The Common Thread: All Social Organizations as Systems

© Copyright Carter McNamara, MBA, PhD, Authenticity Consulting, LLC.
Adapted from the Field Guide to Consulting and Organizational Development.

Sections of This Article Include

• First, What is a System?
• Tools to Depict a System
• Critical Role of Feedback in a System
• So Why is it Important to Look at Organizations as Systems?
• Closed Systems Fail — Open Systems Flourish
• System Within Each Management Function

Recently, management studies have come to view organizations from a new perspective: a systems perspective. This systems perspective may seem quite basic. Yet, decades of management training and practices in the workplace have not followed from this perspective.

Only recently, with tremendous changes facing organizations and how they operate, have educators and managers come to face this new way of looking at things. This interpretation has brought about a significant change (or paradigm shift) in the way management studies and approaches organizations.

First, What is a System?

Despite the complexity of organizations as explained in the topic What is an Organization?, it helps a great deal to think of organizations as systems. When reading the following paragraphs about systems, think of an organization that you know — or even about other systems, such as automobiles or plants.

Simply put, a system is an organized collection of parts that are highly integrated in order to accomplish an overall goal or outcome. The system has various inputs which are processed to produce certain outputs, that together, accomplish the overall goal desired by the system. There is ongoing feedback among these various parts to ensure they remain aligned to accomplish the overall goal.

For example, in an organization, the inputs might be funding, people, facilities, and technologies. (For an actual organization, the list of inputs would be much longer and more specific.) Processes would be, for example, using the money to train people, developing and marketing products and services, and measuring customer satisfaction. Outputs would be, for example, the number of products and services that were sold. The overall goals, our desired outcome, would be highly satisfied customers sufficient that they pay a suitable price and the organization remains financially viable.

A pile of sand is not a system. If one removes a sand particle, you’ve still got a pile of sand. However, a functioning car is a system. Remove the carburetor and you no longer have a working car.

Systems range from very simple to very complex. There are numerous types of systems. For example, there are biological systems (for example, the heart), mechanical systems (an automobile), human/mechanical systems (riding a bicycle), ecological systems (predators and prey), and social systems (departments and groups).

For more information about systems in general, see Systems Thinking, Systems Tools, and Chaos Theory.

Tools to Depict a System

There are a variety of tools to depict the inputs, processes, outputs, and outcomes in systems, as well as the recurring cycle (or loops) of activities within them. One of the most straightforward to use is a logic model. The model can be very useful when planning or analyzing a system. It can also be very useful for describing the system to others. Here is an example of a logic model for an educational program, which is itself a system as depicted in the logic model.

The next columns in a logic model are the outcomes that the outputs go into and produce.

In the above example, the educational program continually gets feedback from people in the program as well as the students who participate in it. The feedback is used especially to improve the quality of the inputs and the processes in the system. Thus, there is a recurring loop of activities in the system.

These articles can explain more about logic models and systems tools.

• Guidelines and Framework for Designing Basic Logic Model
• What Are Some Systems Tools?

Critical Role of Feedback in a System

Any system that does not have continual and useful feedback shared among its various subsystems will likely produce low-quality outcomes or will fail altogether. That is true for all systems, including social systems like organizations and mechanical systems like automobiles.

In an organization, feedback should continually be collected and evaluated from those it serves, but also between the various parts of the organization. If a certain team in an organization is not getting sufficient feedback from its supervisors, then the team will not optimally perform.

If the supervisors are not getting sufficient feedback from executives, then supervisors will not perform well either. This is why internal communications are critical to the success of any organization.

Many leaders and managers intuitively know those connections and the importance of communication. However, that understanding is made much more clear and important when they can see that the communications are, in essence, the “life’s blood” of the system. That is why significant change in organizations always requires ongoing communications in the organization from the top down and from
the bottom up. See Organizational Communications

So Why is it Important to Look at Organizations as Systems?

In the past, when an organization was struggling, managers typically focused on fixing one part. For example, when there were continual shortages of money, then they worked to get more money. Soon, they realized that they were still running out of money because they still were spending too much and perhaps not earning enough. So they would cut costs while doing more marketing in order to get more revenue.

Then they would realize that they were not getting more customers because customers were reporting that the quality of their products and services was very poor. So then the managers would attend to improving quality. Then the managers might realize that they could not improve quality without getting more internal expertise, which requires yet more money. That, in turn, requires the top executives to really believe that more money is really going to make a difference -t his time.

Today’s managers have learned to have a systems perspective. They work to improve their organizations, not by examining what appear to be separate pieces of the organization, but by recognizing the larger patterns in interactions.

Closed Systems Fail — Open Systems Flourish

What is a Closed System?

Any organization has to regularly exchange useful feedback among its own parts if it is to thrive. However, an organization can do that and still fail if it does not exchange that kind of feedback with its customers — people who are outside of the organization.

An organization that does not exchange feedback with its immediate outside environment is called a closed system. You might be able to think of some examples of organizations that quit listening to the opinions of those outside of it and, as a result, their products and services continued to be of lower quality.

Or, you might be able to think of organizations that, while they continued to have high-quality products and services, their organization were perceived as operating in a highly unethical manner. Yet, the organization ignored the opinions of those outside stakeholders, and eventually, the organization’s sales and profit suffered.

What is an Open System?

So an open organizational system is one that regularly exchanges useful feedback with all of its important external stakeholders, for example, its customers, collaborators, leaders in the community, and researchers in the industry.

Those kinds of communications often require careful planning, implementation, and monitoring. Inexperienced or unwise leaders and managers might see that effort as a distraction from focusing on their own visions and ideas. While that will seem passionate and productive for a while, it soon will fail. An
example of this situation is what some people refer to as Founder’s Syndrome where an organization is operating more to the personality of someone in the organization than to its mission to serve others. See Founder’s Syndrome.

Here is a depiction of a logic model of an open systems view of an organization.

System Within Each Management Function

Description of Various Subsystems — You Will Recognize Them

There are numerous examples of subsystems in organizations. Think of any recurring processes, such as the management functions of strategic planning, marketing, and financial management.

1. For example, the inputs to financial management might be the budget plans from other departments.
2. The processes in financial management might be continually monitoring the income and expenses that occur during operations.
3. The outputs might be financial reports to management. (In that situation, management is really an internal customer to the Finance Department.)
4. The reports help achieve the goal of continually informed managers who, in turn, make wise decisions in the organization.
5. Management’s decisions might affect the budgets of the various departments.
6. Those budgets change the inputs to the financial management system.

Similarly,

1. The outputs of the recurring strategic planning process are inputs to the recurring program or product planning processes.
2. The outputs of the program and product planning processes are inputs to the financial planning process.
3. The outputs of that process are the inputs to the fundraising process (in the case of nonprofits).

How You Can Integrate and Depict Relationships Between Subsystems

That loop, or system, of activities, continues as long as the organization is in operation. Similar loops occur in each of the major functions in an organization. Here are depictions of some common subsystems in an organization.
Examples of Systems View of Management Functions

You can use logic models to show the integration and alignment of various subsystems in an organization by “chaining” the logic models. See How to Chain Logic Models

This diagnostic model also explains the relationships between each of the management functions in a for-profit organization.
Systems-Based Model to Diagnose For-Profit Organizations.

This model explains the relationships in a nonprofit organization.
Systems-Based Model to Diagnose Nonprofit Organizations.

Suggested Exercise

Here is a template for a logic model. You might think of a system in your work or personal life and diagram the system in the template.

Learn More in the Library’s Blogs Related to Organizations

In addition to the information on this current page, see the following blogs which have posts related to organizations. Scan down the blog’s page to see various posts. Also, see the section “Recent Blog Posts” in the sidebar of the blog or click on “Next” near the bottom of a post in the blog.

• Library’s Consulting and Organizational Development Blog
• Library’s Leadership Blog
• Library’s Nonprofit Capacity Building Blog

For the Category of Organizational Development:

To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature.

• Related Library Topics
• Recommended Books

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