Lately, we’ve been thinking a lot about the systems thinking approach to leadership.

Being part of a high-performing team is an amazing experience. Many incredibly smart people have dissected the best teams to understand what are the key attributes that lead to superlative performances. Yet, despite knowing so much, it’s still frustratingly hard to recreate the magic that just makes some teams click. Why is it so hard to create high-performing teams? Part of the problem lies in the fact that we try to dissect team performance. It helps if you also approach high-performance teams by taking a look at the whole, thinking bigger picture and applying what’s called systems thinking.

Peter Senge and the systems thinking approach

Here’s a quote from Peter Senge in The Fifth Discipline: The Art and Practice of the Learning Organization:

“When you ask people about what it is like being part of a great team, what is most striking is the meaningfulness of the experience. People talk about being part of something larger than themselves, of being connected, of being generative. It becomes quite clear that, for many, their experiences as part of truly great teams stand out as singular periods of life lived to the fullest. Some spend the rest of their lives looking for ways to recapture that spirit.”

The reason it’s hard to build a high performance team is because teams are complex systems. Even if you are able to reduce things down to a few key principles and recreate them flawlessly, the subtlest difference can have a significant impact on the end result. Scientifically speaking, this is called chaos theory (an example of this is the “butterfly effect”). Put another way, if you try to roll a pair of dice exactly the same way on the same table a hundred different times, you’ll get 100 different results.

Peter Senge argues that a key problem with a lot of leadership theory is that simplistic frameworks are applied to complex systems, rather than a systems thinking model. We focus on the parts rather than seeing the whole. We fail to see an organization as a dynamic process.

What is the systems thinking approach?

Systems thinking is an approach to problem solving that attempts to balance holistic and reductionist thinking. Here’s a basic run-down of the systems thinking in business: in organizations, systems consist of people, structures, and processes that work together to make an organization “healthy” or “unhealthy.”

By taking the overall system and its parts into account, the systems thinking approach is designed to acknowledge that an improvement in one area of a system can adversely affect another area of the system. It promotes organizational communication at all levels to avoid the silo effect with the goal of creating an increased level of shared understanding.

The systems thinking model viewpoint is generally oriented toward the long-term view. That’s why understanding feedback loops is so important. In the short term, you can often ignore them; they’re inconsequential. But they only come back to haunt you in the long-term.

Peter argued that we learn best from our experience, but often we never directly experience the consequences of many of our most important decisions. We tend to think that cause and effect will be relatively near to one another. Therefore, when faced with a problem, we focus on solutions that are close. We look to actions that produce improvements as quickly as possible.

However, when viewed in systems thinking terms, short-term improvements often involve significant long-term costs. For example, cutting back on research and design can bring quick cost savings, but can severely damage the viability of an organization long-term.

Implications of systems thinking in business

So many businesses put faith in a heroic leader who can create grand strategies for growth and success. However, many strategies run into interpersonal and cultural issues within the team that resist change. No amount of expert advice is useful. Culture eats strategy for breakfast as the saying goes.

To build a high performing team that can execute strategy, you must develop reflection and inquiry skills so that the real issues can be identified and opened for discussion.

For leaders of organizations, this can be summed up as the “iceberg of ignorance”. In his acclaimed study, consultant Sidney Yoshida concluded:  “Only 4% of an organization’s front line problems are known by top management, 9% are known by middle management, 74% by supervisors and 100% by employees…” Although the Yoshida study involved numerous mid-sized organizations, the basic findings tend to be the same in organizations of any size.

Ultimately, there needs to be a movement towards better tools, processes and skills to support a more holistic, long-term view of how an organization realizes its objectives. That’s exactly where systems thinking comes in. New leadership skills are needed and new ways of collaborating across silos and through levels of hierarchy.

What to do next

Now that you've read this article, here are some things you should do:

1. Our YouTube channel is full of tips on management skills and team building.
2. Learn more about Hypercontext and how it can help you run a high performing org.
3. If you found this article helpful, please share it with others on Linkedin or X (Twitter)