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Going below the tip of the iceberg
Rashmi Verma
7 min read
April 12
Rashmi Verma recommends developing systems thinking as a strategic practice.
Rashmi Verma recommends developing systems thinking as a strategic practice.
We are continuously operating amid various systems. Nations, economies, organisations: all function based on interdependent variables and continuous interactions contributing towards an outcome. An organisation operates with the synchronised efforts of its employees and systems guided by processes and policies within the business ecosystem. Systems thinking in the context of business is about taking a holistic view of this interdependence and the impact of each variable on all others.
In the last 12 years of my career, steering corporate strategy roles that were often combined with chief of staff responsibilities with the head of the organisations, I have witnessed first-hand the complex dynamics of leading organisational projects and cross-functional initiatives. Maintaining connectivity within the systemic organisational structure is crucial to continuous efficiency and future preparedness. This requires accessing and synthesising a plethora of multi-dimensional information. An organisation that practices this sort of systems thinking is set to take well-informed decisions and respond to dynamically evolving ecosystems and disruptions.
Systems Thinking
Systems Thinking
The concept of ‘Systems Thinking’ was introduced in 1956 by Professor Jay W. Forrester at the Sloan School of Management at MIT. Systems theory believes in the holistic approach of considering any system as larger than the sum of its parts. A system is a set of things working together as parts of a mechanism or an interconnecting network; a complex whole. We can think of an individual business as a system: different departments and functions work together to create and sell a product or service. Businesses also extend to a wider system with multiple stakeholders – customers, suppliers and advisers, agencies, banks, and competitors – that interacts with legal and political systems and the familial and social systems of all their employees. Therefore, in order to solve a problem at the business level, it is important to understand the impact of all the subcomponents of the same system, and of the other systems that intersect it. It is similar to the difference between looking closely at the detail of a Pointilliste painting and zooming out to see the full image.
Systems thinking calls for breaking the traditional linear flow of identifying a problem and then finding a solution. Such an approach often fails to account for the impact of any decision on other parts of the system. But a holistic analysis of the whole system can often better clarify both the problem and the ways to tackle it.
For example, in a mid-size Software as a Service (SaaS) organisation, a series of new products did not receive the expected market response, and certainly not the expected revenue. After a series of small interventions, the management decided to investigate the situation with a thorough analysis of the entire process including product development, quality of the sales cycle, nature of customer complaints, and internal feedback from every business function involved. They discovered that the product team did not maintain continuous interactions with the sales team during the development and implementation phase. As a result, either the product didn’t meet market expectations accurately, or the sales team struggled to pitch the product correctly and align it with customer requirements. This led to constant pressure on the product, production, sales and distribution teams. Once this analysis was gathered and communicated, the product team took a holistic approach and brought all the different functions together to create an inclusive methodology of planned interactions in development of the product. They also created a well-planned bridge in assisting the sales team with customer interactions. As a result, the following year started witnessing a steady flow of positive feedback and revenues.
Systems thinking into practice - The Iceberg Model
Systems thinking into practice - The Iceberg Model
The Iceberg Model of culture, introduced by the anthropologist Edward T. Hall, suggests that events and patterns visible to us are caused by systemic structures and mental models which are often hidden. ‘Systemic structures are the organisational hierarchy; social hierarchy; interrelationships; rules and procedures; authorities and approval levels; process flows and routes; incentives, compensation, goals, and metrics; attitudes; reactions and the incentives and fears that cause them; corporate culture; feedback loops and delays in the system dynamics; and underlying forces that exist in an organization’ (Monat et al, 2015). Only the tip of an iceberg is visible above the water, and majority of it is below sea level. However, that invisible part determines the true size and nature of the iceberg.
The Iceberg model emphasises assessing the invisible variables leading to an event or situation. This promotes ‘big picture’ and cohesive thinking within an organisation.
Events/Incidences/Issues
Everything visible
Patterns
What is the recurrence and behavior, what has been the pattern
Systems/Structures/Interconnectivities
The relationship between various parts that influence the pattern
Mental Models
The relationship between various parts that influence the pattern
Influencing factors
(not visible)
In practice, to use the Iceberg Model, you need to synthesise the information in the four key categories and deep dive to understand the complete scenario and the reasons behind the events that you can see. The following case study investigates the post-COVID-19 ‘Great Reshuffle’ and the following year of layoffs.
- Event (visible issues): In the USA, nearly 47 million employees quit their jobs in 2021–22. The Great Resignation was a trend identified by Professor Anthony Klotz of Texas A&M University. This period saw employees seeking alternative opportunities that facilitated a long churn of individual aspirations translating to new jobs, entrepreneurial ventures or independent new journeys. But this wasn’t all: the Great Resignation was immediately followed by a year of massive layoffs globally, where tens of thousands of employees were given pink slips owing to weak consumer spending and high inflation rates leading to aggressive cost-cutting initiatives.
- Pattern (Investigate the path of occurrence of the above, the pattern or trend): The foundation of this mass exodus was already building before COVID-19 emerged, but reinforced by pandemic-induced changes to working arrangements. The rising awareness that patterns could be broken and that choices could be made about when and where work could be done was also supported by the availability of flexible and employee-led policies in many organisations. Meanwhile, organisations were also making aggressive talent plans to maintain a balance (with the shuffling workforce) and to be ready for the anticipated expansions in particular industries, especially within the technology sector.
- Underlying structures (interrelationship of the various parts or processes that influence the patterns): Technology-led Industry 4.0 and the rapid changes in the way life is lived and work is done are leading to non-traditional approaches to work and employment. Moreover, the age of social media has also led to new lifestyle aspirations and an increasing expectation that work environments should be able to cater to individual needs. At the same time, there has been increasing competitive pressure on organisations to be ‘lean’ and agile.
- Mental models (beliefs): Already less inclined than previous generations to envisage spending entire careers with the same employer, the global workforce took a step back during the pandemic and thought deeply about life and work. Burnout was widespread, recognised and discussed. LinkedIn's Global Talent Trends 2022 report highlights compensation, work life balance, flexibility and upskilling as the top priorities that surfaced post-pandemic for the majority of workers. Meanwhile, many organizations, particularly the big technology companies, that had initiated massive talent acquisition plans based on the assumption of continuing unfettered growth have seen these disrupted by the changing economic situation and further by the pandemic.
If we look below the waterline, many of the issues driving employee resignations could have been pre-empted. Similarly, there have been rising concerns over shrinking consumer spending and increasing inflation, which require conscious future planning and talent management efforts by organisations starting many years in advance. It is also true that the global landscape is fast evolving and facing continuous disruptions. Even now, an organisational response to labour market challenges requires an evolving understanding of mindsets and structures throughout the system if it is to be effective.
Three ways to embed systems thinking in your organisation
Three ways to embed systems thinking in your organisation
- Maintain central teams (for example, the offices of the chief of staff or chief of strategy as they carry a full view of the organisation design) with a remit to monitor the interdependence of various functions and sub-units of the organisation: who are the key stakeholders and what are the key positions, main functions, important processes and platforms, critical timelines and dependencies, risk assessments. This approach can be replicated further by each functional head for their respective teams; over time this will become a practice. Therefore, any time a project is planned, or a problem is addressed, the impact will be assessed in a realistic manner and with awareness of the likely impact. This also enables continuous improvisations.
- Allow time for senior leaders to periodically review systems so as to maintain the rhythm and assess any signs of future problems (read iceberg model) that can be mitigated with early action.
- Encourage ‘big picture’ thinking and build alignment to reconcile activities within the business ecosystem.
Author Bio
Rashmi Verma
GM - Strategy and New Business
HarperCollins Publishers
Rashmi Verma is a Corporate Strategy and Business Transformation Professional. She has experience of working in various industries including global education space with the likes of HarperCollins and Wiley, law firm management, and led various roles in strategy and consulting for the last 12 years wherein she also led responsibilities of the chief of staff position
Reference:
- Jamie P. Monat*, Thomas F. Gannon What is Systems Thinking? A Review of Selected Literature Plus Recommendations, 2015 American Journal of Systems Science http://article.sapub.org/10.5923.j.ajss.20150401.02.html
- Marion A. Weissenberger-Eibl, André Almeida, and Fanny Seus, 2019, A Systems Thinking Approach to Corporate Strategy Development, https://www.researchgate.net/publication/331708985_A_Systems_Thinking_Approach_to_Corporate_Strategy_Development
- The Great Resignation Stems from a Great Exploration, Keith Ferrazzi and Mike Clementi https://hbr.org/2022/06/the-great-resignation-stems-from-a-great-exploration
- Majority of workers who quit a job in 2021 cite low pay, no opportunities for advancement, feeling disrespected, Kim Parker and Juliana Menasce https://www.pewresearch.org/fact-tank/2022/03/09/majority-of-workers-who-quit-a-job-in-2021-cite-low-pay-no-opportunities-for-advancement-feeling-disrespected/
- Joseph Fuller and William Kerr The Great Resignation Didn’t Start with the Pandemic . HBR, March 2022, https://hbr.org/2022/03/the-great-resignation-didnt-start-with-the-pandemic
- LinkedIn Global Talent Trends 2022, https://business.linkedin.com/talent-solutions/global-talent-trends#
- Oxford Dictionaries (2008) Concise Oxford English Dictionary 11th edn. Oxford: Oxford University Press
- Edward T. Hall, Beyond Culture, 1976, https://www.spps.org/cms/lib/MN01910242/Centricity/Domain/125/iceberg_model_3.pdf12
- Wendy H. Mason "n.d." Reference for Business. https://www.referenceforbusiness.com/management/Bun-Comp/Complexity-Theory.html#ixzz7qYkZJqyB
