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Larry Reynolds

Courageous Conversations at work

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Organisational development – which model should I use: Part 4


In the fourth article in our series on organisational change models, Larry Reynolds examines the pros and cons of the 'Systems theory'.

Most people who want to bring about change in their organisations think in terms of cause and effect. If we introduce a new performance management process, then performance will improve. If we send people on a customer care training course, then customer satisfaction will increase. If customer satisfaction increases then our profits will go up.
But anyone who’s tried to bring about organisational change knows that it’s not that simple. Causes don’t always lead to the effects you expect. Many years ago, I’d hitchhiked a ride in a lorry which was approaching a busy roundabout. Yellow lines were painted across the road, and the nearer we got to the roundabout the closer the lines were together. The idea, I suppose, was to create the sensation of speed and so persuade drivers to slow down. When I said this to the lorry driver his reply was: "I don’t know about that – they make my eyes go funny so I always drive over them as fast as I can."
Systems theory is a way of making sense of causes that lead to unexpected effects. Although the basic idea has been around for more than a century, Peter Senge first drew attention to it in a business context with his 1990s best selling book, 'The Fifth Discipline'.
"Systems theory does a great job of capturing the complexity and messiness of real life. It’s particularly good at explaining organisational phenomena that seem a bit counter intuitive."
According to Senge, if you want to understand how organisations work, you have to understand them as systems. Causes and effects can be linked by loops as well as one way lines. With reinforcing loops, a relatively small cause may lead to a massive effect. If your manager tells you that you are not working hard enough, you may feel sufficiently miffed to take your full lunch break instead of working through it as you used to; when your manager realises that you are away from your desk he’s even more critical next time you meet, and your output drops further… and so on. In balancing loops the effect tends to cancel out the cause, in the same way that a thermostat will switch off the boiler when the room gets too hot.
There’s more to systems theory than loops and lines. It’s particularly useful when considering how an organisation interacts with other systems in its environment.
In the 1980s fishing fleets operating in the North Atlantic competed aggressively against each other to get as much cod out of the sea as they could. Because they were fishing faster than the fish could replenish themselves, cod stocks dropped by 90% between 1980 and 1995 and most of the fishermen lost their jobs. (If you give a man a fish you feed him for a day, but if you teach him how to fish you risk wrecking the world’s ecology).
Had the fishermen looked beyond their own fleet to look at the fishing industry as a whole, they might have been able to agree a different course of action which would have protected their livelihood to this day. This phenomenon – of overexploiting a scarce resource – is called the tragedy of the commons. Systems thinking encourages people to think about the complex interactions, not only within the organisation, but also across its boundaries.


Most organisations are complex, and simple models often fail to predict accurately what will happen in the real world because they are too simple. Systems theory does a great job of capturing the complexity and messiness of real life. It’s particularly good at explaining organisational phenomena that seem a bit counter intuitive. For example, sometimes performance management processes make people perform worse, not better, and systems theory can help you understand why.

One especially useful systems theory concept is the point of leverage. Often, in very complex systems, a comparatively small intervention can produce huge, positive effects.
Another useful idea is that innovation comes from crossing the boundaries of the system. US carmakers were until very recently trying to make traditional cars better – faster, more features and all the rest of it. (Now they’re just trying to survive). But more than 20 years ago Toyota realised that cars were part of a bigger system, and that true innovation would come from examining the boundary between cars, oil supplies, carbon dioxide emissions and climate change. Hence Toyota’s success with the hybrid Prius, and the likelihood of further success with all electric cars.


Systems theory is itself quite complicated, and it doesn’t have the intuitive appeal of Kotter’s eight steps, or the change equation. Human beings do like simple models, even if they are not always up to the job of dealing with complex situations.
And systems theory can sometimes be guilty of promising more than it can deliver. Some systems are so complicated, that they are inherently unpredictable, however sophisticated your model – or so Nassim Taleb claims in his influential book The Black Swan.
In some situations trying to control change probably doesn’t make sense – instead it’s better to use tools like 'appreciative enquiry' which help you to guide emergent change. That’s the topic of my next article.
But before we throw out the baby with the bathwater, it’s worth drawing attention to the biggest tragedy of the commons of all time: climate change. Peter Senge’s most recent book, 'The Necessary Revolution', describes the way businesses are using a systems-thinking approach to tackle climate change. Systems thinking has both pros and cons, but when it comes to tackling global warming we need all the help we can get.
Read the other articles in Larry's series:

John Kotter's leadership model

The change equation and change curve model

Larry Reynolds is managing partner of 21st Century Leader, a company which helps leaders to create businesses which are sustainable, profitable and great places to work. Visit

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Larry Reynolds

Managing partner

Read more from Larry Reynolds

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