I can still remember standing at individual stations with a stopwatch, monitoring each step in the process and asking myself: How can we make this faster, improve efficiency, increase capacity, and maintain accuracy?

But improving individual processes was only part of the challenge. Making one station faster didn’t necessarily improve the overall operation if the next station couldn’t keep up. We needed to understand how the individual processes worked together and how changes in one area would affect the others.

After several months, with the help of some of the hardest-working and most talented people I’ve known, we developed new systems and processes capable of meeting the new operational requirements.

Organizations are made up of people, departments, processes, resources, and systems that depend on one another to accomplish their goals. Although we often organize work into individual responsibilities and departments, very little of what happens within an organization occurs in isolation. That’s where Systems Thinking becomes important.

Systems Thinking is the ability to recognize how different parts of an organization interact, understand the relationships among them, and anticipate how changes in one area may affect others. It’s about looking beyond individual activities to understand how the larger system operates.

The objective isn’t to become an expert in organizational design or process improvement. It’s to develop the habit of looking at the bigger picture, recognizing connections, and thinking through the potential consequences of decisions before making them.

Like most skills, Systems Thinking improves with practice.

Understanding the Bigger Picture

One challenge of working in an organization is that we naturally see things from our own perspective. We understand our responsibilities, the processes we use, and the problems we encounter. We may have a reasonable appreciation for what happens immediately before and after our work, but considerably less understanding of what happens elsewhere.

There’s nothing unusual about that. Organizations divide work into departments and responsibilities for good reasons. Specialization helps people develop expertise, establishes accountability, and makes complex operations manageable. Problems arise when we treat organizational boundaries as though they separate activities that are actually connected.

Consider a company experiencing late customer deliveries. The transportation department might appear responsible because its trucks aren’t departing on schedule. However, the underlying problem could be that warehouse personnel are receiving orders too late, inventory records are inaccurate, or production isn’t completing products on time.

If leadership focuses exclusively on transportation, it may invest in additional trucks or drivers without improving delivery performance.

Systems Thinking encourages us to look beyond where a problem becomes visible and consider where it may have originated. However, this doesn’t mean every problem requires an organization-wide investigation. Sometimes a late delivery is truly caused by a transportation problem. The skill is knowing when to look beyond the obvious explanation.

Recognizing Organizational Interdependencies

An interdependency exists when one activity, department, or process relies on another to accomplish its work. Some interdependencies are obvious. A warehouse cannot ship products it hasn’t received. A manufacturing department cannot produce goods without the necessary materials. A payroll department cannot accurately compensate employees without reliable personnel and timekeeping information. Other interdependencies are less apparent.

Consider a sales department that launches a highly successful promotion. Orders surge, but production, inventory, and transportation aren’t prepared for the additional demand. From the sales department’s perspective, the promotion was a success. From the customer’s perspective, delayed deliveries and unavailable products may tell a different story. The lesson isn’t that the promotion was a bad idea, but that its success depended on other parts of the organization being prepared to support it. Another example might be that a company may introduce a new software system to improve efficiency. The technology department might successfully install the software, but employees may need training, existing procedures may require modification, and managers may need to change how they evaluate performance. If these supporting requirements aren’t considered, the new technology could initially make operations less efficient rather than more efficient.

This is why it’s important to distinguish between completing an individual task and achieving the larger organizational objective. When evaluating an activity or proposed change, I find it useful to ask:

1. Who or what provides the information, materials, or resources needed to perform this activity?
2. Who depends on the results?
3. What happens if the activity is delayed, changed, or eliminated?
4. Are other departments or individuals prepared for the consequences?

These questions help identify relationships that may not be obvious when looking at a process from only one perspective.

Looking Beyond the Immediate Problem

One of the most valuable applications of Systems Thinking is distinguishing between a symptom and the underlying cause of a problem. Suppose a department consistently requires overtime to complete its work.

At first glance, the problem might appear to be insufficient staffing. Hiring additional employees seems like a reasonable solution. But what if the department is working overtime because it routinely receives incomplete information from another department? Or because equipment frequently breaks down? Or because its workload increases dramatically at the end of every month? Additional employees might help, but they wouldn’t necessarily address the underlying problem.

This is where asking why becomes particularly useful.

Instead of immediately asking how to reduce overtime, start by asking why overtime is necessary. Then examine the conditions that create that requirement. Perhaps the problem is insufficient staffing. Perhaps it’s poor scheduling. Perhaps it’s a process that requires employees to perform the same work multiple times. Sometimes the solution is straightforward. Other times, identifying the actual cause requires following a process through several departments or activities.

A technique often associated with process improvement is the Five Whys, which involves repeatedly asking why a problem occurred until the underlying cause becomes clearer. Five isn’t a magic number, and the technique isn’t sufficient for every complex problem. The value lies in challenging the first explanation rather than accepting it immediately.

One caution: not every recurring problem has a single root cause. Multiple conditions may interact to produce the same outcome. Systems Thinking helps us recognize those relationships rather than assuming every problem can be traced to a single person, department, or decision.

Understanding Feedback Loops

In LK09, Performance, Accountability and Resource Systems, we discussed feedback loops as mechanisms for monitoring performance, evaluating results, and making adjustments. Feedback loops provide leadership with the information needed to determine whether systems and processes are performing as intended. Without that information, it becomes difficult to assess whether a decision, process improvement, or organizational change is actually working.

Systems Thinking extends that concept by examining how activities and decisions influence other parts of the system, including the conditions that created the original problem.

Consider a department falling behind on its workload. As the backlog grows, leadership authorizes overtime to catch up. Initially, employees complete more work, and the backlog begins to shrink. A feedback loop that monitors workload, overtime hours, and completed work can help leadership determine whether the additional overtime is producing the intended results.

However, if overtime continues for an extended period, employees may become fatigued. Mistakes increase, productivity declines, and additional work is required to correct errors. The department may eventually fall further behind despite working more hours.

Without appropriate performance measures and regular feedback, leadership might not recognize these developing problems until they become significant. By monitoring not only the backlog but also productivity, errors, and rework, leaders can better understand whether overtime is helping or unintentionally making the situation worse.

This example also illustrates what is commonly called a reinforcing feedback loop. As errors and rework increase the backlog, leadership may respond with even more overtime, potentially creating additional fatigue and errors. Each reaction reinforces the conditions that contributed to the original problem. Reinforcing feedback loops aren’t necessarily negative. For example, improved customer satisfaction may generate additional business, providing resources that allow an organization to further improve its products and services, potentially attracting even more customers.

A balancing feedback loop, on the other hand, works to counteract change and move a system toward a desired condition. For example, when inventory falls below an established level, a replenishment process orders additional supplies to restore the inventory.

Both types of feedback loops are important for understanding how systems behave. Reinforcing loops can amplify positive or negative changes, while balancing loops help maintain stability or move performance toward a desired condition.

The important skill is recognizing not only whether an activity is producing the intended results but also how those results influence other parts of the system. Effective feedback allows leaders to identify problems, evaluate decisions, recognize unintended consequences, and make adjustments before small problems become larger ones.

When a problem keeps returning despite repeated attempts to correct it, consider whether the solution itself is influencing the conditions that cause the problem—and whether the organization’s feedback mechanisms are providing enough information to recognize what’s happening.

Anticipating Unintended Consequences

Another important part of Systems Thinking is recognizing that decisions can produce consequences beyond their intended outcomes. We often refer to these as first-, second-, and third-order effects. The first-order effect is the immediate result of an action. Second- and third-order effects are consequences that arise as the initial change influences other activities or conditions.

For example, suppose an organization needs to reduce operating expenses and decides to cut employee training. The immediate effect is lower training expenses. Over time, however, employees may become less proficient, new employees may take longer to become productive, and errors may increase. Supervisors may spend additional time correcting mistakes, reducing the time available for other responsibilities. What initially appears to be a cost-saving measure may eventually increase operating costs or reduce organizational performance. That doesn’t necessarily mean reducing training expenses is always the wrong decision. Organizations must routinely make difficult choices with limited resources. The point is that a decision should be evaluated not only by what it accomplishes immediately but also by what it may cause elsewhere and over time.

An additional challenge is that consequences don’t always appear immediately. A decision made today might not create a noticeable problem for several months. By then, the link between the original decision and the emerging problem may be hard to recognize.

Developing Systems Thinking skills means learning to ask what happens next, who else might be affected, and what new problems a proposed solution could create.

Understanding Systems and Processes

Although the terms systems and processes are sometimes used interchangeably, there’s an important distinction.

A process is a sequence of activities performed to achieve a specific result. Examples include receiving inventory, processing a customer order, or onboarding a new employee.

A system is the broader arrangement of people, resources, processes, policies, technology, and relationships that work together to achieve an objective.

For example, processing customer orders is a process. The organizational system supporting order fulfillment includes sales, inventory management, warehousing, transportation, information systems, and the people responsible for coordinating those activities. Understanding this distinction helps determine how broadly to examine a problem.

If a particular activity is taking too long, the process itself may need improvement. But if the process depends on inaccurate information, conflicting priorities, or another department’s capacity, improving the individual steps may accomplish very little. Sometimes improving one process simply shifts the problem to another part of the organization, making the original process look better without improving overall performance.

Several established methodologies can help organizations evaluate and improve processes, including Lean, Six Sigma, Total Quality Management, and the Plan-Do-Check-Act cycle. Each has its own approach and applications. You don’t need to master these methodologies to begin developing Systems Thinking skills.

Process improvement focuses on making individual activities more effective or efficient. Systems Thinking examines how those activities interact and whether improving one part benefits the larger organization. The two approaches complement each other, but improving an individual process doesn’t always improve the overall system.

Developing Systems Thinking Skills

The good news is that you don’t need a leadership role, specialized software, or an elaborate organizational model to practice Systems Thinking. You can start with the processes and responsibilities you already understand.

Start by identifying a recurring problem or an activity that could be improved. Choose something familiar enough to examine how it works. It might involve delayed approvals, inaccurate information, repeated work, scheduling conflicts, or customer complaints. I know this is going to sound silly, but it could even be something as simple as cooking a meal. How you organize your ingredients and prepare the dishes is part of a larger process.

Follow the activity from beginning to end. Identify what initiates the work, the people and departments involved, the resources required, and what constitutes successful completion. Back to our meal example, do you find yourself going back and forth to the pantry multiple times? Is there a more efficient way to organize everything you need? And how do you coordinate preparing the dishes so everything is ready at approximately the same time? Improving one step is helpful, but the real objective is making the entire process work together.

Consider different perspectives. One practice I’ve found particularly valuable is talking with both the customer and the service provider when evaluating a process. The customer can explain what they need and whether the process is producing the desired result. The service provider can explain how the work is performed, what resources are required, and what obstacles make the work difficult.

I remember having trouble with my internet service and calling the company for technical support. What should have been a straightforward request became one of the most frustrating customer service experiences I’d had. Afterward, I completed a customer complaint form.

A representative called to ask why I’d been so dissatisfied. I explained how difficult it had been to reach someone who could help. He laughed and said employees complained about the same thing. In fact, they had developed a workaround. I remember asking him, “If the system is so poorly designed that your own employees can’t use it, how do you think your customers feel?”

I suggested that the next time he needed to make changes to his account, he ask his wife to do it while he watched. Don’t tell her which buttons to press or how to navigate the system. Just observe her experience. Then ask yourself whether the helpdesk process needs improvement.

The employees had found a workaround, but that didn’t mean the problem had been solved. Sometimes the best way to understand how well a system works is to experience it from the perspective of someone who doesn’t already know how to navigate it.

This doesn’t have to be a formal process. Sometimes a spontaneous conversation can uncover insights that a formal survey might overlook. The two perspectives don’t always align, and that difference can be revealing.

Look for relationships and constraints. Identify where information, materials, decisions, or resources flow between people or departments. Pay particular attention to delays, handoffs, competing priorities, and activities that depend on factors outside the immediate team’s control.

Consider the consequences of potential changes. Before recommending a solution, ask how it might affect other activities. Could it create additional work elsewhere? Will another department need more resources? Might it solve the immediate problem while creating a longer-term issue?

Make adjustments and evaluate the results. Where you have the authority, test an appropriate change and monitor the outcome. Where you don’t, share your observations with the people responsible for the process. Not every proposed improvement will work as expected. That’s part of learning. The important thing is to avoid assuming that because a change produced the intended immediate result, it had no other consequences.

Over time, this approach becomes more natural. You begin to notice relationships that weren’t obvious before, recognize recurring patterns, and ask better questions when problems arise. You know you’re getting better at systems thinking when you start seeing things differently. You’ll begin to recognize dependencies you previously overlooked, ask better questions before recommending solutions, and anticipate consequences that might otherwise have surprised you. Over time, you’ll become more comfortable examining problems from multiple perspectives rather than immediately accepting the first explanation.

Applying Systems Thinking at Every Level

One misconception about Systems Thinking is that it primarily concerns senior executives responsible for managing large organizations. Certainly, senior leaders need to understand how departments, resources, strategies, and organizational priorities interact. Their decisions can influence hundreds or thousands of people. But Systems Thinking is equally valuable at all levels.

An employee who recognizes that incomplete information creates problems for the next person in a process is practicing Systems Thinking.

A supervisor who investigates why employees repeatedly fall behind, rather than simply demanding greater productivity, is practicing Systems Thinking.

A department manager who coordinates a proposed change with other departments before implementation is practicing Systems Thinking.

A senior leader who considers how a new organizational initiative will affect staffing, technology, finances, customer service, and existing operations is practicing Systems Thinking.

The scope of responsibility changes, but the underlying skill remains the same.

The goal is to understand how your work fits into the larger organization and how your decisions may influence others.

Practice Makes Perfect

Systems Thinking isn’t about making every decision more complicated. In fact, developing the skill should eventually make many decisions easier by helping you recognize relationships and anticipate problems.

Begin by looking beyond the task or problem directly in front of you. Consider what happened before the problem appeared, who else is involved, and what might happen after a proposed change is implemented.

When a problem keeps recurring, resist the temptation to assume the people involved simply need to work harder. Sometimes they do need better training, clearer expectations, or stronger accountability. But sometimes the problem is built into how the work is organized.

When a department reports an improvement, consider whether the organization as a whole is better off. A faster process, lower cost, or higher production rate is valuable only when it contributes to the intended outcome.

You won’t always recognize every dependency or anticipate every consequence. No one does. Organizations are too complex, and circumstances change too frequently.

During the 2008 financial crisis, the phrase too big to fail entered our everyday vocabulary. Another concern was whether some financial institutions had become too big to manage effectively. At Berkshire Hathaway’s annual meeting in May 2008, Warren Buffett raised this concern, questioning whether major banks had become too complex to manage their risks effectively.

I think there’s a lesson here that applies to organizations of every size. As organizations grow and become more complex, understanding how their parts interact becomes increasingly important. You don’t need to know every detail of every process, but you do need to recognize the relationships, dependencies, and potential consequences that shape the larger system.

At the end of the day, Systems Thinking is really about: learning to see not just the individual parts of an organization, but how those parts work together, and using that understanding to make better decisions.

RuReady Framework Connection

This article supports LS10 Systems Thinking, a Skills element within the Leadership Domain of the RuReady Adult Readiness Framework. Systems Thinking is the ability to recognize organizational interdependencies, understand how people, processes, and resources interact, and anticipate how decisions or changes in one area may affect others. It emphasizes looking beyond individual activities and immediate problems to understand how the larger system operates.

Systems Thinking connects closely with LK09 Performance, Accountability and Resource Systems, which provides the foundational knowledge of how organizations manage resources, establish performance expectations, measure results, and maintain accountability. LK09 helps explain how organizational systems function, while LS10 develops the practical ability to examine their relationships, recognize feedback loops, identify underlying problems, and anticipate unintended consequences.

If you enjoyed this article, explore the broader RuReady Adult Readiness Framework:

Preface: A Field Manual for Adult Life
Chapter 1: Why Do We Do What We Do?
Chapter 2: An Exploration of the RuReady Framework
Chapter 3: Life Skills for the Personal Domain
Chapter 4: Career Skills for the Professional Domain
Chapter 5: Leadership Skills for Every Level

Before moving on, feel free to use the checklist below to assess your readiness level.