Systems Thinking in Business

I’ve always used the fable of the blind men and the elephant to describe the dilemma of the modern business. Complexity and speed of change continue to accelerate. And it gets harder and hard to see the forest for the trees or, as the fable goes, to see the whole elephant.

That’s why I’m especially excited about the integrated reporting movement. It is explicitly trying to drive integrated and systems thinking in business. Two concepts that are especially powerful for this purpose are the multi-capital model and the concept of sustainable value creation. These concepts help us see the individual value drivers for companies while also seeing how the individual drivers work together as an integrated whole.

Systems thinking is an especially strong companion for integrated reporting because of its links with two big trends. First it provides a model for seeing organizations as ecosystems which provides support for the integration of sustainability thinking into mainstream business. Second, it models change in systems as a process of continuous learning which recognizes the enormous importance of knowledge intangibles in today’s economy.

Smarter-Companies has just published a new paper called Systems Thinking Using a Multi-Capital Model. Its focus is on driving profits and prosperity with integrated reporting and thinking. The paper includes examples from Clorox, Arcelor Mittal and Entergy. Let us know what you think!


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