2010 Volume 13 Issue 3

Editorial: Systems Thinking

Editorial: Systems Thinking

Much of what has worked in the past no longer works in today’s competitive environment forcing firms to abolish the comfortable ways of doing business and to work harder to find new ways of creating and delivering value to their customers.

[powerpress: http://gsbm-med.pepperdine.edu/gbr/audio/summer2010/Chun-editorial.mp3]

Mark Chun, PhD
Mark Chun, PhD

The global recession that we have experienced in the last several years has caused businesses to rethink their operations. Even the industry leaders that have been able to gain a substantial advantage in the marketplace have not been immune to the struggle. Most of their competitive advantages—be it pricing power, control of supply-chain and distribution channels, name brand recognition, or a dedicated customer base—are short-lived, as the conditions are ever-changing. Much of what has worked in the past no longer works in today’s competitive environment. The change has forced firms to abolish the comfortable ways of doing business and to work harder to find new ways of creating and delivering value to their customers. As a result, many businesses are breaking down divisional barriers and conducting business in a more agile, flexible, innovative, and creative manner. To stay ahead of the curve, if not just afloat, businesses must understand how to create new value from multiple divisions and perspectives, drawing on a diverse skill set including information systems, law, entrepreneurship, organizational design, strategy, decision sciences, market, accounting, and finance.

This new perspective on orchestrating all of the organization’s functions and divisions can be described as a “systems thinking” approach to doing business. Systems thinking views the entities of the organization (i.e., departments or functions) and their associated processes from a holistic viewpoint and looks at them over time. It requires an understanding of the interactions and the cause-and-effect relationships between organizational functions and divisions. Think of it like a fishbowl—the fish, plants, water, oxygen, and food work together to create a systemic environment in which each entity relies on the other to survive and to be productive. Removing or damaging one part of the system can be catastrophic for the system as a whole. Many successful firms have been able to apply the notion of systems thinking to their organizations and have skillfully synchronized their firm’s initiatives so that the customer can experience and recognize their full value.

Initiatives that are enacted within the organization before they are fully developed can often have adverse effect on other parts of the firm. Typical questions that you should ask yourself before engaging in any strategic initiative are: What are the effects that the changes will have on other parts of the organization? Which functions may gain and which may lose as a result of this initiative? Would this initiative lead to any short- and long-term gains?

Systems ThinkingIn this issue of the Graziadio Business Review, our contributing authors have shared articles that address how firms can systemically create value throughout the organization—whether it be through improvisation when dealing with ambiguity and complexity (Leybourne), by properly managing human resource capital during economic recovery (Leo and Schieberl), through corporate negotiation factors (Rainey) or by expanding globally through exports (Coscarello). All of these are important considerations for corporations that aim to be more competitive. In addition, interviews on green technology and leadership (Kass), the future of financial management (Iritani), and servanthood leadership (Bowman) are included in this issue to add an additional perspective for what is expected from firms as they attempt to conduct business and to provide value in today’s challenged economic environment. Interestingly, what remains consistent when creating new value to the customer across all business functions is the necessity to conduct business honestly and ethically.

There are numerous other ways to creatively deliver new value in corporations, especially after this down economy. We would like to hear your thoughts on other innovative and creative ways that you’ve added value to your firm. Check out a blog post on “systems thinking” at the GBR blog. Your comments are appreciated. We also encourage you to attend the Center For Applied Research 2010 Symposium, entitled “Creating Value After A Down Economy,” which will be held on August 31, 2010. Learn more about the conference at http://bschool.pepperdine.edu/events/applied-research/.

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Author of the article
Mark Chun, PhD
Mark Chun, PhD
Mark Chun, PhD, earned his doctorate in Information Systems from the University of Colorado at Boulder; an MBA from the University of California, Irvine, with a emphasis on business and strategy; and a Bachelor of Business Administration with an emphasis in management information systems from the University of Hawaii. His research focuses on the use of IT to create value and to transform organizations, the integration of information systems, and knowledge management. He has been published in the Communications of the Association of Information Systems journal, the Journal of Information Technology Management, the Journal of Global Information Technology Management, and the Journal of Information Technology Case and Application Research. Dr. Chun has worked for Intel Corporation, Pepsi Co./Taco Bell, Coopers & Lybrand, and the Bank of Hawaii, and has conducted research at Qwest, Honda, Hilton Hotels, Kaiser Permanente, Mattel, and Pratt-Whitney Rocketdyne. He has also researched the diffusion of information technology in less-developed Asian countries.
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