for gears can also be easily adapted for supply chain processes. However, it should not be forgotten that the company, which is a social system along with its sub-systems have the capability of choice and that the company must act in line with a set of goals and targets. These two features are encapsulated in the definition of the system.

In order for a company to move in the same direction with all its subsystems, its mission and vision must be clearly defined. This is followed by action plans, which we call strategic plans for long-term goals. The strategic plan in line with the mission and realizing the vision is reduced to shorter-term goals, and the processes that make up the entire supply chain are run to ensure that the organization achieves its goals. While the processes are run according to their purpose, their performance is constantly monitored and compared against predefined acceptance criteria (Key Performance Indicators). Subsystems that have a choice (e.g. human resources process, production process, design process…) have to be carefully tuned and metered regarding the company’s strategic plan and related objectives. That is why a company needs to clearly and unequivocally determine its reason for being (mission), its perspective on its future (vision), its strategic direction, and its business plans. It is essential not to overlook the delineation of boundaries when defining a system or process.