The importance of applying the systems approach to cities and urban policies is illustrated using the circular economy. Cities are laboratories for innovation and have the entrepreneurial impetus and links to citizens to generate the social, environmental, and economic benefits of innovation and experimentation. Many cities are implementing circular economy strategies to maintain a healthy and regenerative economy, while promoting environmental sustainability and liveability. City infrastructures have to be re-engineered and re-operated to rectify environmental “bads”, for example degraded water. If cities are to be forces of good for the environment, the traditional systems approach may not suffice. Conventional policy analysis contains four precepts that should be reversed. Do not: insist on a single and agreed definition of the problem; distinguish facts from values; set up a single metric for comparing and assessing options; optimise around the most promising option.