The Importance of Systems Thinking in Retail

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Systems thinking pursues the comprehension of phenomena as a result of the interaction of different parts. The modern corporate space has experienced rapid growth of assumption of complex systems in business. Increasingly, different global regions are getting more connected through globalization. Technology, and more so the Internet has reduced the world into a global village where people from extensively distant geographical regions can get in touch conveniently. The adoption of advanced technology has developed systems that are dependent on and complement each other to complete the interconnection of people around the world. In the context of the global economy, world trade and regional integration connect countries through principal economic feedback avenues. Policy shifts in any country can unvaryingly result in ripple effects in another nation, more so the ones that are close trade partners. For example, in the United States, there is the desire to cut foreign aid spending in a bid to increase the country’s internal spending through the “America First Policy.” Systems are aggressively moving towards interconnectedness as globalization spreads over time all of them feed into one another in the production of extremely compound and unpredictable impacts. In the modern retailing industry, there is the extensive employment of the systems approach to thinking. Being part of lengthy distribution chains, retailers invest in systems in such a way that they can integrate operations into a single unit of operation in their organizations.

Approaches to Strategic thinking

Strategic thinking involves the capacity of developing though patterns on temporal planes. It is more about making vital decisions directly towards the achievement of defined results as purposive activities. Mintzberg argued that strategic thinking is about distinctive ways of developing thought patterns through utilizing creativity and intuition with the result being an integral perspective of the enterprise (Hill, Jones and Schilling 2014, p.14). In a retailing business context, strategic thinking benefits the organizations through the identification of competitive plans that are likely to position the firm differently from the prevalent conditions. In this way, strategic thinking comes with the benefit of planning business operations in suitable arrangements that are profitable for the organizations. In a systems approach, strategic thinking pursues business plans that ensure that there is a smooth operation between the different organizational aspects and division with the intention of achieving common goals and objectives (Hill, Jones and Schilling 2014, p.14).

The development of effective strategies has to be preceded by the comprehension of the system in question. It is impossible to have a strategy without first comprehending the system and an organization cannot develop a successful system without implementing appropriate strategic plans. In this way, systems and strategies are interconnected and complementary with regard to the manner in which they are integrated into the delivery of business (Elmes and Barry 2017, p.41). Retailers need to know their organizational and larger industry trends in a bid to integrate their operations into a single effective unit. For example, retailers at times have to attend to multiple business aspects including the running shop pricing, helping clients, placing items, dealing with vendors, and so forth. They at times manage their organizations in purely transactional mannerisms by simply having the next task completed. Systematically, there is the need to look into both the external and internal trends to capture all the key information that is important in the focus, prioritization, and proactivity of the business. Strategic plans in this front are important in aligning the different aspects and elements of business activities into integrated ways of completing business operations in the retailers’ workstations.

Another important aspect of strategic thinking is the involvement of employees in developing plans for integrating organizational operations. Employee engagement in all the stages of the tactical thinking progression is significant in confirming that the people remain tangled in the employment of operative strategies (Elmes and Barry 2017, p.43). Without enforcing an active involvement of employees in the organization, there will be the disintegration of corporate activities, and the ultimate objective of arranging activities systematically could fail. Strategic thinking in retail has to depend on measurement where an on-going process assesses the effectiveness of the plans and verifies that the strategies are implemented as projected. Retailers need to engage different parties in executing strategic plans meant to develop the systematic approaches of going about business. Failure to engage key stakeholders such as employees could fail in the implementation of the systematic strategies in totality (Elmes and Barry 2017, p.44). Retailers have to benchmark the original needs of their organizations against their actual implemented actions in a bid to align strategy with systems in business. In totality, strategic thinking makes great contributions to overarching, general, and broad concepts focusing on the future direction of an organization on the basis of anticipated environmental contexts.     

Systems thinking

Thinking is the manner in which individuals and organizations by extension develop meaning from different pieces of information. Awareness regarding the manner in which people develop thought patterns and the way large phenomena work is the whole concept of system thinking. Thinking is the process through which information is turned into knowledge because people build knowledge from the acquired data in different aspects of life (Haines 2016, p.21). The concept of systems thinking provides the framework of comprehending the organizations or phenomena to which people and their discourses belong. Having an awareness of relationships important in comprehending the operations of different systems. Understanding interconnections and associations between different entities can be vital in different ways. Systems thinking in an organizational setting facilitates the comprehension of problems and potential solutions (Haines 2016, p.21). Also, the concept is important in understanding fundamental structures and patterns and can lead organizations and stakeholders to think of new ways of doing things in business.

Systems thinking involves an integrated approach to developing thought patterns of analytics and synthesis. The approach considers factors by looking at the whole phenomenon, where individual parts are not important and should work for the benefit of the whole entity. System thinking informs strategic ways of developing thought patterns (Haines 2016, p.23). The manner in which things work and fit together in an organization influences corporate direction and the manner in which to accomplish the set goals and objectives. Systems thinking is highly synthetic, dynamic, and descriptive as compared to the strategic philosophy which is more decision-oriented, directional, and analytical. Strategies are enhanced by system thinking because the latter addresses all business parts in association with long-term success and profitability of the organization. Retail business is potentially vulnerable to corporate divisions as a result of broad interactions between multiple stakeholders (Haines 2016, p.23). The alignment of systems and strategic thinking is paramount in a bid to bring together different stakeholders and processes together to function as a single unit.

Systems thinking boosts better strategic awareness in an organizational setting. The approach encourages the aspect of looking at the broader aspects around problem spaces. It also facilitates the comprehension of the effect of imposing boundaries within the spaces. At advanced levels, systems thinking involves the awareness of the whole phenomenon and how changes to a given part affect other parts of the larger entity (Haines 2016, p.25). For this reason; systems thinking can be synthetic or analytical. At high levels, strategic thinking encompasses the consideration of the organizational situation, the projected position in the future, and the manner in which to close the extant gap. In a bid to operate effectively, systems thinking has to be an integral part of all steps of strategic processes in an organizational setting. Retailers need to develop their systematic ways of doing things strategically (Haines 2016, p.25). Players in the retail industry have to come up with sustainable plans that will oversee the development and implementation of functional systems in the execution of the entity’s business activities.  

Complexity perspective: New ways of thinking about strategy

The concept of systems thinking is founded on the ideologies of the complexity of operational arrangements in an organizational setting. In the era of change and complexity, decision-makers have to handle a broad range of problems affecting their businesses. In this sense, expectations are premediated on continual embracing of effective and efficient organizational processes with the help of the latest developments in technology (Sturmberg, Martin and Katerndahl 2014, p.66). For retailers to be proactive in operations, their members of staff need to be inspired regarding complexity in systematic operations. Strategically, retailers need to harness knowledge and share information across the organization for prompt learning and being ahead of the competing players in the industry. Without driving a strategic acquisition of knowledge and new skills among members of staff, retailers are likely to face difficulties in operations. Successful operation of complex system calls for high levels of transparency, accountability, and competence in the workforce (Sturmberg, Martin and Katerndahl 2014, p.66). Consequently, the retailers have to develop strategic plans that are essential in establishing flexible structures and practice transformational leadership to counter the drawbacks of highly complex systems in operations.

The complexity of systems establishes the nature of problems to be encountered in operations. Problems do not exist in isolation; rather, they come as a compound network of highly interconnected situations. When they are critically examined, problems tend to become bigger and in the end, involve more stakeholders and significant issues. In the light of complexity, the retail business is compounded by different factors affecting players along the distribution chain (Rogers et al. 2013, p.18). For this reason; problems experienced by business persons in the trade are complex and multifaceted and cannot be solved by a single party’s efforts. The complexity of systems requires the formation of strategic alliances that develop all-round solutions to problems experienced in the course of conducting retail business.

The viability of an organization is guaranteed by its capacity of responding to consistent shifts in environmental changes. In the modern global economy, business organizations face great and visible dynamism in terms of customer tastes and preferences and changes in regulatory provisions over a short time (Rogers et al. 2013, p.18). For example, large-scale retailers experience global competition which they seek to counter through developing commensurate technological innovations. Societal transformations impose new corporate responsibilities on the retailers globally. In the retail industry, complexity can be seen from different theoretical fronts that arise from different disciplines such as mathematics, sociology, philosophy, computer simulation, and so forth (Rogers et al. 2013, p.18). The most fundamental foundation of the complexity theories is to offer a conceptual framework on the way of thinking a way of perceiving things and events. Complex systems have inherent difficulties that are experienced by observers in describing and explaining the organizational behavior of systems at macro levels in terms of constituent parts (Rogers et al. 2013, p.18). In totality, retailers have to counter compound issues that are associated with the complex nature of their business, and they have to develop strategic plans for proceeding with business with minimal or no interruptions.   

Complexity adaptive systems: Modelling complexity

Complexity adaptive systems involve arrangements that have an excellent comprehension of individual parts of a phenomenon that do not automatically convey a perfect comprehension of the entire behavior of systems. The systems are compound because they assume dynamism of networks of relationships and interactions which are not aggregations of individual static phenomena (Chiva, Ghauri and Alegre 2014, p.68). Every adaptive complexity system is more than the aggregate of its constituting agents, and its properties and behaviors are unpredictable from the demeanor and characteristics of the agents. The systems are characterized by distributed control systems, and they react to feedback coming from their environments in a bid to survive and succeed in emerging and uncertain situations. Complexity adaptive systems are common in the retail industry which involves different players in the distribution chain (Chiva, Ghauri and Alegre 2014, p.68). The flow of products from manufacturers, wholesalers, other middle-men, retailers, and to the consumers comes with high levels of dynamism and uncertainty in operations. Retailers need to view the entire chain as a holistic system whose operations are interconnected in a way that they achieve the same goals and objectives.

The underlying aspect of the complexity philosophy model is the complex adaptive systems. The adaptive nature implies that the systems have the knack of absorbing information from their surroundings and develop stores of knowledge that can facilitate action. Showcasing distinctive demeanor of self-organization, emergence, learning, and co-evolution are important doctrines of the complex adaptive systems (Chiva, Ghauri and Alegre 2014, p.70). The traits are common across different systems like business organizations, human settlements, and so forth. From a retailing point of view, understanding the characteristics of the systems is important in the development of representations relating to organizational settings. The retailers need to be in a position of self-organization where they ascertain the capacity of their systems to organize themselves into great states of complexity. In essence, individual components of a complex retailing system interact among themselves, and this results in the renewal and reshaping of the entire arrangement (Chiva, Ghauri and Alegre 2014, p.70). The complexity of the systems keeps them going where different factors complement each other with the ripple effect of pushing the agenda of the organization forward.

Complex adaptive systems can learn and adapt to different situations. Being in a position to react to events aggressively and seeking benefits from situations effects shapes the complex adaptive systems. Both corporate organizations and private individuals learn continuously from their experiences and react to changes in their surroundings (Chiva, Ghauri and Alegre 2014, p.71). Retailers develop patterns that facilitate interactions between their organizations and the environments in such a way that the entities learn from and react to surroundings. They assume changed perspectives which are accompanied by different ways of acting and relating to the environment. The development of new relationships between retailers and other stakeholders and approaches to business provide the platforms for the development of new systems and organizational forms (Chiva, Ghauri and Alegre 2014, p.71). Systems think in the context of complexity and are supposed to inform the development of their strategic thinking processes.

The practice perspective

The concept of practice perspective looks into the manner in which society begins with diverse motives and intentions to develop and transform the system. It comes as a conflict between human agency and social structure working back and forth in dynamic relationships. Additionally, the concept attempts to explain the associations that obtain human action and global identity (Oliver 2014, p.29). The approach resolves the antinomy between the traditional structuralism approaches and aspects like the methodological individualism that explains societal phenomena with regard to individual actions. In the context of the retailing industry, the practice perspective is applicable in terms of different aspects that affect the smooth running of operations.

The practice perspective is founded on context. In different approaches, practice scholars are concerned with the manner in which context shapes practices, procedures, shared understandings, languages, and cultural rules. In a practical setting, the retail business is dynamic, and reactions are assumes depending on the factors identified by the practice theorists. Retailers work in extended systems, and they have to align their business operations depending on the environment in which they are operating (Huxham and Vangen 2013, p.37). For example, retailers are unlikely to be interested in distributing pork products in regions that are mainly populated by Muslims. The cultural rules guiding these people prohibit them from consuming such products, and hence retailers will lack market in such environments. Strategically, retailers seek to penetrate markets with high affinity for their products.

Practice perspective scholars embrace individuality through asserting people’s actual activities in practice. Practically, social practices are followed readily in accordance with the unique demands of different situations. In business, the practice perspective is all about the norms and standards of running organizational affairs. Retailers have their code of conduct that they pursue when dealing with different players in the distribution chain (Huxham and Vangen 2013, p.37). For example, suppliers and consumers have expectations in terms of professionalism from the retailers. Strategically, the middle players have to develop systematic ways of handling their operations universally to the satisfaction of such important stakeholders in the business. It is vital for the retailers to use creative agents who innovate marching actions and ways of running systems in dynamic settings (Huxham and Vangen 2013, p.37). The strategic creativity has to be in tandem with the professional and ethical provisions of running a retail business on the side of the distributors.

Conclusion

Business organizations compete in volatile and unpredictable market spaces which demand great capacity for innovation and diverse strategic thinking to create and sustain competitive advantage. If applied effectively and efficiently, systems thinking can facilitate the establishment of a holistic way of running the complex retail activities. Applying the concept of systems thinking can facilitate an enhanced comprehension of complex demeanors in a bid to predict them better and in the end adjust their business outcomes. There is an exponential growth of systems in the global economy, and this comes with added demand for system thinkers to solve the compound problems. The need stretches far beyond the retailing sector where other disciplines such as engineering and science also largely seek systems thinking to run their operations smoothly. In the modern global economy, system thinkers have to prepare for increasingly globalized and compound systems in the future. The preparation involves developing strong strategic skills that will enable system thinkers to see the future of operations and align their operation with potentially high profitable methods of operations.

References

Chiva, R., Ghauri, P. and Alegre, J., 2014. Organizational learning, innovation and internationalization: A complex system model. British Journal of Management, 25(4), pp.68-70.

Elmes, M. and Barry, D., 2017. Strategy retold: Toward a narrative view of strategic discourse. In The Aesthetic Turn in Management (pp. 39-62). Routledge.

Haines, S., 2016. The systems thinking approach to strategic planning and management. CRC Press.pp:21

Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.pp:14

Huxham, C. and Vangen, S., 2013. Managing to collaborate: The theory and practice of collaborative advantage. Routledge.pp:37

Oliver, R.L., 2014. Satisfaction: A Behavioral Perspective on the Consumer: A Behavioral Perspective on the Consumer. Routledge.pp:29

Rogers, K.H., Luton, R., Biggs, H., Biggs, R., Blignaut, S., Choles, A.G., Palmer, C.G. and Tangwe, P., 2013. Fostering complexity thinking in action research for change in social–ecological systems. Ecology and Society, 18(2).

Sturmberg, J.P., Martin, C.M. and Katerndahl, D.A., 2014. Systems and complexity thinking in the general practice literature: an integrative, historical narrative review. The Annals of Family Medicine, 12(1), pp.66-74.

January 19, 2024
Category:

Business Science

Subcategory:

Management

Number of pages

12

Number of words

3066

Downloads:

37

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