The Significance of Systems Thinking in Crafting Strategy

by Aug 29, 2023Advisory Groups, Business, Entrepreneur, Growth, Strategy

It is imperative to strengthen this capability within your organization in order to effectively navigate the growing intricacies of today’s world. The global landscape is constantly evolving, accelerating, amplifying the challenges posed by the fast-paced nature of commerce and globalization.

This increase in complexity has a direct impact on strategy development. We create strategies to chart a path that allows our organization to win in the market and create success for our people.

Creating strategies, especially long-term plans, is a critical component to the success of every organization. That’s why creating those strategies usually falls to members of the C-suite and other executives. After all, the people at the top of the organization have the best macro view of the business, right?

Probably not. The truth is that not everyone is wired to think the way you need to develop viable strategies that account for all the complexity in the world. It’s a rare skill despite countless people claiming they are strategic. And it might be time for you to change up the team members you rely on to develop your strategy.

Let me explain.

A Complex Landscape

The core of a good strategy is first developing an understanding of the landscape you are creating your strategy around. This is the canvas on which you are painting your strategy.

If you want to paint an accurate picture of your market, you need to find people in your organization who are skilled at systems thinking. Systems thinking is strategic thinking.

In other words, you need to incorporate all the variables that impact your market, like price, competitors, regulation, technology, human capital, and how they depend on each other and interact. This messy mix needs to become the backdrop of your strategy if you want it to succeed.

It’s an incredibly difficult task that’s gotten harder and harder to do as the world has become more complex. Things used to be easier when the pace of change was slower. If you were off a bit, you could often adjust.

But that’s not true today. If you want to build a quality strategy, you need to create an accurate system for the world around you to gauge whether your strategy will work.

The better the mental model of the world you have because of systems thinking, the better your strategy will be.

Help Wanted: Systems Thinkers

But now we need to address the elephant in the room. Most people are not good at systems thinking. It’s important to understand the distinction between someone’s intellectual capacity and their ability to understand how a wide range of variables and dependencies will continue to change over time.

The more you can understand these dependencies over long time horizons, the better off you will become. But this isn’t how most people are wired.

Let’s think through an example. Let’s say your business strategy involves shifting away from brick-and-mortar sales into online selling. How many on your team can digest and process the litany of issues involved with this shift over time, such as dealing with more complicated logistics, a different regulatory environment, people, and technology issues? These issues are interconnected and will continue to play out over multiple years.

Part of your job as a leader is to assess which team members have the mental complexity and systems thinking to paint this picture. Unfortunately, it’s not a skill that can be learned. It’s a gift; you either have it or you don’t.

Part of the problem is that this skill isn’t tied to titles. Your VPs, who might have bigger jobs, might not be wired this way.

But you may have people who can think through complex variables deeper in your organization. And it’s your job to find them.

You need to find ways to identify your best systems thinkers and make sure they are around the table when you’re setting your strategy. For this search, the title doesn’t matter. I’ll share some techniques for how you can go about finding systems thinkers in an upcoming post.

A Different Way to Think About Strategy

The key takeaway is that the secret to building a winning strategy is leaning hard on systems thinking to help you chart out a complex world and how your organization can thrive in it. But not everyone has the skills of a systems thinker–which is why many strategies fail, especially in the long run.

If you want to chart your path into the future successfully, the more systems thinkers you can put on the job, the better off you will be.