What If Business Took Systems Thinking Seriously?

The economy is in the tank and thousands of people are out of work. In the U.S., given the slow recovery, the housing crisis continues.

At the same time, the planet is dangerously heating up and ecological systems are declining. What are we to make of these troubles? Are they merely the result of poor policies? Or is something more fundamental at play?

The roots of our difficulties are simple, yet for many business leaders completely hidden from view. The activities and goals of most firms, including mortgage banks and other companies operating in the mortgage market, along with the structure of the economy as a whole, have been shaped by fundamental misjudgments about how the planet functions and what it means to live a good life.

To resolve today’s challenges, our leaders must overcome the erroneous perspectives that created the predicament. At the most fundamental level, this requires moving from a ‘linear’ way of thinking—where we focus on quickly fixing the most visibly broken parts of what isn’t working—to a “systems” perspective that brings our thinking and behavior into line with the natural laws of sustainability.

Despite years of talk about systemic thinking, few companies actually practice it. This is due, in part, to the lack of a simple framework to guide the implementation of a systems perspective.

Here is a framework involving five interrelated commitments that can help business leaders make the shift from linear to systems thinking.

First, always strive to see the systems of which you are part. The economy collapsed in large part because the financial sector maximized it’s own self-interests without considering the consequences for the larger economic system is it embedded within. The Earth is heating up because humans have maximized their economic interests by burning coal, oil and gas without considering the effects on the global climate system.

It is an indisputable fact that all life on the planet, including each one of us, exists only because we are enmeshed within a complex web of interdependent ecological and social systems. Executives must remove their blinders and recognize this natural law of interdependency. The first commitment required to make the shift to systems thinking is to “see the economic, social and ecological systems you are part of.”

Systems are not easy to quantify. But you can map them. Drawing systems maps will help leader’s grasp that they exist only because they are part of complex interdependent systems.

Second, be accountable for all of the consequences of your actions on those systems. In today’s overcrowded, overheating, and extensively interconnected world, almost every action we take affects the planet’s social, economic, and ecological systems in some way, now or in the future. Like a bull in a china shop, however, business and government leaders pursue their own self-interests without considering the consequences on those systems. The natural law of cause and effect is ubiquitous. Our failure to understand this always produces dire outcomes. Assessing carbon footprints is a start. But much more is required. Executives must strive to account for all of the possible consequences of their firm’s activities on the social, economic and ecological systems they are part of.

Like systems, cause and effect can be difficult to quantify. But it can be mapped using tools such as ‘fishbone’ diagrams.

Third, abide by society’s long held universal moral principles of equity and justice. After their awareness expands of the affects of their activities on the systems they are part of, leaders must adopt a clear set of moral principles to guide their response.

By morality I mean decisions about what is fair and unfair in the way they treat people here and abroad, and what their duties and responsibilities are to others. The most universally held moral precept is to “do no harm.” The natural law of moral justice says that any action that causes unjustifiable human suffering and death is morally wrong. Our use of fossil fuels is already causing human suffering and death, and much more will occur as the planet warms. This is one example of morally wrong behavior. A commitment to “do no harm” focuses executives on the need to control their innate selfish and aggressive traits.

Investigating the many ways an organization can “do no harm” is a powerful exercise.

Fourth, acknowledge your trustee obligations and take responsibility for the continuation of all life. The scale of today’s economy and associated ecological impacts mean that human activities, not natural processes, will now determine the fate of the Earth. Like it or not, we must now accept the natural law of trusteeship—every individual and organization is a trustee of the planet with the responsibility to ensure the continuation of all life for current and future beneficiaries. The Golden Rule expresses this commitment: “Treat others as you would like them to treat you.” We must treat the economic, social and ecological systems we are embedded within as we want others to treat them, because our lives depend on it. This commitment magnifies the innate selfless, cooperative, and caring instincts to “do good” that is inherent in every business and political leader.

When public and private sector leaders clearly and publicly state—and enforce—the moral principles that will guide their organization’s activities, constructive changes always result.