Rethinking Management: Why Most Organisations Miss The Whole System

Rethinking Management: Why Most Organizations Miss the Whole System

When a Boeing whistleblower described their company as “broken down…a whole system in shambles,” they weren’t just referring to a few bad decisions or isolated failures. They were pointing to something much deeper: the collapse of an organization’s ability to manage itself as a coherent whole.

It is a simple and obvious statement that you cannot maximise a company’s value if you do not maximise the value created by everyone involved in an organization’s whole system. Yet, despite all the talk of leadership, culture, and strategy, very few companies truly understand themselves as a human system. Fewer still take responsibility for managing the complex web of relationships among employees, customers, suppliers, and investors that ultimately drive performance and risk.

A Failure in Modern Management

Decades of management education have produced leaders skilled in finance, strategy, and operations, but often ill-equipped to oversee the human dynamics that underpin sustained value creation.

Research by the Maturity Institute reveals that fewer than 1% of organizations possess any formal leadership or governance capabilities for managing the material value and risk arising from their human systems: the interrelated set of human relationships, from leadership to local communities.

Too often, people management practices are framed through transactional thinking: branding and retention exercises instead of meaningful engagement, cost-cutting over collaboration, and compliance systems rather than cultures of trust and integrity. Conventional management not only wastes human potential, it also introduces systemic risks.

Boeing and AstraZeneca: Cautionary Tales

The recent Boeing crisis is a case in point. A corporate strategy focused on cost minimization and profit maximization undermined product quality. In the wake of a series of aircraft failures, employee morale, supplier relations, and customer trust have been badly affected. The human system failed, and no one was accountable for managing it.

A similar problem emerged at AstraZeneca. In 2019, our analysis warned that the company was addressing ethical risks only at the surface level, relying on compliance structures without addressing the cultural and systemic roots of potential misconduct. Five years later, a bribery investigation in China confirmed these concerns. CEO Pascal Soriot admitted that non-compliance had “moved outside of [their] systems.”

These aren’t isolated incidents. They’re symptoms of a widespread failure to manage organizations as living, interconnected systems.

Why Fragmented Thinking Fails

Many companies still operate in silos with fragmentation across functions, teams, and locations. A unifying view and a system of management to ensure everything fits together are often absent. Even academic research regularly falls into this trap. Take the case of cognitive diversity. Professor Alex Edmans recently revisited his assumptions that having a “wider range of expertise, experience, perspectives, preferences, traits, and ways of thinking within a team” would create better outcomes. Edmans noted that while diversity can enhance performance, the research evidence was weaker than expected. His key insight? Diversity only works if it’s managed well, a task that requires coherent systems thinking, not ad hoc or piecemeal interventions.

The same principle applies to other management tools and strategies. Whether it’s performance management, learning systems, or culture change initiatives, none will deliver their full potential value unless they are aligned and integrated into a mature, purpose-driven system.

Toward Whole System Management

Whole system management begins with a new mindset: organizations are not machines. They are complex, human ecosystems. Success depends on designing and managing the system as a whole.

At the Maturity Institute, human systems frameworks are developed using Organizational Maturity, which measures how well an organization aligns its purpose, culture, systems, and practices to unlock human potential. Maturity Institute research, conducted with Professor Carlos Botelho, found that high-performance practices, such as training, work design, and selective recruitment, had a significantly lower impact unless they were embedded within a mature, coherent system.

The real shift occurs when a company stops viewing its workforce as a cost and begins to see people as the most valuable asset for creating sustainable stakeholder value.

Managing the Whole: Three Levels of Responsibility

To manage a business as a whole system, leaders need to consider human value from relationships at three interconnected levels:

Internal: How does the organization operate as a cohesive system, from purpose to people’s roles?
External: How does it interact with suppliers, competitors, regulators, and the wider market?
Societal: What broader responsibilities does it acknowledge, and how does it manage them?

These three dimensions form an organization’s true ecosystem. Thriving whole systems emerge when behaviors, incentives, and values are aligned. When the potential value of human capital is encouraged to flow freely, a common purpose is understood and shared at every level.

Business success is being redefined from financial performance to integrate human and environmental impact. We’ve gone beyond the turning point and into a transition period. Leaders must go beyond fragmented fixes and build capabilities for managing whole systems. Boards must demand governance over human value and risk, not just financial returns. And business schools must stop teaching management as a set of technical disciplines and start treating it as a systemic one. The organisations that succeed in the coming decades will be those that embrace complexity and build maturity into the core of their business.

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