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by Tseren Tserenov

What is systems thinking?

Can anyone give a simple explanation - what is systems thinking? Is there such a universal concept with respect to business, engineering and management?

Most of us operate with the "everyday" understanding of the term "system" and mean by "systemic" personal organization, diligence, the desire to foresee everything, take into account all sorts of details and everything that may be important. The system that people bring to their work is called "thoughtfulness", "discipline in performance, following a plan". However, especially diligent executives and employees, for whom everything is connected with everything suffer the most as a result of such "thoughtfulness" of plans and discipline of their implementation. They are left with an even greater mess in their heads and deeds, as well as in a total chaos in all areas of work. "Systematic" is often confused with "systematicity" - and systematically bad or wrong thinking leads to disastrous results.

One of the examples of understanding system thinking was shown by G.O. Gref in his recent lecture for students of the "Skolkovo" business school. In his opinion (see from 1:01:50), system thinking is the ability to combine analysis (understood as the ability to dive deeply into details) and synthesis (understood as the ability to rise from these details in time). Of course, having this kind of ability is almost as good as being rich and healthy at the same time, instead of being poor and sick. Unfortunately, this kind of explanation leaves the word "system" itself behind, which means it does not describe system thinking – thinking that comes along with the use of the meaning of the word "system" and principals of system approach. "The dive in, rise from" story does not even give a little opportunity to understand how to master system thinking skill and how entrepreneur, manager or engineer can use it in real life situations.
Some people can support the conversation about the postulates of the system approach, they recall the classical understanding of the "system" - the sum of the interacting parts that together make up the whole so that it is greater than the sum of the parts. They can even operate with such properties of the "system" as integrity, emergence and hierarchy. That would be point where people's knowledge about system approach and system thinking ends.

What do the leaders of world known companies really mean when they talk about system thinking?! What is after all taught in the courses of systems thinking?

Knowledge of the term "system" and the ability to notice the integrity and hierarchy of the system (coupled with the emergence – which means that the properties of the system are not reducible to the properties of its parts) is not enough for productive work in today's complex and fast changing world. It is no longer acceptable to rely on the old textbooks of system approach: for example, the writings of Bertalanffy and Ackoff are no longer demonstration of the best system thinking as of today. Life has changed, the world became familiar with the system approach 2.0 - the naturally scientific concept of the system as a certain object ("objective" system) has developed and turned into "active" understanding of the system, i.e. the system is determined by parties with an interest in an enterprise or project (stakeholders). Or, if the system was previously interesting with its mechanism, connections between parts, etc., now system is considered according to its activity and begins with its stakeholders.

It's somewhat a simple and logical conception, but this kind of "active" approach entails great changes in business, and in management, and in technologies. For the development of this new system approach we should be greatly thankful to the engineers. Thanks to them we can look for strict and precise descriptions of what modern system thinking is in the rapidly developing international standards of system engineering. System engineers began to study system thinking after obtaining higher education degree, while any academic subject needs to be fully formalized and fixed by considering strict structure that was recently learnt.

Following this, management is increasingly drifting from the humanitarian specifics to engineering disciplines - it turns out that for decent coordination of the work of nowadays organizations and their development in our fast changing and complex world, knowledge in the fields of economy and finance, as well as leadership skills are not nearly enough to perform the work. Tasks such as calculations, planning of work and resources, modeling and designing of optimal systems for nowadays managers is as important area of interest as it is for engineers.

There is a huge gap to fill starting from very common understanding of system-systematic, the fundamental knowledge of the system approach till the actual mastering of the real system thinking. The skill can be learnt by studying significant number of new concepts and terms, using the same technique as if you would study chemistry, physics or mathematics. These concepts and terms (or understanding of these terms from the point of view of the system approach 2.0) you will not learn by attending the business courses, management courses or even specialized engineering courses (not system engineering). You will need to learn how to think in new language, solve your practical problems using new language with the help of new tools of system thinking.

You would need to learn to think simultaneously about three related systems: about the "system of interest", "enabling system" and "using system." You will have to master this thinking at several logical levels. It will be necessary to look for these systems in your own work, in your clients work as well as in subcontractors' work. It will be necessary to think about the numerous stakeholders of these systems and work with them by distinguishing their interests and preparing based on these interests different descriptions (models) of these systems.

It is also necessary to know the life cycles of all used systems, understand and be able to transform the architecture of your enterprise, as architecture realizes the life cycle of the system of interest. Another skill to learn is to link the projects of creating the systems with the enterprise's development strategy, and the development strategy needs to be constantly changing (this continuous cycle is called strategic).

Tseren Tserenov
Managing Partner of the Systems Management School
As a matter of fact, system thinking is not an abstract idea or common thinking, but a very concrete and structured tool for the continuous improvement of practices in business, engineering and management. The system approach 2.0 allows us to separate and analyze administrative and engineering activities – by not only considering the "work" from project and process management or case management, but also by considering "practices" that are directly related to people's competencies and used work technologies.

Such new methodologies as Lean 2.0 (version for developers, not for conveyor mechanical engineering production), agile in software engineering, or the theory of Goldratt constraints are considered as "practices." Old known classical software engineering and the machine learning in nowadays world are represented as practices in the creation of information systems. New technologies are emerging and breathe new life into some long-established practices. So the practice of accounting in today world completely transforms into the technology of blockchain - the technology of distributed accounting.

But it must be understood very clearly that each of these very different practices, like any medicine, saves only "from its' illness." The world is full of trendy practices . It is important to learn how to manage not only projects and processes, but also practices, as well as technologies that support these practices. System thinking allows us to orient ourselves in the tangled world of new and old methods of work.

This kind of understanding of what is included in the specific activity of a professional or in the activity of the whole enterprise, as well as the ability to follow the numerous best practices can be seen as the first step on the way of setting in stone system thinking. These skills would be enough to become a qualified customer for future changes, correctly set tasks for consultants and employees, and most important not to make silly mistakes, not to waste time and money, including when choosing new management methods and introducing new technologies. This level of understanding of system thinking would also be enough for any employee to become noticeable in any team due to system thinking about the development of the enterprise or project.

The next stage of development of system thinking cannot occur without shift from understanding to the skills. And that is where you need to train the ability to see each enterprise as a combination of different practices and implement this kind of combination that will guarantee company the maximum success. For example, one enterprise can have simultaneous work of BIM with 3D design, benchmarking, agile and the Goldratt constraint theory all together. This combination of practices is a unique genome of the enterprise, consisting of separate practices-genes. System thinking helps to improve the genome: to understand how practices are combined with each other, which new practices should first be built into the functioning part of the enterprise, and which ones to stop perform immediately. It is quite risky to adopt new practice and technology without understanding how it will be combined with existing practices and with the current genome of your enterprise. The skill of system thinking allows to "build" an enterprise consciously, not by intuition or by using experience or the "everyday" understanding of the term "systematic".

Unfortunately, system thinking cannot be built into the brain for practical use in a few days. Moreover, there is no hope for traditional training courses. Learning system thinking is more like learning advanced math course. Modern civilization is based on advanced mathematics, but everyone realizes that it is not possible to master it in a week or two. There is no easy way. It takes considerable time, knowledge of the theory, habit of solving practice problems. Moreover, for the best result you would need to have a mentor who can help notice and correct mistakes in thinking. Not everyone is able to master advanced mathematics, just like not everyone is able to master system thinking. But just like in mathematics, anyone who has decided to change their thinking about management and engineering, can choose needed and approachable level of understanding, competence and skills of system thinking suitable for them personally.
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