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If you're new here, I'm Sanjai Kathirvel, and The Auxo newsletter is all about solving business revenue and growth problems.

Picture this: Priya's food delivery startup is struggling. Orders are down 40% this month. Her team starts scrambling—maybe they need better ads? Faster delivery? Lower prices?

They spend ₹5 lakhs on Facebook ads. Orders spike for a week, then crash again. They hire more delivery drivers. Orders improve slightly, but customer complaints increase. They cut prices. Revenue drops even more.

Sound familiar? This isn't a marketing problem, or a logistics problem, or a pricing problem.

It's a systems problem.

And by the end of this newsletter, you'll see exactly what Priya's team couldn't—and how thinking in systems can solve growth problems that individual tactics can't touch.

Most growth problems aren't isolated issues you can fix with one solution. They're system problems where everything affects everything else. Understanding systems thinking can 10x your problem-solving ability and save you months of random tactics.

Let me break this down super simply. Donella Meadows (one of the smartest people who ever thought about systems) said a system is:

"A bunch of related parts that work together in some environment to achieve a goal."

Think of your body:

Your startup is also a system:

Here's what makes it tricky: Systems can be designed (like your app) or they can just emerge naturally (like the weather, or how people behave on social media).

And here's what makes it REALLY tricky: systems exist inside other systems.

Your product exists inside your company system, which exists inside your market system, which exists inside the economy system. Change one thing, and ripples go everywhere.

Normal thinking goes: A causes B.

You run ads → You get customers.
You build features → Users are happier.
You cut costs → You save money.

Systems thinking goes: A affects B, which affects C, which loops back and affects A differently than before.

You run ads → You get customers → They tell friends → Friends have different expectations → Your product positioning changes → You attract different customers → Your ads need to change.

The difference: Linear thinking stops at the first result. Systems thinking follows the chain of reactions.

Back in 2010, Instagram was just a photo-sharing app. Simple, right?

But look at the system it created:

Instagram made photos look beautiful → People posted more → Friends saw beautiful lives → Everyone felt pressure to live beautifully → People started staging their lives → Businesses saw opportunity → Influencer economy was born → Marketing budgets shifted → Traditional media struggled → Creator economy exploded → Entire generation changed how they think about success and happiness.

One photo filter app changed how humans think about themselves.

That's systems thinking. Instagram's founders weren't trying to change society. But they created a system that had system-level effects.

When you have a problem, you can solve it at three different levels:

Most people stop at Level 1. Good founders reach Level 2. Great founders change the system at Level 3.

Every product decision creates unintended consequences. The question is: do you see them coming?

Uber made transportation easier → But also put taxi drivers out of work → Which created political backlash → Which led to regulations → Which changed how they could operate.

Facebook made staying connected easier → But also made misinformation spread faster → Which affected elections → Which changed how governments think about tech → Which led to privacy laws → Which changed their business model.

The pattern: Every solution creates new problems. Systems thinkers try to guess what those problems might be and plan for them.3. Metaperception: What You Think Others Think About You

Real Research: Recent studies show that "metaperception" – what you think others think about your referral – is the biggest predictor of whether you'll actually refer.

The Scenario: Priya discovers a new fintech app. Before referring, she thinks:

What's happening: You're not just deciding if the product is good. You're calculating social risk vs social reward. If you think your referral will make you look bad, you won't do it – even if you love the product.

The psychology: This is why Tesla owners refer so much – owning a Tesla signals environmental consciousness and tech-savviness. The referral actually enhances their identity.

Jeff Bezos once got a complaint: "Your customer service sucks!"

Most CEOs would think: "Let's train our customer service team better."

Bezos thought differently. He asked: "What system is creating bad customer service experiences?"

He discovered:

The "customer service problem" was actually a data and coordination system problem.

Instead of training customer service reps, Amazon built better inventory systems. Customer complaints dropped 80%.

That's the power of systems thinking.

The Situation: Arjun's app has great user acquisition but terrible retention. So he builds more features to keep users engaged.

The System Reality: New features take 3 months to build. Meanwhile, users are churning because the onboarding experience is confusing. By the time new features launch, most users have already left.

The Hidden Pattern: There's a delay between cause (bad onboarding) and effect (churn). Arjun is solving tomorrow's problem while today's problem gets worse.

The Fix: Look for delays in your system. What you're seeing today might be the result of something you did (or didn't do) weeks ago.

The Situation: Kavya's SaaS company cuts customer success team to reduce costs. Revenue drops. They cut more costs to survive. Revenue drops more.

The System Reality: Cutting customer success → more churn → less revenue → need to cut more costs → cut customer success again. This is a reinforcing loop that spirals downward.

The Hidden Pattern: Sometimes the solution makes the problem worse, which demands more of the same solution.

The Fix: Identify your feedback loops. Are they reinforcing the problem or solving it?

The Situation: Rohit's marketplace has low supply (not enough sellers). His team focuses on getting more buyers to attract sellers. But more buyers just overwhelm the few sellers, making service worse.

The System Reality: The constraint is sellers, not buyers. Adding more buyers makes the seller experience worse, which reduces supply even more.

The Hidden Pattern: Working on the wrong part of the system can make the whole system worse.

The Fix: Find your system's constraint. What's the bottleneck that's limiting everything else?

When you face any growth problem, use this framework:

S - See the whole system Map out all the connected pieces. What affects what?

T - Track the timing What are the delays between cause and effect?

E - Examine the loops What feedback loops are reinforcing or balancing the system?

P - Pick the leverage point Where can small changes create big results?.

The Problem: Restaurants were leaving Zomato's platform.

S - See the whole system:

T - Track the timing:

E - Examine the loops: This was a death spiral—a reinforcing loop going downward.

P - Pick the leverage point: Instead of just getting new restaurants, Zomato focused on making existing restaurants more profitable through better delivery efficiency and marketing tools.

The Result: They broke the death spiral by improving the economics for existing restaurants first.

Regular Problem Signs:

System Problem Signs:

The Dead Giveaway: If you've tried multiple solutions and the problem keeps returning in different forms, it's a system problem.

P.S. - Systems thinking feels slower at first because you're looking at the big picture instead of rushing to quick fixes. But once you start seeing systems everywhere, you'll solve problems faster and more permanently than ever before.