This is a bold claim, and there is a lot of practical experience in organizations of every type. There is also solid academic evidence of the impact of the VSM.

Evidence of Impact:

1. Enhanced Diagnosis and Design of Organizations:
   • VSM has demonstrated significant diagnostic power in identifying weaknesses and opportunities for improvement in organizational structures, aiding in their redesign to better cope with environmental complexity (Schwaninger 2006)
   • It supports the creation of systems that are both autonomous and adaptable, ensuring viability by addressing critical variables and ensuring effective communication channels (Leonard 2009).
2. Applications in Diverse Contexts:
   • The model has been successfully applied in areas ranging from higher education to software development and sustainability practices, showcasing its versatility (Rezk and Gamal 2019), (Kawalek and Wastell 2002). (Leonard 2007), (Espinosa Salazar and Walker 2017), (Espinosa 2022).
3. Improved Management Practices:
   • By facilitating better alignment between organizational activities and environmental demands, VSM enables managers to address complexity effectively. This is particularly valuable in highly dynamic industries (Hildbrand and Bodhanya 2013)
   • The model encourages systemic thinking, which is crucial for addressing interconnected challenges (Espejo 190
4. Empirical Validation:
   • Studies have empirically validated VSM’s principles, showing its effectiveness in fostering organizational viability and resilience (Schwaninger and Scheef 2016).

Literature

• Espejo, Raúl, and Antonia Gill. o. J. „The Viable System Model as a Framework for Understanding Organizations“.
• Espejo, R. 1990. „The viable system model“. Systems practice 3:219–21. https://doi.org/10.1007/BF01062728.
• Espejo, Raul, and Alfonso Reyes. 2011. Organizational Systems: Managing Complexity with the Viable System Model. Berlin, Heidelberg: Springer Berlin Heidelberg. https://doi.org/10.1007/978-3-642-19109-1.
• Espinosa, Angela. 2022. Sustainable Self-Governance in Businesses and Society: The Viable System Model in Action. 1. Aufl. London: Routledge. https://doi.org/10.4324/9780429490835.
• Espinosa Salazar, Angela Ma, and Jon Walker. 2017. A Complexity Approach to Sustainability: Theory and Application. Second Edition. Series on Complexity Science, Volume 5. New Jersey: World Scientific.
• Hildbrand, S., and S. Bodhanya. 2013. „The potential value of the Viable System Model as a managerial tool“. Management Dynamics : Journal of the Southern African Institute for Management Scientists 22:2–15.
• Kawalek, P., and D. Wastell. 2002a. „A case study of the use of the viable system model in the organization of software development“, 120–34. https://doi.org/10.4018/978-1-930708-41-9.CH007.
• Leonard, Allenna. 2007. „Integrating sustainability practices using the viable system model“. Systems Research and Behavioral Science 25:643–54. https://doi.org/10.1002/SRES.937.
• Leonard, Alenna.. 2009. „The viable system model and its application to complex organizations“. Systemic Practice and Action Research 22:223–33. https://doi.org/10.1007/S11213-009-9126-Z.
• Rezk, Sahar Saeed, and Shahinaz Gamal. 2019. „The viable system model and its applications in higher education: an overview“. Kybernetes. The International Journal of Cybernetics, Systems and Management Sciences 48:438–50. https://doi.org/10.1108/K-04-2018-0185.
• Schwaninger, M. 2006. „Design for viable organizations: The diagnostic power of the viable system model“. Kybernetes. The International Journal of Cybernetics, Systems and Management Sciences 35:955–66. https://doi.org/10.1108/03684920610675012.
• Schwaninger, M., and C. Scheef. 2016. „A test of the viable system model: Theoretical claim vs. empirical evidence“. Cybernetics and Systems 47:544–69. https://doi.org/10.1080/01969722.2016.1209375.

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The Canvas Material

• A standard template of the Viable System Model. VSM practitioners recommend using the standard VSM diagram – it represents a specialized language to talk about information structures in organizations. Using it makes your findings easily accessible in the VSM community. Print it as large as you can (e.g. in A0) or just paint it on a moderation board or flip chart.
• The Canvas itself as a poster contains a VSM diagram and a kind of exploded view for the parts. It allows you to add your observations to the instances of the systems and channels in the unit that you choose to analyze/design. We recommend the use of the Canvas and drawing your findings into the template later, but of course, you are free to use the standard template instead.
• A cheat sheet that guides you through the analysis and design steps. The cheat sheet is essentially identical to the Canvas – it has numbers in its areas which refer to the steps in the analysis respective design steps. Print it in A4 or letter format. In a workshop, you can hand the cheat sheets out to the participants of the workshop.
• A poster with the analysis steps. The poster visualizes the Tasks in the respective steps and relevant observations. The yellow areas at the bottom of the steps are meant to help refer to the involved people and units in the organization chart.
• A poster with the design steps. The layout of this poster is slightly different. The top row denotes some aspects of the organization, the „powers that be“. The second row consists of the design steps. At the bottom, you find „decisions“ and „efforts“. Decisions are obvious, you can implement them immediately. Efforts are more diverse: tasks, projects, backlog items of different sizes, criticality, and difficulty. These efforts are the input for your backlog or project plan.

The Viable System Model template

The Canvas itself as a poster

A cheat sheet that guides you through the analysis and design steps

A poster with the analysis steps

A poster with the Diagnose (orient) Steps

(Under development)

The Design Steps Poster

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One usage option is a workshop of, let’s day 6 hours.

What you need for a Workshop

Material 1x

• Poster: Canvas
• Poster: Analysis
• Poster: Design Improvements

Per participant

• Canvas Cheat Sheet
• Playbook or excerpt
• Canvas Steps

Agenda

• Purpose & goals of the workshop
• Introduction to VSM and the OODA loop
• Observe: initial analysis
• Orient: make sense of the data
• Decide: design improvements
• Act: plan interventions and experiments

The Canvas Material

Actually, the Canvas consists of several parts.

• A standard template of the Viable System Model. VSM practitioners recommend using the standard VSM diagram – it represents a specialized language to talk about information structures in organizations. Using it makes your findings easily accessible in the VSM community. Print it as large as you can (e.g. in A0) or just paint it on a moderation board or flip chart.
• The Canvas itself as a poster contains a VSM diagram and a kind of exploded view for the parts. It allows you to add your observations to the instances of the systems and channels in the unit that you choose to analyze/design. We recommend the use of the Canvas and drawing your findings into the template later, but of course, you are free to use the standard template instead.
• A cheat sheet that guides you through the analysis and design steps. The cheat sheet is essentially identical to the Canvas – it has numbers in its areas which refer to the steps in the analysis respective design steps. Print it in A4 or letter format. In a workshop, you can hand the cheat sheets out to the participants of the workshop.
• A poster with the analysis steps. The poster visualizes the Tasks in the respective steps and relevant observations. The yellow areas at the bottom of the steps are meant to help refer to the involved people and units in the organization chart.
• A poster with the design steps. The layout of this poster is slightly different. The top row denotes some aspects of the organization, the „powers that be“. The second row consists of the design steps. At the bottom, you find „decisions“ and „efforts“. Decisions are obvious, you can implement them immediately. Efforts are more diverse: tasks, projects, backlog items of different sizes, criticality, and difficulty. These efforts are the input for your backlog or project plan.

The Viable System Model template

The Canvas itself as a poster

A cheat sheet that guides you through the analysis and design steps

A poster with the analysis steps

A poster with the Diagnose (orient) Steps

(Under development)

The Design Steps Poster

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OD stands normally for Organization Design.

The acronym OD can however be interpreted freely in several ways. Each of these interpretations represents an option for shaping interventions into an organization.

1. OD: Diagnosing the Organization

 This is the process of carefully examining an organization to identify challenges and problem areas. It’s akin to a doctor making a diagnosis before prescribing a treatment. In organizations, this often involves analyzing workflows, corporate culture, and employee engagement to pinpoint opportunities for improvement.

This would mean using the Observe part: analyzing the organization and going through steps 1 to 7. It makes probably sense to use parts of step 8 for making sense of the learnings and gaining a consistent view.

2. OD: Debugging the Organization

This involves locating and fixing specific faults or issues within organizational structures and processes. Borrowed from the world of computing, where it refers to identifying and correcting errors in code, in an organizational context it means detecting and rectifying inefficiencies or dysfunctions to enable smoother operations.

This would mean using the Observe and the Orient part of the Canvas: while Observe implies a somewhat detached view of the organization, in Orient, you switch to a more opinionated view, where you think in terms of improvements and deficiencies.

3. OD: Designing the Organization

 In terms of organizational development, design refers to the deliberate shaping of organizational structures, processes, and systems. It’s about creating the organization in a way that allows it to effectively achieve its goals, not just solving problems but architecting an entity that is poised for the future. This mode involves creative thinking and the application of design principles to make an organization future-proof.

The Decide part of OODA is represented in the design steps 9-14 which represent design decisions.

While classic OD leans typically toward a slow process with long cycles (in agile terms: Waterfall process), this might become problematic in a fast-moving environment. We take this fact into account by contrasting the linear transformation model with an iterative, evolutionary approach.

4. OD: Developing the Organization

Development focuses on the growth and continuous improvement of the organization. This includes promoting learning processes, adapting to changing circumstances, and investing in employee skill sets. Develop is a forward-looking approach that aims to advance the organization through training, innovation, and strategic planning.

In the Act chapter, we give a short outline of three different approaches to Change.

Journeys through the Playbook

There are several possible ways in which you can traverse the playbook. They correspond to your current intentions and how deeply you are already involved in the world of the Viable System Model.The chapters in the Playbook are arranged for the typical path. But you might perform only part of the steps or come back multiple times to apply changes iteratively.

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The final part of the Canvas journey is the implementation of improvement which you identified in the previous steps.

VSM itself does not limit your approach, but in principle, you have the choice

• Transformation: perform one classical change process. This implies you have access to senior management, who can authorize a possibly drastic intervention. Once you start such a transformation you are committed; it causes high transaction costs: communication, expectations, and fear in the organization and you do not want to go through this multiple times.
• Evolution: devise single improvement steps. This iterative approach is better suited when you have a limited sphere of influence or if you want to experiment with one change before committing to the next one.

Hack: Start with some actions, or experiments and see what happens. This can be beneficial if you do not have an official mandate while seeing the urgency to change things.

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The final part of the Canvas journey is the implementation of improvement which you identified in the previous steps.

VSM itself does not limit your approach, but in principle, you have the choice

• Transformation: perform one classical change process. This implies you have access to senior management, who can authorize a possibly drastic intervention. Once you start such a transformation you are committed; it causes high transaction costs: communication, expectations, and fear in the organization and you do not want to go through this multiple times.
• Evolution: devise single improvement steps. This iterative approach is better suited when you have a limited sphere of influence or if you want to experiment with one change before committing to the next one.
• Hack: Start with some actions, or experiments and see what happens. This can be beneficial if you do not have an official mandate while seeing the urgency to change things.

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Make identity and purpose explicit

Abstract

The way that policy is made and implemented is without doubt the most important issue for an enterprise. The business must pay its bills and make a profit, but all of the financial issues are constraints: what the company is really about is defined partly by its mission statement, and partly by the working environment it creates for its members.

Central to this issue is the involvement that everyone has in making policy.

In a small startup, this is easy: you have a meeting, and discuss an issue until some sort of consensus emerges, and the policy is made.

In a larger company, the dynamics of large meetings make this difficult, and choices have to be made about the methods of involving everyone in all the important policy decisions, and how to prevent the business from degenerating into endless non-productive meetings.

Tasks

C6.1 Involvement

Look at your systems for defining new policy. Must all members be involved? Are they regular enough? Do all members feel that their opinions are essential in defining new policies?

C6.2 Accountability

Look at you systems for ensuring policy is adhered to. Is everyone accountable? Are there mechanisms to empower any group of members to call a General Meeting?
Copy

Notes

The VSM shows System 5 overseeing the interaction between System 4 (collecting environmental data .. making strategies ..) and System 3 (overseeing the Operational units .. looking for ways of generating synergy … )Assuming all of this runs smoothly, the policy systems have very little to do except to act as a watchdog over this process and to ensure that policy is adhered to.

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We continue now with developing an opinion, i.e. an orientation where we evaluate tho organizations according to functionality.

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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:

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.

Working Principles

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.

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The VSM Guide is a manual for managers of co-operations, written by Jon Walker. It is based on Jon’s practical experience with organizing and structuring co-ops and federation.

Its strong points include

• it is very practical, gets directly to the point and helps managers to start immediately with making sense of an existing organization. While the examples are located in Jon’s main line of work – co-ops – the descriptions are universal and can easily be adapted to the generic company.
• it includes a step-by-step approach to a preliminary – meaning: quick – diagnosis of what is going on in an organization.

Download PDF

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