INTERVIEW:Succeeding with Complex Systems James Hackett

Jim Hackett, President and CEO of Steelcase Inc., reveals why the complex systems of business should be treated as design problems.

Organizations tend to drive for simplicity when attempting to solve complex, systemic problems. Jim Hackett, President and CEO of Steelcase Inc., observes that these practices are sweeping the rich opportunities of complexity under the carpet. Jim contends that successful organizations will embrace systems thinking, approaching their system of business as a design to be tested against the fitness of other businesses.

Brandon Schauer: You've been known to talk about systems problems and design in the same sentence. What exactly are systems problems, why are they important, and what do they have to do with design?

James Hackett: This is a very rich question, and I want to thank you for asking it in a sincere way because it's in the essence of the question that tells me when people really understand the nature of that potential problem. The idea of someone thinking that there's a related issue, or related events, or related aspects, or disparate elements is in fact what makes up the content of systems thinking.

Let's use the example of solving a problem. There are a number of different angles to solving a problem, and a number of different dimensions — and I'm intentionally being repetitive in my phrasing. What tends to happen in business is that you might be educated really well in one dimension -- for example, you might be outstanding in manufacturing -- and yet the product that you make has an impact in another dimension, has an impact in the sales dimension, or an impact in the repair area. Systems thinking says that all these dimensions have to be considered in the ultimate configuration. This configuration could be the design of a product, the design of a process, the design of an experience. This configuration could be things that you can touch and it could be things that are vaporous. But the systems thinking persists across all these different examples.

The underlying aspect of systems thinking is a little abstract but very powerful. Consider the nature of systems like a product going to market, a rocket going to the moon, or a flower transferring from a seed into full bloom. These are all examples of something traversing through a whole system. There are many smart people who have looked at theses systems and have been able to document a series of complex elements within them. It's these complex elements that make up the richness of the systems. However, it's not within the typical human purview to understand these complexities. It takes time and training to try to understand things at this level. But then abstraction of complex systems becomes even more vague when you learn that these systems fight for a thing called fitness. In other words, as the complexity of the systems is making it difficult for humans to understand them or reinvent them, the systems — independently of us intervening in them or trying make them better — are competing for survival.

So let me now make that less abstract. If we look at the experience of going to Disney World, and we look at the experience of going to a movie, we may start to say to ourselves those are two unrelated events — I go to a movie in my home town, and I go to Disney World in Orlando. However these experiences actually compete in a very economic way for your dollar. And they compete in terms of which one is the best experience. Over time one of those two systems, if they compete, will survive longer than the other. You can find cases of this in droves in the business world, especially when you're trying to access how well your model is competing.

This is the essence of these complex systems. You have to be able to see them, and you have to be able to understand that the complexity properly managed, or said another way "properly designed," is ensuring your fitness and ensuring that you'll prevail.

Brandon Schauer: How do you then engage an organization to start thinking about themselves as a system in competition with other systems so that you don't run into the "can't see the forest for the trees" problem?

James Hackett: You get it. There's very few people reporting on this that would understand what you just said.  It's not only a malaise that business people face but it's an at-large problem that exists. "So how do you get people to engage in systems thinking?" is a very interesting question. How do you get them to understand that there's a series of relationships here?

I want to suggest to you that one of the ways organizations cope with it is that they drive for simplicity. Organizations say, "Look, we're making this too complex, this is a simpler issue." Well, the truth is that the smart people at the Santa Fe Institute and others say that the system actually is complex. You can declare it simpler, and you can declare you don't want to pay attention to some of the edges of it, but the complexity is actually there. And so one thing we can see is the contra state where you can see the evidence from when people are deliberately trying to avoid complexity because it's stressful, it's hard, and it's difficult.

What the Institute of Design teaches is it doesn't have to be that way. There's a method for you to break the system into its parts to try to identify the relationships inside the system. Then you can identify what aspects are really more important than others in terms of creating value. The Institute of Design has — and I apologize of using the word — they have a systematic way of doing that. Oddly enough this method is an unbelievably well kept secret. Even though there's such a demand for this kind of thinking, it's not broadly understood. One of the reasons I'm passionate about the Institute of Design is I believe that the techniques taught there can solve some of the most knotty problems that we have around us. You could address social issues to business issues to community issues. This method works.

I just want to provide a sidelight here. I saw a presentation early in my experience on the Institute of Design's Board of Overseers when the students were attacking the exposure of being in the U.S. Parks system. There were a lot of questions at the beginning of the ‘90s about how much should we be investing in our national parks, and should we retain them or let them decay, or were they even in decay. The ID students did a systems review of the question and presented it in Congress. There were already lots of individual dimensions that were deeply studied prior to that, but no one had taken a systems view of it. And one of the things that the students had determined over a decade ago — just to prove how interesting this is — is that we could create mobile devices for the park rangers that would let them understand the ecosystem and its health using telemetry. By monitoring the ecosystem in this way the U.S. Parks system could actually have less staff while gaining more of a sense of where the decay was and fix it before it happened. The students also had ideas about addressing issues from pollution to crowd control to wildlife dysfunction using some of these wireless, remote devices. And wasn't it funny a decade ago before the technology existed? It's there today, but it wasn't then. They actually had the design ready to go before the technology showed up. And I've seen this systems thinking a hundred times at the school, where they've considered very complex problems and have decided, "Here's a better way to handle it."

Brandon Schauer: As the Institute of Design Strategy Conference quickly approaches, what's on your mind when you reflect on the intersection of design and business?

James Hackett: I am excited in that the intersection of design and business is beginning to move mainstream. For example, given Steelcase's relationship with IDEO and their recent appearance on the cover of Business Week it says, "this celebrates the relationship between systems thinking and business." And it's not as well kept a secret as I was just alluding to a moment ago because some very large companies are doing extremely well with it — Proctor & Gamble is a notable one, and their business performance reflects their adoption of it.

One of the things I'm going to talk about at the conference is what is the makeup of the kind of people that you will want in these knowledge jobs that produce ideas. What will be different now knowing that this is a value-added aspect versus what we historically used to hire? The tipping point is we are going to certainly emphasize MBAs and people with financial skills, but we're going to require that they have systems thinking ability as well. You can't just have 50% – you've got to have both parts. So I'm excited about the potential of educational programs to begin adopting systems thinking. It makes me very optimistic about the future of business.

Jim Hackett has overseen all operations of Steelcase Inc., including domestic and international operations since 1994. Steelcase Inc. and its subsidiaries have dealers in more than 900 locations, manufacturing facilities in more than 50 locations and approximately 16,000 employees around the world. Jim serves on the board of directors for Northwestern Mutual Life, Fifth Third Bankcorp, and he is a member and past chairman of the Institute of Design Board of Overseers.