Old systems-thinking focused on the parts that make up a system. New systems-thinking focuses not only on the parts, but also more importantly on the interrelationships between the parts and the interactivity within the parts themselves.

Unfortunately, complex systems are exactly how they sound: complex. This means that simple cause and effect models usually do not apply. That is, “one to one” relationships between parts within the system are rare. Instead, our systems are made up of “many to many” relationships and nonlinearity. Complex systems often exhibit:

• One cause having multiple effects
• Combination of causes leading to one effect
• Causes having multiple causes
• Effects having other downstream effects

Why is understanding system complexity important?

Because business organizations are complex systems, it is important for managers to understand the parts of a system and in particular the interactivity of the parts when making decisions that impact stakeholders. Well-intentioned managers sometimes improve business processes, alter strategies and redefine objectives without having the tools necessary to understand the cascading effect of these decisions on the other parts of the system. Sometimes localized improvement causes one part of the system to perform better but the effect on the performance of the system as a whole is worse.

Does understanding complex systems need to be complex?

No! When systems are analyzed in detail, they appear very complex. However, most systems when analyzed at a high level display distinct characteristics and allow us to discern pattern from the noise.

Business systems are no exception. As a very simple example, businesses are made up of many distinct parts with countless interactions between the parts, but the performance of the company measured by its profit displays a consistent pattern. A company that understands its customers, investing in research and development, led by committed management, with good cash flow and well positioned in its market will likely show a pattern of consistently making money.

Our job is to understand business management systems in the level of detail necessary to understand the key system drivers so that we can:

• Effectively manage our complex system for fulfilling stakeholder requirements, and
• Make well informed decisions regarding changes to the system

Our first step is developing our organization’s management system.