Managing complexity: systems thinking as a catalyst of the organization performance

Abstract

PurposeThe paper aims to analyse new management practices for addressing complexity, uncertainty and changes of today's business landscape. In this context it is critical to understand the role of intellectual capital and particularly what are the key competencies to be developed in order to deal with the fluidity of business. Effective decision making and learning in a world of growing dynamic complexity requires leaders to become systems thinkers – to develop tools to understand the structures of complex systems. The paper aims to clarify the relationship between systems thinking and organization performance.Design/methodology/approachThe methodology of systems thinking is inseparable from the philosophy of systems thinking, thus, the first part of the paper presents the common theory of systems and the systems approach to the organization. The paper follows a quantitative research approach. Firstly, exploratory factor analysis was employed to assess dimensionality of scales. Secondly, relationships between variables were explored using Spearman's correlation. Thirdly, multiple linear regression was run to test the hypothesized model of relationships. Finally, one‐way ANOVA was employed to test the influence of intelligence competence level on mean of organization performance.FindingsBased on the analysis and synthesis of the scientific literature a conceptual model of the relationship between cognitive intelligence competencies (such as systems thinking) and organization performance was developed. The theoretical model was supported by empirical evidence. Correlational and regression analyses revealed that systems thinking was associated with higher organization performance.Research limitations/implicationsBecause of the chosen research approach, the research results may lack generalizability. The sample of this research was limited only to national level therefore it is not possible to compare results across different countries. In order to generalize the research findings, further research should include more companies from different industries. Secondly, the traditional self assessment method has been used for evaluation of competencies in this paper, but the results could be supplemented by adding 360‐degree feedback or multisource assessment results.Practical implicationsA systems thinking approach allows the realization of various interrelations and working schemes in the organization and helps to identify regularities of the organizational development. The application of systems thinking principles cannot guarantee success but may be a useful means or a permanent form of activity when solving conceptual problems.Originality/valueRich insight to the systems thinking approach was provided at the conceptual level and meaning of systems thinking was developed. The paper discloses the effects of systems thinking on organization performance and includes implications for the development of systems thinking and other leadership competencies.