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Systems Analysis
At the heart of your ability as a leader to navigate complexity is the discipline of systems analysis. Systems analysis consists of the creation of simplified models of complicated realities. It’s absolutely essential, of course, that systems models capture the most important features and dynamics. But given the very, very high levels of complexity today, no human being and indeed so far, no computer is able to flawlessly model the entire set of variables and interactions that constitute a complicated system.
One example I use is climate. Today, we have very good models of climate, but they’re absolutely simplifications of reality. They model large chunks of the atmosphere, for example, in ways that are really kind of, crude, but they do capture the most important features of the overall climate system in a way that lets you make good predictions.
Diagnosing Your Organization
One of the most useful applications of systems analysis is actually within organizations. It gives you a shorthand for doing diagnosis of an organization and understanding what’s really going on inside. And like all systems models, they start with what are the key elements of an organization. Strategy, structure, systems, talent, incentives, culture. By having a systems model like that, you can begin to think about each element in turn. What’s the work I need to do with strategy? What are the implications for the structure? How are our key processes and systems working? What kind of talent do I need in the organization? What are the incentive systems you have available to you to influence behaviors?
By identifying those key elements, you can work on them individually, but you also need to be thinking about overall interaction and fit. For example, if you’re going out with a new strategy, what are the implications for the structure of the organization? Because structure follows strategy. If you’re trying to shape the culture of the organization, building systems models can really be so incredibly powerful because it magnifies your vision. There’s an iterative transformational dimension to this work as well. You can drive change off any one of those elements, but recognize that they have to connect with each other. They have to ultimately fit. Having a systems model of your organization helps you iterate around the model on an ongoing basis.
The tool you can use to help you think about this is the idea of mapping out causal loop diagrams, and this can be done, frankly, on the back of an envelope. It’s a way of diagramming out and capturing the way these cause-effect relationships work. That if you do something here, it’s likely to have an impact over there and may create a feedback loop that either creates outcomes you want or leads you in directions that you don’t want to go.
Creating an Adaptive System
When you focus on your organization and are thinking about it in systems terms, pay some attention too to creating an adaptive organizational system. As you recognize and prioritize important things that are going on in the environment, you need to have an organization that’s adaptive and capable of responding to them. And some of the key elements of adaptive organization are threat detection. Focus on creating your organization as an adaptive system by inquiring into: How do we detect threats? How do we manage crises? Do we do a good job of post crisis learning? Do we really embed the lessons learned into our organization in a way that helps us prevent problems from happening in the future?
You have to be testing your ability to deal with crises on an ongoing basis. There is no substitute for simulation. It’s important to engage in some pressure testing of your organization’s capability to do that. You have to be imagining the kinds of classes of crisis that could happen and begin to not just plan, not just have a set of protocols, not just have a set of resources ready to go, but really engage in the process of simulating what would really happen in a crisis. It should enhance your ability to do problem prevention so that those crises don’t emerge in the first place.