An organization is a web, not a chart of boxes and lines. In this lesson, we'll discuss systems thinking, and how decisions made in organizations can impact the environment of the organization, its human values, and the larger natural environment.
You've seen the typical organizational structure of boxes and lines: decision A leads to consequence B, and so on. But that's a limited way to describe the makeup of organizations. Systems thinking is a more integrated way to understand organizations. Systems thinking in organizations means that we view organizations as interconnected pieces or subsystems. It is no longer a set of boxes, but a web of interconnected parts.
Since an organization is an interconnected web, a change to one area of the organization can have ripple effects in many other parts of the organization. For example, decisions made in information technology will have effects on clerical areas, and so on. Think of a web instead of a pretty flowchart, where a system is comprised of smaller systems (called subsystems). From janitorial services to administrative staff, all jobs are part of the whole. And all parts, as one collective, make up the system.
In addition, remember that all organizations and their systems have goals. Since it's the core goal of most organizations, let's consider increased profits. A well-oiled system will continually have checkpoints in its components to ensure targets for reaching profit goals are being met.
With all that in mind, let's take a graphical look at systems thinking in action. A visual tool we can use to understand all of the interconnections involved in systems thinking is the causal loop diagram.
For instance, consider an organization that makes paints and varnishes. Its costs of materials have gone up, while management has demanded more and more productivity. This loop diagram shows some of the known interactions and issues that may arise from this decision.