What is a system? A system is comprised of processes, some important, some not so important. A process has a start and a stop, an in and an out. You know you have a process when you can flow chart it on a piece of paper. A process has a certain state. It is mature and working well or could be embryonic and very immature. A process can be broken if some pieces are not working well together. The system then represents the state of all of its processes. The idea of a system is to focus on long term stability. Understanding the system helps not to make short term decisions which may temporarily fix the immediate need but damage the system in the long term. It is easy when trying to resolve problems to focus on cause and effect. What is a management system? A management system also has many processes on multiple levels. They all contribute to the health of the management system. For example, it is very important to understand what process is used to evaluate people. If people are evaluated in a way which encourages competition among peers this will influence the overall competition and affects the climate in a company in an unhealthy way. If people are encouraged to work together on teams and collaborate, the system will look different. In this case people will tend to help each other more without fear of sharing information which might affect their performance ranking. The way managers communicate affects the overall system. If management typically keeps its doors closed and rarely shares business updates with the entire staff, the system will tend to operate in a way which encourages secrets, gossips, and many other problems. If management keeps the doors open, it will help open communications and overall sharing of all business related information to all levels. In this type of system one will see more risk taking, creativity, and interest in the business by employees. The Worst management system! The worst management systems encourage limited information sharing, a lack of creativity, unfairness and less opportunity to contribute and participate in the overall business. I will give you a few examples of bad management systems. A top manager asks Human Resources to establish a ranking and rating system among staff in an effort to improve performance but this leads to less teamwork and positive relations between staff and a direct impact to the bottom line. Another manager might establish a new policy that limits overtime which leads to an increased amount of errors in the workplace as employees rush to complete their work so they are not forced to work long hours without pay. A manager implements a new policy which restricts employees from transferring to new positions if they are not performing well in their current role. This leads to people leaving the organization for lack of opportunity when all they may have needed are new opportunities. Now the manager will have to hire replacements at usually twice the costs. Another manager decides that the first cost cutting activity should be to eliminate free coffee and instant soup in the lunch rooms. This does not lead to much cost savings but instead sends a message to employees that they are not that important thus leading to work slowdown, poor morale, and people leaving, which ends up costing the organization many times over what the coffee and instant soup cost! Another example is an employee is always late to work so the manager punishes the employee by not allowing this person to contribute to new efforts. The person as a result of the punishment starts to arrive at work on time. The manager likes the result so decides to implement new attendance policies for all employees. Long term however employees feel micro-managed and start to contribute new ideas less often causing an overall drop in system performance. These are examples of behavior which is usually well intended but simply not thought through from a system’s view. The impact of non-systemic thinking in management Decreasing revenue, morale, working relationships, and overall fear and lack of trust occur with short term non-systemic thinking. A recent county government manager decided to shut down many local parks just to resolve a short term budget gap. As a result the people who used to pay on weekends to attend these parks now traveled to new areas in different counties where they spent their weekend dollars. Much more overtime is lost through this new cost cutting. This could have been avoided with systematic thinking upfront. The way management roles models itself will influence the system and the behavior in it. Just wander into any retail store and you will notice the health of the system. For example there is one office chain I used to visit. It became more difficult to find any employees working there. It seems in this store they are each given assignments in the morning having to do with store maintenance for which they are rewarded or possibility punished for. As a result in the system there is little focus on the customer. As a result customers will over time visit competitors and much more is lost in this system. On the other hand I can think of a local bagel shop I visited which the employees greet me by name and remember my usual order. I notice how happy all employees seem. Later I learned every employee has been given a share of the business and is considered an owner. In this example they don’t hide from customers as this is their business. I am sure you can now think of similar examples. Non-systematic thinking leads to entropy, errors, and a general decline of the business. The BEST manager thinks through all decisions and policies and in advance determines the resulting impact on the system. The best management system The best management systems are aligned and interdependent. All processes make sense and impact each other in a positive way. There is a favorite grocery of mine which I like to visit. All employees are treated fairly and equally. No tasks are either too big or too small for any employee. Since people are treated well, they are motivated to contribute their best at work. This store pays the highest in its industry with the best benefits. There is job rotation so everyone gets to know all aspects of the business. Communication is frequent, there are no closed doors, and the managers are also accessible. The best management systems make sense. The people who work in these systems know what to do, have complete autonomy, and are respected. Each business process leads to another. If a customer requests a product which the store does not have, this product is ordered and now the inventory process and related processes adapt to this customer request. Employees are given updates on new products coming in and old products going out. This constant flow of open communications leads again to employees feeling vested in the business. In the best management systems, people can explain how things work and why. The impact of systemic thinking in management The impact is felt widespread. The business works well, employees are happy, customers feel good about the service, and the brand builds a healthy reputation. Most important, the business thrives and grows. How to implement a good management system Think from a big picture view. Indentify the most important processes and examine how they work with each other. Understand which processes have the biggest influence on the organizational goals. Put people in charge of these processes to improve them. Have open feedback and communications at all levels of the system. Encourage risk taking, creativity, and personal development. How to make a good management system last Make the people who work there the most important, more important than customers, more important than profit. People will rise to the occasion helping to build a system which lasts. Involve all levels of staff including them in all major decisions and actions. Enable staff to feel like owners of the business and they will work to improve the system. As a result everyone benefits. Why systemic thinking matters Without systemic thinking, the same issues go unresolved. Time and resources are wasted and customers and employees are unhappy. Systemic thinking leads to the improvement of all working parts. With systemic thinking, processes become mature, people make better decisions, and the organization, its products, and services thrive. This is BEST management! Craig Nathanson