Essay

“Systems thinking essentially seeks to understand phenomena as a whole formed by the

interaction of parts’ (Stacey, 2011)

Critically appraise the above statement in relation to changing ideas of strategic thinking and
explain how it exists within your company’s approach to strategic management.

Name and Surname: Chidinma Uwaoma Nwogu

Registration number: R2002D10432079
Course name and code: Strategic Systems Thinking ST4S39-V1-18397
Tutors Name: Sharad Kumar
Date: 16-August-2020

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INTRODUCTION

The complex, dynamic and varied nature of the recent economic environment has created the

need for managers to thoroughly analyse the environment, in order to have a clear

understanding on how to steer the organization towards achieving its aims and objectives.

Comprehending how to construct great concepts has become of great importance to

management in today’s innovation-driven economy (Bouhali et al, 2015 p. 73). Organizations

have had to apply strategies in order to remain relevant, attain competitive advantage as well

as achieve success for the organization. In attempting to respond to the above statement it is

pertinent to define and understand the main theories. This essay will go further to explain what

System thinking is and by extension, describe how it merges into the larger subject of Strategic

thinking. There will be an attempt to explain strategy and analyse the various approaches to

strategy. An attempt will also be made to describe how varying notions of Strategic thinking

developed over time and how they exist in contemporary Management. This essay will also

explain complexity perspective theories and complex adaptive systems as they apply to

organizational strategy. Finally, the essay will delve into how strategy applies in practice

through the use of various tools.

STRATEGY

Strategy, according to Johnson, Scholes and Whittington (2008) is a set of plans designed by

an organization towards accomplishing a long term goal in a dynamic environment, through its

alignment of resources to meet the expectation of stakeholders. Porter (1996), also emphasized

that strategy outlines and converses the distinctive point of an organization as well as

determines how its resources, skills and capabilities would be pooled together to attain

competitive advantage.

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 Planning for organizational success is very important, hence the need for

organizations to anticipate and prepare for the future in order to take full advantage of available

opportunities. Strategy could either be deliberate or emergent. Deliberate strategy is a well

thought out plan with clear purposes and articulated visualization that is put in place in order

to achieve an expected outcome (Maritz, Pretorius and Plant 2011, p. 101). Here, strategy is

developed through discussions between an organization and its stakeholder’s through

examining environmental data. Emergent strategy on the other hand has to do with dealing with

unexpected outcomes, having to formulate new plans, making swift responses and adjusting to

environmental changes in order to remain on course (Maritz, Pretorius and Plant 2011, p. 101).

Organizations have no choice but to refine their strategies gradually as a result of new

information and opportunities. This will usually lead to giving up aspects of the deliberate

strategy as a result of altering circumstances and the dynamics of the business economy.

APPROACHES TO STRATEGIC THINKING

Strategic thinking involves analyzing the past and current situations of an organization in order

to come up with decisions for the future actions of the organization. Fogel (2018) explains that

it allows for identifying, clarifying and understanding relevant factors in charting the future

course of the organization. According to Bouhali et al (2015) strategic thinking spreads

significance and determination throughout the organization in order to develop goals and tactics

to meet the actual requirements of the organization. When thinking strategically, consideration

is made to the larger work environment. The hypothesis working in the organization and

industry is challenged, complex and vague information are collected and analyzed in order to

determine the main issues and appropriate actions. The aim of all this is to achieve the best

possible result for the business (Emran and Emamgholizadeh 2015).

In strategic management, Henry Mintzberg postulated ten schools of thought with the aim of

explaining the various approaches to strategic thinking. There are summarized as follows;

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The Design School sees strategic thinking as process conception where clear and unique

strategies are formulated by matching internal situations of the organization to external

environment. This school of thought is responsible for the development of the SWOT analysis.

The Planning School sees strategic thinking as a formal process requiring rigorous steps to be

taken in planning and executing strategy.

The Positioning School sees strategic thinking as an analytical process that places the business

within the context of its industry and looks at how the organization can improve its position

within the industry. A typical example is competitive advantage.

The Entrepreneurial School is a visionary process that relies on the intuition and judgement of

the leader. Entrepreneurs bring in innovative products and services to the market.

The Cognitive School is a mental process that studies how people perceive patterns and process

information.

The Learning School sees strategic thinking as an emergent process that allows management

to pay close attention over time to what works and what doesn’t. They incorporate lessons

learnt into the overall plan of action.

The Power School is a process negotiation that develops strategy by negotiating between

stakeholders within the organization and/or between the company and external stakeholders.

The Cultural School sees strategizing as a social interaction based on the beliefs and

understanding shared by members of the organization.

The Environmental School as a reactive process that responds to the challenges imposed by

external environment.

The Configuration School sees strategic thinking as a transformational process in which the

organization is transformed from one type of decision making structure to another.

Mintzberg and Lampel (1999).

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SYSTEMS THINKING

Before delving into systems thinking, it is important to have an understanding of what a system

is. According to Ackoff (2015) a system is a whole that is made up of several interrelated parts,

each of which has the ability to affect the performance of the whole. It is a group of parts that

interact, relate and depend on each other, thereby making up a complex and unified whole and

having a specific purpose. Ackoff (2015) in his speech, used the automobile as an illustration

to further buttress that a whole is the product of the interactions of its several parts which cannot

function independently of one another in a way that it positively affects the performance of the

whole. In other words, a system only exists through the mutual interaction of its parts. It is

therefore important to note that without such interaction and interdependence between parts,

there is just a collections of parts and no system. An organization will be used as a typical

example of a system, for the purpose of this essay. An organization is seen as a system as it

requires the interaction and interdependence of its various parts (workforce, resources, facilities

etc.) in order to achieve optimum performance and these parts cannot function independently

to achieve the goal of the organization.

Having understood what a system is, what then is systems thinking? Systems thinking has been

defined in various ways since it was coined by Barry Richmond in 1987. Arnold and Wade

(2015) argue that the improvement and use of systems thinking skill may be hindered by the

absence of an agreed definition of systems thinking. According to Jagustovic et al (2019),

Systems thinking enables the understanding of a complex whole, rather than concentrating on

its component parts. It also “considers interdependent relationships and views problems as a

dynamic, interdependent, and ongoing process” (Jagustovic et al, 2019). After comparing

definitions of several theorists and putting them through a systems test, Arnold and Wade (2015

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 p. 6) came up with the conclusion that they all had “common elements which

tend to include interconnections, the understanding of dynamic behaviour, systems structure as

a cause of that behaviour, and the idea of seeing systems as wholes rather than parts”.

Fundamentally, systems thinking is a method of helping an individual to see frameworks from

a wide point of view, which includes seeing overall structures, patterns and cycles in a system

as opposed to seeing individual events in the system. This helps to rapidly distinguish the actual

reasons for issues in organizations and realize exactly how to and where to tackle them from.

Systems thinking has created an assortment of standards and devices for investigating and

evolving systems. By concentrating on the whole system, specialists can attempt to recognize

solutions that address as many issues as possible in the system.

Systems thinking can be understood as a shift from conventional thinking that enables the

understanding of the complexity of the whole rather than focusing on its individual elements.

It also considers interdependent relationships and views a problem as a dynamic,

interdependent, and ongoing process (Richmond, 1993).

COMPLEXITY PERSPECTIVE- New Ways of Thinking about Strategy

According to Carmichael and Hadzikadic (2019) there are two types of complexities;

disorganized complexity and organized complexity. For the purpose of this essay, focus will

be on organized complexity. Carmichael and Hadzikadic (2019) described organized

complexity as the interactive correlation of a large number of agents within a system which

produce emergent, universal level properties for the system as a whole.

Complexity theory is a theory that studies the relationships between the parts of a system and

how they give rise to collective behaviour. It is a theory that seeks to understand how the system

interacts with its environment and how they develop, adjust and progress. As defined by

Systems Innovation (2017), “Complexity theory is a set of theoretical framework used for

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 modelling and analysing complex systems within a variety of domains”.

Complexity theory also explains how chaotic situations give rise to organized systems. Complexity

theory is made up of key components. Self-Organization Theory: This theory seeks to

understand how elements of s system follow simple rules, thereby synchronizing their

behaviour. The result of following rules is the process of self-organization. Systems Innovation

(2017) explains that this theory provides the tools to comprehend the process of occurrence

where indigenous relations result in universal patterns. An example is the alteration of pricing

strategy and buying decisions in a self-organizing manner resulting from the changes in

economic demand and supply. Non-Linear Systems: This describes the non-proportionality of

input and output to a system. It arises from the fact that the outcome of combining things

together may not necessarily be a simple addition of the properties of each element in isolation,

but a whole that is less than or greater than the simple sum of each part. (Systems Innovation,

2015). This behavior is nonlinear as certain inputs will have a disproportionately strong effect

on others. Network Theory: All complex system can be understood and modelled efficiently as

networks. This theory comprehends complex systems in terms of how they connect and how

things flow through the system.

COMPLEX ADAPTIVE SYSTEMS (CAS)

This is the fourth component of complexity theory. Complex Adaptive System consists of many

parts of a system, acting and reacting to each other’s behavior. It has to do with flexible systems

that adjust their behavior according to changes in the environment. According to Carmichael

and Hadzikadic (2019), CAS refers to a “system of agents that interact among themselves

and/or their environment, such that even relatively simple agents with simple rules of behavior

can produce complex, emergent behavior”. They are complex systems that are flexible and can

modify their structures and actions depending on the changing environment. “Complex

adaptive system is a collection of individual agents with freedom to act in ways that are not

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 always totally predictable and whose actions are interconnected so that one

agent’s actions changes the context for other agents” (Gplsek and Greenhalgh,2001).

Complex adaptive system is a system that is made up of various elements interacting with each

other in various ways, and these interactions are governed by simple, localized rules operating

in a context of constant feedback. When dealing with complex systems, the results are more

uncertain than certain. Organizations are complex systems and requires creativity and

innovation to be able to adapt toe environmental uncertainties.

A typical example is the current situation of most organizations as result of the covid-19

pandemic. Using my organization as a case study, the covid-19 pandemic has caused a drastic

and rapid change in the way the day-to-day activities are carried out within the organization.

The organization has had to adapt to current situations as well as make drastic changes in order

to abide the safety rules to flatten the curve while still remaining in business. The strategy

currently being used by organization was realized after considering and looking at the

organization as a whole (the workforce, resources, facilities). For instance, we have had to

develop work schedules for rotational presence at the office in order to reduce the daily

workforce by 50%. The current work schedule was developed strategically, considering the

key players for daily success. Each department was considered as they relate with the other

departments. Example, two key players from the same department cannot be present on the

same work day. Each has to work alternate days in other to have the presence of that key role

at every time in the office. Thus as a result of the current situation, the organization have had

to develop adaptive behaviors by being flexible to the change in the environment.

THE PRACTICE PERSPECTIVE

The success of every organization depends on how well the business strategy is formulated.

According to Jarratt and Stiles (2010), there are two models of strategizing; the process based

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 model and the emergent model. They explain that the process based model

arises as a result of consultation between the organization and its stakeholders depending on

the business environment, while the emergent model is refines existing organizational strategy

based on the environmental context. The process based model of strategizing is guided by

traditional analysis tools such as SWOT analysis (Strengths, weakness, opportunities and

threats), PEST analysis (Political, economic, social and technological) and BCG (Boston

Consulting Group). These methods are perceived to be uncomplicated and they focus on key

issues (Jarratt and Stiles, 2010) however, they have been criticized for being too simple.

Jarratt and Stiles (2010) explain that there is no preferred practice approach, however managers

select their strategizing tools based on their point of view on the environment and competitive

strategy. The selection of strategic tools and their use differ as the methods and tools are first

contextualized in alternative practices in order to be adapted.

According to Jarratt and Stiles (2010), there are three main approaches applied by managers in

strategic practice. They are; Routinized Practice usually used in settings that are very

predictable and is centred on market alignment and the configuration of resources. Reflective

Practice usually used when the environment is perceived as complex and dynamic. Here,

managers prefer to share and use their past experiences to tackle current business environments.

Imposed practice usually used when the business environment is observed to be stable and

there is a possibility of incremental change.

According to Jarzbkowski et al (2007) and Whittington (2006) strategy as a practice seeks to

address 5 consistent questions: What is strategy? Who is a strategist? What do strategists do?

What does an analysis of strategists and their doings explain? How can existing organization

and social theory inform an analysis of strategy-as-practice?

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 As explained in the early part of this essay, strategy is a set of plans designed

by an organization towards accomplishing a long term goal in a dynamic environment, through

its alignment of resources to meet the expectation of stakeholders (Johnson, Scholes and

Whittington, 2008). Strategizing on the other hand comprises those actions, interactions and

negotiations of multiple actors and the situated practices that they draw upon in accomplishing

that activity (Jarzabkowski, 2005).

CONCLUSION

The world is surrounded by complex systems and only a holistic approach can be adopted

where systems are understood based on the interactions of its various parts. Strategic thinking

is very key in identifying, clarifying and understanding relevant factors in order to chart the

future course of the organization. Organizations have had to find sustainable solutions to

complex situations through systematic thinking. Systemic thinking enables organizations

understand how elements within a hole influence the behaviour of each other (Ackoff, 2015).

It offers tools and processes that enable organizations to see outlines and networks, which leads

to greater productivity. In summary, there is a unique relationship between systems thinking

and strategic thinking.

In-depth knowledge and understanding of a system as a whole is required in order for strategy

to be set in motion. It is therefore safe to conclude that it is pertinent for an organization to

apply both system thinking and strategic thinking in its management structure, for it to achieve

competitive advantage.

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