Why You Need Systems Thinking Now

Business has made huge strides in advancing economic and social prosperity in recent decades through innovative technologies and new ways of working. But many of those innovations have costs. For example, plastics are used to make many convenient and low-cost consumer products, but they create huge problems for both terrestrial and marine ecosystems and find their way into thousands of kinds of animals, including humans.

Although the unforeseen consequences of innovation can to some extent be mitigated retrospectively through regulation and tax policy, it is believed that a better approach is to avoid them in the first place by thinking more carefully about how innovation is done.

While considering strengths and weaknesses of the two dominant approaches that businesses apply to innovation—breakthrough thinking and design thinking—which often produce socially and environmentally dysfunctional outcomes in complex systems, the authors suggest innovators should apply systems thinking, a methodology that has been around for decades but is rarely used today. It addresses the fact that in the modern economy every organization is part of a network of people, products, finances, and data, and changes in one area of the network can have side effects in others.  Systems thinking helps predict and solve problems in dynamic, interconnected environments.

Three Modes of Innovation

1. Perhaps the most popular approach to business innovation is breakthrough thinking. It’s the 10x, winner-takes-all model characterized by Mark Zuckerberg’s mantra to “move fast and break things.” Here the innovator, typically an entrepreneur armed with a new piece of technology, ignores existing relationships, norms, and even laws to create a better product.  When it works, breakthrough thinking delivers huge rewards for its practitioners. But it can also create a lot of collateral damage.  Typically, the extent of damage from breakthrough thinking is highest when it is applied to “wicked problems”—those that are constantly changing and hard to define and whose solutions involve difficult trade-offs. The more complex the ecosystem around the problem, the more likely it is that the solution will impose economic and social costs. So while breakthrough thinking is ideal if the problem is clearly bounded—like getting a rocket into space—it won’t work well when it comes to, say, fixing the U.S. healthcare and education systems.
2. The second common innovation approach, design thinking, was popularized in the 1990s by companies like IDEO. It has become the go-to methodology for consultants and innovation teams, especially when the context is complex and features multiple interconnected actors with divergent goals. Design thinking cuts through that complexity by focusing primarily on the users of the product or service being designed. Innovators study people in the contexts in which they will use an offering, empathize with them, divine their unarticulated needs, and then seek to reshape products and processes in ways that improve their experience.  Design thinking has a track record of success, but it too has significant downsides as the obsessive focus on the user creates knock-on problems for other parties.
3. The third approach, systems thinking, emerged from the pioneering work of theoretical biologist Ludwig von Bertalanffy, computer scientist Jay Forrester, and others. It had its heyday in the 1990s with the publication of Peter Senge’s bestseller The Fifth Discipline. Systems thinking recognizes and embraces the complexity of organizational problems, rather than seeking to simplify them. It leads to innovations that make an entire system more sustainable and resilient, avoiding the side effects and collateral damage sometimes seen in the other two approaches. At its best, systems thinking generates more-creative solutions and greater engagement in organizational ecosystems.

To reap the advantages of systems thinking you don’t need to precisely model a complex adaptive system. Instead, you can develop a general understanding of critical patterns in the system and then collaborate with actors in the ecosystem to test simple ideas. The goal is to experiment, not to make wholesale, potentially catastrophic changes. A good nudge will often inspire new ideas that can transform the system.  It has four key steps.  Define your desired future state.  Frame the problem, reframe it, and repeat.  Focus on flows and relationships, not products or services.  And nudge your way forward.

Meeting the wicked challenges that society is experiencing is almost certainly beyond the capabilities of even the most inspired breakthrough or design thinkers. In these situations, systems thinking provides a more robust framework for change.

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