Every business is a system, a collection of elements and forces that interact with each other to produce a given set of results. Change one element and you impact all the others.
Thus, nothing in business can be viewed in isolation. Although the problem is that not everyone thinks like this. Of course, there are a number of ways of thinking and making decisions in both life and business.
However, by just knowing and understanding a few principals behind systems thinking, I’m sure you and your business will benefit.
Here are a couple of ideas to get you started:
1. Understand Balancing Forces
Isaac Newton has said, “For every action, there is an equal and opposite reaction.”
In business, when you increase your sales, for example, your inventory will naturally decrease. Thus as you grow, you must also hire more people to meet your increasing demand.
Of course, every decision leads to a cause and effect. There are many short-term strategies that only lead to long-term problems. If you don’t understand how one decision affects the rest, then you’ll quickly find yourself digging holes for yourself.
2. Find Feedback Loops
Some situations and decisions in business can take you on a continually onward and upward trajectory. While others can take you on a quickly falling downward spiral. Hence, the key is recognizing where feedback loops come into play.
For example, if you develop a new service line and people love it, they will naturally tell more people about it, which will increase your number of customers, sales and so on. This is a positive feedback loop that will obviously continually grow and develop your business.
Although on the contrary, there are also negative feedback loops that will hurt your company. For example, cutting salaries may seem like a good way to save money. However, it will likely lead to your best people leaving, which will decrease your ability to deliver on your promises, which will create unhappy customers, and so on.
Thus, you must seek to create positive feedback loops, while avoiding and removing the negatives.