Introduction
System thinking proposes a framework for the effective evaluation of elements of the system and the interaction between them. The approach can be defined as considering structures and events as part of a larger structure that has a unified and specific function (Ercil, 2020). The characteristics of the system depend on its components and, which is more important, the interaction between them. Thus, by applying system thinking, managers can develop projects that would contribute to the development of the overall corporate structure and be interconnected to achieve organizational goals.
Discussion
System thinking is connected to corporate strategy as it states that the system has a purpose. The approach is based on the assumption that all the components of the system should contribute to this purpose (Kim, 1999). Projects act as the system element serving the achievement of the goals set for the whole company. Thus, planning should be focused on developing strategies based on the projects that are interconnected and can bring different benefits to the company. Overall, the interaction of the projects and their outcomes can build the structure of the company contributing to its growth through system transformation.
System thinking became the basis of the approach to effective strategic management. Weissenberger-Eibl et al. (2019) underline that many organizations lack system thinking, which is critical for informed decision-making and strategic planning in a constantly changing business environment. Westover (2020) supports this assumption claiming that “good organizational change and development require a systems-thinking mindset and an interdisciplinary, holistic approach to tackling complex organizational challenges.” Therefore, system thinking is essential for any organization to develop and build a holistic structure that can move efficiently toward the goals set. Leaders that use systematic thinking are aware of the interconnectedness of the elements of the structure and evaluate the outcomes of the interaction between them. They also understand that each part of the system should have a specific place and serve the overall purpose.
In terms of corporate strategy, the systematic approach allows managers to examine the outcomes of the synthesis of various elements that interact in a nonlinear manner. Looking at the system that includes both internal and external environments makes it possible to create new solutions that take into account more diverse factors and interactions between them (Grewatsch et al., 2021). This phenomenon is called emergence, which is an important characteristic of system thinking (Westover, 2020). This concept comprises all the effects of interaction between different factors that cannot be easily predicted based on its components. Additionally, system thinking helps focus on the process rather than outcomes. This is important for corporate strategy as it allows the company to be flexible and spot potential problems on different levels of operations. Finally, system thinking helps consider alternative approaches and conditions, which is critical in the changing environment. Grewatsch et al. (2021) note that evaluating potential risks and planning for the long-term benefits of corporate strategy through the stimulation of innovative behavior and transformation of existing processes. System thinking allows managers to evaluate alternative approaches and their influence on the structure, which can lead to meaningful strategic changes.
Conclusion
A positive or negative event can grow into a vision or strategy by using feedback loops and labels. Feedback is critical for development as it “provokes thinking, reflection and then considered action” (Carless, 2019, p. 707). Feedback loops are circles when a system’s output is used as the input for subsequent operations (Westover, 2020). For example, the company may face such negative events as a product sales failure. Then, it should consider all the factors that contributed to the event, analyze it, and further use the insights gained in future product launches. Using this feedback loop, the company could develop an effective promotion strategy. Eventually, this process will help the company to minimize the risk of failure by identifying gaps and using feedback labels. Feedback labels can help to spot efficient decisions that lead to the gap decrease and apply them on a systematic level.
References
Carless, D. (2019). Feedback loops and the longer-term: Towards feedback spirals. Assessment & Evaluation in Higher Education, 44(5), 705-714. Web.
Ercil, Y. (2020). Systems and systems thinking. Trafford Publishing.
Grewatsch, S., Kennedy, S., & Bansal, P. (2021). Tackling wicked problems in strategic management with systems thinking. Strategic Organization, 1-12. Web.
Kim, D. H. (1999). Introduction to systems thinking. Pegasus Communications, Inc. Web.
Weissenberger-Eibl, M. A., Almeida, A., & Seus, F. (2019). A systems thinking approach to corporate strategy development. Systems, 7(1). Web.
Westover, J. H. (2020). The role of systems thinking in organizational change and development. Forbes. Web.