Which Problems do we solve
How do we make decisions and which decisions are made where is treated more as a subordinate question that arises from the organizational and operational structure of a company. Accordingly, problems resulting from inadequate decision-making structures and information channels are often only indirectly visible.
VSM adds a unique approach to addressing organizational problems by concentrating on these decisions and can therefore shed light on a number of problems:
- Effective Communication and Coordination
VSM addresses problems related to ineffective communication and coordination within an organization. Its structured approach clarifies roles and responsibilities, ensuring an effective flow of information and quick decision-making, reducing organizational silos.
- Strategic Decision-Making
For organizations struggling with decision-making processes, VSM offers a framework that encourages the analysis of data, information flows, and feedback mechanisms. This holistic view helps in identifying potential bottlenecks and forecasting future challenges, leading to more effective and strategic decision-making.
- Steerable Organizational Structure
VSM aids organizations in designing structures for effective steering and control. By identifying key systems, subsystems, and their roles. It assists in optimizing processes and resource allocation, balancing autonomy and initiative with alignment to organizational goals.
- Continuous Learning and Adaptation
Organizations seeking to foster a culture of continuous learning and adaptation find VSM’s emphasis on feedback loops and information exchange beneficial. This iterative approach allows for performance monitoring and implementation of necessary changes, enhancing adaptability in response to market shifts and technological advancements.
- Controlled Scaling and Fractal Application
VSM’s recursive or fractal nature makes it suitable for addressing issues at different organizational levels or abstraction levels. This allows for precise control over the impact of interventions, providing a significant advantage in risk management during change processes.
- Complexity Management
VSM’s holistic approach is ideal for organizations struggling with the complexity of their operations. It helps in understanding the interdependencies and interactions between different system components, making it a valuable tool for managing the inherent complexity of organizations.
- Organizational Resilience
Organizations facing challenges in adapting to change and surviving in dynamic environments can benefit from VSM. It aids in identifying weaknesses and inefficiencies, thereby enhancing resilience and the ability to respond effectively to external disruptions.
- Compatibility with Existing Methods
For organizations struggling to identify blind spots and improve decision-making and communication processes, VSM adds an additional perspective. It integrates well with existing structures, complementing them with its cybernetic tools to make improvement opportunities understandable and actionable.
Key Concepts of VSM
- Cybernetic Nature: At its core, the Viable System Model (VSM) is a cybernetic model, primarily focused on decision-making and steering within complex environments. This framework emphasizes the dynamics of control and communication in organizations.
- Beyond Traditional Org Charts: While VSM relates to organizational structures, it is distinct from conventional organizational charts. It offers a deeper and more dynamic view of organizational functioning.
- Lean Perspective: VSM is compatible with the Lean approach of „value creation first“, encapsulated in the phrase “the system is what it does.
- Recursive Nature: A hallmark of VSM is its recursive nature. This means that the principles of analysis and design inherent to VSM can be consistently applied across different levels of an organization, with each level addressing its unique challenges and dynamics. Whenever we conduct an analysis or design effort, we decide on the unit that we currently focus on. This unit is called the System-in-Focus.
- Unique Cybernetic Language: VSM introduces a specialized language, a product of its cybernetic roots. This language, although initially unfamiliar, is highly effective in articulating complex organizational concepts and can be surprisingly engaging once understood. For example: the primary value-creating elements or subsystems of the current System-in-Focus are identified as its Systems 1.
VSM offers a distinct approach to managing complexity This creates some common patterns and priorities:
- Local Problem-Solving: In a complex environment, addressing challenges at the local level is often the most effective strategy. This approach allows for rapid response and leverages local knowledge and expertise. From a methodological point of view, it favors enabling and empowering its units, which are referred to as Systems 1.
- Power of Horizontal Collaboration: VSM places significant emphasis on horizontal collaboration and synchronization between different parts of an organization. This method is recognized for its effectiveness, yet it remains underutilized in many organizations. The institutions, people, roles, and artifacts that enable and support horizontal communication are building System 2.
- Role of Management or Higher Authority: As a first option, management favors the units to solve their own problems. Certain conflicts, however, such as those over resources, or issues of compliance, necessitate intervention from a higher authority within the organization. Operational management is referred to as System 3. Like System 2 and the other systems, System 3 can contain institutions, people, roles, and artifacts. Most supporting units like HR, Controlling, etc. are mainly part of System 3
- Future-related Concerns: VSM acknowledges that someone within the organization needs to focus on research, future planning, and strategy. This is System 4.
- Balancing Operations and Future Planning: There is an inherent conflict between managing daily operations and preparing for the future. This conflict, while challenging, can be productive if properly moderated. This moderation is done by System 5 by identifying the „North Star“ or the principal direction of the System-in-Focus and acting on it. System 5 decides as the final authority in conflicts.