Viable Systems Model explained
The VSM is a management technique for understanding variability and how complex organisations react to them
But it gets a little bit more complicated than that
Variety is the number of potentialities and a system needs to be variable to be able to handle variety. For example the brain must be complex to regulate the body; as an organisation has to be complex to manage its many operations.
Organisations have a variety of relationships existing between the different components of said organisation. Organisations need to have a constant sense of identity and purpose – known as being Purposive. Organisational purposes allow organisations to adapt to change and recreate these relationships to achieve the purpose. This is the principle of autopoiesis – meaning “self creation or self-production.
Hierarchy and structure
Hierarchy exists in organisation, but it must be viable for the organisation to function.
There are underlying structures which keep the purpose viable and this is what makes up the VSM
Environment has more variety than operations and operations have more variety than management. In other words the management of operations is less variable than the actual operations.
Ashby’s law of requisite variety: Variety absorbs variety
Control can be obtained only if the variety of the controller is as good as the variety of the situation being controlled
Means of control
Senior Management’s method of control is derived from resources
Operational levels carry out tasks in exchange for capital and manpower AKA a resource bargain
Operational Management is therefore accountable for their operations to senior management
Accountability is an effective actuator of variety
Senior Management should regulate not an intrusive one
Systems within VSM
System 1 – Implementation (Start of the supply chain, iron ore I the steel industry)
System 2 – Coordination – the centre designed to coordinate all operations in system 1
System 3 – Control – represents all structures put in place by system 2/ senior management to dictate rules, rights and resources within system 1. It is the link from the lower levels of the business to the senor levels.
System 4 – intelligence – is responsible for analysing the external environment. Intelligence is used by businesses to analyse and adapt
System 5 – policy is the organisation ethos. It is the system that steers the organisation and is responsible for balancing the demands between all the different areas
Beer’s Principles of Organisation
Organisations should aim for the most efficient way to establish variety without making drastic changes to the organisation or to people’s freedom
The four directional channels must be able to maintain pace with variety otherwise variety will pose a risk to the organisations
When information relating to a variety crosses a channel it undergoes “transduction” as different areas have different lingos. Each transduction must be equivalent to the channel. For example, customer service people can talk to people out on the field, but CEOs and plumbers have a very different lingo for work
The three principles must be maintained without delay. Because business does not operate in quarters in Realtime managerial processes must be constant to keep up with the changing environment
Axioms of management
“First Axiom: the sum of horizontal variety disposed by operations elements equals the sum of vertical variety disposed on the six vertical components of corporate cohesion” To put it simply the excess variety transferred from environment to ops must be controlled by an organisation through system. Variety from uncontrollable sources is dangerous.
“Second Axiom : the variety disposed by system three resulting from the operation of the first axiom equals the variety disposed by system four” Basically 3 and 4 must be in balance intelligence and control in organisations must reflect each other because control influences operations it must keep up with the ongoing sin the environment from intelligence. Organisations with a poor system 4 leave organisations no well adapted to the environment
“Third axiom: The variety disposed by system five equal s to residual variety generated by the operation of the 2nd axiom” Essentially system 5 must adapt to the excess variety between system 2 and 3, coordination and intelligence.
All systems have processes for unbalances between two connections
Signals between implementation and control should be monitored constantly as that is the bridge between what the senior management want and what employees are doing
If an emergency occurs, it will be sent to Policy which then will request corrective action from intelligence and control
Implementation then corrects errors before waking up control and it also prevents unnecessary intrusions from control into implementation
Thus, achieving a balance between centralisation, decentralisation, freedom and effectiveness
Beer described the VSM as an insight machine and Others have described the VSM as a paradigm shifter because of its validity and practical use. Although his theory is complex, the VSM nevertheless provides a framework according to which non-mathematicians can understand systems and gain insight of hwo to manage them better.
VSM offers a framework for getting vital information on systems functioning, aimed at ensuring the viability of systems. It uses variety measures to allow the system to respond to challenges in a balanced and nuanced way.