Strategic Systems Thinking – ST4S39-V1-15746
















Part fulfilment of MBA

University of South Wales















Strategic Systems Thinking – ST4S39-V1-15746










Table of Contents



Purpose of the Report 3

The Organization and the Environment 3

Analysis Methods. 3




Non-linearity. 10

Sensitivity. 11

Innovation to explore. 11

Far-from-equilibrium.. 11

Self-Organization. 11

Dissipative Structures. 11









Purpose of the Report

This paper seeks to explore and critically appraise the statement “Systems thinking essentially seeks to understand phenomena as a whole formed by the interaction of parts.” (Stacey, 2011), in relation to changing ideas of strategic thinking and identify its existence within the Bank of St Vincent and the Grenadines’ approach to strategic management.

The Organization and the Environment

Bank of St Vincent and the Grenadines have recognized that due to the rapidly changing conditions and environment in which they operate, there is need for more than just an adaptation policy.  The company is currently engaged in a full-scale restructuring process which demands not only a more engaged and agile staff, but also a more innovative method for dealing with sudden and dynamic change.  It is evident that implications brought about by decisions that failed to consider the larger space and time proportions have opened the need for both strategic leadership and strategic systems thinking.

Analysis Methods

Investigation was performed through an evaluation of the literature, observation and data collected through interviews with members of the Management Team.



Mintzberg (1994) in his book The Rise and Fall of Strategic Planning, provided definition for strategy via the 5P’s: the interrelationship between Plan, Ploy, Pattern, Position and Perspective (Mintzberg, 1987), while Jeve (2015) explains that strategy is different from vision, mission, and goals.


Mintzberg (1994) explains strategic thinking to be about synthesis, utilizing insight and creativity to articulate a vision for the forward direction of the organization.  Mintzberg, et al (1990) illustrated ten schools of strategic thought and respective approaches.  The Design School; strategy as a set of decisions and uses the dynamic capabilities approach, the Planning school sees strategy as a process of planning and emphasizes the soft techniques approach, the Positioning school portrays strategy as a market position with strategic maneuvering approach. These three schools are deliberate strategies and prescriptive in nature. Then the descriptive schools; the Learning School, which is strategy resulting from organizational learning, Cultural School, which entails strategy resulting from culture and capabilities, the Power School; strategy resulting from power play. These are the emergent strategies. Thirdly, the Cognitive School, strategy resulting from strategic interpretation, Entrepreneurial School, strategy as a vision, the Environmental School, strategy as a market reactive or external force strategy, and the Configuration School which utilizes both deliberate and emergent.


Following Mintzberg’s 10 schools of thought, Liedtka (1998) developed a model, which defines strategic thinking as having five characteristics. Systems perspective, the development of a mental model encompassing the system holistically, and understanding the inter-relatedness. Peter Senge (1990) and Moore (1993) support this view, that a business must become greater than that of the industry in order to foster innovation.  The second element is intent focused. Hamel and Prahalad (1994) state strategic intent is differentiated and carries a sense of direction, not only top-down communication, but promotes bottom-up strategy.  Liedtka (1998) explains that strategic intent provides focus, allowing employees to concentrate on achieving goals.  The third element is intelligent opportunism. Liedtka (1998) explains this as agility to divert using emergent strategies based on environmental conditions.  Mintzberg, et al (1999) views this approach as an underpinning to the difference between emergent and deliberate strategy.  Hamel (2007) supports this view and advocated for organizations to listen to their lower-level staff, as this fosters creativity and gives growth to emerging strategies.  The fourth element according to Liedtka (1998), thinking in time, reveals that strategy is not only about the future.  Hamel and Prahalad (1994) explained that strategy seeks to close the gap between where an organization is currently and its vision.  Handy (1994) supports this approach in that strategic thinking must connect the past, present and future.  The fifth element is hypothesis-driven and according to Liedtka (1998) is pivotal as it goes beyond analytical, and allows for the “What if…?” which allows for critical and creative thinking.


From observation, management at Bank of St Vincent and the Grenadines (BOSVG) utilizes Mintzberg’s design school.  According to Mintzberg, et al (1999) this school views strategy formation as a process of conception. Precise and unique strategies are formulated in a deliberate process, wherein strengths and weaknesses are mapped, along with perceived opportunities and threats using a SWOT analysis. This approach allows for a fit between internal capabilities and external possibilities.  Finlay (2000) explains that an organization should be agile in its strategy to conquer major threats, and expounded that small organizations operating within an unpredictable environment can decide to follow the planning school of strategy to enhance success in a competitive environment.  From a positivist perspective, this school brings order and reduced obscurity as it allows for simplicity (Sarbah, Otu-Nyarko, 2014).  However, the design school is used in relatively stable environments, Sarbah and Otu-Nyarko, (2014) explains that the design school is weak in a rapidly changing environment, such as BOSVG’s. Further, the simplification of the strategy put forward by management appears to staffers as a distorted reality, particularly with restructuring process that allowed for several redundancies, causing staff to resist the vision.


Mintzberg and Waters (1985), explains that planned strategies using the design and positioning schools (Mintzberg, 1990) and classical perspective (Whittington, 2001), are for controlled and predictable environments.  All strategies are not planned and so we realize that strategy is also emergent (Mintzberg and Waters, 1985).  BOSVG is currently in a changing environment. Quinn (1980) constructed his approach of incremental developments, emphasizing that total strategy is best defined by the interaction of subsystem strategies.  Mintzberg, in his view on emergent strategy, also shares this philosophy.



Senge (1994) defined systems thinking as a language for describing and understanding the interconnectivity and interrelationships that control the behavior of systems.  According to Reisman and Oral (2005) systems thinking is “thinking systemically” and focusing on the dynamic, nonlinear routes of collaboration between resources and the environment wherein the system operates.  Mingers and White (2010) explains the systems approach to thinking which includes; viewing the situation as a whole, being able to recognize that the interrelatedness between components determine the behavior of the system and not the individual components.  Recognizing the echelons of systems and ideas emerging at different levels, and accepting that people will act according to their purpose (Mingers and White, 2010).


According to Mitleton-Kelly (1998) organizations are systems, albeit complex and evolving within a social ‘ecosystem’.  Within a rapidly changing environment, increase in technological advancements, and globalization, systems thinking is most relevant in allowing a holistic approach to problem solving. Sartre (2004) cited in Kaspary (2014) five properties in systems thinking for viewing groups and teams as living systems.  Interrelatedness within a system will form cohesion, which in turn creates oneness.  This theory is supported by Lewin (1965), Pichon-Riviere (2005), and Morin (2005a), cited in Kaspary (2014).  Interdependency is another noted property of systems thinking: a system will fail to be a system without the presence of the interaction of its parts. Vasconcellos (2002), cited in Kaspary (2014) that interdependencies inside a system are both unilateral and circular. The third property noted is autonomy and dependency, indicating that teams are dependent on other systems, yet teams require autonomy to operate independently. This is probably best explained in the words of Morin (2005a: 282), cited in Kaspary (2014) ”all human life is a standalone web of dependencies”.  Organization, which occurs as a system goes through cycles of disorder and order, and eventually with creativity organizes itself.  Self-production, also referred to as autopoiesis by Maturana and Varela (1992) cited in Kaspary (2014).


Systems thinking require us to think of an issue not as a problem but a situation. Checkland (1981) explains the type of systems thinking, hard and soft systems thinking, which provides the basis for rectifying situations.  Checkland (1981) describes that hard systems thinking assumes that the objectives of the system are clear and stable, with well-defined problems that can be solved by process or design.  It is a rationalized and systematic approach to problem solving.  This type of situation was visible within BOSVG when management had to decide on whether to lease or purchase premises for the organization to conduct business. The situation was well-structured and through design (budgeting) the decision was made to purchase.


Checkland (1981) describes soft systems thinking as being able to address situations that are “unstructured” and seen within social activity systems, situations that are ambiguous, and poorly-understood. It is within the soft system situations that ‘messes’ can arise.  Ackoff (1970) coined the term mess defining a dynamic system of problems.


In the restructuring process at BOSVG, management had completed all the necessary budgeting and planning, along with a new organizational chart.  Redundancies/change were a part of the transition process towards the new structure. Further, they could not understand the loss of motivation by almost 90% of the staff, and recommended morning kick-off meetings and other engagement to motivate. To date, there has been no improvement in staff morale. As it relates to change management, the individuals made redundant were working on major projects that are left hanging, there was no continuity plan; the projects are currently in limbo. Soft systems thinking methodologies, as explained by Checkland (1981), would recognize change and uncertainty as natural elements of the environment in which human systems operate.







Complexity theory is rooted in general systems theory, with academic roots in biology (Kauffman, 1993, 1995, 2004), chemistry (Prigogine and Stengers, 1984; Bonchev and Rouvray, 2005), physics (GellMann, 1994a; Bar-Yam, 1997; Gell-Mann and Tsallis, 2004; Ellis, 2005), applied to corporate strategy (Levinthal, 1997; Brown and Eisenhardt, 1998; Macintosh and Maclean, 1999; Rivkin, 2000) cited in Eisenhardt and Piezunka (2018).


Mitleton-Kelly (1998) explains complexity as arising from the interaction and interrelatedness of components within a system and a system and its environs.  According to Arthur (1994); Beinhocker (1997); Levy (1994) and Stacey (2004) cited in Mingers and White (2010) complexity and complex systems involve non-linear dynamics, self-organization, emergent properties, operates far-from-equilibrium and possesses sensitivity to the environment. Understanding complex systems requires a holistic comprehension of their structure and how components interrelate and connect.


Organizations consist of people who interact and are interdependent. According to Mitleton-Kelly (1998) these interactions allow for many differing responses, which makes it a complex, unpredictable and non-linear system.





The smallest of change that occurs at a high speed can produce unpredictable changes that cannot be predicted, and the organization would need to be agile and adjust to the change (Mitleton-Kelly, 1998).

Innovation to explore

Complexity has shown that for an organization to survive and thrive it must explore opportunities. Ashby (1956) cited in Mitleton-Kelly (1998), environments today are rapidly changing and so strategy also must change, according to Graetz (2002) when an environment is categorized by instability and uncertainty, creating and maintaining competitive advantage is tantamount to survival.


Gleick (1990), Parker & Stacey (1994) cited in Mitleton-Kelly (1998) complexity has other faucets apart from non-linear dynamics. Systems are forced to explore and create new relationships or structures, when far-from-equilibrium.


Order and organization can arise out of the disorder through the system performing “self-organization”, during the period of stability and instability,

Dissipative Structures

According to Prigogine and Stengers (1985) cited in Mitleton-Kelly (1998) open systems, which are systems exchanging information with their environment, contains “fluctuating” subsystems. If one or more fluctuation is sufficiently powerful (resulting from positive feedback), it can shatter the existing organization, forcing the system far-from-equilibrium to the point of bifurcation. The system can either disintegrates into instability or organize into a ‘dissipative structure’.


Chaos Theory development has shown how complex systems can be extremely volatile to initial environments, (the butterfly effect), and such a dynamic system can be difficult to analyze. Systems thinking, however, does not seek to control the system, just to understand it, and as such soft systems thinking is a critical component of complexity theory and ‘complexity’ understandings are systems concepts.  Mintzberg (2000) revealed the value of systems thinking and its importance in complex, unpredictable systems, where he depicted managers as similar to blind men and the elephant as the strategy process.  Only being able to grasp some part of the animal, but ignoring the whole, consequently, perspectives are narrow. Comprehension is required of the entire beast for the process to work, therefore, perspectives on formulating strategy requires understanding of the complexity of the system.





The emergent type of behavior that comes from Complex Adaptive Systems (CAS) is referred to as ‘complexity’, Holland and Miller (1991); Gell-Mann, (1994a); Miller and Page (2007) cited in Eisenhardt and Piezunka (2018) not the system itself.  Systems are dynamic by nature and adaptive due to their co-evolutionary features (Bar-Yam, 2003; Stacey, 2007).  CAS are made of components (agents and parts) that interrelate according to set rules. The system progresses due to dynamic interactions between agents, wherein the agents are responsible for interaction and decisions.  According to Stacey (2007) each agent’s behavior is influenced by the system as a whole, as the system learns and evolves, using information, creating feedback loops, and adapting based on experiences.


Bank of St Vincent and the Grenadines is a complex adaptive system (CAS), as the organization considers external influences in the form of changes within the environment (laws, regulations, competitors, coronavirus, etc), which are identified by the internal agents of the Bank. When the information is received, internal processes based on system rules can be observed, or re-organization may be required.  Other internal agents may act on the external environment, and a feed-back circuit is empowered for continuous learning and adaptation based on the process of external exchange and internal re-organization.  An example of this adaptation was with the passing of new regulations by the Central Bank regarding increased reserves and liquidity ratios for banks, and a transparent fit and proper policy.  This led to an entire re-structuring process, with agents being re-assigned according to the new policy requirements, along with the finding of a strategic partner to ensure the survival of the bank. How the organization relates to its’ environment to ensure sustainability is a complex problem (Metcalf & Benn (2012); Thompson and Cavaleri (2010) agrees that for an organization to be successful, extensive trial and error is required to build knowledge.  This approach is in keeping with Mintzberg’s Learning School.


Complex Adaptive Systems require leadership that is higher than authority, and should bear elements of emergence, based on a complex interaction of agents in ways that produce new processes (Heifetz, 1994; Plowman et al, 2007), cited in Uhl-Bien, et al (2007).  Driven by globalization, knowledge and technology, where small changes in the external environment have major consequences for businesses, creativity and agility are paramount to organizational survival (Bettis & Hitt, 1995; Boisot, 1998, cited in Uhl-Bien, et al (2007).






According to Varra and Whittington (2012) the practice perspective can be traced back to Wittgenstein (1952) and Heidegger (1962). Reckwitz (2002) explains practice theory as connected to human activity, termed ‘praxis’.  Praxis refers to the activity involved in strategy planning, practices refer to tools and frameworks, while practitioners are all those involved in strategy-making (Varra and Whittington, 2012).  The strategy-as-practice perspective aims to translate complex concepts into practices involved in strategizing.


Mintzberg (1994) cited in Stevens (2016) defined strategy as “a pattern in a stream of decisions”.  McKeown (2012) cited in Stevens (2016) “strategy is about shaping the future”.  According to Heracleos (1998) cited in Lawrence (1999) and supported by Leidtka (1998) strategic planning and strategic thinking are interrelated, as both are essential for effective strategic management, being both necessary as a combination. The moving of concepts into practice includes academic and consulting tools, and artefacts (Jarzabkowski and Whittington, 2008) for effective strategizing.


Within the strategic management process, the tools used to foster the flow of innovation are not as vitally important as creativity and analytical ability.  The traditional tool for strategizing used at BOSVG is Porters SWOT analysis. It allows for focus on specific areas and provides a reliable framework, Gunn and Williams, (2007); Mintzberg, Ahlstrand and Lampel, (1998); Pickton and Wright, (1998) cited in Jarratt and Stiles (2010). A Consultant has advised management at BOSVG to commence the use of a PESTLE analysis as it will provide more in-depth analysis, with departmental SWOTs that will feed into the overall strategic plan.  MacIntosh and Maclean (1999) cited in Jarrett and Stiles (2010) have argued that a deeper look into structure is required in dealing with structures undergoing transformation.


The CEO is the strategist at BOSVG, formulating strategy is a deliberate process of meetings to discuss budgets, targets, and KPIs. One of the limitations to Mintzberg’s Design School in that the practitioner, based on individual knowledge and perspective, has limited information on internal and external situations. Further, formulated strategies are inflexible to change, and usually have to await a Board approval.  According to Mintzberg (1979), strategy is not a deliberate plan, and neither should it change at management’s whim. However, strategy should be both deliberate and emergent.  It was noted that from an operational level there is the need for emergent strategy within BOSVG, wherein front-line personnel in direct contact with the customers may recognize a situation that requires immediate change to maintain good business relations, but BOSVG’s strategy is not bottom-up. Mintzberg also highlighted that while the external environment may remain undisturbed for some time, at other times it can change so rapidly that the best planning techniques become useless (Mintzberg, 1979).  Ansoff (1991) debated that the Design School was “frozen in time” and argued that Mintzberg should give way to more emergent strategy.


Holmstrom (1982) stated that “competition among agents has merit solely as a device to extract information optimally”.  This is similar to Mintzberg’s ploy, which recommends tactics to outperform the competition and gain competitive advantage.  In keeping with Waldman and Siegel (2008) corporate leaders are seen by the implementation of initiatives.  As it relates to BOSVG’s corporate social responsibility, with the onset of the Coronavirus in SVG, the CEO rented a portable hand-wash station for placement outside the banking hall for customers’ usage.  This was the first initiative of its kind on the island.





Empirical evidence shows that systems thinking is an effective approach in strategy formulation.  This paper critically appraised the statement by Stacey (2011) ‘Systems thinking essentially seeks to understand phenomena as a whole formed by the interaction of parts”, and found that organizations are systems and to foster a holistic understanding of how situations should be resolved, understanding of the whole system is essential.


From a strategic management perspective, BOSVG will benefit from more emergent strategies, which would allow for a bottom-up approach and allow differing perspectives, while fostering agility in the rapidly changing environment.  As a CAS we need to be agile in order to navigate the environment, while employing systems thinking and viewing the organization holistically for sounder decision making.  Simple KPIs given by managers in one department, can off-set another department when they are not based on the overall strategy. Finally, the strategy must be functional in the real world and the tools we employ for strategizing should be fit for the objective.








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