AOE 1. Performance Improvement; Sub section 1.2. Systems thinking and theory
This episodes Learning Objectives for Systems Thinking and Theory: 

• Explain why systems thinking and theory are important for improving performance
• List three cultural and global factors the practitioner should consider during a performance improvement initiative
• Describe mergers and acquisition management
• List and describe two sets of factors related to industry knowledge 
• List four factors related to broad company knowledge 
• Explain the concept of a system archetype

Systems thinking looks at problems in a holistic way and puts them into context of the whole to find objective performance solutions. When taking a systems approach to projects, you need to look at the entire organization with regards to the ramifications of all decisions and strategies. For example, you might question the types of behaviors that are being rewarded or incentivized — and how this might look if people were rewarded for long-term systematic changes. More on what systems thinking involves: what, why, when, where, and how?

The goal is to determine the underlying and fundamental relationships causing the problem. It’s a proactive way to avoid the continual reaction and need to manage issues. General principles of systems thinking includes:

• Identifying the problem and separates the issue into parts; actions taken may have other consequences that make the overall situation worse
• With complex systems there may be many interdependencies, so it is key to identify the best places for performance solutions to be effective at solving the problem; keep in mind the interconnectedness of all people, process, equipment, and materials in a system will matter
• System boundaries need to be defined to reduce the scope of the problem to focus the analysis and simplify the problem; keep in mind that a narrow scope (most common error) also gives a limited perspective of analysis and understanding of the variables creating the problem
• An open system, one that interacts and learns from its environment, can be influenced by outside events and need boundaries; a closed system is self-contained 

Characteristics of systems thinking:

• Understand complex relationships and interdepencies
• Take responsibility for fixing problems
• Balance short-term and long-term needs and perspectives
• View an issue or problem in another way
• See the entirety of a situation
• Discern patterns of recurring problems not created by daily events
• Question any and all underlying assumptions
• Develop understanding and compassion

Principles of Systems Thinking (Kauffman, 1980; Senge, 1994):

• There are no final or right answers
• Cause and effect are not related to time and space
• Solutions require careful consideration
• Behavior gets worse before it gets better
• There are limits in every system
• Foresight benefits the organization — especially with complex systems who are not linear, but are self-organising

READ: The Six Systems Thinking Steps to Solve Complex Problems

Levels of Systems Thinking Problems — involve the understanding how how you view the problems in terms of events, patterns, and structures. Ways to unlock systems level change you need to unpack the systems mindset, identify the right tools or process for the job, and understand the impacts of human dynamics. How does systems thinking impact a collective mindset? What are the ways we can solve issues with these considerations? 

Cultural and global factors that can affect the organizational system include:

• Economic factors, e.g. pricing and local currency
• Social interactions, e.g. societal norms 
• Traditions, e.g. holidays

Systems thinking helps to identify and respond to a series of changes before those changes lead to failure — especially as organizations experience transitions (e.g. mergers and acquisitions). People experience these transitions in four stages — here are their reactions to change:

1. Disengagement: an individual appears to lose interest and initiative. 
2. Disidentification: employees  feel they have lost their identities and become vulnerable
3. Disorientation: employees feel lost and confused, do not know where they fit in, or what they feel; their priorities or direction are gone and often spend time determining what should be done instead of how to do it.
4. Disenchantment: distinguished by the feeling of being disappointed with something and not longer believing that it is good or worthwhile; employees may become negative or angry and seek support during change

Other factors to benchmark during a business analysis include:

Industry Knowledge           
-the organization’s rationale for a goal and why it is a priority

-other organizational goals, that may be competing or contradictory

-other strategies that have been identified or tried previously to meet the goal

Industry factors to understand:

--the competitive environment

--compliance issues

        Broad Company Knowledge:

-the industry segment

-the organizational structure

-the formal and informal power structures

-knowledge transfer

Business awareness: key factors impacting the organizations current situation, influences in the market/industry, and factors affecting health.

System Archetype: is a pattern of behavior of a system which can be used to identify the type of system one is working with. Here are eight system archetypes and their storylines as mentioned in this episode. Examples discussed include: Fixes that fall; Shifting the burden; Limits to success; Drifting goals; Growth and underinvestment; Success to the successful; Escalation; and Tragedy of the commons

Books mentioned in this episode:

• The Fifth Discipline by Peter Senge 
• Systems One: An Introduction to Systems Thinking By Draper Kauffman