The Hidden Cost of High Performance - Why optimizing teams in isolation can cripple organizational outcomes

The Parts vs. System Paradox

“Changing parts will have little impact on the system. But changing interactions or purpose can create a massive impact.” — Steven Schuster

Systems thinkers have long understood this. So why do many organizations still obsess over optimizing individual teams — driving up local efficiency while system-wide performance stagnates or declines?

Here’s what happens:

• A team gets faster
• But what they produce isn’t aligned with what the customer actually needs
• Or worse, it clashes with what another team is doing
• You get work that’s faster, cheaper… and irrelevant

To improve real outcomes, stop focusing on parts. Start improving how the parts work together. Make collaboration worth it for individuals — not an extra burden, but a source of progress and shared wins.

The Suboptimization Trap

“When a subsystem’s goals dominate at the expense of the total system’s goals, the result is suboptimization.” — Donella Meadows

We see this every day:

• Sales wants volume
• Support wants lower tickets
• Development wants fewer changes
• Marketing wants launches

Each team wins, but the customer loses.

Suboptimization isn’t just inefficient — it’s invisible sabotage. It feels like “success,” but it erodes coherence and trust.

The Solution: System-Level Design

Fixing it means aligning incentives, breaking silos, and designing for shared outcomes:

• Feedback loops between teams
• Conversations across interfaces
• Leadership that rewards system success, not heroism in isolation

Russell Ackoff’s Three Rules

Russell Ackoff laid it bare with three simple rules:

1. Optimize the system? You’ll sub-optimize some components
2. Optimize the components? You’ll break the system
3. Every subgroup follows the same pattern

These aren’t just rules. They’re warnings. You can’t build a great organization by piecing together high-performing parts. You need a coherent whole — teams designed not just to work, but to work together.

---

✅ Ready to move beyond parts-thinking?

If this resonates — and you’re ready to see your organization as a system, not just a chart of boxes — join my course:

🎓 Systems Thinking in Action: Exploring The Fifth Discipline

A hands-on learning experience rooted in Peter Senge’s work and applied to your real-world challenges.

🔍 Learn to see patterns, shift mental models, and improve the system — not just the symptoms.