Management is both a craft and a career. The theoretical foundations of this field include systems science and complexity science, which investigate the behavior of social systems. This is how system-oriented management works.
It needs to be set apart from business administration-based methods.
System-oriented management is concerned with the design, development, and steering of social systems, which include all forms of organizations in which humans interact (companies are one exception). Consequently, handling complexity is a key concern.
On the other hand, approaches centered around business administration typically focus the optimization of financial figures and entrepreneurial processes.
The difference between management and business administration was initially made by Hans Ulrich in the 1960s. He is regarded as the creator of the St. Gallen Management Model, which is based on systems science and cybernetics and is now available in different versions.
Complexity in System Oriented Mangement
In system-oriented management, complexity refers to the intricate and interconnected nature of various elements within a system. It encompasses the multitude of relationships, dependencies, and interactions among components that make up the system.
Complexity is a fundamental characteristic of systems and their environments, and it poses challenges for effective management.
Complexity scientists examine all phenomena that arise from the interactions among components.
Characteristics of complexity
Characteristics of complexity include:
- The conduct of a system (or a model)
- The system consists of diverse components with distinct roles.
- Components adhere to local rules, encompassing actions, interactions, problem-solving, and the categorization of things.
- components to interact in a variety of ways (without a reasonable higher instruction defining the range of possible interactions)
- Components are interdependent and respond or act accordingly.
- Components therefore combine to create a higher order of emergence that is larger than the sum of its parts.
Basic drivers for Organizations and Entrepreneurs
These drivers form the core principles that guide organizations and entrepreneurs in navigating the complexities of the business landscape, fostering resilience, and achieving long-term success.
Fundamental drivers for organizations and entrepreneurs encompass:
1. Survival and Value Addition
- Objective: Ensuring the continuation and sustainability of the organization.
- Strategy: Adapting to market dynamics, customer needs, and external factors to survive and thrive.
- Execution: Adding significant value to products, services, or solutions to remain competitive and relevant.
2. Optimization and Reinvention
- Objective: Enhancing efficiency and staying innovative in a rapidly changing environment.
- Strategy: Continuously improving processes, embracing technology, and fostering a culture of innovation.
- Execution: Actively seeking opportunities to optimize operations and periodically reinventing strategies to meet evolving demands.
3. Steady Development and Understanding Patterns/Organizational Life Cycles:
- Objective: Achieving consistent growth and longevity.
- Strategy: Understanding organizational life cycles, identifying patterns in market trends, and adapting strategies accordingly.
- Execution: Implementing measured and sustainable development strategies that align with the organization’s position in its life cycle.
A system is a collection of interconnected and interacting elements that work together to produce a unified whole—elements that constantly affect one another (directly or indirectly) in order to keep the system functioning and achieving its goal.
Closed Systems (in theory)
- Only significant components within the system
- Do not interact with or are influenced by their surrounding
- Nothing goes in or out of it.
- Everything inside can interact.
Open systems, which are prevalent in real life, involve frequent cross-boundary exchanges of information, materials, and energy with their larger external environment or system.
Features of Systems
- Methods for input, output, and feedback as part of a larger system.
- Maintain an internal stable state in the face of changing external surroundings.
- Show properties that differ from the whole.
- Some systems become stops functioning when an element is removed or changed altered.
Systems thinking integrates a network of relationships within and between systems, going beyond the traditional, reductionist method of focusing on a system’s component parts.
The “emergent” behaviors that occur in all physical, biological, social, economic, and technological systems are the result of these relationships.
System-Oriented Management stands as a comprehensive and holistic approach to navigating the complexities of organizational and business environments. By emphasizing interconnectedness, interdependencies, and the dynamic nature of systems, this management philosophy seeks to provide a more accurate and effective framework for decision-making and problem-solving.
Through the lens of System-Oriented Management, organizations are encouraged to view themselves as dynamic entities influenced by internal and external factors, rather than isolated components. This perspective enables a deeper understanding of the intricate relationships between different elements within a system, fostering adaptability and resilience in the face of change.
The acknowledgment of complexity, emergence, and the ever-evolving nature of systems guides managers to adopt a proactive stance, anticipating challenges and leveraging opportunities for innovation. Additionally, the integration of systems thinking methodologies, such as feedback analysis and dynamic modeling, equips organizations with tools to visualize and comprehend intricate systems.
As businesses operate in an increasingly interconnected and fast-paced world, System-Oriented Management emerges as a valuable paradigm for leaders seeking sustainable growth, adaptability, and a strategic advantage. By embracing the principles of systems thinking, organizations can navigate uncertainties, optimize processes, and cultivate a culture of continuous improvement, ensuring long-term success in a dynamic and interconnected global landscape.