The Systems Thinking Approach to Strategic Management
Abstract
:1. Introduction
2. Systems Thinking
2.1. An Introduction to Systems Thinking
- Mechanical systems are systems whose behavior is regular, determined by the internal structureand specific laws, e.g. clocks. This was the typical business in the 19th century, where employees were replaceable machine parts performing unskilled work and the business was run directly by the owner.
- Organismic systems have purposes of their own, but their constituent parts have not goal or purpose and are open. Therefore, they have to be considered together with their environments. Organizations that originated after the end of World War I were examples of this type. The fundamental change was the appearance of managers that replaced owners with workers who were more specialized and skilled. However, the focus was productivity and autocratic hierarchies.
- Social systems are open systems with purposes of their own as a system, as well as their constituent parts. Thus, organizations are intrinsically integrated internally, e.g., people playing more important roles, and externally, e.g., society. Since they cannot be divided, the performance is not equal to the sum of the actions taken separately. Therefore, analytic thinking, which consists of separating components and treating them separately, can be counterproductive. Instead, synthesis, which involves understanding components as parts of a larger system, can help to understand the performance of an organization.
- Functionalist ST. ST methods, e.g., Systems Engineering, Systems Analysis, and Socio-Technical Systems Thinking, in this category use mechanistic (level 1–3) or organismic (level 4–6) models to understand systems. They focus on efficiency and survival of systems using scientific methods to learn about the nature of the parts of the system and their interrelationships internally and externally. In terms of the analysis, their approaches focus on representing the systems as mechanistic structures managed through close-loop control mechanisms.
- Structuralist ST. In this classification, ST methods, e.g., System Dynamics, Viable Systems Model, search for key mechanisms or structures responsible for the system behavior. A structuralist approach leads analysts to identify the problems with the system and manipulate its design/structure to make it more effective over time (level 1–6). Their analytical lenses also focus on mechanistic and well-defined structures controlled by close-loop mechanisms. One criticism of these ST methods is their application to social systems because people through their motivations and actions define the emergent behavior of systems, and these methods don’t capture the subjective interpretations of the world.
- Interpretative ST. The ST methods, e.g., Soft Systems Methodology, Critical Systems Heuristic, Team Syntegrity, in this classification focus on the symbolic levels of complexity analysis (level 7–8), where system behavior originates from ‘images’ rather than direct stimuli, as the brain organizes information into knowledge structures or images. Therefore, these approaches work with the interpretation of the issues in systems by the actors in the system rather than defined and well-structured system models. Attention is paid to ensure sufficient accommodation between different views of the system to achieve ‘idealized designs’ of the system.
- Interpretative implies participatory decision-making processes, self-organization, free will, creativity, and spontaneity within democracy.
- Functionalist involves hierarchical decision-making processes, externally imposed order and control, deterministic behavior within a technocracy.
2.2. ST Methodologies
3. Strategic Management
Concept | Design | Planning | Positioning | Entrepreneurial | Cognitive | Learning | Power | Cultural | Environmental |
---|---|---|---|---|---|---|---|---|---|
Summary | This school focuses on achieving congruence between the organization (in terms of strengths and weaknesses) with the environment (in terms of threats and opportunities). | This school considers strategy as a highly formalized program of activities with strong quantitative focus through budgeting and numerical scenarios. | For this school, strategy is an analytical process of the competitive dimensions leading to generic strategies and the arrangement of initiatives in portfolios. | Strategy is about envisioning, leading to bold actions originated by the insights of the entrepreneur. | Strategy is in the mind of the leaders, as frames, imagination, or maps. The critical components are perceptions, interpretations, bounded rationality, and cognitive styles. | Strategy is about learning, incrementalism and emergence. A combination of sense-making, entrepreneurialism, and venturing. | In this school, strategy is about bargaining, conflict, and grabbing. It also entails managing coalitions (networks, alliances), stakeholders, and political games. | This school considers strategies are driven by values, beliefs and myths. Aspects such as culture, ideology and symbolism define the development of strategies | Strategy involves reacting to the environment in different ways: coping, capitulating, adapting, evolving, or disappearing if the conditions are not appropriate. |
Strategy development process | The development of strategies follows a planned approach aiming for unique, informal and simple strategies that may imply occasional changes. | This process to develop strategies consists of detailed plans decomposing strategies into sub-strategies and programs. It is a formal and deliberate process leading to incremental change. | This process is driven by economic analysis that leads planned positions in markets sustained by a defined and deliberate set of competitive actions (ploys). Strategies derive into piecemeal, frequent changes. | This process is about creating a personal, unique perspective (vision) about a place in the market (niche). Therefore, strategies are mostly visionary, intuitive, and emergent. Change is mostly opportunistic and revolutionary. | This process is focused on the micro-behavior of the top management team leading to the generation of strategies. No specific recipes but the interaction of mental perspectives are critical to generate mostly emergent strategies that may or may not change. | This process is informal, emergent, messy, and continuous. The main outcomes are strategies as patterns of unique actions. Change is mostly incremental. | Developing strategies is a political process leading to patterns of actions, some of them cooperative and other conflictive/aggressive. The outcomes are messy and emergent leading to frequent changes. | Strategy development process is an exercise of collective perspectives, unique and ideological. The resulting strategies are constrained by the collective ideology with infrequent changes. | Strategy development involves finding specific positions in markets/industries and adapting to them passively. Strategies can lead to no change or radical changes depending on the environment. |
Key actors responsible for the development of the strategy | Strategies are designed by the chief executive officer, who is the architect designing the organization as it sees it, in a dominant and judgmental manner. | The key actors are the staff in the corporate planning area; the planners, who elaborate procedures that are followed by managers to develop the strategies. | The main role in the process is taken by analysts, who generate the portfolio of market positions. Managers are responsive to this analysis. | The only actor is the entrepreneurial leader, who has a dominant position and she/he is driven by her/his intuition. | The leaders working alone or in teams. Their cognition has the main role | Everyone can be responsible for the strategy as a learning process. | Anyone with power inside the organization. | There aren’t any specific actors responsible for the strategy since it is a collective effort. However, symbolic leaders may drive the process. | There aren’t any specific actors. However, the most relevant roles are related to the analysis of the environment. |
Conceptualization of the Organization) | The organization is considered as a formal machine, highly structured, and centralized in the figure of the CEO, with the assumption that it can accept changes, if needed, easily so it can be reconfigured without any problem. | Organizations are large centralized, formalized machines organized in divisions. The structure is easy to decompose and its activities arranged into programs followed by the decision makers. | Similarly to the previous two schools, organizations are considered large centralized and formalized machines competing preferably in commodity or mass markets at global scale.Change is good if the change implies creating a competitive advantage or doesn’t change. | The organization is conceptualized as simple but centralized around the entrepreneurial leader and ready to change. They are usually small in size and startups or large and in turnaround processes. | The organization can take any shape as it depends on the conceptualization of the leaders in terms of structure. | The organization is a professional adhocracy highly decentralized and flexible. The organization is continuously evolving, especially during unprecedented change. | There is no specific conceptualization but it may be conflictive, disjointed, and uncontrollable (micro) with continuous political challenges, either blockages or flux. | The organizations are driven by a mission shared collectively in a cohesive way and supported by norms. It is a stagnant organization with significant inertia. | Organizations are formal machines, centralized and accustomed to their market/industry as they are mature. |
Conceptualization of the Environment aspects | The environment is considered to be expedient and easy to understand in categories, e.g., social, political, technical, and stable. | The environment is assumed to be manageable and controlled as a list of factors that can be predicted and are stable. | The environment is competitively demanding but analyzable, and ultimately acquiescent to the organization. The environment tends to be stable with enough historical data. | The environment is dynamic and full of opportunities, which are clearly understood by the leader. The organization is able to maneuver around the niches with ease. | The environment can be overwhelming due to its dynamics and complexity. On the other hand, it can be perceived in an extremely simplified way. | There is an elaborate conceptualization of the environment, which is unpredictable and dynamically complex. | The environment is contentious and divisive, but negotiable leading to control or cooperation. | The environment doesn’t have major impact, and it is passive, unless there are incidents/threats that affect the organization. | The environment defines the past, present and future of the organization, so it is highly relevant and exigent for the organization. The environment is also competitive and clearly delineated. |
4. Integration of Systems Thinking with Strategic Management
Concept | Design | Planning | Positioning | Entrepreneurial | Cognitive | Learning | Power | Cultural | Environmental |
---|---|---|---|---|---|---|---|---|---|
Type of system | Mechanical | Mechanical | Mechanical | Social | Mechanical/Organismic | Organismic/Social | Social | Social | Mechanical |
Complexity | Simple | Complicated/Complex | Simple | Simple | Complicated/Complex | Complicated/Complex | Complicated | Complicated | Simple/Complicated |
Unitary/Pluralist/Coercive | Unitary | Unitary/Pluralist (if participative) | Unitary | Unitary | Unitary/Pluralist | Unitary/Pluralist | Coercive | Pluralist/Coercive | Unitary |
Functionalist/Structuralist/Interpretative | Functionalist/Structuralist | Functionalist | Structuralist | Structuralist | Structuralist/Interpretative | Structuralist/Interpretative | Interpretative | Interpretative | Structuralist |
ST Methods | SE/SA/OR/VSM/SD/VM/STS/SCA | SE/SA/SD/VSM/IP/VM/RA/OR/SCA | SE/SA/SD/RA/OR | SD/SSM/SODA/SCA | SD/SODA/SSM/SAST/CSH | SD/SODA/SSM/SAST/CSH/TS | CSH/CST/SI/TS/STS/SD | CSH/CST/SI/TS/STS/SD | SE/SA/OR/VSM/SD/VM/STS/SCA/CST |
ST examples and resources | [29,32,37,39,40] | [3,29,33,37,39,40] | [3,29,37,39] | [2,3,38] | [2,38] | [3,35,39] | [3,4,31,35,38,39] | [4,34,38,39] | [27,36] |
5. Conclusions, Limitations, and Ideas for Further Research
Funding
Data Availability Statement
Conflicts of Interest
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Kunc, M. The Systems Thinking Approach to Strategic Management. Systems 2024, 12, 213. https://doi.org/10.3390/systems12060213
Kunc M. The Systems Thinking Approach to Strategic Management. Systems. 2024; 12(6):213. https://doi.org/10.3390/systems12060213
Chicago/Turabian StyleKunc, Martin. 2024. "The Systems Thinking Approach to Strategic Management" Systems 12, no. 6: 213. https://doi.org/10.3390/systems12060213
APA StyleKunc, M. (2024). The Systems Thinking Approach to Strategic Management. Systems, 12(6), 213. https://doi.org/10.3390/systems12060213