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Incorporating Systemic Thinking into Leadership Decision Making

Cyanna Larissa Cano

South Texas College

ORGL-4342-V02-Organizational Change

Amadita Zamora

August 14, 2022

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Abstract

Systems thinking is a dimension of organizational capacity for change that helps in

understanding how the organization fits into specific systems, and how its parts and whole

interact with one another. This paper seeks to prove the usefulness of incorporating systems

thinking into a leader’s decision making process. Consequently, organizational capacity for

change should benefit from this. Ultimately, this paper proves that systems thinking affects

decision making by deep understanding and recognition of one’s system. Higher end thinking

applied to complex situations allow for individuals such as leaders to increase performance and

similarly, the capacity to change.

Keywords: systems thinking, decision making, leadership, organizational capacity for

change, higher thinking, complexity

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Incorporating Systemic Thinking into Leadership Decision Making

In 2010, the infamous pizza-chain Domino’s was facing a problem. Company growth had

slowed, and stocks were low and unmoving. In an attempt to improve and solve their dilemma,

the company promoted then president Patrick Doyle as Chief Executive Officer (Taylor 2016).

Under Doyle’s direction, Domino’s was able to get themselves out of their rut and transform

themselves into one of the largest pizza-chains today.

So what happened here? An obvious answer could simply be that having Doyle in the

leadership position of CEO made all the difference. This is sensible because within an

organization, leadership positions play a pivotal role in an organization’s stability and structure.

Leaders tend to have responsibilities such as managerial roles, inspiring and motivating their

respective employees, being trustworthy in all facets, etc. Among those responsibilities is the

duty and ability to execute crucial decision making. Although nearly every individual in a work

setting is making decisions as they relate to their role or the organization; however, leaders are

capable and tasked with making the decisions that can cause major organizational change. This

can be a conclusive answer to how Doyle made such a difference to the company—his decisions

created organizational change. This is not a satisfactory answer to what is being asked though. It

cannot be simply stated that Doyle abruptly made decisions that caused change because there

must be some sort of reasoning for his decisions. To take it one step further, it would be fair to

say that Doyle did not cause organizational change, but rather, he made the organization capable

of change.

Organizational capacity for change relates to a company’s ability to respond to

unpredictable events. Within the concept there are multiple dimensions that help organizations

become capable of change including one dedicated to trustworthy leadership. Regardless, the
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dimension of systems thinking is one that can be the key to Doyle’s reasoning for his decisions.

The hypothesis of this paper reports that H1 systemic thinking plays a key role in the decision

making process of company leaders which directly influences their capacity for change.

Essentially, Doyle’s use of systemic thinking in his decision making could be the reason as to

why the company was able to change for the better.

Literature Review

More than a Pizza-Making Business

Systems thinking refers to an understanding of natural and man-made systems; where the

whole [of the system or organization] affects its parts and vice versa (Judge, 2012). Reflecting on

the story on Doyle covered by both Taylor (2016) and Maze (2018), it is evident that some sort

of break-down of the foundation of what Domino’s is was contemplated by the CEO. Take for

instance this excerpt concerning the situation:

By reminding themselves of the business they’re in. Domino’s is not just in the

pizza-making business, the CEO emphasizes, but in the pizza-delivery business, which

means it has to be in the technology business. “We are as much a tech company as we are

a pizza company,” [Doyle] told the audience, pointing out that of the 800 people working

at headquarters, fully 400 work in software and analytics (Taylor 2016).

This excerpt is key in explaining how systemic thinking was incorporated into the decisions

Doyle will make to transform Domino’s. On the surface level, it is blatantly obvious that

Domino’s is in the pizza business. Most individuals would stop there and label it under “food” or

“food services,” but Doyle and his team took a step back and provided a new perspective. An

essential part of Domino’s was its food delivery services, and Doyle recognized how crucial it

was and allowed it to drive change for the company. He understood that the part (tech) could
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benefit the whole (company success). The article continues with other decisions that Doyle will

make with the company; however, these decisions are supported by Doyle’s use of systemic

thinking of the company, and it is what allowed them to be successful and bring change to the

company.

Decision Making & Systems Thinking Relationship

Doyle’s case leaves the question of what further proof is there that systems thinking

incorporated into decision making positively affects an organization. The case study by

Yurtseven & Buchanan (2016) presents the idea that systemic thinking works in decision making

when the situation at hand (the problem) is complex. This aligns with the concept of

organizational capacity for change as it is discussed that successful or high capacity for change is

signified by an organization’s ability to respond to unpredictability and complexity. Furthermore,

the manner in which systems thinking is described in Yurtseven & Buchanan’s (2016) case study

utilizes words such as ‘adaptive, predictive, and anticipatory’ This further solidifies why system

thinking works. In problem solving, it is common to actively respond to a problem, and decide

on a solution that seems like the right option. Although this works for traditional problems;

however, what if the problem is too complex to the point that once it has been done it is too late

to effectively respond to? This is where systems thinking is crucial. Similar to nature, an

organization needs to be adaptive to its environment, meaning it should be able to respond

regardless of what is thrown at it. The best way to describe the manner in how the organization is

being viewed in the Doyle case is as an open system. An open system allows for a better

understanding of the environment, the organization, and all relevant pieces. This is very similar

to the “whole” and “parts” discussion provided above, but the point is that when decision

making, an individual needs to recognize the situation as a system; each with its own connecting
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parts and wholes that should be considered (Chang & Chuang, 2016). Incorporating this sort of

thinking into one’s decision making allows for proactive decisions to be made which can help

organizations regardless of the complexity or unpredictability of the problem. Consequently, an

organizational capacity for change grows.

Maani & Maharaj (2004) conducted an experiment related to systems thinking’s role in

decision making. In the experiment, participants were simulated into the role of CEO where they

were in charge of making decisions regarding revenue, profit, and market share over a

[simulated] 5 year period. Decisions were made every quarter (4 quarters per year; 20 total) and

each participant had some formal training in systems thinking with a portion of them having

taken courses and experience on the topic. Despite revealing that individuals with less experience

with systems thinking ranked better in more procedural performance; however, individuals that

utilized higher ranked thinking types better understood the system they were working in.

Therefore, individuals who understood and recognized the system played a greater role in

performance success. This study sheds light on the fact that individuals who take part in higher

thinking (systems thinking) can contribute more to the company and affect performance.

Especially considering the fact that the participants were acting in the role of a leader, these

results can translate into Doyle’s case showing that his successful decisions could have been the

result of a higher level of thinking.

Leadership

The final fact to be discussed regarding systems thinking and decision making is its

relevance to leaders. Even though it can be helpful to have all levels of employees to apply

system thinking into their work-related decisions. However, the reason it is important for leaders

is because as mentioned before, they are the individuals making the crucial decisions that can
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have drastic effects on the company. Take for instance Maani and Maharaj’s (2004) study; their

participants acted in the role of CEO’s. Although it was a simulated experiment, it shows that

leaders are the one making the grand decisions. The experiment overall, would have taken a

whole different approach if done through the lens of the workforce.

Looking at the Doyle case, although employees can attempt to create change within their

respective chains and make decisions for their teams; ultimately, they cannot create great enough

change to evolve the company. This must be done by leaders with the power to do so.

Additionally, in a leadership position, leaders have a greater grasp of the system presented to

them, more so than the individuals below them. By viewing the entire framework including its

parts, there is the potential to prepare for the future and for change.

Findings

This paper set out to test the hypothesis of whether systems thinking plays a role in a

leader’s decision making and its ultimate effect on an organization's capacity for change. Overall,

the evidence shows that the inclusion of systems thinking does play a role in decision making,

especially when considering organizational capacity for change. Through the case of Dominos

and its CEO, a direct example of how Doyle undertook a systemic thinking approach to fixing

Domino's problem is shown through him breaking down what the core of the company is and

expanding on an essential part of it: technology and delivery. In addition, the case studies of

Yurtseven & Buchanan (2016) and (Chang & Chuang, 2016) provide the technical and

conceptual reason as to why system thinking works in decision making. Complexity and

unpredictability is a facet of organizational capacity for change that systems thinking seeks to

resolve, so when there are equally complex situations and decisions needing to be made, the

systems approach is applicable. When looking at a decision and breaking it up into its different
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parts and all relevant pieces, a solution is not only developed, but also allows for individuals to

be prepared and adapt to future problems. It is interesting, however, that systems thinking

becomes more applicable the more complex the situation is. Not to say that it cannot be used for

more “straight to the matter” type problems, but as mentioned before, these types of situations

and decisions are being executed by individuals in higher levels of an organization. Lastly,

Maani & Maharaj’s (2004) experiment resulted in the conclusion that individuals who use

systems thinking (higher thinking) perform better (successful decision making) because of their

ability to understand and recognize the system they are working in. In correlation to the study on

Doyle, it can be concluded that systems thinking was occurring in the facet of understanding that

the company had more to offer than its main product. As a result, decisions could be made to

ensure the company’s growth and ability to change.

Conclusion

It is sensible why system thinking is applicable in decision making. Organizational

capacity to change is built on the idea of being proactive to uncertainty and problems. Being

proactive and adaptable to these problems is similar to decision making and problem solving.

This paper is more so a reinforcement of the organizational capacity for changing the dimension

of systems thinking, but by applying it on a more specific scale. Organizations need to become

adaptable to change, but it needs to start through a process and insightful reflection about the

organization. By understanding the organization as a whole, as well as figuring out the

significance of its parts, decisions for change can be made—regardless of how complex the

situation is. Further research regarding this topic could follow not only leadership positions, but

the possibility of lower level employees, and how they may incorporate systems thinking and

enact organizational change to their respective firms, departments, and teams.

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References

Chang, C.-W., & Chuang, C.-M. (2018). Re-Interpreting Signaling with Systems Thinking: A

Concept for Improving Decision-Making Quality. Systemic Practice & Action Research,

31(4), 347–357.

Judge Jr., W. Q., (2012). Focusing On Organizational Change. University of Minnesota

Libraries Publishing Edition. Accessed on 14 August 2022.

Maani, K. E., & Maharaj, V. (2004). Links between systems thinking and complex decision

makingThis paper is dedicated to the memory of Barry Richmond whose work has

inspired this research. System Dynamics Review (Wiley), 20(1), 21–48.

Maze, J. (2018). “How Patrick Doyle changed Domino’s, and the restaurant industry.”

Restaurant Business Online.

https://www.restaurantbusinessonline.com/amp/leadership/how-patrick-doyle-changed-do

minos-restaurant-industry. Accessed on 14 August 2022.

Taylor, B. (2016). “How Domino’s Pizza Reinvented Itself.” Harvard Business Review.

https://hbr.org/2016/11/how-dominos-pizza-reinvented-itself. Accessed on 14 August

2022.

Yurtseven, M. K., & Buchanan, W. W. (2016). Decision Making and Systems Thinking:

Educational Issues. American Journal of Engineering Education, 7(1), 19–28.