www.systemsthinkingmethod.

com

Organisations are facing

challenges as conditions in the
economy get tougher. In times
like these where companies are
operating with tight budgets and
increasing customer expectations,
the effectiveness of running our
businesses using traditional
management methods must be
questioned.

Organisations that have switched

from traditional to systems
thinking are reaping the benefits
of having ‘economies of flow’ such
as reduced costs and improved
service at quicker and sustainable
rates. An Introduction to
These results are a consequence
of a change in thinking and not by
applying a ‘tool’. Managers
sometime find the difference
Systems Thinking
difficult to understand and this
article provides a simple summary
of the differences between
traditional and systems thinking.

Vanguard Scotland - Helping Service Organisations Become Industry Leaders ©Vanguard (Scotland) Ltd 2008
 2

An Introduction to Systems Thinking

I
n order to understand systems thinking it is useful to understand traditional thinking and
its origins to provide a comparison.

Traditional Thinking Systems Thinking

Top down Outside in

Functional specialisation Demand, value, flow

Separated from work Integrated with work

Related to budget, activity, Related to purpose,variation,

productivity, standards demonstrating capability

Extrinsic (incentives) Intrinsic (pride)

Manage budgets & people Act on the system

Contractual What matters

Traditional thinking has its roots in the The starting-place for those who
work of Henry Ford, Alfred Sloan, challenged traditional management
Frederick Taylor and others. The ideas thinking was the fact that it caused sub-
developed by these people solved problems optimisation. Breaking an organisation into
of their time and led to improved parts (functions), setting targets for the
performance. parts and ‘managing by the numbers’
actually makes overall performance worse.
Systems thinking is a step beyond these
traditional ideas. It has its roots in the work To understand just how this happens
of Ackoff, Deming, Ohno, Senge and others requires managers to look at how the parts
who were the first work together, they have to take a systems
Systems thinking leads to
to challenge the view. When managers take a systems
‘economies of flow’ – a
status quo. perspective they learn that systems thinking
quantum leap beyond
‘Traditional is indeed a better way to make the work
economies of scale.
thinking’ is work.
s o m e t i m e s
Systems thinking provides the means to
labelled as ‘mass production thinking’; mass
understand work as a system. It leads to the
production methods lead to ‘economies of
scale’, systems thinking leads to ‘economies design and management of work from the
outside-in, managing flow rather than
of flow’ – a quantum leap beyond
function. It requires the development of
economies of scale.
different measures and methods. And these
The consequences are better service and principles lead to reductions in the number
lower costs, something the traditional of steps, reductions in end-to-end time,
manager would find counter-intuitive reductions in waste, improved service and
because improving service is usually reduced costs.
equated with increasing costs.

Www.systemsthinkingmethod.com ©Vanguard (Scotland) Ltd 2008

 Some of the key principles of systems thinking are:

 Understand what customers want and only do work that improves their experience
of the service

 Ensure work goes out 100 per cent perfect, taking whatever time is needed and
drawing on all necessary resources

 Manage the customer through to the end of the process, keeping them informed of
progress and the service levels they can expect

 Organise work so that it is as error-proof as possible

 In meeting demand, work on the principle of 'first in, first out'; seek to improve the
end-to-end flow of work through the system every day

 Use measures that tell staff how well they are achieving things that matter to
customers, not official specifications

Systems thinking organisations 2. Provide all staff with the tools and
perspectives needed in your particular
have 3 key operating principles: circumstances.
1. Ensure that continuous improvement of Working in this way ensures it is easy to
customer service and efficiency becomes deliver excellent service as it is easy to get
an integral part of the way that the things right and difficult to get things
business operates. wrong. Quality is built into the system from
the start.
The goal of continuous improvement
becoming integral to the way the business 3. Overcome any resistance to change
operates is achieved by ensuring everyone in
the organisation is using the same Using a ‘normative’ approach to change
principles, therefore action is taken on the (‘learn’ rather than ‘tell’) involves people in
system which improves performance in a understanding how their current system
consistent manner. It is an approach that works today – what makes it sub-optimal and
ensures integrity between people’s thinking how their own thinking and behaviour
and behaviour, and their actions on the way contribute to the system’s current
the work works. capability. From this position people feel
able to make informed choice about what to
do.
The first step is to analyse the current
THINKING system. This starts with establishing current
performance -customer satisfaction,
efficiency, revenue and productivity.
From here we look at how these results are
SYSTEM being achieved (features of the system) and
then, how thinking and behaviour are
maintaining the status quo.

PERFORMANCE

Www.systemsthinkingmethod.com ©Vanguard (Scotland) Ltd 2008

 Statistical Process Control and In addition to reducing waste, SPC can
lead to a reduction in the time required to
Capability Measures deliver the service end to end. This is
because SPC data can be used to identify
The principle issue with measurement is bottlenecks, wait times, and other sources
whether it can help us look at method. of delays within the process. SPC also
Capability data invites an exploration of indicates when action should be taken in a
method – it invites us to ask ‘what are the process, but it also indicates when NO
causes of variation?’ When genuine action should be taken, therefore is an
differences in performance occur they are extremely useful management tool.
known to be genuine and again one can ask
why. ‘What has caused a step-wise change?’
Article written by:

Purpose Caroline Rodgers, Vanguard Scotland Consultant

For more on SPC visit:

Measures www.answers.com/topic/control-chart

If you think this article has been useful, you’re

welcome to redistribute, reprint and reuse. We only
Methods ask that you refer to Vanguard Scotland as the source
and refrain from changing the content of this article.
It is central to a systems approach that
Sign up to our monthly eNewsletter and get free
capability measures are used to measure
articles and case studies.
performance. Capability measures tell you
about the predictability of something; they
can be used to learn about two aspects of
how the work works – demand and response.
Rather than know the percentage
achievement of a standard, it is better to
know what performance is being achieved
predictably – that is what a capability
measure will tell you.
A key aspect of capability measurement is
statistical process control (SPC). SPC is an
effective method of monitoring a process
through the use of control charts. By
collecting data from various points within
the process,
By collecting data from variations in the
various points within the process that
process, variations in the may affect the
process that may affect quality of the
the quality of the service service can be
detected and
can be detected and
corrected, thus
corrected. reducing waste
and as well as
the likelihood that problems will be passed
on to the customer. With its emphasis on
early detection and prevention of problems,
SPC has a distinct advantage over quality
methods, such as inspection, that apply
resources to detecting and correcting
problems at the end of the process.

Www.systemsthinkingmethod.com ©Vanguard (Scotland) Ltd 2008