Control and direction emanate from the top of conventional organizational structures and management practices. These structures and procedures become obsolete and unable to adapt to the volatility of the market. Inadequate and sporadic communication between the various divisions of the organization is another problem with this traditional hierarchy.
Innovation and the external environment have an ever-increasing impact on businesses. Stafford Beer, a British operations research theorist and cybernetician, developed the Viable System Model (VSM) to determine the probability of a system's or business' continued viability in the face of incessant disruption and intensive competition.
According to Stafford Beer, organizations and systems are extremely diverse and governed by multiple interdependent and interactive strata. Variety and complexity are proportional to the size of the organization. Adaptability is one of the most prominent characteristics of viable systems, which must also maintain environmental equilibrium.
The Viable System Model describes an organization as an integrated system. This system must be in harmony with its surroundings. If this equilibrium is disturbed, the organization will cease to exist. The Viable System Model emphasizes the significance of adaptability to a dynamic environment for the success of organizations.
To facilitate rapid and effortless change implementation, the VSM promotes a horizontal, self-organizing organizational structure. Self-organizing systems or organizations are those that maintain a fundamental sense of self and direction, indicating that their decisions and actions are governed by clear and significant goals. Self-organizing enterprises typically have multiple levels of purposes, each of which must be viable and maintained for the enterprise to operate efficiently.
A self-organizing system or enterprise is influenced by three essential factors:
- Operations – indispensable for accomplishing duties.
- Management is indispensable for operations.
- The environment in which the other two factors function.
Typically, the external environment presents more numerous and intricate challenges and uncertainties than the organization's daily operations. Similarly, the complexity and diversity of an organization's operations will always outweigh its management structure's complexity. The VSM facilitates:
- Examining a company's internal and external equilibrium.
- Identifying issues and deficiencies.
- Improving organizational procedures and infrastructure.
Stafford Beer described the VSM's five subsystems or components:
- Operational Unit
- Management Level
- Coordination Level
- Cognitive Level
- Policy or Organization Ethos
These subsystems can be mapped to organizational structure elements.
Let's now dive deeply into the first two VSM components.
Subsystem 1: Operational Unit
The first component of VSM, the Operational Unit, is responsible for daily operations and the implementation of operational processes. This element is responsible for executing the activities that directly contribute to the production of goods or services, or the accomplishment of the system's objectives.
Operational Units interact with their internal and external environments and receive performance feedback. It coordinates with other VSM subsystems longitudinally (with other operational units) and vertically (with higher-level systems). By encouraging top-down and bottom-up communication, organizations can inculcate a culture of collaboration, cooperation, and adaptability.
Subsystem 2: Management Level
The second subsystem of the VSM is the operational unit's coordination and control mechanism. This level assures alignment with the overarching objectives of the organization or system. The Management level ensures that the required communication channels, information flow, and Decision Making processes are in place to promote cooperation and unity among the various units.
This component creates strategic plans, policies, and directives for Operational Units. It determines the overall direction and objectives of the system and ensures their effective communication and implementation. This level assesses the unit's resource requirements, allots resources and budgets, and ensures optimal utilization and operational performance within the organization or system. It is responsible for the system's adaptability and learning requirements.
Interested in learning more about the other components or subsystems of VSM? You can download an editable PowerPoint presentation on the Viable System Model here on the Flevy documents marketplace.
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