What is a system?
Important concepts from General Systems Theory

System

A set of interrelated components related by flows of energy, material, or information. (money has characteristics of all three).

Some Important Characteristics of Systems

Hierarchies...

There are systems within systems. Each smaller system is a component of a larger system. Each larger system is the environment of its component systems.

Boundaries...

If you can draw a boundary around the activites of a system you have defined the system.

Openness

Systems are affected by events outside their boundaries.

Dynamic

systems are changing over time and internal relations can change over time as well.

Synergetic

Synergy isthe total behavior of a system that is not predictable by looking at the sum of the behaviors of each part in isolation.
It is possible to have both positive and negative synergy.
Unfortunately, popular usage has degraded this useful word by making the bad assumption that all synergy is positive.
Definition of synergy from R. Buckminster Fuller synergy http://www.rwgrayprojects.com/synergetics/s01/p0100.html

Control through feedback

Some of the output flows of the system return as inputs to the system. This provides a means to control the system's behavior. Feedback may be either positive or negative.

Negative feedback

has the effect of correcting for changes in the system and tends to help maintain a steady state. The easiest examples of negative feedback come from control systems like thermostats or cruise controls that are expected to maintain a steady state, and only intervene when the steady state has changed.

Positive feedback

ususally results in a system changing its behavior in one direction at an accelerating rate. The best known positive feedback system is the microphone/amplifier/speaker system at a concert. When too much speaker output goes into the microphone the result is the familiar ear shattering squeal.
A more important form of positive feedback for business is the phenomenon of increasing returns to scale. Companies like MicroSoft, who become dominant in an industry enjoy ever increasing dominance in part because of the positive feedback from customers and other companies who adopt the standard and then continue to adopt and build on that proprietary standard. As you can well imagine analysis of situations with positive feedback are very messy.

Autopoiesis

The tendency of some systems to be self-organizing, spontaneously creating new structures and flows that are efficient. The marketing system is such a system. This is one of the central concepts of Complexity Theory.

Equifinality

The fact that a given end result can be achieved through a number of different combinations of system behaviors and pathways. This bears heavily on marketing strategies in terms of finding lower cost pathways and activities, or ones where competion is less.

In marketing, we are dealing with a social and economic sytem that is very complex. Because of the complexity, there are no easy answers to most marketing questions.

The management of a company's marketing system requires careful monitoring of feedback from the social, economic, and political environment in which it exists.

The internal marketing efforts of a company also comprise a complex system, whose control is the job of marketing managers.

For a Thorough, see The Atlantic, September 1998.

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