Finding Leverage: Systems Thinking and Change Management
By: Joseph A. Smith
Tags: Systems Thinking, Integrative Thinking, Strategy, Change Management, Business Strategy

Change Management is an enormous field. Both academically and in terms of industry, the study and practice of transformation within organisations is vast. Many schools of thought exist as to why transformations succeed or fail. Academics unpack the data and devise theories, practitioners spot patterns over the course of their career and provide consulting advice on how to bring about change successfully. However, despite fields of academic study devoted to change management, and millions of dollars spent annually on business transformation, there is no definitive theory or set of principles to guide a company undergoing change.

A brief search reveals suggestions for: The 4 Pillars of Successful Change Implementation; The Three Components of Organisational Change; The 5 Key Elements for Successful Change Management; Changing Change Management; and more.

Suggestions as to the critical components that lead to a successful organisational change abound: Clear Vision, Accountability, Accessibility, Alignment; or maybe it’s Planning, Leadership, and Maintenance of Change; but could it be Communication, Engagement, and Enrollment?

All of these concepts no doubt contribute to making organisational change a success. It seems unlikely that any project could succeed without a clear vision or communication, planning or leadership. What appears to be lacking though, is a cohesive way of thinking about organisational transformation and change management holistically. Transformation doesn’t happen person by person, or department by department. It succeeds when all of the interconnected and interdependent relationships between individuals, teams, departments, and business units all work as a synergistic whole. In other words, it succeeds when all of the elements within the system work as a collective unit.

One useful way to think about the interconnected relationships between elements is with system thinking. Applying a system thinking lens to organisational transformation enables a change leader to think through not just the key pillars of change, or the human components of an organisation, but to encapsulate all of the different ways that the elements within the system interrelate to form the whole company.

What is System Thinking?

System thinking and systems theory seeks to understand the relationships between structure and behaviour. Understanding how systems work allows us to identify the causes of substandard performance and to make interventions that lead to better behaviour patterns. In other words, system thinking doesn’t just tell you is happening, but also helps explain .

A system is a set of things — people, cells, molecules… — interconnected in such a way that they produce their own pattern of behaviour over time.

- Donella Meadows, Thinking in Systems

When applied to organisational change, system thinking focuses on the connectivity between people. One of the key insights of system theory is that systems involve interconnected relationships and feedback loops. Feedback and feedback loops can quickly produce exponential effects on the system, causing unintended or unforeseen outcomes. Feedback loops are easily missed in a traditional analytical approach to problem solving since analytical thinking focuses on breaking the whole down into the constituent element and looking at each element individually. Thus, system thinking provides a way of approaching problems that enables one to account for non-linearity, and importantly in our context, to take into consideration a dynamic collection of relationships that change over time.

How Can System Thinking Be Applied to Change Management?

When undergoing organisational transformation, many managers struggle to find ways to think holistically about the change. Fires spring up across many different teams, departments, or business units — all seemingly urgent — resulting in a disorganised and unprioritised list of independent action items to resolve the problems that are occurring. This leaves change managers feeling like they are playing a game of whack-a-mole where solving one problem causes two more to spring up elsewhere.

One of the most significant benefits of applying a system lens to organisational change projects is that it allows a change agent to identify points of leverage in a system — a small number of crucial relationships that produce outsize impacts on the system as a whole. By communicating this information to the appropriate managers, change leaders can direct resources to these points of leverage and make informed, meaningful interventions. During times of transformation, budgets, resources, and time may be in short supply. Thus, concentrated effort on a small number of points of leverage at a single point in time provides both a logical approach to transformation and an effective use of constrained resources.

Not all leverage is created equal…

Donella Meadows and the Academy for Systems Change suggest that there are four layers of leverage. Meadows suggests thinking about it in terms of an iceberg. Using the iceberg model, we can recognise that there may be more to a system than meets the eye. The tip of the iceberg — events — are what we experience in the world. The rest of the iceberg reveals three levels of “hidden” parts in a system that influence the way the system works. These are: patterns of behaviour, systems structure, and mental models. As we go deeper toward the bottom of the iceberg, leverage increases. However, there is a balance here: since it may require significantly more effort and creativity to change people’s mental models than to change behaviours, managers must think carefully about where to direct their time and energy.

The Iceberg Model from the Academy for Systems Change

Create a Causal Loop Diagram

Causal loop diagrams are frameworks for exploring and understanding systems. It allows a manager to identify the elements that make up a system and map the relationships that link them together. This is important because it provides a way to visualise potential causes for confusing behaviours or unintended system outcomes.

A causal loop diagram is made up of:

Elements Relationships or links Signs on the links indicating how the elements are related Signs on the loops indicating the behaviour produced by the loop

The illustration below shows a very simple causal loop diagram of how money in a savings account is increased by interest earned. Interest earned is also increased by the amount of money that is in the savings account. Since the two relationships between the elements are positive (indicated by an ‘s’ next to the arrow), and there are no negative relationships in the loop — it is known as a reinforcing loop. Reinforcing loops produce exponential growth or decay in a system which can often lead to unexpected outcomes.

A very basic reinforcing loop example

The next illustration below represents a vey simple balancing loop. Balancing loops have an odd number of negative relationships (indicated by an ‘o’ next to the arrow) and tend to produce outcomes that oscillate and eventually trend toward equilibrium.

A very basic balancing loop example

With all of the key elements in place and the interconnections between them mapped, change managers can apply a system view to organisational transformation. Furthermore, complex patterns of behaviour may be more easily understood once the reinforcing loops between elements are identified. This allows resources to be targeted toward solving problems at the source without getting carried away dealing merely with symptoms.

Change Structure to Change Behaviour

The key insight of causal loop diagrams is that there is often a structural reason, or cause, for the emergent behaviour within a system. Moreover, the important thing to recognise is that the behaviour of a system is an outcome of the way a system is structured. In other words, the behaviour we see is a result of the interplay between the way the elements in a system are organised and connected — not always due to a pre-specified purpose. The reason why this is useful is because it frees a change leader to focus on creating better structures in an organisation rather than making futile attempts to control people’s behaviour.

A Complex example: A causal loop diagram summarising the dynamics of a social-ecological system.

Get the Whole System in the Room

In order to make meaningful organisational change, it requires buy-in. It is not enough for a leader to make decisions in isolation and then disseminate that information in a trickle-down fashion. To be truly effective and to make real progress in transforming an organisation (and thereby a system), it is crucial to get the whole system in the room.

Getting the whole system in the room means identifying all of the stakeholders that have a say in the change and bringing them together to co-create systemic (rather than single problem) solutions. It may take the form of a town hall meeting, or a three day retreat. Although administratively challenging, a system-wide meeting enables every stakeholder in a system to have a voice and take part in the change. When people participate in change and feel a sense of ownership, they are far more likely to enact and sustain it.

Another benefit of ensuring that the whole system is present when planning for organisational transformation is that it helps to uncover blind spots. Groups composed of one person from each stakeholder group quickly come to realise that their department/function/workstream is part of a much larger system and that challenges faced by one group have knock-on (or reinforcing) effects that impact the rest. Equipped with a mutual understanding, it becomes possible for stakeholders to begin co-creating systemic solutions to previously intractable problems. Furthermore, a critical point here is that when solutions are proposed and plans are created — having the whole system in the room means that those with the authority to make decisions and direct resources are already there, and already bought in. This is absolutely critical in organisational transformations that often have tight timelines and constrained budgets to work within. Suddenly, problems are turned into solutions and then into actionable plans that have buy in, very quickly — and all of the admin to get the whole system in the room was worth the effort.

A useful moniker to guide thinking around who needs to be in the room has been proposed by Weisbord and Janoff (2007): ARE IN

Authority to act — decision-making responsibility

Resources to enact change (time, capital, contacts, energy)

Expertise on the topic or issues under consideration

Information that everyone needs or that no others have

Need — they are going to be impacted by the outcome and can articulate the consequences

System Thinking Can Change How You Do Change Management

System thinking is an incredibly valuable mindset that can be applied broadly. The system thinking approach focuses on the interconnected relationships between elements and the emergent behaviour of the system as a whole. Understanding the connections in a system enables change agents to concentrate their efforts on points of leverage and create a meaningful impact with their limited resources. Causal loops diagrams enable leaders to take a system view to organisational change and visualise the reinforcing and balancing loops within a system. This helps in identifying and understanding the causes behind the unexplained behaviours in a system and illuminates potential adjustments that can be made to the structure of a system to get the desired results. To enact systemic change that lasts, leaders need to ensure the whole system is in the room and understand that if the right mix of people ARE IN it together, meaningful change can happen.