Archiv der Kategorie: Interconnected thinking

In this area it is all about systemic thinking, chaos and complexity.

The VSM provides, what everybody needs

For a very long time, the horizontal and vertical division of labor was the basis for the breakdown of economic endeavors. The lack of availability and the slow flow of information required many handover points to propagate the intentions of the management and to create transparency of the business. At the same time, the tasks, authorities and responsibilities were designed in such a way that the actual value creators could fulfill their tasks without understanding the big picture. With the introduction of computers and their interconnectedness nowadays, all parties involved can reach the relevant information wherever and whenever, without the need for additional coordination expenditure. Since the companies reached the end of the one-way street of reducing costs, they are looking for new approaches, e.g. Holocracy, Platforms, Agility, Connected Company, etc. Although, there is already an approach available for a long time that fits perfectly with today’s requirements – the VSM.

The Viable System Model (VSM) describes the setup of a viable distribution of tasks. Stafford Beer introduced this model as early as 1959 in his book Cybernetics and Management. The VSM is part of a new view that has been developed for decades under the term System Thinking in the shadow of classical organizational theory. In this article we start looking at the model in general. Henceforth there will be more blog posts on this.

  • System 1 – Value creation (S1)
    In this area subsystems generate the deliverables. The products are manufactured respectively the services are executed. There is a direct contact with the environment, for example with the customers, the suppliers, and partners. This is where the value-adding activities take place. Each of these units is by itself a VSM with the corresponding components. In the new approaches these would be the sub-circles, the producers, the agile teams or the pods.
  • System 2 – Harmonization (S2)
    The value creation takes place in a small „company” (S1a) that behaves autonomously and self-organized. So that the individual subsystems interact, it is necessary to agree on the scope, the functionality and the interfaces. The vague exchange of information of the new approaches is made more specific in the VSM.
  • System 3 – Coordination (S3)
    Even though the everyday interaction in the S2 is harmonized, there is still a need in the here and now to focus on the big picture. For this purpose, the means to be used, the responsibilities and decisions are here made and disseminated in the operational units. Besides S3, an independent unit (S3*) is available in order to collect information that reflects the current state of the value creation as unspoilt as possible. The new approaches coordinate with, for example, backlog refinements and daily scrums, interaction platforms and governance.
  • System 4 – Alignment (S4)
    The company is constantly on the move in a direction that should be determined. This adjustment is influenced by the opportunities that arise in the environment. The direction of the company is determined by the leadership based on the new technical solutions that will be incorporated into future deliverables and on market opportunities that emerge. The insights will then be digested into a strategy and the associated planning that have an impact on all areas, including the development of employees and executives. In the new approaches, the alignment is left to the acting people.
  • System 5 – Final instance (S5)
    The areas of tension between the present (S3) and the future (S4) as well as between the company and the environment can not be resolved in Systems 1- 4. The last authority for such dilemmas makes the decisions that prevent the company from being damaged by its different internal interests. In contrast, the new approaches are based on a natural resolution of disputes through transparency and open exchange of positions.

Bottom line: Companies can not avoid putting themselves in a position that serves their purpose. The division of labor that eventually has a henchman performing simple activities dissolves. These same processes can nowadays be performed by machines and robots. The cascade for the distribution of information is also no longer needed due to the pervasive availability. As a result of the increasing digitization, there is a need to re-position the own company. The VSM provides, what everybody needs, since it allows realizing the bundling of tasks, authority and responsibility in one hand at the point of action as well as the agilization of lumbering companies.

The whole is more than the sum of its parts

The view on the world is determined by the tools and our position that we use to look at the reality. The telescope allows us the glance into the distance. The small things become visible through the microscope. We learned dealing with different levels of details, by always specifying the range and the resolution of our scope. We call the entire area the whole. The interconnected elements that are part of it are again systems that consist of elements, and so on. Each level has separate characteristics plus the characteristics that result from interaction within the whole. Therefore we speak of: The whole is more than the sum of its parts.

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A system is an abstract term for a wholeness that bundles parts and relations within one “object” that functions delimited from the environment. In order to use a system consciously, it is necessary to describe it and recognize its patterns. Some systems evolved from natural conditions. Examples are the solar system, animals and humans, a forest or a lake, the brain, the immune system, etc. Other systems were created by people. Examples are machines, vehicles, thermostats, software, hardware, economic systems, juridical systems, religions, politics, products, services, etc. These lists can be extended at will.

Let’s look at the two following examples: the world and the enterprise.

  • World
    • Our conception of the world became more and more concrete – from the first map, to the globe, to Google Street View.
    • You are sitting probably somewhere outside or in a room (e.g. an office, a café, a train compartment). Characteristics are thereby the inventory, the infrastructure, the size etc.
    • The room is in a complex (e.g. a house, an office building or a train). Characteristics are the number of floors, the number of buildings and the entrances.
    • The apartment is in a city (e.g. a mega city, a town or a village). Characteristics are the number of inhabitants, the traffic connections and the economic power.
    • The city is in a country (e.g. Germany, the USA, Brazil or Japan). Characteristics are the Gross Domestic Product, the Gross National Happiness and political stability.
    • The country is on a continent (e.g. America, Europe or Asia). Characteristics are the economic zones, the climate zones and the population density.
  • Enterprise
    • In the enterprise on each level tasks, authority and responsibility (TAR) are assigned that should have as few overlaps as possible.
    • The position that an employee occupies, is the finest level from business perspective (e.g. the doorman, the housekeepers, the specialists, the managers, and the executive committee). Characteristics are additionally to the TARs the commitment, the experience and the skills.
    • The positions are bundled in teams that follow functions or procedures (e.g. the development of exterior mirrors, the receipt of invoice). Characteristics are additionally to the TAR the group dynamics, the cohesion and the productivity.
    • Departments consist of teams (e.g. the computer-aided design, the accounting, and the overseas logistics). Characteristics are additionally to the TARs the power structures, the internal competition and the legacies.
    • The departments are assigned to functions (e.g. Research & Development, Finance & Controlling, and Logistics). Characteristics are additionally to the TARs the influence, the innovativeness and the autarky.
    • The functional areas belong to enterprises (e.g. aircraft manufacturers, software houses, shipping companies). Characteristics are additionally to the TARs the industry sector, the business form and the revenue.

The individual levels result in a sum of characteristics for the overall system that is larger than the sum of the individual levels.

There is not that perspective in the classical silo thinking. The synergetic characteristics of the superordinate levels are not perceived by the lower levels. At the same time in the silos a lot of energy is wasted for internal competitions that do not create a value-add for the whole.

From the systemic point of view the focus is on the whole – on the advantages that result from the interaction of all elements. The following aspects help opening these sources of earnings.

  • Describe your system. Which elements are available and in which relation do they stand to each other? Thus, you create clarity for genuine improvements for the whole.
  • Respectively assign the tasks, the authority and the responsibility. Thus, you create autarkic subsystems that act independently and therefore avoid double work and friction losses.
  • Observe continuously your system concerning upcoming patterns. It allows adapting promptly to anomalies with relatively small expenditure.
  • The holistic view guarantees that you design your procedures in such a way that the individual activities create a value-add for the whole. They regulate in such a way that the individual parts complement each other and do not mutually push efforts and costs around.
  • The crucial factor of the system is the meaning that the data and the information convey. Thus you provide the involved ones the chance of doing the right thing right.

Bottom line: The specification of the system improves its control. Each system consists of parts that can be likewise described as system. At the same time each system is a component of a superordinate one. With the view of the respective whole, the elements and relations can be specified. The activities beyond the borders of the whole only become interesting if they touch the own whole. That way the tasks, authority and responsibilities can be delimited and the profit for the whole can be ensured. Activities that lie outside of these borders are represented and performed by other people.