Business InsightsSYSTEMS THINKING

Our way of thinking is changing from Analytics to Systems!

Albert Einstein“We cannot solve our problems with the same

thinking we used when we created them”

We use Analytical Thinking, when we want to understand how something works.

1. Start by taking it apart

2. Try to understand what the parts do

3. Assemble an understanding of the parts into an understanding of the whole

Answers the Question: How?

Analytical Thinking

If you want to understand how a Corner Café works…

1. Start by taking it apart… • People, products, suppliers, customers, window displays etc…

• Cost Structure, fixed vs. variable costs, overheads, margins, profitability, etc…

2. Try to understand what the parts do…• People: Who are the people that work there, Owners? Family? Friends

• Suppliers: Who are the suppliers, how are they selected? How often do they deliver?

3. Assemble an understanding of the parts into an understanding of the whole• Family run business which provides employment for a couple and their daughter

• Cash based business which relies on high margins on the sale of fast moving consumer goods

Answers the Question: How a Corner Café works?

Analytical Thinking – An Example

Systems Thinking

We use Systems Thinking, when we want to understand why something works the way it does.

1. Start by identifying what is it a part of

2. Try to understand the behaviour of the system as a whole

3. Assemble an understanding based on the interactions between the parts

Answers the Question: Why?

If you want to understand why a Corner Café works the way it does…

1. Start by identifying what it is a part of…• Supply of fast moving consumer goods (FMCG)

• Meeting peoples basic daily needs

• Convenience with easy access and quick service

2. Try to understand the behaviour of the system as a whole• Corner Café > Supermarket > Manufactures > Distributors > Importers

• Accessibility > Pedestrians > Locals > Residents > Workers > Adults > Children

3. Assemble an understanding of the parts into an understanding of the whole• Provides convenient access to basic goods / services

• As a cash-based family business, the owners have a lot of flexibility in who works there and what profits they declare

Answers the Question: Why does the Corner Café model work?

Systems Thinking – An Example

SummaryUse Systems Thinking, when you want to understand

Why something works the way it does.

• Start by identifying what is it a part of, and• What sub-systems are a part of it?• Include multiple levels in both directions

Step 1 Part of?

Try it for yourself• The next time you are faced with a problem• Don’t ask, How did this happen?

• But rather, Why did this happen?

• Use the Systems Thinking Approach to get a better understanding of the Interactions that caused the problem

• Identify which interactions need fixing in order to solve the problem

• Reflect on the process• Differences between Analytics and Systems Thinking

• Use a combination of both outcomes to determine where to intervene

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