This video is an excerpt from the Business 901 Podcast that I did with host Joe Dager in 2016. In this video, we discuss some of the challenges associated with systems thinking, along with some thoughts on the potential of Big Data. We begin this discussion with some background on the issues with education and systems thinking. Then we briefly explore the difficulty in learning when there is a delay between action and result. Finally, we touch on how big data and better organization models may provide new insights and hope for systems thinking in the future. Below is a summary of the key points.
Challenge # 1 – How We Educate
- Business schools are organized into functional silos (departments) such as marketing, finance, accounting, etc.
- The curriculum is designed around these disciplines and taught as individual subjects.
- Then we wonder why graduates design organizations composed of functional silos that don’t operate very well as integrated systems.
Challenge #2 – Distance between Cause and Effect
- We’ve known for a long time now that humans learn best when the feedback is immediate or a soon as possible after the performance. When learning to drive, you turn the wheel of a car, and the car turns.
- In organizations, there is often a delay between action and the results. For example, the results from changes in strategy are often not realized for many months and sometimes years.
- The delays in organizations, along with their complexity, make it difficult to know what worked, didn’t work, and why.
Big Data and the Need for Better Organization Models
- One of the challenges to understanding organizations has been the limited and infrequent data on key aspects of performance that are available to managers.
- Big Data is not only lowering the cost of data but also providing data on more components and more frequent data points.
- To take advantage of this additional data, we need better models and theories of the organization to help make sense of the data.
- One framework that may prove useful as a starting point is Dr. W. Edwards Deming’s notion of a System of Profound Knowledge.