Systems Thinking And Strategic Management: A Critical Appraisal

Approaches to Strategic Thinking

This essay is written with the purpose of analysing the statement “Systems thinking essentially seeks to understand phenomena as a whole formed by the interaction of parts” , described in Stacey, (2011) critically and it will help to provide perception on the approaches of strategic management and system thinking in such a dynamic environment of business (Haines 2016). As the nature of industrial issues are becoming complicated day by day, organisations are demanded to think and implement new strategies as effectively as possible. As the scenario is changing rapidly, with the help of the reference taken from North et al. (2013)modelling complexity will be discussed through a process called Complex Adaptive System. It will also elaborate a practice perspective to think effective strategies. The fact cannot be denied that the entire world is experiencing a change as countries are being interconnected with the progress of globalisation (Bond and O’Byrne 2014). As a result of this, a complex social system is introducing itself as well as the demand of strategic thinking is increasing in the global field of business. Modification of policies in any nation can leave a deep impact on others as technological advancement has made the system dependent on each other on a large scale. For instance, United States’ decision of reducing foreign aids can be concerned. As described in Crawford, Costa-Gomes and Iriberri(2013), the governing body once decided to increase the flow of domestic spending and it casted an unpredictable effect on the other nations’ strategic planning. Therefore, through a systematic process of thinking and implementing strategies, extremely complicated and unpredictable situations canbe handled and how the entire process is going to be effective, that will be the central topic of discussion.

The theme of strategic thinking revolves around the proper analysis of opportunities, probable issues and a vision towards consequences caused by decisions and actions of a certain organisation (Brocas et al. 2014). This process is considered globally as an ongoing phenomenon and not an event. Thinkers have a visionary approach towards both the existing and future issues and its solutions. Managers should not consider this as an individual thinking style;instead, it is a perception, whichgradually grows by interacting among the organizations and learning from the strategic areas of business operations. A detail discussion on how to analyse strategies has been conducted in Grant(2016), it also states that every strategy is unique in nature as it is not possible to imitate thoughts for the competitors. Strategic management helps to introduce perspectives and approaches yet to describe the thinking process by a certain definition can be difficult as the approaches are numerous. According to, Vanhaverbeke and Roijakkers(2013), it will be easier to understand the entire procedure if the characteristics of strategic thinking can be elaborated first instead of going through definitions because none of them covers all the dimensions. Strategic thinkers, whenever face difficult situation they try to solve that with prior perception and available information their ability lies in deciding something effective which will be beneficial for the organisation and at the same time creates a positive impact on other companies or nations. However, information cannot be available entirely unless one is living an ideal world. Therefore, they have to take decision withability of thinking pragmatically based on the partly available information and considering a wider scenario of work. It will help them to attain appropriate insight as far as understanding of issues and concrete action is concerned (LEU et al.2014).

Systems Thinking

Strategic management comes with two approaches of planning and thinking.Planning helps an organisation to deal with the unpredictable,not so pleasant situations within an organisation and to gain the competitive advantage in the market over the rivals. On the other hand, managers use strategic thinking to identify the effective factors, which will help to accomplish the objectives of an organisation along with satisfying the customers. This ability of thinking comes from a creative mind as well as deeper understanding of business operations. The managers should have enough vision to guide a company towards success unless both the potential and resources will go in vain. A book entitled ‘Strategic Thinking’ written by Kenichi Ohmae says that if the fundamental issues cannot be recognised in a proper way, both the physical and psychological pressure on the employees will not be able to deliver the desired outcome. Strategic thinking involves recognising the field of competition as well as understanding the opportunities before the competitors get to know about those. In order to understand the impact of strategic thinking the instance of Amazon’s one of the managerial decisions can be taken into account. They decided to sell books online for the first time back in the year of 1995, as they were able to identify the fact that virtual shopping not only reduces costs but also creates more choices for the customers. An insight provided by Eden and Ackermann(2013), as they recognised the opportunity before any other company did, automatically the point added up to their favour and helped them to gain competitive advantage in the market. In the midst of such a dynamic environment of business,these approaches create motivation and commitment for the enterprise and its stakeholders. Therefore, it can be stated that strategic planning is necessary to execute the prior framed strategies, which are unconventional in nature,through a pragmatic thinking process.

Strategic thinking delivers a sense of systematic attitude. There are two central contributions of the systematic approach to the strategic management of a certain organisation. The system provides a guidance on which the strategic planning is going to be applied; it determines the appropriate way and time to apply the strategy as well. Moreover, it suggests a series of methodologies, which should be implemented as a strategic plan. Before applying systematic methods,it is important to know the factors working behind any kind of organisational emergency. A strategic thinker should frame a system of values and develop a perception on the relationship between several factors influencing the business. According to the porter’s model “strategy is a holistic and integrated attitude”, yet several different activities can be found regarding this matter. Systematic approach always keep the objectives and orientation of the company in mind. The singular focus drives the organization and its resources towards the objective. Managers should have greater vision while thinking systematically, because strategies are framed considering the past and current issues, as well as future opportunities. Identification of right time to implement strategies is essential otherwise; the organization may miss the chance of getting benefit out of existing opportunities. Discovering hidden opportunities is another task, which is necessary to adopt strategies accordingly. Sometimes, assuming future situations and planning solutions for probable cases, which is called hypothesizing, is considered a blend of creative thinking and professional understanding.As described in Bond and O’Byrne(2014), the company will make profit in future if current strategies have enough potential to accomplish the goals. Therefore, this essay differentiates strategic planning and thinking as two different phenomenon and planning needs to be done after a detail process of thinking. Further, two different level of thinking can be identified; one is individual and the other is organizational. Both the levels are interdependent while taking business decisions on the behalf of the organisation. A detail study of Cummings and Worley(2014) suggests that, in order to understand both the approaches clearly and by the process it works within an organisation,a framework will be presented. There are five stages of strategic thinking, first the management has to learn the external and internal factor, which influence the business operations. Considering the environment the organisation has tomeasure the possibilities to be successful.Next, according to that whatever strategies have been framed a successful implementation of those through operationsis the next thing to do. Then, the organization’s objective to create the ideal future will be fulfilled. Therefore, it can be said that, strategic thinking is not a single phenomenon rather there are several phases through with the systematic approach can be achieved. This analysis supports the theory, “Systems thinking essentially seeks to understand phenomena as a whole formed by the interaction of parts” as described in the journal, (Stacey, 2011).

Complexity Perspective: New Ways of Thinking about Strategy?

There are various execution methods of five phases of systems of thinking. Methods are as follows. Comprehensive strategic planning is necessary according to the organizational need, quick and short-term strategic planning is helpful to resolve the issues of small and medium organizations and make the best use of market opportunities, developing a strategic plan after understanding the areas of improvement and according to the needs of projects entire strategic plan demands to be changed. It has been stated distinctly in the study performed by Kopnina (2017), that,sometimes, it is essential to adopt new strategies to cope up with the dynamic environment of business.

Along with these variations, few more types of systematic thoughts and strategies are there. Such as, according to Grunig (2013), developing the quality of the product to provide satisfaction among the customers, human resource should be managed with easy communication method and developing their potential as per need to make them more effective can be beneficial for the organization’s future.

Above all, a systematic approach in strategic thinking and implementing strategies can increase the chances of organizational success to a greater level. A detail study of Dibrell, Craig and Neubaum (2014) suggests that corporate business strategy focuses on the strategic options with which multi business organisations have to deal with, to perform better and increase competitive advantage in the market. Business firms generally concentrate on effective strategies of launching products. Although, the strategies are objective oriented, various factors work behind framing a proper promotional strategy via systematic thinking and planning. A much-discussedand debated dimension regarding this sector, which is currently coming forward that is, if the traditional methods of thinking and planning is effective enough if the situation is critical and complex. Business practitioners and experts have started to think business strategies in a complexity perspective, in the background of 21^st century. It is obvious that, management has to keep the effects of globalization in mind while implementing strategies and it has been proven that the traditional methods are unable to cope up with the transformation of business environment. Therefore, strategies should be viewed in a complex perspective if the purpose is to achieve organizational excellence. The business practitioners and scholars have assumed it that, business organisations who are operating in multiple sectors are example of complex adaptive system, which includes several modular and loosely interlinked business units (Malviya 2017). While the structure of these kind of organisations are consistent, considering the changing business scenario,traditional methods of sharing information and theories in the understanding of organizational need has become difficult. According to the statement provided by Benn, Edwards and Williams(2014), as the speed of global environmental change in business is rapid, it has been increasingly difficult to cope up with the changing atmosphere applying different strategies for different needs. When the present issues are evaluated in a complexity perceptive, a vast difference can be noticed between the implications of corporate strategies maintaining the traditional way and following a complex one. Organizational complexity theory is in the central focus here. Although, the search of new theories to resolve issues while implementing strategy was necessary yet some of the existing strategic theories are still equally effective in this field.

Complex Adaptive Systems: Modelling Complexity and the Practice Perspective

Business organisations operating in multiple fields adopt the culture of Complex adaptive system (CAS) to engage themselves into strategic thinking in a systematic way (Liang et al. 2013).A reading of Khadartseva (2014) helps to grow the perception that, Proper thinking and plan is necessary to avoid issues due to the complex structure of the organisation and the external factors, which are changing as the time progresses. Complex adaptive system always search for new regulations and try to avoid conventional methods in order to execute policies. As the application of technology has been increased as a tool of research, CAS feels to introducenew dimensions while breaking the traditional boundaries. The concept of complexity adaptive system is always associated with the development of the business (Cummings and Worley 2014). Hence, thinkers use to frame the agendas while developing a perception of a dynamic global environment. Both the natural and human world has instances of Complex Adaptive System. Political parties, economic principals are considered under the CAS of human world. In order to develop an understanding of the system few characteristics of CAS need to discussed. CAS is consisted of several networks of gathering information, learning from the feedbacks and prior experience and imposing strategies accordingly. It is needless to say, considering the nature of Complex Adaptive System, that their future is unpredictable (Roh, Hong and Min 2014). It exists in multiple levels within an organisation,as one level is dependent on the other for both the positive and negative outcome. Instructions are always unpredictable instead of pre-determined. There are various fields where complex adaptive system has been applied. Starting from the science communities, disciplines like economics and political science have adopted this system so far. Multi business units are also regular practitioners of this system.

Apart from identifying complexity within a system, it is essential to measure the intensity of a complex situation as well. Measurement is necessary for better understanding of the complex environment and imply the strategies. Business units are interlinked with cultural values, mutual collaboration andadvanced HR management policies. A business firm likely to receive success when all of these factors are working together yet in the period of organizational crisis if the structure does not collaborate with each other, it affects the performance of the farm largely. As the units are loosely linked with each other yet committed to deliver mutual supportthere are several scopes of innovation, which adds competitive advantage in favour of the organisations (Johnston and Bate 2013). According to North et al. (2013), the complex adaptive systems are useful for business organisations like Brugal & Cia to manage proper understanding of the concepts of systems associated with the business functioning and furthermore determine the behaviors of the system to ensure improved business effectiveness along with better productivity and higher revenue generation. The complex adaptive system is considered as useful and reliable for Brugal & Cia, the rum manufacturing company, in terms of systems thinking as well as facilitates the strategic planning and the implementation of strategies required to accomplish the business goals and objectives with ease and effectiveness (North et al. 2013). The adaptive system has assisted in defining new ways of thinking about strategies and even maintained transition across phases to manage effective behaviours too. Based on the statement provided by Levin  et al. (2013), there are various benefits associated with the complexity adaptive system and one such advantage could be the optimization, which has eased down the business operations at Matasha, the tobacco company too. It allow the employees of the business organizations to think strategically and understand the system dynamics by integrating the various components of the system with the business operations (Levin et al. 2013). This will create better scopes for resolving the issues and complexities much more easily, furthermore enable innovation and creativity for the development of own self, the organization and its employees too.

Organisational Examples to Illustrate Themes

One such example is that the adaptive system implemented at Coles, the retail chain supermarket, has facilitated the general management orientation and allowed the business practitioners to formulate new theories, ideas and concepts required to implement successful organizational change all throughout. The adaptive system can be useful during the mergers or acquisitions’ situations, where systems thinking, learning and adaptation are necessary for maintaining a flavour of uniformity. As stated by Arrow et al. (2013), it will not only strengthen the design principles, but will also consider the core values and beliefs required for implementing strategies effectively. It could create more value for the organization and allow the companies to think strategically about being socially responsible too (Arrow et al. 2013). The power of innovation and creativity has been unlocked, which has increased the potential to handle complex situations with convenience and ensured formation of dynamic and systematic thinking as a whole.  The complex adaptive system, as the name suggests, deals with the modelling complexities and has high level of adaptive capability, which ensures providing flexibility during the complex situations. Highsmith (2013) stated that the model is considered as effective because of its extensive feature of simplifying the modelling process and fosters the development of successful communication among the employees of Coles too. This would also enhance the skills and knowledge of employees to handle crises and improve the company’s flexibility to adapt to changing situations while improving the non-linear interactions at the similar end too (Highsmith 2013). Therefore, it is clearly understandable that the complex dynamic adaptive system can benefit the organizations by making it remain competitive in the marketplace. With the use of this model, the gaps in business functions and certain areas of weaknesses experienced at Tesco are also identified, which can be managed through the adopting of good leadership. The management of leadership skills will be facilitated with the complex adaptive system implementation and shall make the organization respond to changes by bringing out the best potential of the employees and enhancing the organizational effectiveness too (Fradkov, Miroshnikand Nikiforov 2013). 

The strategy from perspective of practitioner of Tesco enables managing various policies and principles to conduct researches and detailed analytical study to assess the external and internal environmental factors associated with the business functioning. According to Fradkov, Miroshnikand Nikiforov (2013), the strategy as practice perspective is influenced at Brugal & Cia with the involvement of various strategists who have dedicated themselves fully to the company by managing the workforce efficiently. The practice perspective has helped in managing persuasion, diversity at workplace and even allowed the companies to adapt to a new culture and changing environment (Whittington 2014). This also has strengthened the relationship between business and its customers and improved the strategic management planning to implement new ideas for business success and flourishing. Whittington (2014) stated that the strategy in practice is mostly important for gaining competitive advantage through gaining detailed knowledge about the micro and macro environmental factors. By assessing these factors, the companies like Coles and Tesco will be able to develop and implement strategies that can be vital for meeting up to the expectations of clients in the different market segments, furthermore ensure higher level of customers’ satisfaction and increase in sales revenue too (Brownand Thompson 2013). 

Theoretical Analysis of Systems Thinking and Strategic Management

Thus, the strategy as practice means proper strategic planning and management. By placing the strategies and ideas behind those into practice could enable renovation f the organizational structure and create a good culture too. Based on Brownand Thompson (2013), this would not only make the organizations adapt to changes within the organization, but could even improve the implementation of strategy as practice in the micro, meso and macro level functions conveniently. At the micro level, the managers of business organisations like Coles implement strategies to ensure that the legal rules and codes of conduct are followed by the employees while at the meso level, their skills and knowledge facilitate coordination among employees as well as creates connection between the business functions and systems thinking (North et al. 2013). This should be essential for handling the complex situations and accumulate vast amount of knowledge and skills required to implement effective strategies and undertake collective action as well.

Therefore, as a conclusion, it can be stated that to attain the purpose of maintaining performance and to gain opportunities strategic planning and systematic thinking are essential part of managing a business organisation. Practice of CAS enables the companies to deal with crises as well as help to maintain complexity within the company. As far as the statement as described in the written account of Stacey is concerned, it can be concluded saying that systematic process of thinking consists of various parts which are interrelated and the whole phenomenon cannot be performed distinctly if one of these partsfails to accomplish its purpose.

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