Systems thinking needs new ways of working

I was working with a UK water utility last week, who are being encouraged by their regulator to take a more “systems thinking” approach to their business to deliver significant cost savings and performance improvements. They have quickly realized that this requires a different way of working to the silo-ed approach of the past.

Systems thinking is about seeing the organisation and the wider context it operates in as a whole system, rather than a series of disconnected elements and it is already providing significant benefits to customers in connecting the business, and creating new insights and ways of doing business.

UK regulators in utilities are pushing systems thinking as a way to continue to deliver benefits in performance and resilience – including specifically asking them to take a systems thinking approach in their next resilience plans.

Initially the focus is on identifying which core systems to work on. As an example from my own business, as part of our digital transformation, we are starting to look at measures such as “time from order to cash”. This encompasses everything from commercial and financial performance and entails operations, delivery, invoicing and payment monitoring coming together to shorten the period from when we take the order to when the cash hits the bank.

These approaches are inherently horizontal, they cut across functions and geography and require cross functional collaboration, new data and different measures and information flows. This horizontal end to end approach is also the essence of digital working.

As we start to work this way we cut across the old vertical silos of function, business line or location. One of the big barriers to getting things done is resistance and control from these legacy silos. Our ways of working, developed over decades, support local optimization of results rather than optimizing the system as a whole. This requires different, broader objectives and metrics and the ability to trade off funding and success in one area to improve the performance of the whole system.

In leadership and collaboration this requires a more matrixed, virtual and agile way of working (irrespective of your actual organization structure) leading and working across the silos, taking accountability without control, exercising influence without authority, collaborating and faster learning and risk taking horizontally. Without this new matrix, virtual and digital skill set it is hard for people to adopt the broader mind set required to deliver systems thinking.

If you need a more systems thinking approach to your business then you also need to address your leadership, collaboration and corporate culture. If you need to find out how to do this, give us a call.