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SCMS Journal of Indian Management , October-December, 2010. 5
A Quarterly Journal
Sy s t em Th i n k i ng , an agen t o f i n t eg r a t i on and enab le r o f e f f ec t i ve dec i s i on mak i ng fo r pe rmanen t
so l u t i on s o f t h i s comp lex wo r ld , h a s deve loped a s an impo r t an t t oo l f o r s t r a t eg i c p l a nn i ng and
dec i s ion mak ing . The concepts o f sys tem th ink ing tend to rega rd s t r a teg ic p lann ing by cont r ibu t ing
a t i n i t i a l l e v e l o f t h e p r o b l e m a n d e x p l o r i n g a l l p o s s i b l e r e a s o n s f o r t h e s a m e g o i n g d o w n t h e
mu l t ip le leve l s o f con t r ibu t i ng f ac to r s . An i n teg ra t ion o f sys tem th ink ing and s t r a teg ic p l ann ing w i l l
e n h a n c e t h e s o l u t i o n c a p a b i l i t y b y p r o v i d i n g b e t t e r s o l u t i o n s a n d p r o v i d i n g e f f e c t i v e p l a n n i n g .
Th i s conceptua l pape r p rov ides a sound d i scus s ion on the Sys tem Th i n k i ng by t a k i ng an i n -depth
look a t i t s o r i g i n s , concept and imp lementa t ion s t r a tegy .
A b s t r a c t
T
System Thinking: Strategic Planning
Arush Batra, Prabhakar Kaushik, and Leena Kalia
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M r. A r u s h B a t r a , L e c t u r e r, M B A D e p a r t m e n t , H a r y a n a E n g i n e e r i n g C o l l e g e , C o u r t Ro a d , J a g a d h r i - 1 3 5 0 0 3 , H a r y a n a , E - m a i l : a r u s h b a t r a @gma i l . com
P r o f . P r a b h a k a r K a u s h i k , M e c h a n i c a l E n g i n e e r i n g D e p t . , H a r y a n a Eng ineer ing Co l lege , Yamunanaga r, Jagadhr i -135003, Har yana , E -ma i l : pa rbha ka r k au sh i k@yahoo .com
M s . L e e n a K a l i a , L e c t u r e r, M B A D e p a r t m e n t , N a t i o n a l I n s t i t u t e o f Te c h n o l o g y , K u r u k s h e t r a - 1 3 6 1 1 9 , H a r y a n a , E - m a i l : l e e n a . k a l i a 8 7 @gma i l . com
he rea l o r i g i n s o f s y s tem th i n k i ng a re s t i l l ve r y
controversial and it is believed that it emerged and
established itself as a trans-discipline in the 1940s and
ear ly 1950s. The
foundation of System
Thinking was laid in the
field of system dyna-
mics, founded in
1956 by MIT Professor
Jay For rester. He
recognized the need
for a better way of
test ing new ideas,
and in the same way
the ideas can be
tested in f ie ld of
management espe-
cial ly strategic pla-
nning. The concept
of System think ing
helps people in understanding the systems problems and
finds a solution to those problems by finding out the root causes
of the problem and considering all of them as a whole system,
and improve their
understanding of pla-
nning systems. Accor-
ding to Hammond,
systems theory is the
one metaphor that
highl ights the rela-
tionships and inter-
connections among
the biological, ecolo-
gical, social, psycho-
logical, and techno-
logical dimensions of
our increasingly com-
plex lives. Notable
scientists in the field
of systems thinking
SCMS Journal of Indian Management , October-December, 2010. 6
A Quarterly Journal
are Ludwig von Bertalanffy, Kenneth Boulding, Ralph Gerard and
Anatol Rapopor t, Wiener, Shannon and Weaver, John von
Neumann and Laswell.
On the other side Strategic management as a discipline originated
in the 1950s and 60s. Although there were numerous early
contributors to the literature, the most influential pioneers were
Alfred D. Chandler, Philip Selznick, Igor Ansoff, and Peter Drucker.
In 1957, Philip Selznick introduced the idea of matching the
organization’s internal factors with external environmental
circumstances and now we call this as SWOT analysis. Alfred
Chandler recognized the importance of coordinating the various
aspects of management under one all-encompassing strategy
and he also stressed the importance of taking a long term
perspective.” Igor Ansoff built on Chandler ’s work by adding a
range of strategic concepts and inventing a whole new
vocabulary. Peter Drucker was a prolific strategy theorist, author
of dozens of management books, with a career spanning five
decades. His contributions to strategic management were many
but two are most important. Firstly, he developed the concept
of management by objectives and secondly he helped in
predicting the importance of intellectual capital.
System Thinking Approach and Strategic Planning
System thinking is a holistic way of thinking, fundamentally
different from that of traditional forms of analysis in which the
observer considers himself the part of reality as a whole system.
System thinking resists the breaking down of problems into its
component parts for detailed examination and focuses on how
the thing being studied interacts with the other constituents of
the system - a set of elements that interact to produce behaviour
of which it is a part. By examining the links and interrelationships
of the whole system, patterns and themes emerge which offer
insights and new meaning to the initial problem. This means that
instead of taking smaller and smaller parts or view of the system
taken for study, it actually works by expanding its view by taking
into account larger and larger numbers of views or parts of the
system. This procedure sometimes results in strikingly different
conclusions than those generated by traditional forms of analysis,
especially in those cases which are more complex or are having
dependence / feedback from other sources i.e. internal or
external.
The character / nature / approach of systems thinking makes it
extremely effective on the most difficult types of problems to
solve: those involving complex issues, those that depend a
great deal dependence on the past or on the actions of others,
and those stemming from ineffective coordination among those
involved and some of the examples in which system thinking
has proven its value include:
♦ Complex problems that involve helping many actors
see the “big picture” and not just their part,
♦ Recurring problems or those that have been made
worse by past attempts to fix them,
♦ Issues where an action affects (or is affected by) the
environment surrounding the issue, either the natural
environment or the competitive environment, and
♦ Problems whose solutions are not obvious,
There are cer tain laws which are related to system thinking
and which help in understanding and solving the problems in
a better and effective way. These laws are stated as:
♦ Today’s problems come from yesterday’s solutions,
♦ The harder you push, the harder the system pushes
you,
♦ Behaviour grows better before it grows worse,
♦ The easy way out usually leads back in,
♦ Cause and effect are not closely related in time and
space,
♦ Small changes can produce big results,
♦ Dividing an elephant in half does not produce two
small elephants,
♦ You can have your cake and eat it too, and
♦ Faster is Slower.
SCMS Journal of Indian Management , October-December, 2010. 7
A Quarterly Journal
The System Thinking Approach has a set of defined moves or
indicators [5] which help in defining and solving the problems
in a better way. These indicators are underlined as following:
♦ Define the Situation, ♦ Develop Patterns of Behaviour, ♦ Evolve the Underlying Structure, ♦ Identify the factors contributing to the underlying
structure,
♦ Identify the Leverage Points, ♦ Develop an Alternate Structure, and ♦ Find solution to the problem.
Areas of Application
Strategy
System thinkers have been interested in strategy for a long time.
Some of the early texts on strategic planning were written by
prominent systems experts. A first look / glance at these early
works by the system experts seem to give the impression that
system thinking and strategic thinking were almost similar or we
can say synonymous. But now a days, it is currently argued that
system thinking has much to offer in strategic planning or
development. Ackoff was the first and foremost to propose an
unambiguous system approach to strategic planning. His major
contribution was that the strategic decisions were generally
messed-up, often characterised as an interactive system of
related issues. Others have also highlighted and contributed in
this observation for example, the context for strategy has been
defined as wicked problems. From the system literature, Ackoff
(with his concept of corporate planning) provided ingredients
and the first recipe for a rational approach required to develop
strategy. System thinking in strategy has integrated ideas from
various theories and regarded strategic decision making as
complex, which involves different issues and many interacting
factors stakeholders.
Strategic Planning is an organization’s process of defining its
strategy, or direction, and making decisions on allocating its
resources to achieve defined objectives, including its capital
and people. Various business analysis techniques can be used
in strategic planning, including SWOT analysis (Strengths,
Weaknesses, Opportunities, and Threats ), PEST analysis (Political,
Economic, Social, and Technological), STEER analysis (Socio-
cu l t u r a l , Techno log ica l , Economic , Eco log ica l , and
Regulatory factors), and EPISTEL (Environment, Pol i t ica l ,
I n f o r m a t i c , S o c i a l , Te c h n o l o g i c a l , E c o n o m i c a n d
Lega l ) .
St rateg ic plann ing is the formal cons iderat ion of an
organization’s future course. All strategic planning deals with
at least one of three key questions:
1. “What do we do?”
2. “For whom do we do it?”
3. “How do we excel?”
The Strategic Planning process is as following (Figure 1):
Figure 1: Process of Strategic Planning
Control
ProblemProblemProblem
Implementation
Strategy Formulation
Analysis
Mission and Objectives
▼
▼
▼
▼
▼
SCMS Journal of Indian Management , October-December, 2010. 8
A Quarterly Journal
How does System Thinking Contribute to
Strategic Planning?
After studying the concept of system thinking and strategic planning, it is the time for taking a real life situation to draw causal loop diagrams considering all the parameters and rules for developing them explain their impor tance and show the effect and contribution of system thinking in strategic planning. We will take two different examples and show the difference in solutions to the problems through s t r a teg i c p l ann i ng app roach on i t s own and w i t h contribution of system thinking approach and strategic
planning.
Problem 1: Problem of Road Congestion
and Accidents
Strategic Planning Approach without
System Thinking
Firstly using the strategic planning approach (Figure 2) to solve
the problem and for that we will define the mission and
objectives of the problem, do the required analysis to find out
the sources of problem and then formulate our strategy by
implementing it.
Road Congestion and
Accidents ��
Large Number of Vehicles
Heavy Vehicles Bad Quality Vehicles
Speedy Vehicles
�
�
Causes/Reasons of Problem have been identified resulting
into formulation of strategy with listed corrective actions /
measures:
♦ Repair of Bad Quality Roads, ♦ Putting Speed Limit Barriers, and ♦ Entry Barrier for heavy vehicles during traffic hours.
But these solutions don’t have the permanent solution of the
problem as the root causes for the same have not been identified
and will lead to fur ther traffic chaos and advancement in the
problem as the system will push back harder as per the law of
system thinking.
Figure 2: Reasons for Road Congestion and Accidents (Strategic Planning Approach)
System Thinking Approach Contribution
With Contribution of System Thinking Approach (Figure 3), we
have been able to identify all-together different reasons for road
congestion and accidents and to avoid these problems or
contributors; strategy will be formulated with listed actions:
♦ Compulsory Implementation and Introduction of Road Education,
♦ Strengthening of Judiciary system to avoid favourism, wrong suppor t and give heavy punishment to
offenders.
SCMS Journal of Indian Management , October-December, 2010. 9
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♦ Strengthening and Drawing up of better and new government policies for traffic management, to avoid
and stop illegal licensing of private vehicles,
♦ Providing improved Infrastructure facilities to avoid congest ion and Implementat ion of ru les and
regulations.
Figure 3: Finding Actual Problem Contributors through System Thinking
SCMS Journal of Indian Management , October-December, 2010. 10
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Problem 2: Problem of Decreased Viewers of
a TV Channel
Strategic Planning Approach without System
Thinking (Figure 4)
Reduced Programme
Story ��
Less Advertisement
Channel Connectivity
Problems
Change of Characters or
Story
Competitors Programme
Popularity
�
�
Figure 4: Reasons for Reduced Programme Viewing (Strategic Planning Approach)
Identification of causes of decreased viewers of the TV
channel is done resulting formulation of strategy with listed
set of actions to remove those causes:
♦ Improvement in Channel Frequency by use of Advanced Set-top boxes.
♦ Re-consideration and consideration of old and previous characters.
♦ More spending on Advertisement.
System Thinking Approach Contribution (Figure 5)
The all-together different reasons which were identified with
the help of strategic approach have been identified for decrease
in programme viewers of a particular TV channel with the help of
System Thinking Approach and the corrective measures have
been indicated in BOLD in the diagram.
Conclusion
The research proves that firms successfully implement System
Thinking, perform better in vir tually every business category,
including return on scales, and return on investment,
employment growth and stock value growth. It has been
found that System Thinking methodology is highly beneficial
to improve the performance of any organizat ion.The
following conclusions can be drawn after the implementation
of two approaches on the same kind of problems:
♦ System Approach leads to in-depth search of problem contributors by finding out fur ther reasons
for those problems and lead to actual reasons of the
same.
♦ System Approach provides solution to al l kinds of problems by considering them as a whole
system.
SCMS Journal of Indian Management , October-December, 2010. 11
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Figure 5: Finding Actual Problem Contributors through System Thinking
♦ System Thinking is different from Strategic Planning as it looks deep down for the reasons of problem by
exploring it while in Strategic Planning Approach, we
analyze the problem from top only and assume what
we don’t know.
♦ System Thinking leads to permanent solutions of problems by act ing on al l possible reasons
simultaneously while in Strategic Planning, we make
plans to solve the problem by removing the reasons
one by one as per the plan formation.
The success of this methodology within an organization has
significant momentum that can only lead to fundamental
organizational cultural transformation. In a net shell, System
Thinking has immense potential for future research.
Keywords: System Thinking, Strategic Planning, Problem
Contributors.
References
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SCMS Journal of Indian Management , October-December, 2010. 12
A Quarterly Journal
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