Nothing exists in a vacuum. Every kind of system exists within a constantly changing environment. Everything that occurs in the environment can have a negative or positive effect on the systems that exist within it - living beings, machines, businesses and so on.
For a system to survive and even prosper, it must be prepared to respond to these changes. Hence, a viable system is any system that continually adapts to its changing environment by finding a way to meet the demands of survival. An organization can achieve this model by maximizing its participants' freedom while exercising the required practical constraints.
The Viable Systems Model (VSM) was developed by Stafford Beer,a researcher and professor at the Manchester Business School. He described the model in his book "The Brain Of The Firm.", which he created after studying various businesses and institutions for nearly 30 years.
Systems Defined Within VSM
Beer described five different subsystems in his VSM model. Of these 5, systems 1-3 define how an organization operates in the current environment; system 4 is concerned with the future, and system 5 gives balance to both the present and future.
Here is a breakdown of each system.
System 1 – Implementation: This system is concerned with all of the basic and primary operations that define the organization; for example, gold mining in the gold industry.
System 2 – Coordination: This layer consists of all the centers that regulate all the activities defined in System 1. It helps in representing all of the communicative channels that allow the operations defined in System 1 to interact with each other.
System 3 – Control: These are all structures put in place by the senior management that dictates the rules, rights, and responsibilities to make System 1 work and help interact with Systems 4 and 5.
System 4 – Intelligence: This system looks at the environment within which the organization operates and establishes the rules with which it may evolve and adapt to remain viable and sustainable.
System 5 – Policy: This system encompasses all the policy decisions within the organization, balances all the operational demands from all other systems, and steers the whole system in a single, cohesive direction.
The Three Axioms Of VSM Management
According to Beer, VSM brings balance between effectiveness and control. Beer stated that governing bodies can exert effective control and guidance at the higher management levels while giving the lower systems the freedom they need to operate. To bring the best out of VSM management, organizations will need to follow these three axioms:
Axiom 1: This first axiom states that the rules established in System 3 cancel out any variety brought into the system from the environment. "Variety" in VSM refers to the number of possible states of a system or an element of the system.
Axiom 2: The second axiom states that the variety disposed of by System 3 - as described by axiom 1 - is the same as the variety disposed of by System 4.
Axiom 3: The variety disposed of by System 5 is the same as the residual variety generated by the operation of Axiom 2. In simple terms, System 5 is supposed to take care of any variety that's not taken care of by the operations occurring between Systems 3 and 4.
Applying VSM Systems
VSM application allows an organization to match people, machines, and money to jobs that produce products or services.
The processes defined by System 1 are managed by System 3 by utilizing System 2 and ensure a steady flow of product to users.
System 3 audits past performance so that production downtimes can be compared with the "good times." System 3 can utilize historical data and fix the issues to find a solution if things go wrong.
If the organization requires more resources, System 5 will need to decide the best course of action through data discerned from System 4. If the remedy requires more resources than it can currently sustain, the issue is immediately escalated to higher management.
In a small business, all these functions are taken care of by one person or shared between the participants. In larger enterprises, these roles can be more specialized and differentiated.
References
Beer, Stafford. Brain of the Firm. Allen Lane, Penguin Press, London, Herder and Herder, USA. 1972
Beer, Stafford. The Heart of Enterprise. New York, NY: Wiley. 1979
Prinsloo, Maretha "What is the Viable Systems Model (VSM)?" (https://www.cognadev.com/what-is-the-viable-systems-model), 2019