Why Founders Must Become System Thinkers

Systems Thinking as the Key to Sustainable Success

Founding a company today means far more than just building a product or efficiently solving a problem. Anyone starting a business today enters a playing field characterized by multiple interdependencies, uncertainties, and dynamics — whether in the market, regulatory environment, or planetary system. Yet many founders still operate with a linear thinking model: Problem → Solution → Scaling. In a world full of feedback loops, trade-offs, and systemic risks, this approach is no longer sufficient.

The consequences of linear thinking regularly manifest in the startup world: platforms that amplify social inequalities despite promising inclusion. Delivery services that strain urban infrastructure instead of relieving it. Climate-tech startups that generate more CO₂ through their supply chains than they save. These examples illustrate what happens when business models aren’t conceived systemically — and where genuine innovation potential is squandered through naive focus on isolated solutions.

Credits: Galina Nelyubova via Unsplash

Systems thinking helps founders better understand interdependencies, identify risks earlier, and create real impact. It’s not about adding complexity, but about making better decisions. Studies show that companies that plan systemically and long-term are more resilient, adaptable, and innovative. According to McKinsey [1], companies that proactively address systemic risks like climate change or social inequality are also economically more robust and benefit from higher stakeholder trust.

This article is aimed at founders who think not just about tomorrow, but about the day after tomorrow. At teams that no longer hope for simple answers, but ask better questions. And at everyone who wants to understand why systems thinking isn’t a “nice-to-have,” but a central leadership tool in times of transformation. We show how founders can integrate systems thinking into their strategy, their product, and their corporate culture — concretely, practically, and with real added value for impact and growth.

Complexity is Not a Complicated Problem

Many founders confuse complexity with complication — and respond with even more control, planning, and supposed rationality. But while complicated problems (e.g., a software bug) can be solved through analysis and linear processes, complex systems behave differently: they are dynamic, adaptive, and not entirely predictable. An intervention at one point can have completely unexpected consequences elsewhere — or only become visible years later.

The classic thinking model of many startups is: “We solve a problem and get growth in return.” But in reality, markets, user behavior, and ecological systems often behave contradictorily. A product can increase efficiency in the short term — and cause more damage in the long run. A social impact can be helpful in one region — and create new dependencies in another. Cause and effect in complex systems are circular, not linear. Those who ignore this make risky decisions based on false assumptions.

A typical example: Many startups advertise sustainable impact because they offer a “better” product — such as plastic-free packaging, climate-neutral supply chains, or CO₂ compensation. But those who look systemically often recognize that the impact is only supposedly positive. Compensation projects (e.g., reforestation), according to studies [2], often don’t meet the criteria of permanence or additionality — and obscure real emissions.

At the same time, demand is artificially stimulated (“green consumerism”) instead of being reduced — with the paradoxical effect that more “sustainable products” consume more resources. Impact cannot be measured solely by the product, but only through systemic analysis — along supply chains, behavioral effects, and interdependencies.

Startups that model linear success chains (“If we do A, B happens”) often overlook side effects, trade-offs, and structural dependencies. This applies not only to climate startups, but also to platforms, digital health services, or educational innovations. Those who don’t think systemically here risk scaling solutions that create new problems — or amplify existing ones.

Those who analyze complex systems with simple models will not build sustainable business models. Systems thinking is not nice, but necessary — not for perfect theory, but for better decisions in practice. In the next section, we’ll look at how lacking system understanding can even slow down innovation — and what strategic risks this creates.

Growth at Any Cost — and the Blind Spots Behind It

Many startups pursue the goal of scaling quickly. Scaling is considered proof of product-market fit, a lever for impact, a prerequisite for financing. But without a fundamental understanding of the systems they intervene in, many founders scale not solutions — but unintended problems. Because what works on a small scale often has different dynamics at scale. Or, as systems researcher Donella Meadows puts it: “In complex systems, the system changes as soon as you intervene in it.”

The sharing economy was once celebrated as a model example of resource conservation. Platforms like Uber, Airbnb, or Deliveroo promised more efficiency through better utilization of existing resources. But viewed systemically, the business model led in many cities to rising housing shortages, precarious working conditions, and more traffic — opposite effects. A study by the National Bureau of Economic Research shows that Airbnb has significantly increased rent levels in urban centers [4].

The cause: The platforms only considered the short-term benefit for individual users — but not the structural impacts on entire markets, living conditions, and regulations. Systems thinking wouldn’t have prevented success here — but would have pointed to trade-offs early on.

The agricultural sector also shows how dangerous technological innovation without system understanding can be. Many AgriTech startups focus on efficiency gains through sensors, automation, or genetic optimization. But these solutions often fall short when they ignore existing power structures in the food system, land use questions, or ecological limits. An example: In regions of the Global South, the introduction of technologically driven agricultural models combined with micro-financing led to small farmers going into debt, dependencies on seed corporations growing, and traditional, resilient farming systems disappearing [5].

Technology alone is not neutral — it operates within social, political, and ecological systems. Without analyzing these, even well-intentioned innovations miss their impact — or create new risks.

Startups that only look at KPIs like user numbers, revenue, or retention overlook these external effects. But these catch up with them later: in the form of reputation risks, regulatory headwinds, or social resistance. Impact investors are increasingly paying attention to exactly these blind spots — and demanding more from founding teams than “Tech for Good” narratives. Systems thinking thus also becomes a competitive factor in capital acquisition and stakeholder dialogue.

Scaling is not an end in itself. Without system understanding, growth quickly becomes overwhelming — for the company, for the market, for society. Startups that consider system effects don’t just make better decisions. They build resilient models — and remain relevant even when the world changes faster than the next pitch deck sprint.

Thinking in Systems — More Than a Buzzword

Systems thinking is not a new buzzword in startup jargon, nor is it a watered-down version of “holistic.” It is a methodical approach to analyzing complex relationships — with the goal of making better decisions under uncertainty. In a startup context, systems thinking means considering the impacts of business decisions not only on the product, market, or users, but on the entire environment: society, environment, regulation, infrastructure.

The Three Pillars of Systems Thinking:

1. Interdependencies instead of isolated logic: Systems thinking recognizes that every decision has multiple consequences — and these don’t always occur where you expect them. An example: A platform for reducing food waste doesn’t just reduce garbage, but also changes shopping behavior, supply chains, and price dynamics in retail. The consequences don’t lie in a straight line, but in a network of causalities.
2. Feedback loops instead of linear cause-and-effect: In complex systems, decisions feed back into your own organization. A company that relies on CO₂ compensation instead of reducing emissions might benefit short-term — but experience regulatory pressure or reputation losses long-term. Systems thinking identifies such feedback loops early and evaluates them as part of the decision-making foundation.
3. Dynamics instead of snapshots: Markets, resources, technologies change — often faster than planning can capture. Those who only optimize for the present often make decisions with short half-lives. Systems thinking therefore asks not only: “What does this bring today?” — but: “How will this change in the future?” And: “What changes when we intervene?”

Many startups call themselves “sustainable” or “holistic” without defining what that actually means. These terms are vague — systems thinking, however, is precise. It forces founders to reveal assumptions, question interdependencies, and anticipate side effects. It’s not an attitude, but a thinking structure. And that’s exactly what makes it so powerful.

Systems thinking doesn’t begin with tools, but with a new perspective. A proven entry point is the System Map or Causal Loop Diagram — visual methods that help identify relevant actors, relationships, and levers in the system. The OECD has developed a framework for policy coherence [6] for sustainable development that relies on similar principles.

For startups, this means: Before you scale your product, map your system. Who is affected? Who changes through your success? What happens when you really become big?

Systems thinking is not gut feeling, but a skill — and a strategic advantage. Those who master it recognize risks earlier, utilize opportunities better, and build more resilient companies.

Those Who Only Build a Product Will Be Overwhelmed by the System

Many founders start with a clear idea: a product, a market, a business model. But in an increasingly networked world, this is no longer sufficient. Startups don’t operate in a vacuum — they are part of complex systems where technology, society, politics, and environment are intertwined. Those who don’t understand this system make decisions with tunnel vision — and later pay with friction losses, boycotts, regulatory hurdles, or plain disinterest.

Systemic founders don’t just ask the question: What problem are we solving?, but also: Why does the problem exist — and who benefits from it continuing to exist? This perspective changes the entire development process. Instead of fighting symptoms, such startups work on the causes — and build viable, long-term solutions.

An example: The Dutch company Fairphone didn’t settle for building a sustainable smartphone. It analyzed the system of electronics production — from raw material extraction through supply chains to software compatibility — and developed a mission from this: a modular, repairable device with fair production. This has impacts far beyond the product — such as on the electronic waste debate, the right-to-repair, or working conditions in mining.

Systems thinking also means: viewing infrastructure and regulation not as obstacles, but as design partners. Successful impact startups actively seek collaboration with cities, ministries, or industry initiatives — not to grab funding, but to enable change together.

An example of this is Monta, a Danish startup for charging infrastructure. Instead of just offering a new app for e-mobility, Monta works closely with city administrations, network operators, and car manufacturers. Goal: an interoperable ecosystem for charging points that makes e-mobility not just possible, but convenient. The startup thinks in system architecture — not in software features.

Systemic founders see stakeholders not just as customers or investors, but as active co-creators. They create participation — through co-creation, early feedback, shared ownership. This not only increases acceptance, but also system resonance: When users, partners, or authorities are involved from the beginning, products emerge that are compatible — in the market and in mindset.

A good product isn’t enough if the system doesn’t support it. Successful systemic startups therefore ask themselves early questions like:

• What needs to change in infrastructure for us to scale?
• Which regulations block us — and which could we help shape?
• Which networks do we need to trigger system change?

These aren’t “later” questions — they belong at the beginning of every growth strategy.

Founders who think systemically don’t just scale faster — they fail less often. Because they recognize: Every startup is an intervention in the system. Those who understand this don’t just design a product, but shape a transformation.

Mapping Systems Instead of Just Hoping

Systems thinking is not a luxury for think tanks, but a survival tool for founders. Especially in the early phase — when assumptions about market, impact, and business model are still unclear — it’s not just ideas that matter, but understanding the systems in which these ideas are meant to operate. The good news: there are tools that make these systems visible and strategically manageable.

So-called Impact System Maps help founders view their solution not just within a linear value creation process, but as part of a larger impact network. Who is directly, who indirectly affected? Which resources, institutions, behavioral patterns, and political frameworks shape the system? Where do unintended side effects arise?

An impact venture in the circular economy — for example, a digital return system for reusable packaging — must consider not only consumer behavior and logistics processes, but also regulatory incentives, infrastructure availability, and incentive systems for retailers. Only through systemic mapping does it become visible where the greatest leverage lies — and where barriers might emerge.

While Impact Maps help identify actors and impact fields, Causal Loop Diagrams (CLDs) make visible how changes within a system dynamically affect each other. They show: Where do interventions lead to self-reinforcing effects? Where do interventions have a stabilizing effect?

Let’s stick with the example: If a digital return system for packaging is better accepted, this could lead to more usage — which in turn reduces infrastructure costs per use, which in turn reduces the price for retailers, which in turn further increases acceptance. A classic “Reinforcing Loop.” At the same time, a lack of return points can lead to frustration — and thus to migration to the single-use option. A “Balancing Loop” that can dampen growth. Recognizing such dynamics changes decisions — and saves expensive course corrections later.

At COSMICGOLD, we integrate both approaches in our Regenerative Business Design Framework — a structured toolset for developing regenerative business models. Here, Impact System Maps and Causal Loop Diagrams are not used in isolation, but systematically embedded in business model development. Founders thereby learn to view impact potentials, risk fields, and strategic decision fields holistically — and derive concrete next steps from this. More about this and access to the tools at www.cosmic.gold/resources.

Using these tools is not just academic. It creates clarity for teams, compatibility for partners, and credibility with investors. Those who operationalize systems thinking don’t just plan better — they also communicate better. And this is crucial in the impact space: Because impact that cannot be explained remains a claim.

Deciding Means: Considering Side Effects

Founding means deciding. Daily. But many decisions in startups are reactive, linear — and focus on short-term outcomes: “What brings traction fastest?”, “Which feature can we build?”, “Where is the biggest market potential?” The uncomfortable truth: decisions in complex systems work differently. They unfold side effects, generate dynamics — and often take effect with delay. This is exactly where systems thinking comes in.

Systemic decisions don’t just ask about effectiveness, but about consequential impact: What feedback loops does a product decision trigger? How does the behavior of users, partners, or political actors change? And: What happens when environmental conditions change?

An example: An AgriTech startup that wants to scale quickly relies on aggressive data collection from smallholder farmers. Good for the product short-term — possibly toxic for trust and market access long-term. Thought systemically: Which governance structure, which participation, which data ethics ensure not only efficiency, but also resilience?

Systemic decisions are not always the most efficient — but often the most sustainable. And that’s exactly what determines survival in complex markets.

Classical management thinks in goal cascades: Vision → Strategy → Measures → Result. Systems thinking thinks circularly. It asks: What do we learn from the system’s reaction to our intervention? How do we integrate this feedback into the next decision?

According to an analysis by MIT Sloan [7], systems thinking is increasingly changing investment logic: investors are less interested in isolated metrics, but more interested in the feedback between economic activity, social behavior, and regulatory change. This exact mindset is needed in daily entrepreneurial life — not just in portfolio management.

Feedback loops are not retrospective reviews, but strategic control instruments. They show where assumptions were wrong, where unintended side effects arise — and enable correction before it becomes expensive. Especially for impact startups that influence not only economic but also social systems, these loops are vital for survival.

Many startups strive for maximization: more impact, more revenue, more users. Systemic founders know: every step has costs. Stronger local integration can slow global scaling. A transparent impact approach can deter investors short-term. An inclusive design process can extend time-to-market.

But trade-offs are not a step backward — they are conscious decisions about system effects. Those who make them visible can shape them. Those who ignore them risk losing trust, bypassing stakeholders, or reinforcing ecological tipping points.

Founders who decide systemically lead differently. They view their startup not as a machine, but as a living system. They understand strategy as navigation through dynamics — not as implementation of a fixed plan. And they build teams that learn, adapt, and anchor responsibility not just in results, but in the process.

From Individual Decision-Makers to Collective Intelligence

Systems thinking doesn’t unfold its power in PowerPoint slides or strategy papers, but in everyday life — in meetings, reviews, feedback conversations, and pitches. But that’s exactly where it often fails: founders and teams work linearly because it seems faster. Decisions are made along functions or responsibilities — not along interconnections.

Yet systems thinking is not a task for individual specialists, but a team competency. It shows itself in which questions are asked — and how:

• “What unintended effects could our measure have?”
• “Whose behavior would need to change — and what would that require?”
• “Where could our solution unintentionally amplify existing dynamics?”
• “Which actors are missing from our model — and why?”
• “How does our impact change when external framework conditions shift?”

These questions change the conversation culture. They force teams to step out of their own function, discipline, or role — and instead look together at the system they want to shape.

Especially in impact startups, diversity is often morally desired — but strategically underestimated. Yet diversity is not an end in itself, but a catalyst for system understanding. Different disciplines, perspectives, and biographies bring different mental models. Founders who only talk with engineers about mobility, only with economists about education, or only with designers about circular economy will hardly recognize how deeply systems are intertwined.

According to a study by Cloverpop, diverse teams increase the quality of strategic decisions by up to 87% — especially when systemic questions are consciously asked [8].

But this only succeeds when meetings, reviews, or pitches are designed not just for speed, but for perspective shifts. Systemically working teams actively promote:

• Interdisciplinary participation in decision proposals
• Reflection rounds with explicit role rotation
• Regular system reviews, not just progress reports

Systems thinking begins in dialogue — not in white papers. Founders who are serious about impact must create structures where teams not only implement, but think along. And this only succeeds when the culture is optimized not for answers, but for better questions.

From Founder Mindset to System Culture

Systems thinking is not a “tool” that can be delegated — it begins at the top. Founders who want to achieve long-term impact must themselves embody the shift from linear management to systemic leadership. Because organizations always reflect the mindset of their founders. Those who ignore complexity create blind spots. Those who shape it build structures for resilience.

Systemic leadership doesn’t mean overthinking every decision or reflecting endlessly. It means consciously dealing with uncertainties, side effects, and interdependencies — without the illusion of complete control. Leadership thus becomes work on the system, not just in the system. A good systemic founder doesn’t ask: “What is the most efficient solution?”, but:

• “What long-term effects does this decision have — on whom, where, when?”
• “How does our goal change when the environment changes?”
• “What do we take for granted that we should question?”

For systems thinking not to end in strategic slides but to arrive in daily practice, concrete levers are needed in leadership routine:

1. Rituals with depth: Retrospectives, standups, or all-hands should address not just output, but impact. What unexpected effects have emerged? What have we learned — beyond KPIs? Regular system reviews or stakeholder mappings can help here.
2. Goal systems that integrate impact: OKRs or other control systems are only future-proof when they map qualitative target variables alongside revenue and user numbers. Our tools like the Lean Impact Assessment Canvas and the Regenerative Business Model Canvas help think of impact as an integral part of the business model [9].
3. Decisions with system perspective: Those who want to lead in a culture that thinks systemically need clear criteria for when something is “right.” Besides time, budget, and feasibility, questions like these should also belong:
   - Which stakeholders have we (not) considered?
   - Where do trade-offs threaten?
   - Which long-term impact assumptions guide us?

Systemic leadership means understanding complexity not as a threat, but as design space. And it means making decisions not for maximum control, but for maximum awareness of interconnections.

An already cited study by MIT Sloan also shows that companies whose leaders actively promote systems thinking are more innovative and adaptable — especially in volatile environments. Those who want to shape system change must lead systemically. Not as a method, but as an attitude — reflected in every meeting, every goal, and every decision.

Founding means shaping — not just delivering

Startups do not develop isolated solutions. Whether in mobility, nutrition, education, or energy — anyone founding a company today intervenes in existing systems. Markets are not empty playing fields. They are closely interconnected structures of behavior, infrastructures, technologies, and rules. And that is precisely why systemic thinking is not just “nice to have,” but a strategic necessity.

To achieve impact, one must recognize interconnections. Many problems that startups attempt to solve — from climate change to social inequality to mental health — are systemic in nature. They cannot be “fixed” with purely technical solutions but require a deep understanding of dynamics, conflicts of interest, and interactions.

Founders who focus solely on product-market fit often overlook the structural drivers of a problem. They scale without reflecting on the side effects. They optimize KPIs without checking if they are solving the right problem. The result: Solutions without impact — and business models that fail due to their own narrow focus. Research confirms this: Organizations with a systemic perspective are more adaptive, innovative, and resilient in complex markets.

Therefore, the call to action: View systemic thinking not as a buzzword, but as a core competence for future-proof entrepreneurship.
This means concretely:

• Understanding problems in context, not in isolation.
• Thinking about impact beyond the first users — also on society and the environment.
• Making decisions that are sustainable in the long term — not just scalable in the short term.

Those who found a company today help determine how we will do business, live, and work tomorrow. Responsibility does not start with the product — but with the mindset behind it. Systemic thinking is not an additional task. It is the difference between short-term solutions and real transformation.

Sources:
[1] https://www.mckinsey.com/capabilities/sustainability/our-insights/does-esg-really-matter-and-why
[2] https://www.theguardian.com/environment/2023/jan/18/revealed-forest-carbon-offsets-biggest-provider-worthless-verra-aoe
[3] Meadows, Donella: Thinking in Systems, 2008
[4] https://www.nber.org/papers/w24361
[5] https://www.tandfonline.com/doi/full/10.1080/03066150.2019.1695601
[6] https://www.oecd.org/en/topics/policy-coherence-for-sustainable-development.html
[7] https://mitsloan.mit.edu/ideas-made-to-matter/what-systemic-investing-and-why-are-impact-investors-taking-notice
[8] https://www.cloverpop.com/hubfs/Whitepapers/Cloverpop_Hacking_Diversity_Inclusive_Decision_Making_White_Paper.pdf
[9] www.cosmic.gold/resources