Systems theory in practice: a mindset for dynamic times

An organisation cannot perceive everything that happens around it. It has to select, and to do so it develops observation and evaluation frameworks that order its perception according to its own criteria. These frameworks are usually only implicit, and the distinctions are made unconsciously.

This gives rise to a dangerous process of self-confirmation. What worked well in the past is repeated. Successful patterns of explanation and interpretation solidify into fundamental convictions that can hardly be shaken, even when the environment has long been demanding different criteria. Deviating observations are reinterpreted until they fit the familiar pattern. The organisation perceives what is already on its radar screen, until a “black swan” appears: an event that was considered unrealistic until it occurred and that makes the blind spots visible.

The same applies to managers as to the organisation: they do not see everything and, in all probability, they also do not see that they do not see something.

Anyone who knows that certain opportunities and challenges escape their own observation can counter the danger by expanding their space for thinking. External impulses and food for thought are a good way to recognise one’s own blind spots and to look beyond one’s own horizon. Workshops and networking events serve this purpose, as do webinars and other forms of digital exchange. The only thing the digital format lacks is the casual conversation at the coffee machine.

Another measure against blind spots is second-order observation. This means a regular meta-perspective: managers reflect on how they observe and evaluate the organisation’s ways of working and developments in the environment, and how the organisation makes distinctions. The frameworks depend on identity and self-image. A hospital considers different information relevant than a bank does and works with different criteria.

Frameworks change over time. Since public sensitivity and purchasing behaviour have changed, a company’s environmental awareness shapes its image and environmental damage can bring financial disadvantages, ecological criteria have increasingly been incorporated into decisions.

In practice, this means regularly putting the criteria that are invisible in everyday life to the test. It needs to be clarified which distinctions guide the gathering of information, how the organisation explains its reality to itself and what it fails to see as a result.

This also includes which options for action its own patterns of explanation open up and which they block, and whether the way problems are defined contributes to their emergence. Such questions make the implicit frameworks workable. Anyone who knows the lens they are looking through can readjust it and reduce blind spots.

It helps to separate two frameworks. The observation framework determines which dimensions are observed at all and which aspects within them are of interest, for example market developments, competitors or employees. The evaluation framework determines the criteria by which an observation is considered relevant: whether a market development meets expectations or whether a competitor is thought capable of keeping pace with one’s own innovations.

Nobody knows what is coming. The capacity to decide therefore arises only by making assumptions to the best of one’s knowledge and belief. Strategies and visions of the future are based on them, and subsequent decisions build on them. When forming assumptions, it is important to include different perspectives and to use the knowledge available in the organisation, the so-called system intelligence.

Following Königswieser and Exner, the approach can be described as a cycle: observing and gathering information, forming hypotheses, deciding and planning the intervention, intervening and observing again.

Once assumptions have been made, current developments are kept constantly in view. New observations and insights are integrated into ongoing processes. The uncertainty on all sides requires agile working in small steps with regular coordination and reflection. Such a forward-looking way of working can save a great deal of time, especially in a crisis.

Part of the systems-theory attitude is not to cling to decisions at any price. Future developments can only be forecast with great uncertainty. The state of knowledge may be different tomorrow, and tomorrow there may be a better alternative to today’s decision. It helps always to mention the probability of error in communication. This makes later correction easier. If other paths prove more suitable and more promising, it takes courage to change course.

Following Wimmer, organisational learning capacity can be shaped in three steps. Variation arises when impulses are fed in deliberately. They irritate, open up space for thinking and shed light on blind spots. More sources of irritation increase the chances of learning impulses. It gives an organisation security to have more options than it can use: if one path has to be abandoned, others are available.

Selection is demanding because organisations tend to hold on to what has proven itself and to sort out the new. The process must be accompanied by management and organised wisely. Critically reflective observation and evaluation frameworks, as well as interdisciplinary decision-making bodies that cut across hierarchical levels, help to make room for the new in the selection.

Re-stabilisation means the ability to turn selected innovations back into usable routines. Implementation begins with the decision, and right up to the end an organisation can resist the new and defend established routines. What is needed are learning architectures that interlink organisational and individual learning and take into account the non-triviality of organisations.

Measures intended to encourage particular behaviours or ways of working do not always achieve the desired result. One possible reason lies in the difference between complicated and complex processes. Understanding a spacecraft in every detail takes years of study. Even so, it is clear that it will lift off if everything has been assembled correctly and the conditions are right. Machines are trivial systems. They follow cause-and-effect relationships that can be explained physically and technologically, and every malfunction has a simple or complicated reason.

A football match is a non-trivial system. 22 people ostensibly pursue the same goal and yet have to decide constantly from the situation at hand. No expert can predict who will score when and how the match will end. Organisations resemble a football match more than a machine. Each person fulfils a function, but interprets situations and tasks for themselves, attributes meaning to them and also pursues personal goals. Scepticism is therefore warranted when guidebooks propose trivialising solutions for organisational change.

The lack of predictability is often lamented. Yet uncertainty is the basic precondition of entrepreneurial action. If every company knew exactly how markets, social needs and customer behaviour would develop over the coming years, none of them could gain a competitive advantage. Because decisions rest on assumptions, it is possible to recognise trends and developments before everyone else. Success comes to those who discover needs and problems in the market or in society for which there are no good solutions yet, and who find smart answers.

Understood in this way, uncertainty is a source of entrepreneurial activity and an opportunity to help shape one's own environment with innovative and surprising solutions.