...it’s the product of their interaction.” While we’ve written intermittently about systems and processes, the current VUCA (Volatile, Uncertain, Comple, Ambiguous) business environment compels us to spend more time on how important systems thinking is to effective leadership. We are using the title quote from the late Russell Ackoff , who was a pioneer in the field of operations research, systems thinking and management science. And to illustrate the importance of the title quote, we will use a case study we came across a year ago to drive the point home. The project was a joint venture between General Motors and Toyota named the New United Motor manufacturing, Inc. or NUMMI for short. The goal of the venture was to apply the lessons Toyota learned around lean manufacturing to a failing GM plant in Fremont, California. The results were dramatic in the increased productivity of the plant proving that transformation could occur with fundamentally the same personnel in the plant before and after the switch. While the application of lean methodologies succeeded in producing much improved results, the lessons learned were ultimately lost on GM leadership. They concluded that it was the processes alone that created the change since the personnel were basically the same. In fact, it was the interrelationships between the processes that carried the success of the venture overall. Today, that plant is owned by Tesla. So, what does that mean in a VUCA business environment? It means that leaders trying to react and flex to pieces and parts of the system that are impacted by change will struggle to solve the problem in a sustainable way. It is understanding that volatility and/or complexity, while deeply affecting one particular part of the system, ultimately has systemic impacts across other systems as well. It also means that uncertainty and/or ambiguity will make it difficult to ascertain where the solution lies without looking at the business through the lens of systems thinking. Now, just for the fun of it, let’s throw in the impact of artificial intelligence (AI). The AI impact has come at the business environment with a vengeance to the point where we are already seeing the strategic and systemic challenges encountered by early adopters. In our estimation, it once again looks like business leaders are adopting AI as a workforce replacement instead of addressing where AI fits into the current and desired systems approach to the business. Once again, the absence of being able to see the interrelationships between systems creates major blind spots and lessons not learned similar to the NUMMI and GM venture. From our 2022 book, “ Finding the Missing Piece : The Impact of Effective Communications on sustainable Success”, we define systems thinking as, “...a holistic approach focusing on how a system’s components work together, how a system operates over time as well as how it operates in the context of other larger systems.” The only way systems can provide the foundational value to the organization is through leaders who can fully appreciate and understand its benefits, especially in a VUCA business environment! How are your leadership interactions enhancing the business systems? If you’re not sure, we can help . Lead Well!
This is a question every leader of any business (for profit or non-profit) of any size and any industry or market needs to regularly ask themselves. It is a critical question in that it establishes the very reason a leader earns the privilege of being called a leader.
In a recent LinkedIn post, the conversation centered on the Dr. W. Edwards Deming quote, “94% of problems in business are systems driven and only 6% are people driven.”