Our world is constantly shaped by myriad systems, some obvious and tangible, others hidden yet pervasive. From the solar system that governs celestial movements to the complex web of interactions in a simple coffee shop, these systems are the invisible and persistent forces that influence our reality.1 Understanding the nature of these systems, both in their visible manifestation and in their invisible dynamics, is fundamental for anyone who wants to navigate and influence the world around us through effective strategies. This report aims to explore these concepts, analyzing how strategy builds systems and how, in turn, intrinsically depends on them.
Unveiling the Invisible: Definition of Visible and Invisible Systems
Visible systems are those whose components and operations are easily observable.2 Think of the solar system, with its planets and other celestial bodies clearly visible in the night sky, or security systems such as fences, entrance gates and uniformed guards, designed precisely to be seen and act as a deterrent.5 Software and application user interfaces also fall into this category, providing immediate feedback through notifications, changes in visual design, and progress indicators.2 Visible diversity characteristics, such as age, gender, and ethnicity, are further examples of systems whose components are immediately perceivable.7 Finally, the physical infrastructure of a city, with its streets, bridges, aqueducts and railways, represents a visible and tangible system that supports daily life.8
In contrast, invisible systems operate through forces not perceived by our senses or intangible structures.1 This category includes a wide range of phenomena. From a philosophical point of view, we talk about thought, knowledge, ideality and aspects of being that are not immediately perceptible, such as the hidden sides of objects or the unconscious.10 In the context of security, stealth systems include hidden cameras, motion and heat sensors, fire and ground detection systems, all designed to go unnoticed and prevent evasion.5 At the organizational level, they refer to the underlying processes and informal relationships crucial to functioning, often overlooked by managers focused on observable work.11 Invisible diversity, which includes characteristics such as disability, sexual orientation, and socioeconomic background, is another example of a system that is not immediately visible.7 From a technology perspective, think of architecturally integrated heating, ventilation and air conditioning (HVAC) systems, wireless power, and ambient intelligence that operates without obvious interfaces.12 The infrastructure that supports our digital lives, such as undersea cables, satellite networks, data centers, and the power grid, are also invisible but essential systems.8 Finally, economic forces such as gravity in the solar system, market economies that coordinate transactions through the “invisible hand,” and systemic tensions within complex systems are further examples of invisible systems that shape our world.1 Intangible authority architectures, such as surveillance systems, also fall into this category, making populations visible to the state through invisible means such as data.14
The distinction between visible and invisible is not always clear and can depend on awareness or the point of observation.15 What is invisible to one observer may be visible to another with different skills or tools. Furthermore, technologies such as augmented reality can make previously invisible systems visible, improving understanding and interaction.15
The Intertwined Dance: Strategy and Systems
Strategy and systems are intrinsically linked in a dynamic and reciprocal relationship. Strategy plays an active role in building and shaping systems to achieve organizational goals.17 Strategic decisions lead to the creation of structured systems, processes, procedures and technologies aimed at achieving these objectives. For example, a strategy that aims to improve efficiency will lead to the implementation of systems for streamlining workflows, reducing redundancies and minimizing errors.17 Strategy defines the “what” and “why” of an organization’s goals, while systems provide the “how” for execution.17
At the same time, the strategy depends crucially on existing systems for its implementation and achieving the desired results.17 Without effective systems, even the most brilliant strategy can fail in its execution. Systems provide the infrastructure needed for efficiency, consistency, scalability, risk management, data-driven decision making and innovation.17 A business is an aggregate of essential systems, such as leadership, marketing, finance and management, that strategy must consider and align for effective implementation.20 The relationship between strategy and systems is therefore dynamic and iterative. Strategy dictates initial systems, but the performance and limitations of those systems can, in turn, influence future strategic choices.17
Deconstructing the Mechanism: Key Components of a System
A system is made up of several fundamental components that interact to achieve a common purpose. Understanding these components is essential to formulating and executing effective strategies.
- Roles: They refer to the behaviors expected of individuals or entities within a system, based on their position or status, often defined by permissions and responsibilities.21 Clear roles ensure accountability, prevent duplication of effort, and define who is responsible for which parts of strategic plan execution.21
- Rules: They are the guidelines, policies, procedures, or rules that govern behavior, interactions, and decision-making within a system, often expressed as “if-then” statements.21 Rules provide a framework for consistent actions, predictable outcomes and standardized processes, ensuring alignment with strategic objectives and facilitating efficient operations and compliance.21
- Input: They refer to the resources, data, information or demands that enter a system to be processed and transformed into outputs, including raw materials, energy, data, capital, labor and customer needs.21 The quality, quantity and relevance of the inputs are fundamental for the system to function effectively and achieve strategic objectives. Strategic resource allocation ensures that the right inputs are available at the right time to support the execution of the strategic plan.31
- Output: They are the results, products, services or outcomes generated by a system after processing inputs, which may be tangible or intangible.21 Outputs are the tangible or intangible results that indicate whether a strategy is successful and whether the system is achieving its intended objectives. Monitoring and measuring outputs against strategic objectives are essential for managing performance and making necessary changes.21
- Feedback: It refers to information about a system’s output or performance that is fed back to the system as input, influencing its future behavior and enabling self-regulation, learning, and adaptation.21 Feedback mechanisms are vital for evaluating the progress and effectiveness of a strategy, enabling continuous monitoring, identification of areas for improvement and timely adjustments to ensure the system remains aligned to its objectives and adapts to changing conditions.21
| Component | Definition (short) | Examples (short) | Importance for an Effective Strategy (short) |
| Roles | Expected behaviors | Employee, Manager | They ensure accountability and define who does what |
| Rules | Guidelines, standards | Procedures, laws | They provide a framework for coherent actions |
| Input | Incoming resources | Raw materials, data | Essential for the operation of the system |
| Output | Results generated | Products, services | They measure the success of the strategy |
| Feedback | Return info | Customer reviews | They allow for adaptation and improvement |
The Power and Dangers of Systems
Systems generate value in different ways. They streamline processes, reduce redundancies and minimize errors, leading to greater efficiency and productivity.17 They provide a structured framework for consistency in operations and service delivery, resulting in superior quality outcomes.17 They enable companies to scale their operations efficiently by standardizing workflows, supporting strategic objectives such as market expansion.17 They help manage risks and ensure regulatory compliance.17 They offer access to data and analytics that can inform decision-making, providing insights into operations, market trends and customer behavior, which helps inform strategic decisions.17 They promote innovation by providing a framework for experimentation and improvement.17 Furthermore, they create system value for the benefit of stakeholders and contribute to better societies and a more sustainable environment.60
However, the systems can also have negative side effects and unwanted consequences. Joint actions of independently trained agents in a shared environment can produce adverse side effects of which they have no prior knowledge.61 Any system of proactive social action inevitably generates unforeseen consequences that can counteract its objectives, influencing both the actors involved and others.62 High-risk technical systems, due to their complexity and tight coupling, have error-inducing characteristics and can produce unexpected and unavoidable negative consequences, leading to “normal accidents”.62 Negative side effects of autonomous systems are inherently difficult to identify at the design stage and can impact system reliability, usability, and safety.65 The pervasive and near-continuous use of organizational IT systems can lead to “technostress,” undermining employee productivity, innovation and well-being.67 Recommendation systems, while useful, can also shape consumers’ preferences in ways they don’t realize, potentially fueling bias and influencing sales in unexpected ways.68 Algorithmic biases in marketing interventions can lead to public criticism and ethical concerns, often occurring unintentionally.71 Change initiatives, even well-intentioned ones, can have unintended consequences and fail due to incomplete strategies, inflexibility, lack of communication, resistance or unrealistic expectations.73 Technical debt in IT systems, the accumulation of technology work needed in the future, can hinder digital transformation efforts, leading to missed opportunities and wasted resources.75 Systems rigidity, particularly in healthcare IT, can lead to alarm fatigue, where clinicians may ignore important alarms due to excessive volume.79 The concept of the “rebound effect” suggests that some technologies can turn against us with consequences that outweigh their intended benefits.80
Finally, established systems can sometimes act as barriers and hinder innovation. Bureaucracy, with its hierarchical decision-making and fixed procedures, tends to stifle creativity and slow the development of revolutionary ideas, hindering rapid adaptability and experimentation.81 The emphasis on short-term results and the comfort trap of doing the familiar can lead to prioritizing incremental improvements over long-term growth and innovation.87 Organizational silos and limited communication channels can hinder cross-departmental collaboration and the free flow of diverse perspectives needed for innovation.81 Long times to market in bureaucratic systems can cause businesses to miss market opportunities and drain resources.81 Rigid management structures that are not open to challenge and experimentation can make organizations resistant to innovation.73 Fear of risk, failure, and criticism among managers and employees can paralyze innovation efforts, leading to a lack of experimentation and investment in long-term success.73 Outdated systems and legacy technology infrastructures can lack the flexibility and functionality required to support new ideas and advancements, hindering technological progress.77 The lack of a clear and well-communicated innovation strategy, as well as misalignment of the innovation portfolio with overall business objectives, can impede targeted innovation efforts.87 An insufficient allocation of resources (time, budget, talent) specifically dedicated to innovation can prevent the exploration and development of new ideas.87 An organizational culture that is too focused on executing and improving the current business may not prioritize or reward the exploration of radical or disruptive innovations.87
Working with the Flow: Elegant Strategies for Systemic Change
Elegant strategies, in the context of systems thinking, refer to strategies that achieve desired outcomes with minimal effort and resources, emphasizing “correctness” and “appropriateness” rather than brute force or hard work alone.113 These strategies operate with style and ease, feeling intuitive and correct, like a piece of a Rubik’s cube falling into place.113 They conserve resources and enable the implementation of other strategies.113
Elegant strategies work with existing systems by identifying unique and differentiated approaches that do not necessarily involve direct confrontation with dominant forces or established methods. Instead of trying to force change through force alone, they find a way to leverage existing elements or introduce a new element that fits perfectly and effectively addresses the desired outcome.113 This often involves a deep understanding of system dynamics and identifying leverage points where a small but well-targeted intervention can lead to significant change.113 Instead of a complete overhaul of the existing system, elegant strategies often work with the flow, subtly moving key elements or relationships within it.113
Some examples illustrate this concept:
- Apple’s strategy of customizing the computer into highly intuitive devices, differentiating itself from competitors with a user-friendly approach.113
- 3M’s application of Post-it adhesive technology to an ever-widening range of products to improve the way people work, leveraging existing technology for diverse applications.113
- Netflix leveraging in-app feedback loops to power its watchlist recommendation system, improving user experience by working with user preferences.128
- Arlanda Airport in Stockholm using design thinking, which involves understanding problems as interconnected systems, to redesign nursing staff shift changes, resulting in more time for care and better patient care.116
- Southwest Airlines’ focus on employee satisfaction and operational efficiency as interconnected elements within its system, leading to strong financial results.130
- Curitiba, Brazil’s approach to integrated public transportation and land use planning, addressing interconnected urban challenges with a holistic approach.131
- Provide young children with quality oral healthcare to prevent future dental problems by addressing a root cause for long-term benefit.131
- Expand affordable housing and mental health resources to address homelessness by addressing the underlying systemic factors.131
Elegant strategies often involve a deep understanding of the system’s leverage points—areas where small, targeted interventions can produce significant, widespread change by working with the system’s natural tendencies. These strategies prioritize effectiveness and efficiency, often being counterintuitive and requiring a shift in mindset from simply applying more effort.
The Importance of a Systems Perspective
Understanding systemic dynamics is fundamental to address complex challenges in different fields.132 It allows leaders to focus on critical connections, feedback loops, and emerging behaviors to inform strategic plans.132 It requires moving beyond departmental silos to formulate coherent and holistic solutions.132 Revolutionize strategy by revealing causality, adopting systems perspectives, basing choices on evidence, and managing collective performance under uncertainty.132 It is essential for effective strategy development, considering internal and external factors and their complex interaction.133 Helps analyze and evaluate factors that influence the development and implementation of business strategy and projects.133 Support evidence-based leadership choices by leveraging quantitative modeling informed by qualitative mappings of complex spaces.132 Balance complex trade-offs between growth, sustainability, capability development, risk management and organizational identity through contextualized decision-making.132
Systems thinking finds application in various disciplines:
- Biology: To understand living systems as sets of interconnected components, focusing on interactions, contexts, processes, feedback loops and emergent properties, from molecular to ecosystem levels.131 Example: Analysis of gene-environment interactions in contributing to health disparities.145
- Economy: To analyze relationships between economic variables, feedback loops and long-term consequences, using tools such as system dynamics modeling, causal diagrams and scenario planning to inform policy decisions.131 Example: Modeling the long-term effects of monetary policy.
- Sociology: To study social structures, networks, norms and the dynamic interaction between individuals and their environment, understanding phenomena such as the spread of social behaviors or the impact of policies on communities.131 Example: Analysis of systemic factors that contribute to poverty and inequality.
- Informatica: To design and understand complex information systems, considering the interactions between hardware, software, users, data and processes, aiming for interoperability, efficiency and user-centered design.131 Example: Developing a healthcare information system that integrates patient data across different departments and providers.
Conclusion
In conclusion, our world is woven by a complex network of systems, visible and invisible, which determine its form and functioning. Understanding these systems and their dynamics is critical to developing effective strategies in any field. Strategy builds systems by providing direction and goals, while the systems themselves provide the infrastructure needed to execute and achieve those goals. Taking a systems perspective—one that takes into account interconnectedness, feedback loops, and long-term consequences—is essential to addressing complex challenges and creating meaningful change in our ever-changing world.