The last weeks I'm thinking a lot about organization design and how to improve/optimize our organization. I see well-intentioned improvement initiatives launched with enthusiasm, only to deliver disappointing results. Despite the energy invested, we're not seeing the transformation we hoped for. Why?
A possible answer could be found in this statement from Russel L. Ackoff that he did in the video below:
If we have a system of improvement that’s direct at improving the parts taken separately, you can be ABSOLUTELY sure that the performance of the hole will not be improved.
The trap of reductionist thinking
What’s possibly happening here is that we are falling into a common trap—what systems thinkers call "reductionist thinking." We break down the organization into components and try to optimize each part separately:
- HR launches a new performance management system
- IT implements a new collaboration tool
- Operations streamlines a specific process
- Learning & Development rolls out leadership training
Each initiative makes perfect sense in isolation. Each team does its part well. Yet collectively, we fail to create the desired impact.
The missing element: Understanding interactions
The answer might lie in a profound insight from systems thinkers Russell Ackoff and W. Edwards Deming:
The system is not the sum of the behaviors of its parts, it is a product of their interactions.
Ackoff and Deming would argue we're missing the most crucial aspect of organizational effectiveness: the interactions between components.
Deming famously estimated that 94% of performance problems stem from the system itself rather than individual components. The way we interact, how information flows, how decisions connect to action, how incentives align (or misalign)—these interactions determine organizational performance far more than the efficiency of any single department.
The fallacy of "Sum of the parts"
When Russell L. Ackoff stated that a system is "a product of interactions rather than a sum of behaviors," he highlighted a fundamental truth: optimization of parts doesn't optimize the whole. In fact, it can make things worse.
Ackoff illustrated this with a thought experiment: Take the best engine from one car, the best transmission from another, the best suspension from a third—would you get the world's best car? Of course not. You'd get a pile of incompatible parts that couldn't function together at all.
Organizations work the same way. Excellence isn't about having the best marketing team, the best sales team, or the best development team in isolation. It's about how well these teams work together toward common goals.
Systems Thinking in practice
So how do we apply systems thinking to create meaningful organizational improvement? Here are key principles:
1. Start with the purpose and the whole
Before optimizing parts, understand what the system as a whole is trying to accomplish. What is your organization's purpose? How do all components contribute to that purpose? Deming emphasized that without clarity of shared purpose, optimization is impossible. Something that Simon Sinek also mentions in his book "Start with Why".
2. Map the interactions
Document how departments, processes, and people interact. Where does information flow or get blocked? Where do handoffs occur? Where do incentives conflict? These interaction points are where your greatest leverage for improvement lies.
3. Think in loops, not lines
Most organizational processes aren't linear but circular, with feedback mechanisms that either amplify or dampen results. Understanding these feedback loops helps predict how changes will ripple through the system.
4. Address root causes, not symptoms
Many improvement initiatives address symptoms rather than underlying systemic causes. When faced with a problem, ask "why" at least five times to get to the root cause, which often lies in system design rather than individual performance.
5. Make interactions visible
Visualize metrics and processes that highlight cross-functional interactions. Make dependencies explicit and create shared accountability for the quality of these interactions.
More information
Want to learn more about the lessons that Russel L. Ackoff has to share? I would recommend taking a look at this lecture about Systems Thinking: