The Viability of Organizations Vol. 3: Designing and Changing Organizations

360 Pages·2020·12.607 MB·English

by  Wolfgang Lassl

Wolfgang Lassl
The Viability of
Organizations Vol. 3
Designing and Changing Organizations
The Viability of Organizations Vol. 3
Wolfgang Lassl
The Viability
of Organizations Vol. 3
Designing and Changing Organizations
123
WolfgangLassl
PureManagement Group
Vienna,Austria
ISBN978-3-030-25853-5 ISBN978-3-030-25854-2 (eBook)
https://doi.org/10.1007/978-3-030-25854-2
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To Ulli, Veronika, and Armin
for their patience, ideas, and support
and
in tribute to Stafford Beer († 2002)
a brilliant, versatile, experienced
management thinker
who had the courage to explore new ways
Introduction
“There is nothing as practical as a good theory”1—the Viable System Model
(VSM)isaninsightfultheoryandvaluablediagnosisinstrumentbutisitsuitablefor
designing organizations? Does it help executives and managers to develop good
organizationalstructuresandifsohow?Canitalsoprovideguidelinesregardingthe
transformation of organizations?
In this volume, we aim to address these questions. Organizational design and
change encompass abroad fieldoforganizationalactivities andaspects atdifferent
levels: from micro-practices and personal collaboration in groups and teams, to
fundamental questions regarding the organizational macro-level structures
(e.g., organizational chart structures). While the micro- and meso-levels are well
covered,thedesignofmacro-organizational(chart)structuresisafieldthatstillhas
manyopenissues;theconstantinfluxofneworganizationalmodels,particularlyin
thepopularmanagementliterature,bearswitnesstothehighdegreeofuncertaintyand
unclaritywhichstillexistsinthisfield.Here,theVSMdevelopedbyStaffordBeer
mighthelpustocloseanimportantgapandenrichourunderstandingsignificantly,as
thisvolumeintendstodemonstrate.Thisvolumeconsistsofthreeparts:
The first part, “Building the Bridge” (Chaps. 1–7), deals with the translation
oftheVSMintothelanguageoftheorganizationalchartstructureandviceversa.In
thispart,wewilllaysomeimportantconceptualfoundationsforthesecondpartof
this book and for the design of organizational (chart) structures. The circular
journeythatwe started involume1,byleavingbehind thestandard perspective,is
now coming to a close.
In Chap. 1, we will try to understand the familiar corporate functions in light
of the VSM and how they operate from a systemic perspective. We will see how
dailyactivitiesandskillsthatdonotfindtheirwayintoanyofficialjobdescription
orareregardedasunimportantgetanewandmoreprofoundmeaning.Fromthere,
we will then show in Chap. 2 how the VSM and the organizational chart structure
are related to one another.
The principles for designing jobs and unitsfrom theVSM’sperspective will be
discussed in Chap. 3. Through jobs and the units in the organizational chart
structure, tasks become unambiguously assigned to individuals, and this creates
1Aboutthehistoryofthisquote:seeBedeian(2016).
vii
viii Introduction
transparency and focus. And yet, as one experiences it daily, job descriptions and
definingthetaskareasofunitscannotanddonotsettleeverything.Chapter4deals
withthegenerallimitationsofjobdescriptionsandorganizationalunits.Thisleads
us then to Chaps. 5–7, in which we will investigate the question of how to restore
the overall holistic view of the organization fragmented by organizational chart
structures.
Chapter 3 and 4, on the one hand, and Chaps. 5–7, on the other, are thus
complementary to one another as it requires both specialization and a holistic
perspective. We express this complementarity through the image of the two wings
that organizations need, like birds, to function, and that allow them to “fly.”
The second part, “Designing Organizational (Chart) Structures” (Chap. 8–17),
focuses on the concrete steps of how to model and design organizational (chart)
structures.InChap.8,weshallfirstconsidertheobjectives,fundamentalquestions,
andlimitationsofreorganizationprojects,aswellasoutlinetheprocessofmodeling
an organization, as such. Chapters 9–15 then describe the modeling process in
detailandtherebytouchspecifictopicssuchasthepossibilitiesandlimitsregarding
the outsourcing of tasks and processes.
Chapter 16 summarizes the essential design and modeling principles, and then
walksusthroughsometypicalreorganizationscenarios(e.g.,centralizingactivities,
creatingnewpositions,insertingnewhierarchicallevels,ormergingunits). Matrix
organizations and their derivatives (e.g., tensor organizations) are always a hot
topic. For this reason, the entire Chap. 17 is dedicated to gaining a better under-
standing of their nature and limitations, and how their design problems can be
mitigated.
Thethirdpart,“Implementation”(Chaps.18and19),isdevotedtotheexecution
of organizational diagnoses and simulations (Chap. 18) and the implementation of
reorganizationsandchangeprocesses(Chap.19).Inthischapter,wedevelopsome
recommendations regarding the implementation of organizational transformation
processes based on the theory underlying the VSM. These final chapters should
open the way for you to apply the VSM in your organization more concretely.
Asinthepreviousvolumes,youcanusethefollowingfast-trackreadingplanto
get a first overview (without the in-depth sections):
(cid:129) Chapter 1–4.4,
(cid:129) Chapter 5–5.2,
(cid:129) Chapter 8,
(cid:129) Chapter 10,
(cid:129) Chapter 13,
(cid:129) Chapter 14–14.1.2 and Chap. 14.2,
(cid:129) Chapter 16,
(cid:129) Chapter 17,
(cid:129) Chapter 19.
For VSM experts or readers who want to understand certain aspects in greater
detail, in-depth sections have been added and marked as such:
Introduction ix
Do you want to know more in detail about the various ways
how system functions can be composed?
If so, then continue reading here, otherwise, go to the end
of the chapter.
5.3 The composition of system functions
Beforewelookmorecloselyintotheadaptationmechanismsandframe
ofreference(seeChaps.6and7),weshouldusetheopportunityanddeepen
our understanding of the VSM regarding the composition of a system
function.Sofar,wehaveusedafunctionalsegmentationinthe
At this point, I wish to thank my reviewers, Prof. Dr. Schwaninger, Wolfgang
Erharter, and Hannes Timischl, for having read my manuscript and for their
invaluablesuggestions.Myspecialthanksalsoextend toMarkusWildwhohelped
me with the graphical designs.
In volume 1, we set sail on a journey aimed at exploring the functioning of
organizations. Like the previous volumes, this volume also enters uncharted terri-
torythatwillofferusnewperspectivesonorganizationsandontheVSM–both in
itstheoreticalconceptionaswellas initsconcreteapplication.2Firstandforemost,
it is aimed at gaining a better understanding of how to (re)design organizational
structures. Creating viable organizational structures must not be left to chance …
Paris, France Wolfgang Lassl
June 2019
2ThisvolumerepresentsonlyoneofmanywaystounderstandtheVSM,andassuchitdoesnot
seek to replace but to enrich existing interpretations. Ashby’s Law applies here too: Only with
enoughchoiceofdifferentapproachescanandwillweadvance.
Review of Key Concepts
Since not every reader of this volume might have read Stafford Beer’s works or
volumes1and2ofthiscompendium,westartbybrieflyreviewingsomeofthekey
concepts from the previous volumes, which we will need for this volume:
1. Ashby’s Law and its application to organizations,
2. The viable system model (VSM) and the four management levels,
3. The principle of recursivity,
4. The axiom of the requisite vertical eigen-variety.
Ashby’s Law
Unlike the organizational chart, the VSM does not view organizations as
stand-alone entities but as being embedded in an environment for which they
createvaluebyprocessingitsproblemsandneeds.Thisrelationshipisconstitutive
for an organization and its purpose, livelihood, and functioning.
This relationship, however, is far from trivial, since the environment is diverse.
The environment varies, for instance, regarding customers, their needs and
demands, (infra)structural constraints, resources, or competitors. Organizations
mustbeabletorespondtothisvariety.ForStaffordBeer,whodevelopedtheVSM,
this relationship can be best characterized by Ashby’s Law of requisite variety
(Ashby, 1976), one of the fundamental laws of system theory and complexity
science.Appliedtoorganizations,thislawmeansthatorganizationsneedtoachieve
an equilibrium state regarding the environmental variety that they are facing and
need to process (see Fig. 1). For this, they require adequate eigen-variety.
An organization’s eigen-variety (Schwaninger, 2006, p. 14) consists of all the
factorsthatallowittoprocesstheenvironment’svarietysuchastheorganization’s
resources, competences, patents, technologies, or behavioral patterns. In order to
achieve equilibrium, organizations also use other means that aim at either attenu-
atingincomingvariety,theso-calledvarietyattenuators(e.g.,rulesandregulations),
oramplifyingtheorganization’seigen-variety,theso-calledvarietyamplifiers(e.g.,
marketing campaigns) (see Fig. 1).
The Viable System Model
This general equilibrium relationship, however, is not yet sufficient to fully
explainviability.Indeed, thequestionis:whatinternalorganizationalprocessesare
xi
xii ReviewofKeyConcepts
Fig. 1 Organizations need to maintain an equilibrium regarding the incoming environmental
variety—adaptedfromBeer(1995a,p.96,Fig.21)
required to make organizations truly adaptive and self-determined? To answer this
question,StaffordBeerdevelopedtheVSM,whichidentifiesthesystemfunctions
necessary for organizations to achieve viability (Fig. 2):
Fig.2 Viablesystemmodel—adaptedfromBeer(1995b,p.136,Fig.37)