Living systems have integrity. Their character depends on the whole. The same is true for organizations; to understand the most challenging managerial issues requires seeing the whole system that generates the issues.
Another Sufi tale illustrates the point of this law. As three blind men encountered an elephant, each exclaimed aloud. "It is a large rough thing, wide and broad, like a rug," said the first, grasping an ear. The second, holding the trunk, said, "I have the real facts. It is a straight and hollow pipe." And the third, holding a front leg, said, "It is mighty and firm, like a pillar." Are the three blind men any different from the heads of manufacturing, marketing, and research in many companies? Each sees the firm's problems clearly, but none see how the policies of their department interact with the others. Interestingly, the Sufi story concludes by observing that "Given these men's way of knowing, they will never know an elephant."
Seeing "whole elephants" does not mean that every organizational issue can be understood only by looking at the entire organization. Some issues can be understood only by looking at how major functions such as manufacturing, marketing, and research interact; but there are other issues where critical systemic forces arise within a given functional area; and others where the dynamics of an entire industry must be considered. The key principle, called the "principle of the system boundary," is that the interactions that must be examined are those most important to the issue at hand, regardless of parochial organizational boundaries.
What makes this principle difficult to practice is the way organizations are designed to keep people from seeing important interactions. One obvious way is by enforcing rigid internal divisions that inhibit inquiry across divisional boundaries, such as those that grow up between marketing, manufacturing, and research. Another is by "leaving" problems behind us, for someone else to clean up. Many European cities have avoided the problems of crime, entrenched poverty, and helplessness that afflict so many American inner cities because they have forced themselves to face the balances that a healthy urban area must maintain. One way they have done this is by maintaining large "green belts" around the city that discourage the growth of suburbs and commuters who work in the city but live outside it. By contrast, many American cities have encouraged steady expansion of surrounding suburbs, continually enabling wealthier residents to move further from the city center and its problems. (Impoverished areas today, such as Harlem in New York and Roxbury in Boston were originally upper-class suburbs.) Corporations do the same thing by continually acquiring new businesses and "harvesting" what they choose to regard as "mature" businesses rather than reinvesting in them.
Incidentally, sometimes people go ahead and divide an elephant in half anyway. You don't have two small elephants then; you have a mess. By a mess, I mean a complicated problem where there is no leverage to be found because the leverage lies in interactions that cannot be seen from looking only at the piece you are holding.