Embracing Systemic Thinking for Our Firms of the Future

By Giles Hutchins

Many experts now point to a great transition unfolding locally and globally, in business and society. One important aspect of this transition is that our corporate logic -- the logic underpinning our prevalent way of organizing and operating in business -- is shifting from mechanistic management logic to the logic of living systems.

Too many of today’s organizations find themselves caught up in a top-down, hierarchic, KPI-obsessed, siloed, control-based, defensive and reactive fire-fighting mindset that is actually undermining our organizational and personal vitality and resilience. It is this mechanistic logic that is preventing us from adequately dealing with the complex, interconnected problems we now face.

With this urgent frame front-of-mind, I recently interviewed one of the world’s most well-respected systems-theorists, Fritjof Capra.

Giles Hutchins: How do our practitioners, leaders, managers and entrepreneurs best apply ‘systemic thinking’ with regard to this shift in corporate logic from mechanistic to living systems? Any tips?

Fritjof Capra: Business organizations need to undergo a fundamental transformation today for two reasons: to adapt to an ever more complex global business and organizational environment, and to become ecologically sustainable. This is where a ‘systems view of life’ can provide important conceptual tools.

Systems-science teaches us that living systems continually regenerate themselves by transforming or replacing their components. They undergo continual structural changes while preserving their web-like patterns of organization. Understanding life means understanding its inherent change processes. Once we have that understanding, we can begin to design processes of organizational change accordingly and to create human organizations that mirror life's adaptability, diversity and creativity.

GH: In your most recent book, "The Systems View of Life," you and your co-author Pier Luigi Luisi explore organizations as multi-layered systems of generative cycles nested within larger systems. While you are keen to point out that organizations are quite different from organisms, you do describe them as living systems. Can you expand a little on this?

FC: This is a difficult issue, which I discuss in detail in our book. To summarize, all human organizations have a dual nature. On the one hand, they are social institutions designed for specific purposes, such as making money for their shareholders. At the same time, organizations are communities of people who interact with one another to build relationships, help each other, and make their daily activities meaningful at a personal level. These communities, known as ‘communities of practice’ to organizational theorists, are informal social networks.

Now, systems-science teaches us that the network is the basic pattern of organization for all living systems. This means that a business organization will be alive — i.e. flexible, resilient and creative — when it recognizes and empowers the living networks, or communities of practice, that exist within itself. Leadership, in the systems view, means facilitating the emergence of novelty — in other words, creativity — within these communities of practice. ‘Emergence’ is a key concept of the systems view of life.

GH: As we shift from mechanistic ways of operating and organizing toward living-systems logic, we shall need to learn and embrace new forms of leadership. What are the qualities of leadership you see as important for facilitating the emergence of novelty, flexibility and creativity?

FC: To facilitate emergence effectively, leaders need to recognize and understand the different stages of this fundamental life process. Emergence requires an active network of communications. Facilitating emergence, therefore, means first of all building up and nurturing such networks of communications. In addition, the emergence of novelty is a property of open systems, which means that the organization needs to be open to new ideas and new knowledge.

Facilitating emergence includes creating that openness — a learning culture in which continual questioning is encouraged and innovation is rewarded. The experience of the critical instability that precedes the emergence of novelty may involve uncertainty, fear, confusion, or self-doubt. Experienced leaders recognize these emotions as integral parts of the whole dynamics and create a climate of trust and mutual support.

During the change process some of the old structures may fall apart, but if the supportive climate and the feedback loops in the network of communications persist, new and more meaningful structures are likely to emerge. When that happens, people often feel a sense of wonder and elation, and now the leader's role is to acknowledge these emotions and provide opportunities for celebration. Leaders who facilitate emergence need to be aware of the detailed dynamics of all these stages.

GH: Is a clear, yet evolving, organizational sense of purpose key to ensuring the cohesion of these corporate living systems?

FC: It is. Over time, an organization’s communities of practice create a certain culture, as all social networks do. The critical task for leaders is to infuse this culture with an organizational sense of purpose.

GH: You refer to organizations creating the conditions conducive for life to flourish, which I refer to as ‘regenerative business’ – the new frontier for future-fit business. Can you expand a little on what you envisage as the core aspects of ‘regenerative business’?

FC: All living systems continually regenerate themselves while preserving their web-like pattern of organization. This coexistence of stability and change is a key characteristic of life. "The Systems View of Life" explores this in detail and in this way provides valuable lessons for leaders and managers.

GH: Do you know any examples of organizations that successfully embed this systems view of life, to embrace stability and change effectively during these volatile times?

FC: Today, there is a growing number of organizations embodying key properties of living systems — decentralized structures, communities of practice, and self-organizing teams following simple guiding principles rather than detailed instructions. Examples would be Gore & Associates (manufacturers of Gore-Tex), Ideo (a design company in San Francisco), Vagas (a Brazilian employment agency), Impact Hub (a global network of social-enterprise community centers), Zentrum für Integrale Führung (a consulting group in Austria), and Amana-Key (a consulting group in Brazil).

GH: What is your view on contemporary capitalism? There are a number of interesting innovations capable of transforming capitalism. Such examples include the take-up of B Corps and social enterprises as a shift away from the singular-focus on maximizing returns for shareholders, as well as different ownership structures such as collaborative commons, crowd- and open-sourcing, and a hybrid of private and social ownership business models where the intent is on generating wellbeing rather than financial returns. What are your views on the current business landscape, and the challenges and opportunities that lie ahead for us?

FC: The idea of unlimited economic and corporate growth, which is absurd on a finite planet, is built into the very structure of today’s corporations. This structure can be, and urgently needs to be, changed. The examples you cite are examples of such changes.

They have been explored in great detail in a very inspiring book by Marjorie Kelly, "Owning Our Future." In it she discusses and illustrates with countless examples, new ownership designs, which she calls ‘generative ownership’ to contrast it with the ‘extractive ownership’ embodied in the conventional corporate ownership model. I review her work in some detail in our textbook, and Kelly also wrote a guest essay for us.

GH: ‘Systemic thinking’ requires us to ‘think’ in terms of relationships, context, patterns and inter-relating processes. The take up in business of initiatives such as biomimicry, industrial ecology, zero-waste, closed-loop economics and cradle-to-cradle clearly help put this thinking in to practice.  Is there also a ‘feeling’ aspect to this, a deeper felt-sense, an embodied ‘way of being’ that needs to accompany this cognitive shift in our ‘way of doing’? If so, how would you describe such as shift in ‘way of being’?

FC: In today’s global crisis, we need very special kind of leaders who are ecologically literate and capable of thinking systemically; leaders, furthermore, who are guided by a "moral compass," in the memorable words of Václav Havel. I see this moral compass as that deeper-felt sense, this embodied way of being, that you refer to. The ethics we need today must honor human dignity and ecological sustainability. Such ethics are presented in great detail in the Earth Charter, a global declaration of 16 values and principles for "building a just, sustainable, and peaceful world." It is a perfect summary of the ethics we need for our time.

GH: Your latest project which is based on "The Systems View of Life" is called Capra Course, an on-line course of twelve lectures launched this April. Who is the course aimed at, and could you explain its relevance, timeliness and importance for these participants?

FC: In my online course, I will teach the essential concepts of the systems view of life in twelve 40-minute lectures, and will discuss them with the course participants in special online forums. I have developed my synthesis of this new scientific understanding of life over many years and have published it at various stages.

Capra Course is my first opportunity to teach the full synthesis to a worldwide audience, which I find tremendously exciting. In the course I specifically emphasize the critical role of systems thinking to solve the major problems of our global crisis, which are systemic problems — all interconnected and interdependent — and require corresponding systemic solutions. Capra Course will give participants the conceptual tools to understand the nature of our systemic problems and to recognize the systemic solutions that are being developed by individuals and organizations around the world.

This interview was recently conducted by speaker, author and adviser Giles Hutchins who blogs at www.thenatureofbusiness.org.

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