Systems innovation can seem difficult at first glance because the word is often associated with abstract models, complex schemes and cross-sectoral collaborations. A clearer way to understand the concept is to read it backwards. Systems innovation is simply “innovation of systems”. When you see it, you realize that the complexity is not primarily in the innovation, but in the systems themselves. The principles of innovation are fundamentally the same as when we work with products, services or business models. It is the diversity, relationships and dependencies of the systems that make the work more comprehensive.
So innovation is not the difficult thing. It is the systems that are difficult. That is why we need to learn how to innovate in, and for, complex systems.
What exactly is a system
One of the easiest approaches to systems thinking is to describe what a system is not. If we do not have a system, we have a collection of separate parts that are not connected. A system only arises when there are relationships between the parts and something new is created by connecting them together.
A simple example is an engine and a wheel. Each of them is just a component. When we connect them with a chain, a “transport system” emerges. We quickly realize that the relationship that binds the parts together, the chain, suddenly becomes a crucial component.
If we transfer this to larger systems, the picture quickly becomes more complex. Energy systems consist of power plants, electricity grids, users, policies, technologies and market models. Nature’s ecosystems consist of species, climate, chemical cycles and evolutionary processes. In both cases, the relationships are numerous, dynamic and sometimes contradictory.
Systems cannot be understood by studying only the parts. They must be understood as wholes where the relationships create behaviors that no part can explain on its own.
Why we need systems innovation
Today’s societal challenges are often systemic in nature. Climate, energy, mobility, welfare and resource use are not areas where a single actor can solve the problems.
Take the transport system as an example. No car manufacturer, or municipality for that matter, can create more cycle lanes, more efficient public transport or better behavioural change among road users on its own. This requires collaboration between municipalities, urban planners, construction contractors, the automotive industry, users and political decisions. When several actors own different parts of the system, innovation must also relate to the system as a whole.
Another reason is our human tendency to improve what we already have instead of thinking new. This leads to us patching and fixing and creating more of the same, even when the problems require us to step back and ask what the system could look like if we started from scratch. System innovation helps us move away from that reflex.
From organisational thinking to systems thinking
One of the biggest obstacles to systems innovation is that organisations often view the system as something that will benefit their business. The question then becomes how the system can be adapted so that my business can grow.
System innovation turns the perspective around. The key question that opens up for system change is how our organisation can contribute to the development of the system.
When organizations make this shift, something interesting happens. By working for the good of the system, the development opportunities of the organization itself often increase as a natural consequence. This is a shift in mindset that is central to everyone who works with system change.
How to manage the size of the system without losing responsibility
System issues can easily become so large that no one feels responsible. This is one of the practical challenges of system innovation. Two things then become important.
First, you need to choose the right level. Systems can always be designed larger and more complex. But there is a level where the system is limited enough to be manageable and extensive enough for a change to play a role.
Second, you need to do instead of getting stuck in abstraction. Many are attracted by the intellectual stimulation of system innovation but remain in analysis and conceptual worlds. In reality, system innovation is about being able to switch between two levels. A more abstract level where you identify system patterns and a concrete level where you innovate in a practical part of the system.
System innovation rarely creates results at its own level. Ideas and changes must be brought down to the concrete innovation level to be tested and brought to life. But concrete innovations rarely create system change unless they are lifted back to the system level.
It is the interaction between these two perspectives that forms the core of system innovation management.
Breaking down system innovation into concrete innovations
One of the most important skills of a system innovation manager is to be able to identify which parts of the system should be innovated in order to jointly contribute to system change.
This can involve determining which components of the system can be influenced, which stakeholders should be involved and which parts are most ripe to experiment with. It can also be about creating sequences of innovations that together drive the system in a new direction.
This requires analytical ability but also creativity. It is work that is similar to putting together a puzzle where the pieces must both fit together and at the same time create something bigger when combined.
System innovation is not about trying to change everything at once. It is about seeing the whole but working in parts, through concrete innovations that together can turn the system in a new direction.
When system innovation becomes a necessity
Many of our most important future areas require system innovation in order to be able to solve their challenges.
In energy, innovations are required in production, distribution, storage, consumption, business models and behaviors. In the circular economy, innovations are required in design, material flows, ownership models, incentives and policy. In health, innovations are required in digital services, care models, prevention, education and coordination.
System innovation has therefore become one of the most central capabilities that society, business and the public sector need to develop.
The ability to switch between levels
System innovation is innovation, but more complex. It is innovation in contexts where relationships, dependencies, actors and structures shape both the problem and the solution.
By understanding what a system is, why system innovation is needed and how to switch between the system level and the innovation level, it also becomes easier to work practically. System innovation is not about solving everything. It is about creating targeted, concrete innovations that together strengthen the system’s ability to change.
When we learn this, we work not only for the development of our organization but for the development of the system. And when the system develops, it also carries with it the organizations that participate.
It is a more generous, more sustainable and more strategic form of innovation.
