A system is an entity which maintains its
existence and functioning as a whole for some purpose through the mutual
interaction of its parts.
Systems Thinking Defined
Systems thinking is your
ability to see things as a whole (or holistically) including the many
different types of relationships between the many elements in a complex
system. "Systems thinking is a
sensibility – for the subtle interconnectedness that gives living systems
their unique character."7
The Goal of Systems Thinking
The goal of systems thinking
is to manage the rapidly growing complexity of the worlds of business and
The task of a
process manager is to create systems, within a sensibly structured
and enables people to achieve higher productivity and greater
The Focus of Systems Thinking
Systems thinking "focuses on
the whole, not the parts, of a complex system. It concentrates on the
interfaces and boundaries of components, on their connections and
arrangement, on the potential for holistic systems to achieve
results that are greater than the sum
of the parts. Mastering systems thinking means overcoming the major
obstacles to building the
process-managed enterprise – for every business process is a whole
Growing Demand for Systems
business processes are dynamic systems, but today's business
professionals are generally not trained in general systems thinking. Too
often constrained to a perspective limited by ingrained business practices,
rigid scripts and structured input-output work, few professionals have a
wide-angle view of, or experience dealing with, end-to-end business
Balancing the Five Basic
Elements of Nature
The Five Basic Elements are Fire, Earth, Water,
Metal, and Wood. According to the ancient Chinese belief, those are the
basic elements of the universe and everything in our word is a compound of
the five elements. These elements are understood as different types of
energy in a state of constant interaction and flux with one another.
The most important of all is the
of all five elements...
Systems Thinking and Modern
system approach to management is based on general
system theory – the theory that says that
to understand fully the operation of an entity, the entity must be viewed as
a system. This requires understanding the interdependence of its parts...
Systems Thinking and
Cross-functional Management (CFM)
Cross-functional management (CFM)
manages business processes across the traditional boundaries of the
functional areas. In Total Quality Management
(TQM) and Kaizen, the
cross-functional goals of QCD (Quality, Cost, Delivery) are clearly defined
as superior to such line functions as planning, design, production and
sales. The positioning of cross-functional goal as superordinate ones
necessitates a new systems approach
to management, thinking and decision
The Power of Your
If you build broad cross-functional expertise,
no idea will be wasted! Your
mind can accept only those ideas that have a frame of reference with
your existing knowledge. It rejects everything else. If your knowledge is
functionally focused, you'll be open to new ideas related to your functional
expertise only and will miss all other learning and innovation
opportunities. If you develop a broad cross-functional expertise, no new
idea will be wasted. It will immediately connect with the existing knowledge
and will inspire you, energize you, and encourage your
The broader your net, the more fish you catch...
80/20 Analysis examines the
relationships between two sets of comparable data and can be used to
change the relationships it describes. One its use is to discover the
key causes of the relationship, the 20% of inputs that lead to 80% of
outputs, and put your resources behind the best-performing efforts. The
second main use of 80/20 Analysis is to improve the effectiveness of the
underperfroming 80% of inputs that contribute only 20% of the output.
80/20 Analysis should be applied
carefully, in a systemic way, as opposite to linear thinking that may lead
to misunderstanding of the 80/20 Principle and its potential abuses. "Don't
be seduced into thinking that the variable that everyone else is looking
at... is what really matters. This is linear thinking. The most valuable
insight from 80/20 Analysis will always come from examining non-linear
relationships that others are neglecting."11...
Management and Value System Analysis
links to the value chains of upstream
suppliers and downstream buyers. The result is a larger stream of
activities known as the value system. The development of a
competitive advantage depends not only on your firm's specific value
chain, but also on the value system of which your firm is a part.
breakthrough improvements in your value chain requires
of the box,
cross-functional, systems thinking. You have to see the
process across the entire flow of work, not just single points...
Complex System Rules of Thumb...
10 Strategic Management
The Framework for a
Growth Strategy: 4 Rules...
Case in Point
Production System (CPS)...