December 2025:

We live in a world of volatility, uncertainty, complexity, and ambiguity (VUCA). Globally, the relational and economic impacts of geopolitics, technologies (AI, IoT, blockchain, social media), and fragile supply chains (disrupted during Covid) are a significant cause of concern for leaders. Luckily, we can make this a teachable moment by observing that what we are witnessing is the interconnectedness and interdependencies of a global system where the whole is greater than the sum of its parts. This lesson won’t address all VUCA, but it can help us address it within our organizations so we can begin to make more confident decisions about how to move forward.

Becoming a Systems Thinker: Sapere vedere (Italian, “knowing how to see”, Leonardo da Vinci)

Without question, one of the most powerful management tools we can recommend is systems thinking, also referred to as systems perspective (Kimsey et al. 2025). A commonly used definition describes systems thinking as a way of making sense of the complexity of the world by looking at it in terms of wholes and relationships rather than by splitting it down into its parts. Systems thinking provides managers with a powerful lens to know how to see their organizations.

Examples of systems are all around us. Most systems are composed of multiple subsystems that need to work together seamlessly for the larger system to operate properly. The human body is an excellent example; we are composed of twelve subsystems including circulatory, nervous, respiratory, etc. Systems and their subsystems share interdependent relationships, implying that neither can survive without the other and that changes or issues in one subsystem can dramatically affect other subsystems or the entire system (Bansal and Birkinshaw 2025). It is only through the collective health of all subsystems, the whole, and close coordination and collaboration, the relationships, that the overall system performs well.

Understanding organizations as systems composed of multiple subsystems allows us to better diagnose challenges and develop creative solutions (Bansal and Birkinshaw 2025). Organizations consist of multiple elements at multiple levels, all interacting interdependently, resulting in feedback and multiple emergent outcomes (Kimsey et al. 2025). There are numerous frameworks for understanding organizations; we recommend the uncomplicated, elegantly simple, and highly effective people-process-technology (PPT) model (Leavitt 1962). We have successfully used this model for decades to define the three organizational subsystems as including:

• People: organizational structure, division of labor, delegation of authority, job descriptions, task definitions, staff policies, incentive systems, performance management, etc.

• Process: standard operating procedures, cross-functional workflow definitions, process policies, process decision-making, escalation procedures, etc.

• Technology: communications and information technologies, physical plant and equipment, business logic, checks and balances, tracking, reporting, systems policies, etc.

Recommendations: The following recommendations leverage insights from Bansal and Birkinshaw (2025) and Kimsey et al. (2025) and offer insights into how to utilize this way of seeing to improve overall organizational performance. Many of the topics and approaches discussed here will be explained further in future writings:

• Nested context: Everything on planet earth can be described in terms of systems within systems. This nested context requires that we see, understand, and respect all intersystem influences and limitations.

  • Organizational survival requires respecting the requirements and limitations of governmental, environmental, and all other suprasystems via compliance, responsible sourcing, and the like.

  • Establish inter- and intra-system feedback loops and pay close attention to what interdependent interactions teach you; system operation and health are best monitored via feedback loops.

• The whole: Upon formation, merger, or expansion, intelligently and intentionally design and operate all subsystem elements to work together in a highly coordinated manner while aligning to a north star.

  • Translate your core purpose into end-to-end, value-creating workflows and utilize process-orientation (see newsletter #7) as a foundational structure; functional specialization and hierarchy are toxic (see newsletter #3).

  • Align incentive systems and performance measures to motivate system-level, value-creating behaviors and outcomes; subsystem-based incentives disincentivize value creation.

• Interdependence: Respect the shared nature of organizational performance and work continuously to improve coordination and collaboration across borders for the good of value creation and customers.

  • Measure subsystem performance feedback in terms of how it advances value creation and customer satisfaction; local subsystem biases can suboptimize the entire organization.

  • Anticipate the system-level effects of local changes so they don’t become system problems; assuming you can contain change to a single subsystem will confound the overall system.

• Operator influence: Having authority over a subsystem, or subsystem element, doesn’t absolve the operator from responsibility for system-level performance; rogue operator actions undermine the system.

  • Work collaboratively with work partners to harmonize cross-border processes and technologies that support end-to-end value creation; siloed thinking and actions create barriers.

  • Maintain a healthy respect for how your specific role, and that of your team’s, contribute to value creation and customer satisfaction; subsystem and system-level KPIs/measures must be aligned.

• Emergence: True systems are capable of emergent outcomes—unexpected positive (or negative) results of interdependence not attributable to a single element—thus making the whole greater than the sum of its parts.

  • The courage to allow your organizational system to generate emergent outcomes will be rewarded with unexpected creativity and engagement; negative results can be easily managed.

  • Thoroughly and continuously monitor system interactions, outcomes, and feedback for emergent outcomes and take action to celebrate or correct; small changes can trigger significant outcomes.

Knowing how to see that the whole is greater than the sum of its parts is the first step in improving organizational performance. The lens of systems thinking offers this perspective and provides a powerful diagnostic and redesign tool.

Stay tuned for MORe insights and recommendations.