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Systems Philosophy and Science -- Addressing "Wholes"
Systems philosophy and science provides the perspective and basis for pragmatically dealing with the real world complexities of business organizations. Systems science provides the practical means to view and represent complex systems. A business is a complex social system.
Business model uniqueness can produce a highly effective competitive advantage while the inherent complexity of business models makes them very difficult to decipher and copy. The more sophisticated and synergistic the interactions of the parts of the business are, the greater the potential for competitive advantage. For a business to innovate its business design, it must have a capability to design, test, and implement increasingly complex models. To remain competitive, a company's business design must be transformed at a rate that matches or exceeds the rate of change in the business's environment.
Business Organizations as Systems
Viewing businesses as systems provides an effective means to understand, design, transform, and manage them. Using General Systems Theory (GST) perspective and techniques develops an understanding based on the business organization's systems characteristics. A system is a group of interacting, interrelated, or interdependent elements forming a complex whole. This "whole", maintains its existence through the mutual interaction of its parts. A system is contained in an environment. This environment gives the system its purpose. The system is also part of its environment. Remove the system from its environment and the environment changes. On the flipside, change the system and its environment changes.
Systems Thinking
A business is inherently complex due to interaction with its environment and the interaction of its parts. GST applied to understanding, designing, and managing businesses succeeds where traditional analysis based approaches typically fail. The thinking process associated with GST is synthesis, or systems thinking. Contrasting synthesis and analysis helps us to understand them both better.
Analysis Based Management
Most management tools in use today have some basis in analysis. Though analysis has served us well for centuries in understanding our world and developing our sciences, it has its limitations. Analysis, as a learning and problem solving approach, has formed the foundation of most management science education, theories, and techniques. These tools include such common techniques like SWOT, TQM, six-sigma, lean, and many, if not most, approaches to strategic planning. Using analysis, i.e. an analytic approach, for strategy development, typically will not produce a holistic solution. The solution tends towards incremental improvement vs. boldly identifying and addressing the current realities, challenges, and opportunities. Analysis, like most tools of management science, is neither good nor bad, but it has been over used and applied too broadly. When it comes to learning and understanding, synthesis and analysis are complementary techniques.
Analysis – Understanding the Parts
Analysis is a method that focuses on understanding the parts of something. The analytical process
- takes apart the thing to be understood,
- seeks to understand the behavior of the parts taken separately, and
- attempts to assemble the understanding of the parts into an understanding of the whole (Ackoff, 1999).
Application of this method to understanding a business organization is mixed at best. The last step of analysis, aggregating the parts, does not explain the characteristics of the whole. It simply aggregates the parts and the characteristics of those parts.
Synthesis – Understanding the Whole
Where the process of analysis has its limitations, GST has its strengths in the process of synthesis (Senge, 1990; Ackoff, 1999). Synthesis is a holistic approach that addresses understanding the whole and the interactions between the parts making up the whole. The synthetic (systems thinking) approach
- identifies the containing whole of which the thing to be understood is a part,
- explains the behavior or properties of the containing whole, and
- seeks to explain the behavior or properties of the thing to be explained in terms of its roles and functions within its containing whole (Ackoff, 1999).
Synthesis is the most effective means to holistically understand, design, and manage complex systems. The systems perspective of the business organization, in conjunction with systems thinking, provides the basis for a pragmatic approach to develop and deploy strategy.
Iterative Inquiry – Learning the Whole
Leveraged off the systems view of a business is iterative inquiry. This inquiry technique is a way of learning and designing particularly suited to business organizations. Iterative inquiry is an effective means of understanding and designing complex systems. This inquiry process is based on the principles of iterative inquiry (Singer, 1959; Gharajedaghi, 1999). These principles maintain that
- there are no fundamental truths,
- realities first must be assumed in order to be learned,
- facts and laws form an interdependent set,
- truth is not the starting point of an inquiry, but the ending point, and
- each iteration yields a greater understanding and more closely approximates the nature of the whole.
So what makes up the iterations? What does the inquiry process "iterate through"?
Aspects and Inquiry
Systems thinkers and management science practitioners have defined specific views of systems useful to understanding and designing systems (Ackoff, 1972; Gharajedaghi, 1999). For this discussion, these views are referred to as aspects. An aspect is simply a way in which a system can be viewed by the mind. The four aspects are purpose, function, process, and structure. Effective understanding of the system requires that we not only understand each aspect, but the aspects' relationships and interdependencies. Iterative inquiry provides for simultaneous differentiation and integration of the aspects by iterating through the investigation or design of each aspect while doing the same for the integration of these aspects.
Prerequisite to a Holistic Inquiry
Applying the aspect and inquiry process to a business enables a holistic understanding of the business organization as the socio-cultural system it is. Aspects help us to know what to look for before our inquiry begins and give us the form our answers will take. The importance of knowing ahead of time the form of the answer we are looking for is explained by Singer,
"It would be idle to set out on a search not knowing what one was looking for; it would be equally idle to seek the answer to a question of whose meaning one knew nothing. But one could have caught nothing of the meaning of the question, did he not know one thing about the answer; namely the form this answer must take." -- (Singer, 1959, p 109)
Said plainly, a person must know something about what they are looking for before they can find it. Using the construct of four aspects guides our inquiry to understand the whole of a business as a system, knowing the form the answer must take.
