Give any three-year old child a new toy and there are three things he or she will do. Take it apart, study its parts individually, and try to put it back together. These are the three steps of Analysis which cover how most of us think today.

Analysis does provide us with knowledge, but it cannot always provide us with understanding, especially when we are dealing with complex systems. It breaks down complex problems into smaller ones, which are easier to solve, with the hope that smaller answers will connect to form the big picture.

Reinventing business thinking Success Alex AthanassoulasUnfortunately, it does not work that way. We know that if you have the parts of a car, you don’t have a working car. And although you may thoroughly examine the car parts, they will never tell you why most cars have – for example – five seats. Or, if you combine the best parts from every automobile company there is, you will not end up with a car, because they do not fit. It is not about the parts but about the relationships between them. Systems thinking provides understanding by examining systems as a whole, relationships between system parts and relationships with other systems.

How do we think about business systems today? Unfortunately, mostly in a linear fashion. We isolate Sales or Marketing from Production, Finance or HR. And we also isolate layers of the System, such as Operations or Personnel from Management. In this isolation, we lose the priceless interactions with customers, we lack a common direction between the parts, and we negate the added value of the precious relationships which form the system itself.

In retail for example, these isolations are expressed as expensive store-concept re-launchings in an ever-shortening period of time. Usually management does not sincerely recognize store personnel as a part of the system and does not build sincere relationships with the customer base (although it is commonly said to be a major objective). So, in the absence of only these two relationships and their feedback to the system, every few years the retailer must perform an expensive and questionable market research to identify customer needs. The findings, if correct, are turned into a new concept and its implementation re-aligns the brand with contemporary market requirements. Store personnel and customers do not know, recognize, or understand the reason for the change and feel as it was imposed on them, however invalid. And then, as before, the store is left on its own, free to “decay” again, widening the gap with the market until sales drop alarmingly to initiate a new circle.

Now think of this alternative. During the expensive re-launching, store personnel is educated on the basics of the strategy and trained to convey and communicate brand values to customers. They are trained to collect feedback from the customers, organize it and report it to management, establishing bi-directional relationships. Market research is now long gone. Management knows what customers need real-time through more effective bi-directional relationships. Feedback is then turned within the system loop to corrective actions, which regularly transform the concept incrementally. The brand is now alive. Through the relationships with its parts, the system recognizes needs, and opportunities, and it reacts. The cost of keeping the brand ahead of competition is minimized and constant re-alignment to the market is established.

When you understand, and act on relationships, you are set for healthy, sustainable growth. Systems thinking can provide valuable help.

article by Alexander Athanassoulas, Business Partners magazine
February 2010