The systems approach to Management came to be developed in the early Fifties of the last century, when there was increased interest in the use of quantitative methods in management. The theory considers management as a set of distinguishable, but inter dependent and inter-related parts operating in a logical manner or sequence in order to achieve a goal. A "system" is defined as "an organized, unitary whole composed of two or more inter-dependent parts (sub-systems) where the whole contains identifiable boundaries from its environment (suprasystem)." Systems must be viewed as a whole; changes in one part of the system affect the other parts. Organizations experience various conflicts, and rather than manage them away, a systems manager learns to take advantage of them.

Systems theory represented the merger of many ideas from scientific management and from human relations management. It was indeed project-based, lending itself well to Gantt charts, and it also strived towards synergism (where the whole is greater than the sum of its parts) through humanistic management of at least the internal environment (the informal organization of the workers).

The system approach provides a unified focus to organizational efforts. Managers are alerted against analysing problems in isolation, but encouraged to develop the ability for integrated thinking. Systems theory recognises inter-action and inter-dependence, the underlying concept of Work groups and Teams that function under a horizontal organisational design and structure in modern business organizations.

Some of pioneers who contributed towards the evolution of the theory are:

• von Bertalanffy (1950) is generally regarded as the founder of "systems theory" and the broad sweep of its applications for almost all disciplines, the natural as well as the social sciences.

• Ackoff (1956) was a MIT professor who invented OR, "operations research", the creation of multi-disciplinary teams of experts used in simulations of war games.

• Boulding, an economist known for popularizing "feedback loops" and "cybernetics", the analysis of inputs, throughputs, and outputs.

• Starr, a decision theorist associated with OR and the concept of "suboptimization"

• Forrester, a demographer who applied econometrics to urban problems and the field of city planning

• Parsons, a sociologist who studied action systems and the integration of subsystems.

Management thinkers who pioneered "the quantitative school" gave us numerous tools, such as PPBS (Planned Programmed Budgeting Systems), CIS (Computer Information Systems), and the whole field of Operations Research. It has turned out to provide a solid basis for the analysis of organizations, which are characterized as either "open" systems (which interact with and are influenced by their environment) or "closed" systems , which do not interact with their environment and do not receive feedback. A clock is an example of a closed system because assuming a power source, the clock needs no further outside environment to run properly. A plant is an example of an open system because it needs air and sunlight from the environment. An open system continually interacts with its environment and takes feedback to adjust its activities. Business organisation is an open adaptive system. Its management is open to suggestions, and criticism by way of feedback for improvement. Other types of Systems identified are - "static systems" as distinguished from "dynamic systems". A static system operates repetitively completing the same cycle of functions without change or deviation. Many machinery and durable (household gadgets) used in our day to day life, like the internal combustion engine are examples of static systems. A dynamic system on the other hands reacts to conditions in the outer environment and undergoes changes. It grows or decays or transforms its state. Biological systems like plants, animals and human beings are dynamic.

The systems theory to a considerable extent resembles the scientific method: "you hypothesize, design a controlled experiment, collect data, and analyze data. The purpose is to maintain the use of science in management to obtain "real time" results that can be used instantaneously to affect control in the organization The goal is to maintain your attention on the whole at all costs. For managers, this means:

1. Define the company as a system

2. Establish system objectives (performance criteria)

3. Identify wider systems (the environment)

4. Create formal subsystems (including a humanistic, psychosocial subsystem)

5. Integrate the subsystems with the whole system (if not the subsystems themselves, whatever interrelates them with other subsystems)"

1. As sub-systems are integrated as a whole and inter-related with each other the position and function of each sub-system can be analysed only in relation to other sub-systems and to the organisation as a whole rather than in isolation. For example an automobile engine derives its utility and purpose by being a part of the vehicle, as a whole. It functions in coordination with other parts as needed or as operated by the vehicle driver. Separated from the vehicle the engine is a static piece of hardware and incapable of functioning by itself.

2. An organisation is not only an open system, but it is also a dynamic system. It perceives opportunities or threats from the outer environment and reacts appropriately towards the same.

The state of inter-dependency and integrated function of the sub-systems presupposes that they all function in perfect co-ordination. Operational processes flow in sequence resulting in the output of a preceding sub-system as the input of the next or succeeding sub-system. In a manufacturing organisation, for example, the Purchase department procures raw-materials and makes them available to the production department, who in turn converts them into finished goods and passes on to the sales department. Thus the sales department would be able to honour its delivery commitments only if the purchase and production departments coordinates their jobs under a common time-schedule. The inter-dependent departments through the technique of co-ordination are able to contribute towards fulfillment of a common goal. The result is seen as a single action of the whole and not as diverse acts of the individual parts.

Operating towards a common goal under a state of perfect co-ordinations the sub-systems bring about a role of synergy in management. Mutual association and harmonious inter-action of the sub-systems results in their collectively contributing more than the sum total of their individual outputs. Thus a group of five persons representing five different functions of a single job working in mutual coordination is able to render more output compared to the same job, when performed by them individually without coordination and without forming a single team. This ismequally so, if all the five parts (functions) are bundled in a single part (person). In this case working for 5 days, the single person will be turning out less output than the case five persons referred earlier working coordinatedly for one day.