One in every five companies in the world winds down operations only one year in, and half of new companies leave the market before reaching the five-year milestone. The lack of finances and extremely high competition were only recently considered main causes of failure. But today, inability to show flexibility and quickly adapt to the rapidly changing VUCA world are considered the biggest obstacles to growth. Systemic thinking may be the secret ingredient to success that can save the day. This kind of mindset means that the top management is capable of assessing risks in a holistic way, discovering hidden consistent patterns while also taking effective decisions amidst the general uncertainty about the future. Is this challenge actually relevant for businesses and is it possible to train the “systemic” muscle? Are Russian top managers ready to think systemically? Invest Foresight interviewed Elena Borodina, competence assessment expert, career coach, Vice President and member of the International Management Academy.
System diagnostics
– Elena, are companies currently lacking systemic thinking?
– Unfortunately, yes, and this is a very serious problem. Top managers do not have this skill. I know it from my own experience; I have worked for decades with businesspeople from various kinds of companies. Interestingly, many of them believe that they not only have this competence, but also actively use it in business processes.
– How can absence of systemic thinking be detected?
– Being an expert, I only need to ask a seemingly simple question: what was Dmitri Mendeleev’s greatest discovery? I ask this question the top managers who come to me for a consultation and are interested in developing systematic skills. Most often, they – even experts in medicine and chemistry – say, “he discovered the periodic table of elements.” And this is a wrong answer. Dmitri Mendeleev did not discover the table; it is nothing more than a graphic representation of the law he discovered that describes periodical regularities of how the chemical properties of elements and their combinations change depending on the charge of their atomic nuclei. This is one of the nature’s fundamental laws, like Newton’s laws.
– How is it connected to systemic thinking?
– The answer about the table shows not the lack of necessary knowledge, but the lack of systematic thinking and the respondent’s ill-preparedness for looking at things in a holistic way. It was this approach that Mendeleev used; he began with learning the properties of simple elements, found connections between them, analyzed huge amounts of information and as a result saw the picture as a whole by discovering the periodic law. Moreover, he left some of the table cells empty because he foresaw the existence of elements that were to be discovered in the future. It was not a guess, but a calculation based on the periodic law.
The philosophical meaning of the law is that when knowing the law and its patterns, we can foresee future case scenarios. And in this sense, the periodic law is directly related to history, sociology, medicine, and of course, economy and management.
Pillar of life and business
– Is it possible to learn to think in a holistic way?
– Of course, and I prove it every day in my work. Today, many become hostages of clip thinking; people lost the skill to build cause and effect links despite the accumulated knowledge. To look at the fullest picture available, one needs to develop some fundamental skills. We develop them, even though it is not a simple process. But Russia is lucky in this sense: the Russian society tends to think systematically, this is our nature. The Western countries are used to act in accordance with a set template, not asking questions. In some cases, this is justifiable, but a strict system destroys talents and holistic thinking and replaces it with clip thinking.
– What methods to develop holistic thinking are the most effective?
– One should begin with the basics and find a point of departure. To that end, we learn to doubt, ask questions, and answer them honestly. What is it that you really want? What do you mean when you say that you want to reach this goal? Are you sure that this is what you want? What goals did you have 5, 10 years ago? It is often scary to answer these questions. But it will help to build a foundation for life and business. To get to the point B, one needs to know where they are and be able to describe the point A. Only then we can begin to move forward.
– Does it involve the skills a person already possesses?
– At the next stage, it is important to understand what resources and skills a top manager actually has to achieve their goals. Those are normally divided into three clusters. The first one involves hard skills – namely, all specific abilities that answer the question “What can I do or am I capable of doing?” The next cluster is about soft skills, which answer the question “How do I do it?” They include emotional intelligence, the ability to efficiently communicate with people, the ability to negotiate and flexibility, as well as creativity and intuition. The third cluster involves self skills, also called spiritual and moral skills, or DNA competence. These abilities are aimed at self-knowledge and self-awareness, as well as understanding one’s inner boundaries and ethical norms.
A comprehensive assessment of these three clusters allows you to look at yourself in a holistic way, sort yourself out, and ultimately take a step towards a systemic view of your business and even create unique products to align with yourself and your true values.
Competence for business
– Is business interested in managers with systems thinking skills? Is competency relevant for hired managers?
– It doesn’t matter whether one is a business owner or a hired top manager. A person who is unable to see and assess the business in its entirety would mean inevitable constant conflicts in the company, with management process resembling that of a circular firing squad – all due to a lack of understanding of what your business actually needs and what is useful for it and what is not. Here, the holistic approach is essential for any business process as well as for employees in every segment. If a top manager cannot think systematically, they act simply as an ordinary executive, perhaps performing their duties properly but in no way differently from, say, a loader or a secretary.
– What businesses see a lack of systems thinking as particularly relevant?
– I know a fair amount of medium-sized businesses whose owners are extraordinary, talented and truly systems thinking people actively involved in the processes. They may have cash gaps, experience problems with personnel and seek investments, but this is a living dynamic business. I know a lot of such companies that have operated for 10, 15 and even 20 years – and these are real green islands. As to large corporations, they already operate as a tightly organized system, with executives and regulations being important. No major system can work in a different way; the question is where its areas of growth are located.
– Do corporations seek systemic thinking?
– A corporation is characterized by a well-oiled system, which is highly essential. However, this concept is not equal to systems thinking: the latter primarily implies independence, the ability to assess the situation in a comprehensive way, including from an unconventional perspective that is beyond horizon – which is not what large organizations always seek. It is no coincidence that their employees often quit to start their own business. This is a challenging path for small and medium-sized businesses – yet, such companies still view people, human qualities, ideas, development, and commitment as important.
– Do major companies need the holistic approach?
– It would be ideal to have people with holistic mindset managing large corporations, departments and regions. This would allow everyone to live in a truly social community. I make efforts to contribute to this process through ‘sowing what is wise, good and true,’ helping grass break through asphalt.