Systems Thinking in Modern Business

By | AgileBusiness, Digital Disruption | No Comments

This post from Leyla Acaroglu on the six fundamental concepts of systems thinking does a great job at defining and summarising some of the key ideas that I would argue have become far more important and more broadly applicable in the complex adaptive  environment that businesses of all types now operate in. In the book we talk about how emergent strategies are increasingly needed to navigate effectively through complex scenarios and shifting contexts. So the basic principles of systems thinking have never been more relevant.

I’m writing this up for my own benefit but, as always, it’s worth reading the original.

One of the core concepts of systems thinking is interconnectedness. A system is ‘a set of inter-related components that work together in a particular environment to perform whatever functions are required to achieve the system’s objective’ (Donella Meadows). All elements in a system are therefore reliant on something else (and often a complex array of things) for survival:

‘…when we say “everything is interconnected” from a systems thinking perspective, we are defining a fundamental principle of life. From this, we can shift the way we see the world, from a linear, structured “mechanical worldview” to a dynamic, chaotic, interconnected array of relationships and feedback loops.’

The shift in mindset is therefore from linear to circular, and systems thinking seeks to untangle the relationships between these interconnected things.

If analysis is about breaking complexity down into manageable components and is therefore more reductionist and appropriate for the mechanical, linear view of the world, the goal in systems thinking is synthesis, or how the elements combine to create something new. So this requires an appreciation of not only the individual components, but the relationships and dynamics between those individual components, and how they combine to create the whole: ‘synthesis is the ability to see interconnectedness’.

Emergence is the result of things interacting and coming together to produce something different (I liked this quote from R Buckminster Fuller that Leyla used: ‘There is nothing in a caterpillar that tells you it will be a butterfly’). When elements interact in a system they create constant feedback loops between the components. These feedback loops can either be reinforcing or balancing. A reinforcing feedback loop can happen when elements in a system encourage more of the same thing, which is often not a good thing since ‘an abundance of one element can continually refine itself, which often leads to it taking over’. This reminded me of John Willshire’s ‘pattern problem’, which he expounded at the last Firestarters:

Conversely, balancing feedback loops are self-correcting and produce stability rather than bolstering more of the same (like a predator/prey situation in natural ecosystems). But dramatic changes in the ecosystem can turn balancing feedback loops into reinforcing ones.

In a dynamic constantly evolving system, understanding feedback loops and causality, or how elements influence each other, becomes important. When we map systems, we need to take account of not only the elements, but the connections, relationships and feedback loops between them. We can then develop insights around interventions or strategies that can shape the system in the most effective way.

It strikes me that this way of thinking is far more important now in business. Not least because value generation is less about rigid, linear processes and more about networked relationships. If businesses increasingly operate as part of more complex ecosystems we need to be able to map the component parts, to appreciate the relationship, feedback loops and causality between them, and how we can establish and orchestrate successful networks that work for everyone involved. We need to understand how intervening in one area impacts the dynamics in other areas.

Strategy is a loop, or a circle, not a linear process. Being agile and adaptive is not about replacing one rigid process with another. It’s about being responsive to shifting dynamics in increasingly complex environments.

For more like this, order your copy of Building the Agile Business Through Digital Transformation, or you can join our community to access exclusive content related to the book.

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Digital Transformation: We Need Missionaries, Not Mercenaries

By | AgileBusiness, Leadership, Teams | No Comments

missionaries

When it comes to transformation programmes, employee experience and engagement can often seem like something of an afterthought.

If digital transformation is 10% technology and 90% people (despite many thinking of it as the other way round) we need to pay far more attention to bringing people on the journey with us, and how we are changing the organisational culture in which change and agility can thrive, and the way in which we work. As this Paul Taylor piece adeptly puts it:

‘Digital transformation isn’t really anything to do with digital tools…It’s about redefining the concept of work itself.’

But we should also pay attention to the people that can actually champion change and make it happen. Irrespective of the level of seniority, this is the difference between leadership and management. There was a relevant metaphor that I particularly liked, used by the former Director of Product at Airbnb Jonathan Golden in his post on how they scaled Airbnb in the early days: Missionaries, not Mercenaries. He talks about how, when they were scaling and hiring rapidly in response to a new competitive threat, Brian Chesky (founder) was passionate about hiring people who really cared about what they were doing, and understood the need to build community around the burgeoning service.

In our book, we talk about but how bruising it can be to be the one/s that are asking the big questions, forging a new path and challenging the norms. More than anything you need determination and you need resilience to be the one at the forefront of change within a culture that does not want change to happen. Digital Transformation is as much a personal challenge and journey as it is a corporate one. That’s why you need missionaries. People who can see the change that’s needed and have the passion and enthusiasm to advocate it and bring it to life. People who believe in a compelling vision of what the company will be in the future and have the will and the energy to actualise it. People who are not afraid to challenge entrenched ways of thinking and doing and have the persistence to go against the flow.

Missionaries, not mercenaries.

For more like this, order your copy of Building the Agile Business Through Digital Transformation, or you can join our community to access exclusive content related to the book.

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A Model for Digital Transformation – Fast, Focused, Flexible

By | AgileBusiness, Culture, Strategy | No Comments

We’ve made a short film that reflects the fact that our book, Building the Agile Business, is structured around three key elements that we believe critical for digital transformation and organisational agility: Fast, Focused and Flexible. Represented as a formula, these components are counterbalanced by corporate, cultural and system inertia:

Fast:

This we define as a heightened pace and progression through continuous experimentation, a culture that supports processes such as Agile, Lean and Design Thinking, overcomes needless risk-aversion and enables exhaustive customer-centric innovation through the rapid origination, validation and commercialisation of ideas. But beyond this need, it captures the need to challenge the habits that over time make large businesses slow by design. The key point here is that it’s not simply about velocity, but actually more about manoeuvrability and responsiveness.

Focused:

This is about understanding what it truly means to be a customer-centric business, and then building organisational momentum through an enabling, agile and adaptive strategy with strong links to execution. We talk not only about the role of a clear vision and purpose in providing direction and removing unnecessary decision-drag, but also about why a curious, outwardly-looking perspective is key to maintaining the momentum. We need to challenge the hubris that brings arrogance with scale. We need to challenge the thinking that seeks to apply old thinking to new and transformational technologies. We need to be data-informed and not just data-driven,

Flexible: 

If digital transformation is 10% technology and 90% people (despite many seeing it as the other way round), we need to stop treating employee experience as the poor relation. The imperative becomes to create the culture, environment and structures to move fast: to structure for continuous innovation; to bring heightened fluidity to resourcing; to empower small, multidisciplinary teams to generate transformational ideas; to enable greater agility in decision-making and governance; to support a productive, collaborative culture characterised by autonomy, mastery and purpose.

Each of these elements is critical since they are mutually enhancing, but cannot work without the others:

With any transformation programme it is essential that we take a holistic approach to change. That’s why we wrote the book – to provide the ‘how’ of digital transformation and not just the ‘why’.

Agile Business: The Three Contexts Shaping the Need for Change

By | AgileBusiness, Culture, Customer Exprience | No Comments

What does ‘agile business’ really mean? Agile is already becoming an overused word inside many businesses and yet it is often poorly understood. Yes, Agile is a process but it is far more than that – in its broadest sense it defines a culture. And an opportunity for organisations to shape their processes, resources and priorities to become far more fit-for-purpose for the digital-empowered world in which they exist.

In our book we frame the need for this shift in terms of three key contexts that are changing more rapidly than ever: Consumer; Competitive; Company. It is the way in which these contexts are shifting that is shaping both the imperative for change and the pathway for achieving it. This is the difference between doing Agile and being agile

We’ve made a short video that is a brief introduction to our book, and captures these framing contexts:

For more like this, order your copy of Building the Agile Business Through Digital Transformation, or you can join our community to access exclusive content related to the book.