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System thinking Essay


System thinking is an approach that seeks to find permanent solutions to the problems found in a complex system. System thinking uses diagrams as tools of elaborating the flow of responses from one part of a system to another. When one part of the system responds to changes made in another part, it is known as feedback dynamics. System thinking creates the big picture by examining interactions in an open system.

Strategic planning focuses on allocating resources and priorities to meet an organization’s objective. Strategic planning considers a closed system where an organization focuses only on its interests. The principles of system thinking mainly caution against finding solutions in isolated parts of a system because the problem is transferred to other areas of the same system. Problems solved in a non-systemic way recur with more difficulty than was identified initially.

Motivation is the drive that increases workers’ performance. There are many ways of motivating workers. A single method of motivating workers is not adequate for sustainable worker motivation. Most companies use cash awards to motivate their employees apart from using other motivating factors.

Motivation integrates system thinking because it can solve the root causes of an organization’s productivity problem. Some of the effects of job dissatisfaction that may reduce a company’s earnings are absenteeism, lateness, and reduced effort. Motivated employees do their best even in challenging situations.

Good communication has been used as a way of motivating employees. It has also been used to conceptualize ways of solving conflicts. Good communication may prevent the occurrence of conflict. Active listening and spontaneous arenas are used to derive solutions for complex problems. Conflicts are considered complex problems because they involve multiple parties. Their root causes may be far from the event where conflict arises.

Mental models are the representations of external features on the mind of different people. Mental models are generated from people’s experiences and accumulation of knowledge. They may be modified by internal thinking. Mental models are used in system thinking to bring different perspectives of the same problem. Mental models with self-sealing impact are derived from the closed system perspective. System thinking may create an understanding by interconnecting conflicting interest in a system.

Spray diagram for an airline that wants to eliminate hedging costs against foreign exchange

Spray diagram for an airline that wants to eliminate hedging costs against foreign exchange. Spray diagram for an airline that wants to eliminate hedging costs against foreign exchange. Part 2.

The airline understands that it would maximize profits if it eliminates hedging costs. It also needs to manage shifts in foreign exchange through the natural offsetting of appreciation and depreciation of the US dollar. Passengers pay using US dollars. Local employees and other operating costs are incurred in local currency.

Appreciation of the dollar means the company has more local currency after foreign exchange. It would lead to increased profitability. Depreciation leads in less local currency after exchange. Foreign exchange rates fluctuate most of the times with small variations. Sometimes they may remain stable for short periods. The airline uses hedging services which incur costs whether the prices appreciate or depreciate.

The company will need to increase cash holdings in order to stabilize the effects of foreign exchange rate fluctuations without the hedging company. The costs may reduce but it may reduce the cash needed for other operations creating cash flow problems. It may also involve holding idle cash. The cost of hedging is usually higher. The cost is transferred to the customer who may not experience the value for money from high fair prices.

System diagram of the global financial crisis (GFC)

System diagram of the global financial crisis (GFC) System diagram of the global financial crisis (GFC) 2

The global financial crisis starts with risk hedging services offered by insurance companies. Banks respond by offering loans without much verification about the risk involved because loans are covered by insurance companies. The large number of loans issued is used to build houses.

The houses are sold through mortgages. The large number of mortgages result in mortgage backed securities which are one type of financial derivatives. The financial derivatives are sold to multiple parties that generate second level and third level financial derivatives. The regulating agencies are unable to control the supply of money. Loans that were issued without the normal restrictions start to show signs of defaulting.

Insurance companies realize that the defaulting rate is so extensive that they cannot cover. Consumer confidence and investor confidence fall making financial markets to lose value. Multiple companies are affected as consumers avoid non-basic consumption and investors avoid financial markets. The stream is transferred from the US economy to other economies because of the existence of global investors and consumers.

The principles of system thinking

System thinking seeks to find permanent solutions for problems in a complex system. It is made possible through the system thinking approach of looking into the big picture from where problems emerge. The root causes of problems are identified before solutions are generated. Problems are considered within the system of related causes (Batra, Kaushik & Kalia 2010, p. 5).

One of the principles of system thinking is delayed time between causes and effects. Batra, Kaushik & Kalia (2010) explain that causes and effects are drawn apart by time and space. Delay in time makes the causes of problems to be hidden from the effects. It requires system thinking to be able to identify the causes from the effects.

Another principle of system thinking is that by solving problems isolated from the system, the situation gets worse as time passes. The concept is captured in the statement “behavior grows better before it grows worse” (Batra, Kaushik & Kalia 2010, p. 6). System thinking requires that problems are solved in consideration of the external environment which provides feedback from corrective actions.

If problems are solved with considerations to the system, a simple solution can provide multiple positive responses from the whole system. A single corrective action can provide solutions to areas that are far from the source of the problem. Batra, Kaushik & Kalia (2010, p. 6) describe the impact as “small changes that produce big results”.

Solutions that are based on a closed system make problems to keep recurring. It creates the need to use more and more of the applied corrective action. Batra, Kaushik & Kalia (2010, p. 6) describes such a situation as “the harder you push, the harder the system pushes back”. By solving problems without consideration of the systemic feedback creates an imbalance that intensifies the problem.

Strategic planning finds a solution to the immediate problems. System thinking describes “the easy way out as one that leads back in” (Batra, Kaushik & Kalia 2010, p. 6). Isolating problems from their system makes them appear smaller to tackle.

There is an assumption that it can be solved with less effort than when solving the systems problem. Batra, Kaushik & Kalia (2010, p. 6) explain that “dividing an elephant in half does not produce two elephants”. Solving problems in isolation from the system transfers the problem to other areas within the system.

Batra, Kaushik & Kalia (2010, p. 7) explain that strategic planning focuses on allocating resources in a manner that makes an organization meet its goals. The organization’s goals may be profit maximization, employee satisfaction, and building a brand name among others.

Batra, Kaushik & Kalia (2010, p. 5) discuss that strategic planning is useful in initial stage of identifying problem and their causes. System thinking links problems on the surface to deep-rooted causes. Strategic planning may break down problems into its components. Strategic planning tends to divide problems into smaller parts so that they can be quickly solved.

System thinking tends to create a flow of causes and effects. Strategic planning tends to create a linear relationship from causes to effects (Batra, Kaushik & Kalia 2010). A flow of causes and effects shows that corrective actions generate responses that act as a setback to the system being corrected. Strategic planning ignores the response from corrective actions to parts isolated from their area of focus. Strategic planning seeks to solve problems that are isolated to smaller parts of a system.

System thinking seeks to find a permanent solution in a system when strategic planning seeks to solve a problem in the part of a system the problem is identified. System thinking considers an open system with external links when strategic planning considers a closed system.

Effectiveness of system thinking

Stages in system thinking

The systems thinking approach starts by defining the situation. The situation is defined by stating the extent of the problem. The next step is to develop patterns of behavior. In the patterns of behavior, the interaction and relationship between different elements in the system are identified. From the causes on the surface, the causes in the underlying structure are also identified. Systemic solutions require the identification of the feedback system. The modern computer may be used to simplify the interaction of items in a complex system. The next step involves identifying the leverage system.

The leverage system examines how the feedback dynamics are transmitted throughout the system. Leverage should be about identifying how the smallest change can create the greatest improvement. Systemic solutions may benefit multiple parties. It creates balance in the system. There is a requirement to develop an alternative that would reduce imbalance in the system. Finding a solution to the problem forms the last stage in the system thinking approach (Batra, Kaushik & Kalia 2010, p. 7).


Motivation is defined as inducements that energize individuals to increase work performance. The inducements are able to sustain individuals’ behavior in the wanted direction (Wlodarczyk 2011, p. 177).

One of the impacts of motivation in the workplace is that employees obtain a will to succeed. Employees are willing to do their best to complete projects and tasks despite challenges that they may meet. There is increased openness when employees are motivated.

Motivated employees are able to use their creativity to generate solutions at the workplace. The importance of motivation includes improved work performance. It reduces negative responses such as lateness and absenteeism which are associated with work dissatisfaction.

There are many items that have been used to motivate employees. Kim (2006 p. 30) explains that most managers use cash awards as a motivator when there are no statistics to support its appropriateness. A study carried out by the National Association for Employees Recognition in 2005 showed that 50% of all companies reward their employees with cash (Kim 2006).

The systems thinking approach may be used to understand motivation in the workplace. There are extrinsic factors that are used to motivate employees at the workplace such as rewards. There are also intrinsic factors that are used to motivate employees such as well defined work that allows an employee to see his/her contribution to the organization (Kim 2006, p. 28).

Nohria, Grosyberg & Lee (2008, p. 6) claim that supervisors matter because they create a local environment that may be different from the organization’s culture. There are motivating supervisors in organizations that create dissatisfaction. On the other hand, there are supervisors that de-motivate employees in organizations that have a motivation culture.

The systems approach can examine the first level causes of employee motivation or dissatisfaction. Nohria, Grosyberg & Lee (2008) discuss that it is necessary to first understand the de-motivating factors. There is need to carry out a capacity assessment exercise to determine the level of work performance. Self-assessment is recognized as an entry point when looking for the root causes of recurring problems.

Supervisors and other employees are interviewed to find the first level causes. The effects of employee motivation and dissatisfaction are then linked in a loop diagram. The second level causes are linked with the first level causes to create a system. Brainstorming is used to find second level causes of the problem. Factors that de-motivate may not be the opposite of the factors that motivate (Kim 2006). The system shows how the response is transmitted through a corrective action.

According to studies, using a single motivating factor does not provide the solution (Nohria, Grosyberg & Lee 2008). Managers may use employees “drive to comprehend” to give them motivation as well as find solutions.


Good communication in an organization motivates employees to share their views. It also motivates employees to work hard because they feel that they are valued by the organization. Managers need to communicate regularly with employees in order to identify and meet their needs (Aula & Siira 2010).

Good communication enables teamwork to meet its goals. Employees need good communication skills to participate effectively in teamwork.

Good communication skills are needed to prevent conflict and solve disputes when they occur.

Active listening provides employees with an opportunity to provide solutions. Constructive criticism is when employees point out a problem as well as possible solutions. It is differs from complaining. Aula & Siira (2010, p. 131) discuss that in active listening “individuals are neither passive nor reactive, but intentional and reflexively self-aware”. Individuals respond to their own views in a way of creating knowledge.

System thinking may apply active listening to find the root causes of problems. When the management team and the employees give their opinion, different perspectives may be incorporated into a single system. Managers are able to see what was only in the view of the employees. On the other hand, employees can get to understand how managers think about work and what they expect. Sometimes managers may use ideal conditions for setting objectives which employees may consider unachievable.

Active listening relates to system thinking by allowing ideas to flow freely. The ideas generated in active listening can be used to map a problem within a system. Aula & Siira (2010, p. 131) explain that active listening happens in a “surrounding which we have created to share meaning and make sense of our experiences”. Active listening reveals the causes that are detached from the effects. Active listening allows pooling of ideas.


Conflict is considered as incompatibility of goals or opinion. It is also considered as disagreements that may lead to complaints, grievances, and charges (Aula & Siira 2010, p. 126). The nature of conflict is that it increases as organizations incorporate openness and diversity. Aula & Siira (2010, p. 127) claim that “conflicts are often complex issues that involve multiple parties”.

Conflicts may emerge from differing interests from multiple parties. Conflicts may emerge as a result of competition to achieve certain goals. Poor communication skills which may lead to misunderstanding may cause conflicts. Conflicts can emerge from individuals or groups breaking rules and conventions. Conflict can emerge when changes have been made to the routine. Conflict may emerge from overlapping responsibilities. There are many sources of conflict which emerge from competing interests and poor communication.

Aula & Siira (2010) discuss that there are three types of options in conflict management. These include right-based processes, interest-based processes, and negotiated processes (Aula & Siira 2010, p. 128). Power-based processes such as strikes may also be considered as interest-based processes.

There are several ways that organizations use to solve conflict. Most organizations have formed conflict management systems that give a predetermined way of solving conflicts (Aula & Siira 2010). Conflicts can be solved through a mediator, or through negotiations. Litigations are considered as ways of solving conflict through a third party. It is a form of a mediator resolution. Negotiations allow conflicting parties to address the problem themselves.

Aula & Siira (2010) discuss that management systems can use spontaneous arenas to generate ideas to solve conflict. Spontaneous arenas are conversations that are not planned. They occur whenever there is an opportunity to talk. Examples include work group talks and corridor talk. Aula & Siira (2010) explain that spontaneous arenas are “highly sensitive to the context”. Formal discussion arenas may also be used to find solutions to conflict. The discussion starts from the managers moving downwards in the hierarchy.

System thinking can have a bearing on conflict management because the existing conflict management system does not treat conflict with the uniqueness of character that it involves. Aula & Siira (2010, p. 130) discuss that in most cases “conflicts are managed by fixed processes in a controlled environment”. System thinking will involve creating a link between conflicting parties to find the root causes of the conflict. The different characters’ perspective can be incorporated into finding a solution.

Conflicts are complex in nature. The human organization resembles the complexity of natural systems. System thinking may enable organizations to improve on ways of resolving and preventing conflicts.

Mental models

Mental models are concepts on our minds about the external systems that we encounter in the world. Mental models may mean our perception and understanding of the external features that we come across. They are modified through newly acquired knowledge and experience. The ideas may also undergo regeneration in the unconscious mind without additional external information (Haines 2007, p. 55). They are accessible by being represented in the brain memory.

Mental models consist of accumulated knowledge and perceptions that may vary for different people for the same subject. System thinking may group the varying perceptions of different people or contesting sides to create the big picture of a systemic problem. The big picture is used to find the best solution that may benefit the biggest number of people. Without system thinking, mental models may be drawn to self-interest that may prevent individuals, parties or groups from seeing the big picture of a systemic problem.

The self-sealing impact of mental models is created by parties considering closed systems. System thinking creates an open system that allows parties to get a view of the interrelationship between small parts and systems. Mental models are considered to have a bias because they are based on individual perceptions (Haines 2007, p. 55).


System thinking seeks permanent solutions by considering the impact of many interrelated parts. System thinking discourages finding quick non-systemic solutions. It seeks to address areas that may benefit most of the people. It is an ethical way of solving problems by ensuring that they do not transfer to other areas within the system. Managing employee motivation through system thinking may be more effective than using cash awards without assessing their appropriateness.

Conflicts are complex in nature which requires system thinking to prevent their recurrence. Most organizations use predetermined ways of solving conflicts which avoid system thinking. People have different characters which make it necessary to use a system thinking approach in finding lasting solutions to conflicts. System thinking may be used to reconcile people with varying mental models by allowing them to see the big picture.

Reference List

Aula, P & Siira, K 2010, ‘Organizational communication and conflict management systems: A social complexity approach’, Nordicom Review, vol. 31, no. 1, pp. 125-141. Web.

Batra, A, Kaushik, P, & Kalia L 2010, ‘System thinking: Strategic planning’, SCMS Journal of Indian Management, October-December, pp. 5-12.

Haines, S 2007, Strategic and systems thinking: the winning formula, Systems Thinking Press, San Diego.

Kim, D 2006, ‘Employee motivation: “Just ask your employees”’, Seoul Journal of Business, vol. 12, no. 1, pp. 19-36, <>.

Nohria, N, Groysberg, B, & Lee, L 2008, ‘Employee motivation: A powerful new model’, Harvard Business Review, July-August, pp. 1-9. Web.

Wlodarczyk, A 2011, Work motivation: A systemic framework for a multilevel strategy, AuthorHouse, Bloomington.

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