1 Systems Thinking: What and Why

In an era defined by rapid technological advancement, global interconnectedness, and complex societal challenges, managers and leaders face an urgent imperative: to think beyond linear, short-term solutions and embrace the nuanced, dynamic perspective that systems thinking offers. At its core, systems thinking is not merely a set of tools but a way of understanding the world: a mindset that equips leaders to navigate complexity, identify unintended consequences, and make decisions that promote resilience and sustainability.

The Systems Thinker

It can be difficult to define systems thinking, but we all recognise a systems thinker when we see them. In our own organisations, we’ve all encountered colleagues who have mastered the art of gaming the system; those who put in the least effort necessary while managing to avoid any negative consequences. At the other, more positive end of the spectrum, we’ve hopefully had the privilege of working with or for leaders who instinctively know how to bring together people with vastly different interests and align them toward a common goal. These are the leaders who see the bigger picture, who know exactly where to line up the next shot on the pool table to keep the game progressing. At the very top of the systems thinking tree, we find individuals like Angela Merkel, who’s leadership of the European Union provided both a force for stability and a catalyst for change.

The first three examples (system gamers, skilled pool players, and Angela Merkel) share a core commonality: they all demonstrate a deep understanding of how interconnected systems operate, albeit in different ways and in different levels of complexity. Here’s why we can consider each of them systems thinkers:

1. The System Gamer

These individuals (and we all know them!) exploit the interdependencies within a system to achieve their goals with minimal effort. They recognise how rules, incentives, and loopholes interact and leverage this understanding to manipulate outcomes in their favour. While their approach might not be ethical, it reflects an acute awareness of systemic dynamics and the ability to anticipate cause-and-effect relationships within a complex framework.

2. The ‘Pool Players’:

   A great pool player doesn’t just focus on the immediate shot; they plan several moves ahead, considering how each shot affects the position of the balls on the table. Managers who have this kind of knowledge of their system understanding how their actions and the actions of others create feedback loops and make decisions that account for multiple interconnected variables to achieve long-term success.

3. Angela Merkel:

   At the pinnacle of systems thinking, Merkel exemplifies the ability to balance competing priorities and dynamics within vast, complex systems like the European Union. Her leadership demonstrates an understanding of how economic, political, and social systems interconnect. She could navigate crises by stabilising relationships and fostering cooperation across diverse stakeholders while introducing meaningful changes to ensure long-term systemic health.

As systems thinkers these three share an holistic perspective, an anticipation of consequences (and whether to exploit or stabilise) and the ability to align short-term actions with long-term goals, ensuring coherence across interconnected elements.

Even a high-level understanding of systems thinking can empower leaders to:

1. See the whole system, not just its parts.
2. Embrace diversity of perspectives to enhance decision-making.
3. Intervene effectively.
4. Build adaptive, sustainable systems that serve both short-term needs and long-term goals.

Why Systems Thinking?

To illustrate the need for these skills, consider the cautionary tales of these three organisational failures: PWC Australia, Robodebt, and Uber. PWC’s collapse stemmed from systemic governance failures, where interrelated financial and ethical breaches went unchecked due to a lack of holistic oversight. The Australian government’s Robodebt scheme, a welfare compliance initiative relying on automated debt recovery, became a scandal because decision-makers failed to account for the broader social and ethical implications of using technology to target vulnerable populations. Even a celebrated innovator like Uber has grappled with systemic issues, such as labour exploitation and regulatory pushback, due to its failure to balance disruptive ambition with stakeholder well-being. Each of these examples demonstrates how decisions made in isolation, without understanding interconnected systems, can lead to catastrophic outcomes.

The Real Opportunity

The argument for systems thinking is not merely that it helps leaders avoid catastrophic failures, though that is critical. Its true value lies in the ability to create better futures.

Leaders who adopt systems thinking mindsets can:

• Recognise and challenge dominant narratives that oversimplify complex problems.
• Foster collaborative, inclusive processes that harness the wisdom of diverse stakeholders.
• Make interventions that deliver meaningful, lasting impact rather than superficial fixes.

As we will explore throughout this book, systems thinking is not about adding complexity for its own sake. It is about finding clarity amid complexity, equipping leaders with the tools and mindsets to thrive in an uncertain world. By learning to see, think, and act systemically, today’s leaders can steer their organisations and communities toward greater resilience, equity, and prosperity, avoiding the pitfalls of PWC Australia,  Robodebt, and Uber while seizing the opportunities that emerge from the workings of complex systems.