Systems Thinking Innovation

Updated: Aug 19

Systems innovation can be seen to be based upon the premise that the system we are interested in is not functioning on a foundational level, or a vision of how the whole system could be better. When we extrapolate this out we can recognize that many of the systems in our society and economy are not functioning as they could. We often hear the word “broken” associated with health care or educational systems; there is widespread recognition to the unsustainability of many systems such as how we do food production, to how we manufacture, retail and use consumer goods.

This leads us to the conclusion that maybe there is something not quite right about this whole set of systems that make up our economies. Once one comes to this insight one is then invariably driven to make some inquiry about why and what might be done about it. A superficial inquiry would lead us to the conclusion that whoever is managing these systems is just doing a bad job and if we could just replace those people and get the good guys in charge then all would be fine again. But a more prolonged and sustained inquiry would lead us to question the structure of the system these actors are within. If we sustain our inquiry even farther we may come to the recognition that how we design and manage these systems is, of course, a product of the models we hold about the way the world is and more broadly our processes of reasoning that go into the decisions we make.

This is the conclusion that systems thinkers typically come to; that the way we organize our world is a product of the models that we use and if there is something fundamentally dysfunctional with our organizations then it is unlikely to be out there but instead a product of our reasoning and modeling. The imbalances in the world are typically traced back to imbalances in our reasoning; the position that an excess of a particular mode of reasoning – called analytical reductionism – has resulted in an imbalance to how we understand, design and manage our world.  

Indy Johar, serial co-founder of social ventures, describes this well when he says[1] “A lot of the economic and organizational model that we live in was born in the Enlightenment and how it was born was we decided that we could understand the world by treating everything in vitro, putting in glass, we could understand the world by isolating science from art understand chemistry from biology, we suddenly took the world and we could fragment everything out and that world allowed us to perceive the world almost like it was infinite because we would see everything through its definiteness and that world has been amazing, it’s allowed us to do incredible things, but actually what it’s also started to do is bring into crisis issues like climate change, when none of the individuals in vitro analysis works because actually, it’s all about the interactions suddenly the cost of interactions those things that we don’t care about or aren’t designed to care about are coming back to haunt us.”

Systems Thinking

Systems thinking recognizes two broad and qualitatively different processes of reasoning that guide our decisions and the actions we take; what is called synthetic holism and analytical reductionism. It is important to understand these two modes of reasoning as much of what is talked about in systems and complexity theory follow from them. Analytical reductionism is a process of reasoning where we try to understand something by removing it from its environment, decomposing it into individual parts, studying the properties of those parts and then putting them back together so as to derive an account of the whole as some combination of these individual building blocks. It is based upon the assumption that the system is nothing more than the sum of its parts and that the system is relatively closed.

In contrast, synthetic holism is a process of reasoning where we try to understand something by looking at it in relation to the whole system or environment that it forms part of, its interaction with other systems and how it is shaped by those interactions and the overall context.[2] For example, given the job of trying to understand a tree in a forest each method would take a different approach that would lead to a very different vision of the tree. Whereas reductionism would isolate one tree and study its internal components while assuming all other trees are similar to that and that the forest is just an additive summation of all those similar trees. Synthetic holism would look at the whole forest and try to understand why the tree is the way it is because of its interaction with other creatures and the whole system. It would see each tree as different because it was shaped by its local nexus of interactions.

Synthesis and analysis are very fundamental paradigms of reasoning and thus lead to very different ways of viewing, acting and organizing our world. Both are equally valid but both are equally incomplete without the other. The systems thinking perspective posits that we need a balance in our reasoning between these two paradigms. This insight leads systems thinkers to identify an imbalance in our reasoning as the source of the major systems-level challenges we face today and some form of correction to that imbalance as critical to reimagining our world and moving forwards.

This perspective sees a massive proliferation of a single mode of analytical reasoning beginning with the rise of the modern era and the scientific revolution and traces it through to the world we live in today. As a reductionist form of science became the conceptual backbone of our modern understanding of the world, finding expression in our new engineering and management methods with the end result being the industrial economic model that we inherit today. For systems thinkers the fundamental issue that we face today is not any of the problems we usually think of, it is instead traced back to an over-dependence and excess of a particular analytical vision of the world. From this perspective a transformation beyond the current industrial model needs to start with a rebalancing of our way of thinking; incorporating synthetic holism as an equally valid mode of reasoning, to counterbalance the excesses of a reductionist approach.

Advantages & Limitations

With analysis we perform differentiation, which means looking at the difference between things; we break systems down, we divide them up and look at what makes them separate, the result is that we end up in a world of little atomic units. An excess of this mode of reasoning can leave us in a fractured compartmentalized world without the capacity to integrate and overcome differences. We start thinking that the environment and economy are two separate things and that we have to make trade-offs between them. A society or organization that has become too differentiated may have exceptional specialized capabilities but it will lack the capacity to overcome its divides and integrate as a whole organization when necessary.

The analytical approach downplays the importance of the relations between things, it sees the world as fundamentally a set of parts that can simply be moved around and recombined without taking account of the specific forms of relations between those parts that might alter how they behave. In reality, the way things are interconnected into whole systems has a very strong influence on how they operate and behave, we often do not understand the complexities of that. Based upon the assumptions of reductionism we assume that it is the properties of the parts that matter and that all we have to do is find some cause that will affect a change in the part and we can manage the system through those linear cause and effect interactions. When we go in the opposite direction we are trying to integrate things, we look for what connects them and is common to both. An excess of this form of reasoning blinds us to the details. Everything starts to become one, we lose the benefits of the division of labor and specialization. In our organization or society, the parts start to become subordinate to the whole and become homogeneous lacking individuality.

Organizations inevitably go through different stages in their development of integration and differentiation but if you want a functioning system, this is one that has achieved a balance between the two paradigms. It is the health system that has many different capacities but is able to bring them together and integrate them as one around the end users needs. It is the person that has many different interests but is able to integrate them and bring them together in the work that they do. It is the political system that contains many different opinions but is able to focus and synthesize them into balanced and acceptable policies.

Although the reductionist approach has brought us specialization with the many great achievements that have followed from that it has also resulted in excessive compartmentalization. If we look at the issues we face with many of our systems today, from health to governance to finance, we will see that they have become overbearingly fractured, compartmentalized and complicated rendering them inert in the face of much-needed change; this is a consequence of reductionism. The solution to that is integration, connecting horizontally across those subsystems to integrate them into a whole, that is a very different dynamic to what we have been doing for the past centuries and it requires a different mode of thinking, systems thinking, to look at how the parts interconnect into a whole.

  1.  YouTube. (2018). Social innovation in the real world – from silos to systems | Indy Johar | TEDxOxbridge. [online] Available at: [Accessed 25 Jul. 2018].

  2. Holism | Wikiwand. (2020). Retrieved 19 August 2020, from

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Systems Innovation

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