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Systems Thinking, 3rd Edition

Book Description

In a global market economy, a viable business cannot be locked into a single form or function anymore. Rather, success is contingent upon a self-renewing capacity to spontaneously create structures, functions, and processes responsive to a fluctuating business landscape. Now in its third edition, Systems Thinking synthesizes systems theory and interactive design, providing an operational methodology for defining problems and designing solutions in an environment increasingly characterized by chaos and complexity.

The current edition has been updated to include all new chapters on self-organizing systems, Holistic, Operational, and Design thinking. Gharajedaghi covers recent crises in financial systems and job markets, the housing bubble, and environment, assessing their impact on systems thinking. A companion website to accompany the book is available at www.interactdesign.com.



  • Four NEW chapters on self-organizing systems, holistic thinking, operational thinking, and design thinking
  • Covers the recent crises in financial systems and job markets globally, the housing bubble, and the environment, assessing their impact on systems thinking
  • Companion website to accompany the book is available at interactdesign.com

Table of Contents

  1. Front Cover
  2. Systems Thinking: Managing Chaos and Complexity: A Platform for Designing Business Architecture
  3. Copyright
  4. Contents
  5. Foreword to the Third Edition
  6. Foreword to the Second Edition
  7. Preface
  8. Acknowledgment
  9. Part One: System Philosophy: The Name of the Devil
    1. Chapter 1: How the GameIs Evolving
      1. 1.1 Imitation
      2. 1.2 Inertia
      3. 1.3 Suboptimization
      4. 1.4 Change of the game
      5. 1.5 Shift of paradigm
      6. 1.6 Interdependency and choice
        1. 1.6.1 On the Nature of Organization: The First Paradigm Shift
      7. 1.7 On the nature of inquiry
        1. 1.7.1 The Second Paradigm Shift
      8. 1.8 The competitive games
        1. 1.8.1 Mass Production — Interchangeability of Parts and Labor
        2. 1.8.2 Divisional Structure — Managing Growth and Diversity
        3. 1.8.3 Participative Management
        4. 1.8.4 Operations Research — Joint Optimization
        5. 1.8.5 Lean Production System — Flexibility and Control
        6. 1.8.6 Interactive Management — Design Approach
  10. Part Two: Systems Theory: The Nature of the Beast
    1. Chapter 2: Systems Principles
      1. 2.1 Openness
      2. 2.2 Purposefulness
        1. 2.2.1 Recap
      3. 2.3 Multidimensionality
        1. 2.3.1 Plurality of Function, Structure, and Process
        2. 2.3.2 Recap
      4. 2.4 Emergent Property
        1. 2.4.1 Recap
      5. 2.5 Counterintuitive Behavior
        1. 2.5.1 Recap
    2. Chapter 3: Sociocultural System
      1. 3.1 Self-organizatioN: movement toward a Łpredefined order
      2. 3.2 Information-bonded systems
      3. 3.3 Culture
      4. 3.4 Social learning
      5. 3.5 Culture as an operating system
    3. Chapter 4: Development
      1. 4.1 Schematic view of theoretical traditions
      2. 4.2 Systems view of development
      3. 4.3 Obstruction to development
        1. 4.3.1 Alienation
        2. 4.3.2 Polarization
        3. 4.3.3 Corruption
        4. 4.3.4 Terrorism
        5. 4.3.5 Recap
  11. Part Three: Systems Methodology: The Logic of the Madness
    1. Chapter 5: Holistic Thinking
      1. 5.1 Iterative process of inquiry
      2. 5.2 Systems dimensions
        1. 5.2.1 Generation and Dissemination of Wealth
        2. 5.2.2 Generation and Dissemination of Power ( Centralization and Decentralization Happen at the Same Time)
        3. 5.2.3 Generation and Dissemination of Beauty: Social Integration
        4. 5.2.4 Generation and Dissemination of Knowledge
        5. 5.2.5 Generation and Dissemination of the Value: Conflict Management
    2. Chapter 6: Operational Thinking: Dynamic Systems: Dealingwith Chaos and Complexity
      1. 6.1 Complexity
        1. 6.1.1 Open Loop and Closed Loop Systems
        2. 6.1.2 Linear and Nonlinear Systems
      2. 6.2 Operational thinking, the iThink language
        1. 6.2.1 Connectors
        2. 6.2.2 Modeling Interdependency
      3. 6.3 Dynamics of throughput systems
        1. 6.3.1 Critical Properties of the Process
        2. 6.3.2 Model of the Process
        3. 6.3.3 Measurement and Learning
    3. Chapter 7: Design Thinking
      1. 7.1 Design thinking, as the systems methodology
      2. 7.2 Operating principles of design thinking
      3. 7.3 Modular design
      4. 7.4 Design and process of social change
      5. 7.5 Interactive design
        1. 7.5.1 Idealization
        2. 7.5.2 Realization — Successive Approximation
        3. 7.5.3 Dissolving the Second-Order Machine
      6. 7.6 Critical design elements
        1. 7.6.1 Measurement and Reward System (A Social Calculus)
        2. 7.6.2 Vertical Compatibility
        3. 7.6.3 Horizontal Compatibility
        4. 7.6.4 Temporal Compatibility
        5. 7.6.5 Target Costing
    4. Chapter 8: Formulating the Mess
      1. 8.1 Searching
        1. 8.1.1 Systems Analysis
        2. 8.1.2 Obstruction Analysis
        3. 8.1.3 System Dynamics
      2. 8.2 Mapping the Mess
      3. 8.3 Telling the Story
        1. 8.3.1 Formulating the Mess: A Case Review (Story of Utility Industry)
        2. 8.3.2 Success Changes the Game, Lack of Explicit Vision
        3. 8.3.3 Monopolistic, Cost Plus, Regulated Environment
        4. 8.3.4 The Non-Competitive Culture
        5. 8.3.5 The Input-Based Personnel Policy
        6. 8.3.6 Mediocrity, Tolerance of Incompetence
        7. 8.3.7 Structural Incompatibility
        8. 8.3.8 Uncertainty About the Future
      4. 8.4 The Present Mess
        1. 8.4.1 Drivers Defining the Behavior of the Present State of the Economy
        2. 8.4.2 How the Game Is Evolving
      5. 8.5 Current Crisis and Future Challenges
    5. Chapter 9: Business Architecture
      1. 9.1 The system's boundary and business environment
      2. 9.2 Purpose
      3. 9.3 Functions
      4. 9.4 Structure
        1. 9.4.1 Output Dimension
        2. 9.4.2 Input Dimension
        3. 9.4.3 Market Dimension
        4. 9.4.4 Internal Market Economy
      5. 9.5 Processes
        1. 9.5.1 Planning, Learning, and Control System
        2. 9.5.2 Measurement System
        3. 9.5.3 Recap
  12. Part Four: Systems Practice: The Gutsy Few
    1. Chapter 10: The Oneida Nation
      1. 10.1 Desired specifications
      2. 10.2 Systems architecture
      3. 10.3 Governance
        1. 10.3.1 Governing Body
        2. 10.3.2 Chief of Staff
        3. 10.3.3 Planning, Learning, and Control System
        4. 10.3.4 Planning, Learning, and Control Board
      4. 10.4 Membership systems
        1. 10.4.1 Empowerment
        2. 10.4.2 The Tie That Bonds
        3. 10.4.3 Membership Network
        4. 10.4.4 Consensus-Building Process
        5. 10.4.5 Back to the Future
        6. 10.4.6 Performance Criteria and Measures
      5. 10.5 Learning systems
        1. 10.5.1 Learning to Learn (Formal Education)
        2. 10.5.2 Learning to Be (Cultural Education)
        3. 10.5.3 Learning to Do (Professional Education)
        4. 10.5.4 Support Functions
        5. 10.5.5 Advocacy Functions
        6. 10.5.6 Oneida Multiversity
        7. 10.5.7 Performance Criteria and Measures
      6. 10.6 Business systems
        1. 10.6.1 Services Sector
        2. 10.6.2 Industry Sector
        3. 10.6.3 Leisure Sector
        4. 10.6.4 Land and Agriculture Sector
        5. 10.6.5 Marketing Sector
        6. 10.6.6 Governance and Intersystem Relationships
      7. 10.7 Core services
        1. 10.7.1 Government Services Division
        2. 10.7.2 Infrastructure Development Division
        3. 10.7.3 Ordinance Division
        4. 10.7.4 Performance Criteria and Measures
        5. 10.7.5 Governance and Oversight
      8. 10.8 External environment
      9. 10.9 Judicial system
        1. 10.9.1 Contextual Analysis
        2. 10.9.2 Contextual Challenge
        3. 10.9.3 Democratic Challenge
    2. Chapter 11: Butterworth Health System
      1. 11.1 Issues, concerns, and expectations
      2. 11.2 Design specifications
      3. 11.3 The Architecture
      4. 11.4 Market dimension
        1. 11.4.1 Market Access
      5. 11.5 Care System
        1. 11.5.1 Contextual Background
        2. 11.5.2 Desired Specifications
        3. 11.5.3 Common Features
        4. 11.5.4 Preventive Care
        5. 11.5.5 Interventional Care
        6. 11.5.6 Viability Care
        7. 11.5.7 Terminal Care
      6. 11.6 Output dimension
        1. 11.6.1 Alternative One: Traditional Functional Structure
        2. 11.6.2 Alternative Two: Modular Structure
        3. 11.6.3 Health Delivery System Design: The Makeup
        4. 11.6.4 Community-Based Health Delivery System
        5. 11.6.5 Specialized Health Delivery System
        6. 11.6.6 Shared Services
      7. 11.7 Core knowledge
      8. 11.8 Shared services
        1. 11.8.1 Need for Centralization
        2. 11.8.2 Control Versus Service
        3. 11.8.3 Customer Orientation
      9. 11.9 Health delivery system, core knowledge, and care system interactions
      10. 11.10 The executive office
      11. 11.11 Recap
    3. Chapter 12: The Marriott Corporation
      1. 12.1 The environment: how the game is evolving
        1. 12.1.1 Bases for Competition
      2. 12.2 Purpose
        1. 12.2.1 Principles and Desired Characteristics
        2. 12.2.2 Mission
      3. 12.3 The architecture
        1. 12.3.1 Product/Market Mix
        2. 12.3.2 Region/Market Operation
        3. 12.3.3 Brand Management
        4. 12.3.4 Core Components
        5. 12.3.5 Core Knowledge
        6. 12.3.6 Critical Processes
      4. 12.4 Recap
    4. Chapter 13: Commonwealth Energy System
      1. 13.1 Stakeholders' Expectations
        1. 13.1.1 Shareholders' Expectations
        2. 13.1.2 Regulators' Expectations
        3. 13.1.3 Employees' Expectations
        4. 13.1.4 Customers' Expectations
        5. 13.1.5 Suppliers' Expectations
        6. 13.1.6 Public's Expectations
      2. 13.2 Business Environment
        1. 13.2.1 The Changing Game: The Energy Industry
        2. 13.2.2 The Changing Game: COM/Energy
      3. 13.3 Design
        1. 13.3.1 Purpose and Strategic Intent
        2. 13.3.2 Core Values and Desired Specifications
      4. 13.4 General Architecture
      5. 13.5 Core Business Units: Gas and Electricity Distribution
        1. 13.5.1 Customer-Oriented Business Units: Energy ŁSupply Systems and Management Services
        2. 13.5.2 Cogeneration and Packages of Energy ŁSupply (Industrial and Commercial)
        3. 13.5.3 Energy Efficiency and Electrotechnologies (Residential and Commercial)
      6. 13.6 Technology/Supply-Oriented Business Units: Energy Generation and Supply
        1. 13.6.1 Energy Generation (Canal)
        2. 13.6.2 Gas Storage (LNG)
        3. 13.6.3 Steam Services
      7. 13.7 Energy Brokerage and International Operations
        1. 13.7.1 Energy Brokerage
        2. 13.7.2 International Operations
      8. 13.8 Shared Services (Performance Centers)
        1. 13.8.1 Service Company
        2. 13.8.2 Financial Systems
      9. 13.9 Executive Office
        1. 13.9.1 Core Knowledge Pool
        2. 13.9.2 Learning and Control System
    5. Chapter 14: Carrier Corporation
      1. 14.1 Expectations, assumptions, and specifications
        1. 14.1.1 The Changing Game: In General
        2. 14.1.2 The Changing Game: The HVAC Industry
        3. 14.1.3 Drivers for Change
        4. 14.1.4 Bases for Competition
      2. 14.2 Core Values
        1. 14.2.1 Products and Services
        2. 14.2.2 Core Technology and Know-How
        3. 14.2.3 Sales and Distribution System
      3. 14.3 Systems Architecture
        1. 14.3.1 Desired Characteristics
        2. 14.3.2 A Multidimensional Framework
      4. 14.4 Markets
        1. 14.4.1 Regional Units
        2. 14.4.2 Area Units
      5. 14.5 Output units
      6. 14.6 Components
      7. 14.7 Inputs
        1. 14.7.1 The Technology
        2. 14.7.2 Operational Support (Process Design)
        3. 14.7.3 Management Support Services
      8. 14.8 Business Processes
        1. 14.8.1 Decision System
        2. 14.8.2 Performance Measurement and Reward System
        3. 14.8.3 Target Costing and Variable Budgeting System
  13. Author Biography
  14. Conclusion
  15. References
  16. Index