A Systems Theory Approach to Covid-19 Recovery

May 25, 2020
May 25, 2020 Joe Britto

Reading time: about 2.5 minutes.

We’ve been hearing that “we’re all in this together” a lot recently. The coronavirus has impacted every aspect of our lives. Now, with an easing of restrictions emerging around the world, it’s time to retool the truth of that phrase into another simple truth: we’ll all get out of this together.

That’s what this week’s blog is about: drawing on systems theory to rethink how we emerge from a lockdown that is completely changing the business and economic landscape.

What is System Theory?

Before we consider how to use systems theory, let’s remind ourselves what it is.

Systems theory in business evolved from family theory. Now often referred to as family systems theory, family theory was developed by sociologists Reuben Hill, Alvin Katz and Richard Simpson along with later work by William Goode in the late 50s and early 60s. It’s an intuitive theory that highlights how the acting out of a child in school, for example, can be traced back to a cause in the family or “system”. Little Johnny isn’t acting out at school in isolation, the theory says, he’s doing that as a reaction to what’s happening in his home life.

In business the idea is similar. Problems don’t happen in isolation, so to understand what’s happening and why, we need to look at the whole system.

Common to the concept of system theory is the idea of reinforcing loops. Those loops can either be virtuous circles where the system creates a positive outcome, or vicious circles resulting in the opposite.

Systems Theory & Covid-19 Recovery

It won’t surprise you to hear that right now we’re in the midst of a vicious circle that’s damaging our business and economies more each day.

As demand for products and services drops, businesses are forced to lay off or furlough staff. That means less consumer spending, which means less demand for the products businesses create. It’s a circle that looks like this:

As demand for products and services nose-dive, businesses are forced to lay off or furlough staff, and that means less consumer spending, which means less demand for the products businesses create

Of course businesses don’t want to lay people off, and if they didn’t have to they wouldn’t. So how does system theory apply to Covid-19 recovery?

Virtuous Circles & Enterprise Thinking

That question takes us back to how I began this blog: we’ll all get out of this together.

Together means seeing our fortunes intertwined in a non-zero-sum game. It means being willing to look beyond our immediate world and see how it fits into a wider context.

Typically we see our team or our business as the enterprise. And because that’s our worldview, we seek to work in the best interests of our team or business. That approach leads to a zero-sum game where protecting our own interests comes at the expense of others.

But what if we rethought what the enterprise might be? What if, in a world facing a common challenge, we consider the enterprise to be humanity? Do that and we see how it’s possible to build strategies that help our business recover and help other businesses recover too.

How Systems Theory Recovery Might Work

Practically speaking, what does that look like?

You, like most people, are looking for your business to recover. And if you can do so and help grow the economy at the same time, you’d be all for it. The question is how?

One element I left out of the vicious circle above is the current willingness for governments to help businesses. Some of that help has centered on bailouts, some on employee pay subsidies, and some on easier access to credit for businesses.

With those tools, businesses have options that, if deployed with an enterprise mindset, have the ability to not only grow an individual business, but the economy.

One focus could be job retention as a vehicle for recovery. Job growth creates more spending, which creates demand for products and services, which increases production, which creates jobs, which creates more spending. And on and on into a virtuous circle of recovery. It might look like this:

ob growth creates more spending, which creates demand, which creates jobs. And on and on into a virtuous circle of recovery

The key point is seeing the recovery of our business as tied to the recovery of the global economy. If we can make that mindset leap, we all become part of the solution that drives recovery.


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