Systems thinking is revolutionizing the organizational sciences, just as it is challenging all the other sciences. If we consider the organization to be a living system, then organizational problems and opportunities are viewed in an entirely new way. For example, a high-performing individual might be creating dysfunction within his or her work group. Similarly, an award-winning department might be the cause of organizational decline. And a financially successful organization could be polluting its natural environment.
Interestingly, systems thinking can lead to principles that transcend a particular area of study. For example, the Japanese often study natural systems (i.e., a river) to guide them in the design and improvement of interorganizational systems (i.e., a supply chain). Similarly, Margaret Wheatley has used systems insights from the study of quantum mechanics to better understand the proper functioning of organizational systems. 1
Systems thinking requires us to consider the subsystems and components within an organization, and the organization as a subsystem within its larger environment. Organizations vary in terms of their levels of openness to the environment, and systems thinking suggests that a balance must be struck between maintaining some boundaries with the environment and assuring that those boundaries are somewhat porous. A classic systems problem is that the organization is not listening enough to its current customers (it is too closed), or that it is listening too much to its current customers, or what Clayton Christensen calls the innovator’s dilemma. 2
Systems thinking also requires us to consider the aim of the system and to what degree the members of the organization, or larger society, align with the overarching aim. Chris Argyris eloquently describes how individuals often have both espoused aims and actual aims; and how the key to individual health and productivity involves minimizing the distance between what is espoused and what is actual. 3
The stakeholder versus stockholder perspective of organizations also deals with the aim of the organizational system. For some managers and theorists, maximizing shareholder wealth is the sole purpose of the corporation, and by doing so the overall economic system, of which the organization is a part, benefits. However, other managers and theorists suggest that there are multiple social actors inside and outside the organization with a “stake” in the functioning of the organization, and that no one stakeholder is more important than any other. Systems thinking enable managers to sort out this difficult, value-laden issue.