Systemic vs. Systematic


By E-Myth Business Coach

When was the last time you thought about why your business does what it does? Every business exists to produce a certain result — a service or a product — but have you ever asked yourself, "Why do we do it this way?" That question is the essence of strategic thinking. And strategic thinking is the result of having a systemic perspective of your business that accomplishes what it does in a systematic way.

More Than Mere Semantics

So what is the distinction between systemic and systematic? From the E-Myth Point of View one would define systemic as the holistic, or integrative, and interdependent nature of each part of a business. If you consider your business as being a "system of systems" then having a systemic perspective allows you to see how each part influences and interacts with the whole.

Systematic, on the other hand, refers to following a clearly defined and organized process. It is about having processes, or systems, that are repeatable and predictable — that produce the same result each time, every time. One could go on to say that where a systematic view focuses on results, a systemic view focuses on interrelatedness.

So why is it important to know the difference? In light of the question, "Why do we do it this way?" is one view more critical than the other? We would argue that both views are critical, both are essential, but they do not always exist in many businesses.

Strategy and Tactics

If we go beyond definitions and look at these two perspectives in a more practical way we might talk about them in terms of business strategy and business tactics. Although this analogy can only be stretched so far, one could argue that business strategy represents systemic thinking in action while business tactics are systems at work. Both are needed to make a business function well and effectively. But the relationship goes much deeper than that.

The tendency among business owners when faced with a problem is to look immediately to solutions that are close by. Typically they look to actions that produce improvements in a relatively short amount time, but this can often involve significant costs down the road. An example is cutting back on marketing activities and advertising costs in order to achieve cost savings benefits when times are tough. At first, the impact on new business and lead generation may be negligible, but the longer term impact can be crippling. This is the result of taking a tactical approach to a problem without considering the larger strategic concerns of the business. The danger of thinking and reacting from a strictly systematic perspective can be costly.

On the other hand it is quite possible for business owners or managers to make strategic decisions while failing to take into consideration specific systems or tactics which impact the whole. An example is the manager tasked with decreasing costs of production in a small factory. He notes that the assembly line produces an average of 100 widgets each month, yet they maintain raw materials for 150. Reasonably, he determines that the company could streamline and reduce overhead by only stocking materials for the 100 that are being made. Over the next six months it becomes apparent that the net production has dropped. The manager assumes productivity is suddenly lacking on the part of the assembly workers. What the manager failed to take into account, however, was the fact that the assembly line would produce between 50 to 150 widgets on any given month for an average of 100 widgets monthly. By limiting the raw materials at hand each month the manager inadvertently reduced their capacity.

Doing the Right Things vs. Doing Things Right

The systemic viewpoint, then, is focused on the "big picture" and the long-range view. The systematic viewpoint is focused on the task at hand and the immediate view. Both are needed, both are critical, and both must be cultivated by the owner and managers of a business if they want to be truly successful and effective. This is what Peter Drucker had in mind regarding business innovation when he said:

You can’t do carpentry if you only have a saw, or only a hammer, or you never heard of a pair of pliers. It’s when you put all those tools into one kit that you invent.

Perhaps the biggest challenge for business owners is developing the ability to see the "big picture" in their particular business and to make sense of all the various parts that have to be developed, maintained and orchestrated. It is easy to get caught up in focusing more on systems — doing things right — at the expense of understanding whether they are doing the right things.

Every business, including yours, exists for a singular purpose and to produce a specific result. The systematic view allows you to see how each and every function within your business is performed — efficiently and effectively. The systemic view allows you to see and orchestrate the optimum interaction of these various systems to accomplish the purpose of your business and to effectively produce its intended result.

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