Dr Michael C Jackson OBE
Emeritus Professor, University of Hull, UK
The Relevance of Critical Systems Thinking to Strategic Risk Leadership
I recently published a book ‘Critical Systems Thinking: A Practitioner’s Guide’ (Wiley, 2024) offering a short history of systems thinking and an account of the range of systems approaches and how to use them. Having just read Torben Andersen and Peter Young’s ‘Strategic Risk Leadership’ (Routledge, 2020), I have become conscious of how relevant my book is to the field of risk management. It is this relevance that I hope to draw out in what follows.
Systems thinking brings the bad news that everything is interconnected so that, if you want to understand what is going to happen, you need to have an accurate model of the whole system. Such a model would allow us to avoid or mitigate all possible risks. Of course, producing an all-embracing model is impossible and it is tempting to shoot the messenger. Critical Systems Thinking (CST), however, has found a pragmatic way forward. It does not seek ‘absolute truth’ but works on the basis of adequate ‘partial truths’. These partial truths have proven useful to humans over time for understanding and engaging with the complexity they face. A review of the literature of philosophy and social theory reveals five partial truths or ‘systemic perspectives’ that seem essential for the success of human endeavors whether pursued through public or private sector organizations. They are the ‘mechanical’, ‘interrelationships’, ‘organismic’, ‘purposeful’, and ‘societal/environmental’ perspectives. The mechanical perspective concentrates on goal-seeking and the minimum use of resources. The interrelationships perspective highlights the impact of non-linear interactions among variables. The organismic perspective emphasizes adaptability, agility and resilience in the face of environmental turbulence. The purposeful systemic perspective focusses on the ‘human factor’ - the need to harness multiple perspectives, to counteract cognitive biases, and to avoid the hazards of ‘groupthink’. The societal/environmental perspective seeks to bring to the table the interests of all stakeholders and wider environmental concerns. Each of these systemic perspectives provides a valid structured comprehension of a situation, revealing some aspects while suppressing others. The five lenses aid ‘thinking about thinking’ by challenging one another.
The ability to see the world through these five systemic perspectives is essential for human progress. What I now recognize, having read Andersen and Young’s book, is that it must follow that the same five lenses can be employed to reveal the most important uncertainties facing organizations. Each lens will highlight crucial risks that must be managed or mitigated if an organization is to survive and thrive. For example, if the organismic systemic perspective suggests that an organization lacks the redundancy to be adaptive then its long-term viability will be threatened. If the purposeful perspective reveals a lack of shared purpose among the stakeholders, then trouble is on the way.
Fortunately, CST has at its disposal not only systemic perspectives that can uncover uncertainties in different areas but also ‘systems methodologies’ that can interrogate the exact nature of the risks revealed and suggest what can be done about them. Given the significance of the five perspectives for humanity it is not surprising that systems methodologies corresponding to each of the perspectives have come to the fore. Here are some examples. Lean systems approaches address matters of efficacy and efficiency and can identify and tackle issues associated with a lack of a clear purpose, prolonged throughput times, and waste. It is essential to manage such operational risks, but Strategic Risk Leadership (SRL) wants to extend the scope of the uncertainties considered in risk management. CST can assist. System dynamics responds to matters raised by the interrelationships perspective, using ‘causal loop diagrams’ to grasp the outcomes of multiple non-linear interactions between variables and identify possible unintended consequences of actions. The ‘viable system model’ empowers the organismic perspective by identifying threats to long-term viability, perhaps stemming from a lack of market intelligence or over-centralization. The purposeful systemic perspective can employ a variety of methodologies to enhance creative thinking and methods such as ‘red-team thinking’ to alleviate risks arising from groupthink (now documented as being a serious problem in the initial response to the COVID-19 pandemic in the UK). Critical systems heuristics uses ‘boundary critique’ to serve the societal/environmental perspective by identifying who or what is being marginalized in the thinking leading to decisions and what the consequences might be.
Andersen and Young argue that risk management is ‘primarily a way of thinking’. It requires ‘critical thinking in the service of interpreting our complex and non-certain world’. CST would concur and offers the five systemic perspectives as relevant mindsets that can support an enhanced notion of risk management. For Anderson and Young, risk management is not just a technical matter, concerned with minimizing loss and maximizing gain, but must seek to ‘understand the context’, embrace ‘sustainable resilience’ as a goal, start with people and address human nature and motivation, and focus on values. Only then will it cease to be just a codified set of practices and become properly ‘integrated in day-to-day management’. CST has systems methodologies that can help. There is a strong prima facie case for a partnership between CST and SRL.
More information about the book: https://amzn.eu/d/hWVEfk8