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The Value of Systems Thinking in Developing Corporate Strategy
Introduction
Systems thinking in company management can significantly affect the organizations success. This approach is of great value in developing a companys strategy. First of all, it allows to conduct a comprehensive assessment of the current affairs and prospects of the organization and to take measures to improve the situation. Thus, systems thinking in management needs more profound research.
The Connection between Systems Thinking, Projects, and Corporate Strategy
Systems thinking is required in making critical strategic decisions for a company. As Monat, Amissah, and Gannon (2020, para. 2) state, it informs pricing decisions, product development, staffing decisions, sales commission structures, inventory management, quality assurance procedures, administrative decisions, and employee motivation. Moreover, this approach is directly related to projects and corporate strategy. Weissenberger-Eibl, Almeida, and Seus (2019, para. 10) state that applying a systemic approach is needed to overcome the limits of decision-making and information processing and to reduce biases in strategy development. Therefore, if the organization is managed based on systems thinking, the company is more likely to secure a good reputation and stable income.
Systems thinking in developing a companys strategy makes it possible to avoid adverse circumstances for the organization or reduce their impact. According to Grewatsch, Kennedy, and Bansal (2021), this approach to company management helps to anticipate changes in the target audiences intentions and build behavior patterns. Thanks to this, companies providing products and services can, for example, develop an effective sales plan or advertising campaigns.
As part of developing a companys strategy, systems thinking helps to analyze the environment and potential of the organization. According to Weissenberger-Eibl et al. (2019), this strategy-building approach helps identify organizational weaknesses early. Furthermore, if you consider the company as an integrated system, you can achieve a better interaction between different departments.
The application of systems thinking is also possible within the one project. Elia, Margherita, and Secundo (2021) argue that every project comprises subsystems divided into critical components and management decisions. Accordingly, considering all these components in a system inseparably from each other can assist to achieve tremendous success and get a better final outcome.
Example
To illustrate, consider a scenario in which a company launches a new product and receives negative feedback on product quality from customers. Feedback is an essential component of systems thinking, as its primary goal is to gain a better understanding of all the forces that are producing the behaviors we are experiencing (Kim, 1999, p.6). Negative product reviews can lead to vicious cycles that result in reduced sales and losses for the company.
At the same time, a systematic approach to solving the problem that has arisen will start balancing processes. These processes stabilize all processes in the company since Balancing loops are continually trying to keep a system at some desired level of performance. Thanks to these loops, the company will be able to improve the quality of the product to stabilize situations effectively. Moreover, loops and labels allow you to loop this process so that the quality of the product will constantly grow.
Conclusion
Thus, we can conclude that the application of systems thinking in the launch of individual projects and the development of the companys overall strategy is very effective. In addition, taking into account feedback, loops and labels will help the company cope with crises and guarantee its stability. Thanks to this approach, the organizations management can predict the audiences behavior and take timely measures to satisfy the clients requests.
References
Elia, G., Margherita, A., & Secundo, G. (2021). Project management canvas: a systems thinking framework to address project complexity. International Journal of Managing Projects in Business, 14(4), 809-835.
Grewatsch, S., Kennedy, S., & Bansal, P. (2021). Tackling wicked problems in strategic management with systems thinking. Strategic Organization.
Kim, D. H. (1999). Introduction to systems thinking. Pegasus Communications
Monat, J., Amissah, M., & Gannon, T. (2020). Practical applications of systems thinking to business. Systems, 8(2).
Weissenberger-Eibl, M. A., Almeida, A., & Seus, F. (2019). A systems thinking approach to corporate strategy development. Systems, 7(1).
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