Introducing the concept of systems and its importance in management practices
We often hear the term ‘systems thinking’ in the context of ‘holistic approach’. As managers we are admonished to look at the ‘big picture’ which, in some sense, is facilitated by systems thinking; but often this pearl of wisdom is not accompanied by describing fully what is a system. In this article we shall introduce the concept of systems and its importance in management practices. Simultaneously we shall compare these various aspects with traditional management and attempt to highlight critical differences that engender superior outcomes when systems-based approach is adopted.
A Recap
Before we embark on a definition and further elucidation of systems let us quickly recapitulate the motivation for going beyond traditional management thinking. We have observed on several occasions that events are influenced, often substantially, by events or factors that may be temporally and/or spatially separated from the event itself. We had given the example of a sudden non availability of toilet papers in the US that, somehow resulted from a virus generated in China, ten thousand kilometers away!! Another rather painful instance is how cutting trees vitiates the environment with unfortunate concomitants. As they say, the flapping of butterfly wings in Shanghai causes a storm in California!!! In other words, we find that we essentially encounter, in our quotidian existence, a densely interconnected reality and this fact impinges significantly, on all our activities.
Traditional Management Approach
Traditional management, the predominant way of tackling managerial situations in today’s world, does not recognize these inter connections. For each element in the environment the interconnections collectively constitute its context. Management studies derives much of its process from those of science and science does not exclusively consider the context. For instance, a scientist, when he or she carries out an experiment in a laboratory, the actual context is disregarded. In fact, to gain acceptability in scientific circles an event or idea has to be agnostic to the context. The measure of gravity is the same, within certain tolerance, everywhere in the world, or combining two chemicals should yield the same compound whether it is in Mumbai or anywhere else. If this condition is not met we do not accept the authenticity of the findings.
Inheriting our methods of inquiry from this way of thinking we naturally miss out on any factors in the environment. A message being circulated over WA for some time now describes this rather well. It narrates how a teacher walks into a classroom and declares that he is going to take a test. He hands over a white sheet of paper to each student with the instruction that it should be turned and seen only after he gives clearance, which he soon does. Students find this side of the paper is another white sheet with a single black dot on it with an accompanying direction to the students to describe what they see. All the students wrote about the dot and no one mentioned the encompassing whiteness of the sheet of paper. Clearly, we are programmed to spot the dot and ignore the surrounding white sheet and that is precisely why we are often oblivious to the circumambient factors.
Summarizing the above, our training as well as our inherent tendencies appear to restrict our vision to the event at the cost of losing out on details of the context. Yet we find a plethora of interconnectedness among elements of any particular situation reinforcing the importance of context. Clearly, we need a different perspective that is in greater harmony with the external reality we encounter.
Managing in an Interconnected world
It is in this context that the concept of systems needs to be understood. The immediate problem is the word ‘systems’; it has been used in a multitude of situations and in each case the meaning is different from others. However, in this context system is defined thus: System is composed of elements that are interconnected and collectively form one whole. An additional defining aspect is its openness to the environment. An open system exchanges matter, energy and information with its surroundings and continually adapts and reconfigures itself, accordingly.
Adoption of a systems approach requires us to view each situation or event along with its context.
To illustrate this aspect let us consider a study aimed at assessing the efficacy of the existing road transport system of a city. The usual approach would be to check the critical performance metrics of the organization, such as passenger kms, cost, revenue, maintenance costs and practices, late arrivals of buses, number of accidents, number of passengers ferried, cost of fuel, absenteeism, hours lost due to accidents, number o persons maimed and killed due to mishaps, how do operational parameters compare with those of comparable cities and towns, inter-bus timings, average salaries and so on. Comparing the performance as revealed by these metrics, we would deliver a judgement on the working of the transport organization.
Systems approach would however adopt a different path of investigation. The transport system is embedded in the city and the first step in this investigation will be to assess the appropriateness of the system under study to meet the pertinent requirements of the containing system. To elucidate further, the particular question asked will be “does the existing system address needs of the city?” We all know that cities are different from one another as are their requirements and hence the first assessment of the performance is whether or not the transport system satisfies requirements of the particular city. If and only if it does meet those requirements should we proceed to assessing other parameters that were mentioned earlier. Does it cognize with peculiarities or specialties of the geography, population mix, does it integrate with other forms of transport and so on. At the risk of stating the obvious, systems approach requires one to assess the extent to which the system under scrutiny is able to successfully perform the role expected of it in the context of the larger system in which it is contained.
In an interconnected world that we experience everyday a reductionist approach is inadequate and, in my opinion, fallacious because it can, and often does, lead to erroneous conclusions. Take another instance, when we carry out our activities oblivious to interconnections that characterize the environment. We then perform those tasks that are required exclusively for the task at hand. While that is necessary but is it sufficient to ensure success? It is often not sufficient and that is why most initiatives, particularly large ones, fail to live up to the original promise.
In conclusion it is necessary to declare that our world today is closely interconnected and we need to recognize this fact and incorporate this in all activities that we undertake. Traditional management methods, based largely on those adopted by science, are reductionist in nature and clearly inadequate.
The Systems concept which views entities along with their context and thereby captures these interconnections is therefore the appropriate for today’s reality.
I would like to add that interconnections in our technology-enabled world is not only high today but is on the rise in the foreseeable future and hence systems approach is not an option but is the only option. Implications of this is huge and we shall, in the next few articles, attempt to highlight these.
[author title=”Prashun Dutta” image=”https://dev.et-insights.com/dev/wp-content/uploads/2020/10/Prashun-Dutta.jpg”]Prashun has around 35 years of varied corporate experience, former CIO at Reliance Infrastructure and Tata Power, an Electrical Engineer and a fellow in Management of the IIM(C). He is well known for his contribution to the electric utility sector where the systems implemented by him at RInfra and Tata Power have been adopted throughout the country. He is now a freelancing consultant to corporates.[/author]
