Systems thinking is a process for understanding that studies complex things and phenomena as a whole – as “systems”. In systems thinking it's essential to understand how different components and their relationships within a system affect the qualities and behavior of the whole. A system often has an objective or purpose, and it functions according to specific principles.

An organization is one example of human centered systems. In this context, a system often consists of the environment, the individuals working in the organization, organizational structures, processes and possible hierarchies. In information intensive fields, the interaction and dependencies between people within the system are often complex, and the system’s communication, control and leadership mechanisms fundamentally affect the qualities and effectiveness of the system.

Systems thinking looks at the organization from the customer’s perspective: Recognizing the amount and nature of the demand created by the customer, and recognizing what is important and useful in service delivery from the customer’s perspective. The system is designed to respond to the customer’s needs.

Vanguard method for developing organizations iteratively

One of the service organization development methods based on systems thinking is Vanguard, which was developed by John Seddon. The method has been used for decades to improve the service quality of organizations and reduce costs.

The Vanguard method combines systems thinking (“How to analyze and design work?”) and intervention theory (“How to make a change?”). The method has been influenced by Chris Argyris, William E. Deming and Taiichi Ohno, among others. The method emphasizes that the top management’s way of thinking defines the structure and qualities of the system, which then define the capability of the system.

The Vanguard method uses the iterative Check-Plan-Do model to improve organizational capability. Change is initiated by observing the present organization from systems thinking perspective (“Check”):

  1. Define the purpose of the system from customer perspective.
  2. Study the nature of demand coming towards the system
  3. Learn how the system responds to the demands.
  4. Understand why this happens.
  5. Identify what policies or measures cause problems in the flow of work.
  6. Recognize the thinking behind the design and management of the system

After this, the means to implement a change are identified (“Plan”). Finally, the change is implemented in the system (“Do”), after which the results are measured in relation to the purpose of the system, completing the cycle (“Check”).

Once knowledge of the present organization grows and the reasons why the organization works in a certain way are understood, it is easier to change one’s own way of thinking and management practices. That is, what is possible and what is stopping you from achieving it.

Towards better information systems investments

The Vanguard method is also used to improve the benefits of organizations’ investments in information systems. Information systems investments are often made with only local needs in mind, or to enhance inefficient or from the customer's perspective useless business processes. Because of this, over time, organizations can end up with dozens of separate information systems that are difficult and expensive to integrate.

In these cases, the situation is often made worse by attempting to find a technological solution, for example by developing integration strategies or defining enterprise architectures. The final result is that the organization is built on and constrained by information systems. This further affects the capability of the organization and the quality of the services it provides.

The starting point in the Vanguard method is that information systems investments should not be made before understanding the present organization from a systems thinking perspective (“Check”). For example, information systems investments to existing processes or entirely new services that may not be important to the customer are not made until the system itself has been changed (“Do”). Investments are made only if, after the system is changed, it appears that information systems would further improve the capability of the system from customer perspective.

Systems thinking steers towards rational process development

Systems thinking has proved to be useful in process development, for example in the implementation of agile methods. Instead of doing things the right way in specific parts of the system, systems thinking steers towards doing the right things in the entire system. As John Seddon has said about implementing agile methods without considering systems thinking, “That could be doing the wrong thing faster.”

One of the main tools for process development in systems thinking is the theory of variation, which helps understanding the natural variation in capability within the organization. The theory of variation consist of four principles:

  1. We should expect things to vary, they always do.
  2. Understanding variation will tell us what to expect.
  3. Understanding variation leads to improvement, it leads us to work on the causes of variation, which are always found in the system.
  4. Understanding variation tells you when something has happened

According to William E. Deming, up to 95% of variation in a system’s capability is caused by the system (Common Cause Variation) and only 5% by the individuals acting in the system (Special Cause Variation). In other words, the main actions to improve capability should be targeted at the system. As Deming once said, ”A bad system will defeat a good person every time.”

The below diagram shows an example of the natural variation of a system's capability using a control chart, a key tool in statistical process control:

A system's natural variation

Variation in the system’s capability can be caused by, for instance, the processes that are used, instructions, metrics, objectives, tools and software, project financing and delivery models, the efficiency of communication and information distribution inside the system, information systems and their technical debt, as well as the structure of the system (i.e. business domains or business units).

Systems thinking is obtaining knowledge

The central message in systems thinking is that the system is not changed until there is enough knowledge about the qualities of the system and the way it works. John Seddon has described systems thinking as “The means to obtain knowledge, and act with prediction and confidence of improvement.”

It is commonly thought that change starts by making a plan. In systems thinking, change starts by acquiring knowledge. That is the only plan.