ST4S39-V1 Strategic Systems Thinking

Assessment 1
Rasha Elbanna
R1805D5376972
Tutor: Pedro Longart

MBA - Master of Business Administration V2

Module- ST4S39-V1
07/11/2018

FACULTY OF BUSINESS AND SOCIETY

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ST4S39-V1 Strategic Systems Thinking

Abstract

The purpose of this essay is to critically appraise the statement “Systems thinking

essentially seeks to understand phenomena as a whole formed by the interaction of

parts”. (Stacey 2011). In this essay, will try to explore the evolution of system thinking

together with its different approaches as well as the different views on Complexity and

how it affects the outlook about Strategy

Introduction

The need to understand strategy and its application has become of great importance

recently. Although it is not always said but, application of Strategy has been involuntary

in use, on daily basis either on personal base or in organizations. In Strategy: A history

(2015), Freedman stated that ‘Strategy is important because the resources available to

achieve these goals are usually limited’.

One of the most common definitions for strategy

"Strategy is the direction and scope of an organization over the long term which

achieves advantage for the organization through its configuration of resources within a

changing environment to meet the needs of markets and to fulfill stakeholder

expectations." (Johnson,G., Scholes,K. and Whittington,R.,2008) .

Strategy involves two activities one is strategic thinking and the other is strategic

planning. These two activities were differentiated, according to Mintzberg in the pattern

of thinking .Mintzberg proposes that strategic planning requires thinking in an analytical

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and sequential manner .On the contrary strategic thinking requires inherent and

unlimited / unrestricted perceptions associated with organizational future.

Moreover, as the world faces continuous economical, political and technological

changes, that have become highly tangled leading to globalization eventually leading to

a complex system, the need for understanding of strategy together with system thinking

as a means to approach strategic management has become crucial. The aim of this

essay is to critically appraise the statement “Systems thinking essentially seeks to

understand phenomena as a whole formed by the interaction of parts”. (Stacey 2011).

In this essay, will try to explore the evolution of system thinking together with its different

approaches as well as the different views on Complexity and how it affects the outlook

about Strategy. Accordingly, the use of complex adaptive system in modeling

complexity and the practical perspectives. In the coming decades, the world will be

facing complexity therefore Systems thinking is extensively accepted critically handling

this issue .

Strategy Management and Strategic Thinking

The ability to define organizational strategy is simply strategic management. It is as well

the possibilities or alternatives framed by managers to establish strategies and to

achieve best performance of an organization and eventually achieve the goals set. The

process of strategic management is compromised of four steps. When placing a new

strategic management plan these steps move in a progressive manner as shown below

in Fig 1.

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Environment scanning: It is an action of collecting, scanning of data internal and

external, then analyzing and evaluating it for strategic purpose.

Strategy Formulation: it is the process in determining the best approach or scheme to

attain organizational goal and purpose.

Strategy Implementation: It is the task or transaction of placing the preconceived

strategy in action. This stage includes outlining of organization’s structure, distributing

resources, developing decision making process, and managing human resources .

Strategy evaluation: This is the conclusive step of strategy management which

includes evaluation of internal and external factors that are the cause for the current

strategy. This is done through measuring performance; as well as corrective actions

required .The action of evaluation ensures organizational strategy is implemented in a

manner that meets the organizational objectives.

Fig 1: Components of Strategic Management Process (MSG-Management Study Guide)

Strategy development is either planned (deliberate/ intended) or emergent. According to

Johnson, Whittington and Scholes (2011) explain how the intended strategy comes

about as the result of Top Management’s deliberations. This is known as the rational/

analytic view of strategy development, or, a design view of strategy development.. ‘Its

development may also be associated with the use of the sort of tools, techniques and

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frameworks for strategic analysis and evaluation’ (Johnson et al, 2011:394). On the

other hand ‘Emergent strategies do not develop on the basis of long-term planning but

rather they emerge over time. This kind of strategies emerge as a series of decisions, a

developing pattern in which becomes clear over time (Johnson et al, 2011:394). Often,

this type of strategies emerges when deliberate strategies fail.

Henry Mintzberg identified 10 schools of Strategic Managements thoughts.

The Design School: Strategy formation as a process of conception. This school is clear and

unique and designed for steady process. This school is limited to stable environment which is

not applicable for highly changeable, complex environment.

The Planning Process: Strategy formation as a formal process. Accurate steps are being

taken from situation to implementation of the strategy. This school reflects controlled action.

Moreover there is a secure use of resources as well as analyst predict through scanning facts. It

is based planning, system theory and cybernetics. This school considers strategy as too static.

The Positioning School: Strategy formation as an analytical process, The positioning

school strategies are grounded on the outcome of computations done by the analysts,

who are oversee the market with respect to the goal of the organization. The concepts

of this school are based on military strategy as well as economical / industrial strategy.

Its limitations are similar to the planning school as well as it is number oriented and

neglects power culture and social elements. This school considers that the external

environment (market) is unchangeable.

The Entrepreneurial School: Strategy Formation as a visionary process. This school

can be considered as the sixth sense or the divination way of laying down a strategy.

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This is mainly a characteristic of charismatic leader who the decisions rely on intuition,

judgment, wisdom, experience and insight. This school would be considered as a one

man show, where the leader takes full responsibility i.e. the light of success or the

darkness of failure.

The Cognitive School: Strategy Formation as mental process. This is a psychological

approach , which depends on how individuals perceive and process information. The drawback

of this school is that it depends highly on market research and surveys. Therefore, plans are

formulated as result of these surveys. With a fast pace, changeable market it is quite difficult to

rely completely on market surveys for decision making tool.

The Learning School: Strategy formation as an emergent process. The school depends mainly

on past experience, i.e. what we learnt from our experience. Such organizations are considered

almost monotonous with just few adjustments. In this school there isn’t a real change or

creativity in strategy. As the market or organizational external environment is continuously

changing it is not advisable to depend only on past experience.

The Power School: Strategy Formation as a process of negotiation. The power school outlines

strategy according to political processes of negotiation, power, and/ or group/ individual

interests. Strategy modeled using power and politics. This school can be very risky, if there is

no more democracy or power is centered within a leader or few people, and the action of

listening is very limited. This would cause very slight or no improvement with such

organizations.

The Cultural School: Strategy formation as a collective process. Within the cultural school,

strategy formation is a birth of collective action between members of an organization while

considering organizational values and culture. In this school the various departments within an

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organization would play a role in setting strategy. One of the limitations of this school is that

people are resistant to cultural change.

The Environmental School: Strategy formation reactive process. The name of school explains

the nature of this school which depends on environment factors i.e. it is a situational oriented

school. As this school is dependent on changes in environment, it would be a burden process,

to have continuous change in strategies.

The Configuration School: Strategy formation as a process of transformation. The

configuration school can be considered as the nine in one school. This school contemplates all

the above nine schools. It would be a preferable alternative to employ a blend of the nine

schools rather than using just one. As Organizations undergo cycles of stable phases, disturbed

phases and transitional phases this school might be the most favorable school in setting

organizational strategies.

The ability to plan for future is the simplest definition of Strategic Thinking. Liedtka

identified five elements of strategic thinking as follows:

1. Systemic perspectives: Strategic thinking is constructed on the basis of a system

outlook. A strategic thinker should envisage the system holistically and inter-relate

its integrants. This can be incorporated through systemic approach.

2. Objective/ Target Oriented: Strategic thinking will aim at deepening understanding of

the organization and directing the organization and individuals as well as resources

to achieve its goals.

3. Intellectual opportunism: Identifying opportunities and make a virtue of it

is a fundamental concept in strategic thinking. This characteristic would need

acceptance of new views as well as new experiences .This can be achieved through

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understanding of situation and analyzing it in the appropriate manner as well as

listening to various opinions and continuous adoption of new strategies.

4. Thinking in Time: Strategic thinking is the ability of thinking of the past, present and

future of the organization in a manner that would let me get the best outcome from

these inputs and deal with the current situation in ideal way that determine or realize

that this action has a positive outcome on the future of the organization.

5. Hypothesizing: This factor is highly connected to strategic thinking which in turn

requires high levels of creativity as well as analytical traits. This can be achieved

through the use of analytical tools.

System/ system classification

System is defined in the dictionary as a set of things working together as parts of a

mechanism or an interconnecting network; a complex whole. With time the concept of

system evolved great deal classifications. Kenneth Boulding (Boulding 1956) classified

it into 9 elements which includes Structures (Bridges),Clock works (Solar system),

Controls (Thermostat), Open (Biological cells), Lower organisms (Plants), Animals

(Birds), Man (Humans), Social (Families) and Transcendental (God). Bertalanffy (1968)

divided systems into nine types, including control mechanisms, socio-cultural systems,

open systems, and static structures. Miller (Miller 1986) offered cells, organization, and

society among his eight nested hierarchical living systems levels, with twenty critical

subsystems at each level. Similarly, Peter Checkland (Checkland 1999, 111) divides

systems into five classes: natural systems, designed physical systems, designed

abstract systems, human activity systems and transcendental system.

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A system is characterized as follows: 1. Organization: It is a way of arrangement of

integrants within a system to achieve a set purpose. 2. Interaction: It is the fashion how

integrants within a system interact together. 3. Interdependence: It refers to dependency

of the different integrant of the organization, as well as coordination and linkage

according to a scheme to perform a certain function. 4. Integration: It refers to the

holism of systems. 5. Central Objective: A system should have a central objective.

System Thinking

“Systems thinking [is] a way of thinking about, and a language for describing and

understanding, the forces and interrelationships that shape the behavior of systems.

This discipline helps us to see how to change systems more effectively, and to act more

in tune with the natural processes of the natural and economic world. (Senge,1993).

System thinking is concerned with system mastery and comprehending the interrelation

between the different components that constitutes the whole system. This concept was

developed early in the 20th century in fields of organismic biology, ecology, psychology

and cybernetics (Capra, 1997). Bertalanffy (1950) modeled what is so called the

General System Theory which included parts/ wholes/ sub-systems, system / boundary/

environment, structure/ process, emergent properties, hierarchy of systems, positive

and negative feedback, information and control, open systems, holism, and the

observer.

System Thinking is a great shift from the old fashion business management to the

disintegration of system into small units. This character of system thinking makes it

significantly beneficial in resolving most of the tough obstacles even those which covers

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complex issues. System thinking explores the correlation between the constituents of a

system, to envisage the function of the system and therefore picture the image as a

whole. Application of this, would aid in formulating the correct pattern that suits the

organization and therefore apply best practices.

According to Meadows (2008) system thinking is composed of three items: elements

(characteristics), interconnections (the way these characteristics relate to and/or feed

back into each other), and a function or purpose.

Strategy and System Thinking

The application of system thinking is certainly a prominent approach in leverage and

implementation of strategies. System thinking is technique of analyzing current

strategies and resetting new ones that overcome continuous environmental changes or

hard times. System thinking is the manner of understanding complicated systems

through its virtual fragmentation into small pieces as well as understanding how these

fragments are interconnected. Understanding such process would consistently assist in

modulating organizational approach.

Complexity and Complex Adaptive System

The Theory of Complexity does not have a specific definition, but several theories

arising from various natural sciences studying complex systems, such as biology,

chemistry, computer simulation, evolution, mathematics and physics. Complex adaptive

system is compromised of several individual parts or agents that follow simple rules with

no leader for coordination. The interaction of these individuals induces emergent

sequence. Any change in the system, the system adapts. The word “complex” implies

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diversity, through a great number, and wide variety of interdependent, yet autonomous

parts. “Adaptive” refers to the system’s ability to alter, change, and learn from past

experiences. The “system” portion refers to a set of connected, interdependent parts; a

network. The best example of a complex adaptive system the human body which

adapts to change in the body, for example an infection in any of the body organ would

reflect a general fever. In this examples the body organs present the pieces which

generate with no leader but would parallel react to an emergent factor like infection of a

single organ (piece ) through general fever (an alarm) that affects the system as whole .

This alarm (fever) produces a reactive process as in the environmental school to treat

the cause through setting a strategy of treatment.

Strategy as Practice

‘Practice’ is a very distinctive theory which enables researchers to employ in a direct

communication with practitioners. Studying practices enables one to examine issues

that are directly relevant to those who are dealing with strategy. Since early 2000

strategy as practice (SAP) has emerged as a distinctive approach for studying strategic

management, strategic decision-making, strategizing, strategy-making and strategy

work (Whittington 1996; Johnson, Melin and Whittington 2003; Jarzabkowski, Balogun

and Seidl 2007). Strategy as practice is considered as a substitute to the ordinary

strategy exploration through its effort to switch awareness away from a ‘mere’ focus on

the outcomes of strategies on performance alone to a more comprehensive, in-depth

analysis of what actually takes place in strategy formulation, planning and

implementation and other activities that deal with the thinking and doing of

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strategy. Strategy as practice is a fast growing division of research in the business

strategy discipline that attempt to understand how it is that strategists work by focusing

on the micro-activities of strategists rather than strategy at the organizational level. If we

take the above example of the human body as a system and fever as an alarm to an

effect to a defect to an integrant (organ of the body), and considering medication as the

strategy and the doctor as the strategist. If we assume that this medication does not

make the expected effect, the physician (the strategist) will have to re-analyze the

factors (the environment) and implement a new strategy (medicine).

Conclusion

I do agree that “Systems thinking essentially seeks to understand phenomena as a

whole formed by the interaction of parts” .Looking at a system from a holistic outlook is

of great importance in avoid defective strategic action alongside with the system

(organization) interaction with external environment and how the they affect each other.

It is as well essential to learn from strategy practice which could be through self

experience or general market or environment experience.

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Reference

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Boulding, K. (1956 ) ‘General Systems Theory: Management Science’, 2, 3 (Apr. 1956)

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Systems Research, vol. 1, 1956.

Capra, F., (1997) The Web of Life: A New Synthesis of Mind and Matter. Flamingo,

London.

Checkland, P.B. (1999) Systems Thinking, Systems Practice. Chichester, UK: John

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