The Relevance of Systems Thinking in the Quest for Multifinal Social Enterprises

Human deprivation and suffering around the world are increasing despite the efforts of traditional aid-based approaches focused on alleviating poverty and improving the quality of life for marginalized communities. There is ample evidence that billions of dollars in aid money have been expended on development projects that are fundamentally unsustainable. On the other hand, social enterprises, which improve lives and livelihoods through practical market-based approaches, are growing in number. Systems Thinking can be especially helpful in navigating the complexity and chaos inherent in social ventures in developing communities. Lack of clarity in the roles, responsibilities, and returns for the various stakeholders epitomizes this chaos and is a major contributor to the failure of such projects. By employing Systems Thinking, entrepreneurs can establish accountability mechanisms, ensure equity for all stakeholders, and facilitate system sustainability. Though much research exists on both Systems Thinking and social enterprise, few sources discuss how Systems Thinking can be practically applied to conceptualize, build, and sustain social enterprises in an easy-to-understand manner. This paper synthesizes definitions of the tenets of Systems Thinking including interdependence, holism, multifinality, equifinality, differentiation, regulation, abstraction, and leverage points. The relevance of each of these tenets to social entrepreneurship is described, and further reinforced, with examples. A practical understanding of these tenets can empower entrepreneurs as they navigate chaotic environments in the quest for social enterprises that create win–win situations for all stakeholders.