The design of a Viable System is not hierarchical and is not authoritative. Senior manager’s role is defined as a ‘Service Provider’ rather than a point of authority; and there is a very good reason for that: Laws of Variety.
It is simply impossible to have an operational unit capable of effectively and efficiently deal with multitude of varieties in its environment and being directed all the time.
System 1 sub-systems are intentionally designed with the maximum autonomy possible. The only thing limiting their autonomy is their defined purpose aligned with the overall organizational purpose.
Let’s have a closer look at other parts of the Viable System design:
System 2 –Coordination and Conflict Management
As mentioned earlier, there is a need for something, that we call here ‘System 2’, in order to ensure the cohesion between different processes.
Without it, multiple horizontal managements will try to maximize their goals, without noticing that being inside the boundary of a larger system, they all affect each other. Maximizing one part might have a negative effect on the other part, and vice versa.
Different parts of a system (an organization) have different purposes and roles; and by definition, they might demonstrate conflicting interests.
Conflicting interests will create instability and disharmony between these parts; and, if left unchecked, this will eventually lead to the destruction of the whole system.
To go back to our previous example of a manufacturing company, maximizing the goal of the financial department to decrease the inventory levels to the minimum level, will negatively affect the sales department to be able to satisfy customers in a timely manner. They will push to increase the inventory levels and by doing so, they will negatively affect financial metrics; hence the oscillation behaviour of the system and disharmony between sub-systems.
System 2 does not have an oppressive nature; to the contrary, it has rather a ‘service provider’ nature. The type of control this system does is considerably different than the usual perception of the term ‘control’ and it’s rather negative connotation. System 2 ensures cohesion and harmony, and avoids oscillation.
A good example of this would be a ‘timetable’ to coordinate vacation time for project team members. The timetable’s purpose is not to dictate what to do and what not to do; it merely provides a very simple service; so everyone can coordinate their vacation time in a way that the project tasks are always covered.
System 2, in organizations, has this unhealthy tendency to become a Viable System itself, trying to exercise more and more control, and in the process, becoming a massive bureaucracy by itself.
Reaching the point of equilibrium is a very delicate matter: to avoid both extremes of ‘no coordination’ and ‘over control’. This is one of the major factors for today’s organizations’ failures.
It is critical to understand System 2 as a ‘service provider’ for coordination, sharing information, common standards, and shared values. System 2 is a repository of the organization’s information and knowledge.
System 3 – Optimization and Synergy – The Internal Eye
So far, in our organizational design, we have environments, processes, managements, and a function to ensure cohesion and avoid oscillation (System 2). Do we need anything else? What are we missing still?
Having the System 2 to ensure cohesion and sharing of the information will, to some extent, enable the organization to manage some conflicts that could happen between System 1 sub-systems.
All these horizontal systems are fully engaged in managing their complex processes and even more complex environments. There is a need for some functions to monitor, observe, control, and ensure the optimization of all activities.
System 3 is responsible to observe the state of all sub-systems (the horizontal managements) simultaneously, and make sure the overall functions of all sub-systems are tuned towards maximizing the overall goal. In other words, System 3 is an Internal Eye, responsible for operations planning and control, for internal and immediate monitor and control of the organization.
System 3 can be thought of as a middle point between multiple operations. Each operation is focused on meeting its environment’s demand. System 3’s purpose is to identify opportunities to optimize the overall process and create synergy.
It does not have a superior existence. Similar to System 2, System 3 is there to provide a service to ensure the operations are effective, efficient, and optimized.
System 3 will perform following functions to ensure optimization and efficiency:
- Goal setting and resource allocation
- Operational accountability
- Corrective actions
- Conflict management
1 - Goal Setting and Resource Allocation
Aligned with organization’s overall objective, System 3 will define operational goals for System 1 sub-systems. The goal will clearly state the target to be achieved, and resources (time, financial, people) to be utilized to this end.
Resources, in any organization, are limited; and System 3’s function is to allocate resources between System 1 sub-systems in accordance with the whole organizations’ purpose and objectives.
This creates an opportunity for sub-systems to come up with ideas to increase effectiveness and/or improve efficiency and start a bargaining process for more resources to implement those ideas.
This dialogue plays an important role in identifying and implementing improvement opportunities across the organization.
2 - Operational Accountability
Having goals set and resources allocated, System 3 needs to make sure that each sub-system (operational element) is adhering to defined goals and resources.
Operational elements, in turn, needs to be accountable for their actions and be able to present their progress against set goals. System 3 will monitor the results and checks them against defined criteria, creating an operational accountability.
However, it might be sometimes impossible to gather all the results and data from all operations across the organization; and if gathered, it will be a considerable work load for any function to manage.
To solve this, Stafford Beer looks to human body to understand the control mechanism of the brain.
Receiving information from its sensory organs (System 3*), human brain creates its holistic model and perception of the environment.
As soon as it understands the concept of gravity, for example, it will know for sure what would happen if it released a glass of water, apple, or anything else: they will all fall.
Knowing the ‘Model’, human brain will have a certain understanding of the possible outcome of many operations and tasks. All the organs (System 1) are doing their defined tasks, and all the information is being sent to the brain. Brain, however, does not take action on every single one of them. As long as the operation is inside its defined boundaries, the data will be stored (or discarded).
System 3 will receive an ‘all OK’ sign if everything is going according to the plan; otherwise, it will be notified immediately to take corrective actions.
3 - Corrective Actions
In case of any deviation from the defined plan, System 3 will get involved with corrective actions. These might be in the form of updating the System 2 to be able to manage the new problem or conflict; or might be in the form of direct interventions.
Considering that each intervention will reduce the autonomy of sub-systems (and hence reducing their variety), it should be performed with utmost care and only when the overall cohesion of the organization is at risk.
It is important to understand that intervening is not a frequent task of System 3. It only happens when there is an absolute need, and it is always short-term. After the situation is resolved, new understanding will happen, and new knowledge will be acquired on how to deal with the specific problem. This knowledge will be cascaded down to System 1 and System 2 to avoid the similar situation to reoccur.
4 - Conflict Management
Many potential conflicts that might arise between operational elements can be proactively managed through the effective designing of System 2. However, there might be conflicts that need an escalation to be managed. These are the times that System 3 will briefly intervene to manage the conflict.
After the situation has been resolved, the intervention will be complete and System 1 sub-systems will go back to their previous autonomous state.
The difference between System 2 and System 3 can be summarized as follows: