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

The post The Canvas Material appeared first on Grado.

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

The post Preparing a Workshop appeared first on Grado.

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.

The post Working with the Canvas appeared first on Grado.

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.

The post Step D1: Choose your transformation pattern appeared first on Grado.

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.

The post Act: the Ways of Change appeared first on Grado.

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.

The post Step C6: Design of Policy Structures appeared first on Grado.

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

The post Orient: Finding Improvement Potential appeared first on Grado.

Find frequently occurring dysfunctions.

Abstract

Locating frequently occurring dysfunctions is collecting low-hanging fruit. It shows particularly impressively the strength of the view of decisions and information flow, i.e. the power of the VSM.

After reviewing archetypes of dysfunctional organizations, try the supplied patterns, but caution: patterns only ever show examples of reality.

Tasks

B2.1 Skim through the archetypes

Review the archetypes of dysfunctions. Does one of the archetypes particularly catch your eye?

Note the observations in the canvas.

B2.2 Use the structural issues list

Use the common structural issues list to locate further dysfunctions and opportunities for improvement.

Common structural Issues

Lack of System 1 Autonomy

• Problem: System 1 (Operational Units) lacks autonomy and is overly controlled by higher-level systems.
• Consequence: System 1 cannot respond effectively to local challenges and opportunities.

Weak System 2 Coordination

• Problem: Inadequate coordination between System 2 (Coordination) and System 1 (Operational Units).
• Consequence: Information and resources are not efficiently distributed or aligned with organizational goals.

Centralized Control (System 3)

• Problem: An overly centralized System 3 (Control) that makes all decisions without input from lower-level systems.
• Consequence: Delayed decision-making, lack of adaptability, and limited capacity to address local issues.

Underdeveloped System 4 (Intelligence)

• Problem: Inadequate System 4 (Intelligence) functions for monitoring and interpreting the environment.
• Consequence: The organization lacks awareness of external changes and emerging trends.

Ineffective System 5 (Policy)

• Problem: System 5 (Policy) does not provide clear direction or long-term goals.
• Consequence: Lack of strategic alignment and purpose within the organization.

Inflexible Structural Boundaries

• Problem: Rigid structural boundaries that do not allow for the creation of ad-hoc teams or units.
• Consequence: Difficulty in responding to unexpected challenges or opportunities.

Lack of Hierarchical Clarity

• Problem: Ambiguity in the hierarchical structure, roles, and responsibilities.
• Consequence: Confusion, inefficiencies, and difficulties in decision-making.

Communication Barriers

• Problem: Communication channels are not well-defined or are hindered by hierarchical structures.
• Consequence: Information flow is restricted, leading to misunderstandings and delayed responses.

Fragmented Information Systems

• Problem: Inadequate information systems that do not support data sharing and real-time information access.
• Consequence: Difficulty in gathering and disseminating critical information.

Misaligned Subsystems

• Problem: Subsystems within the VSM are not properly aligned with organizational goals or strategies.
• Consequence: Lack of coherence and synergy among different parts of the organization.

Notes

At the end of this process, you should have

• Identified the major parts of your System-in-Focus which render it viable.
• Considered the parts that seem to be inadequate.
• Identified any parts that don’t map onto the VSM and therefore don’t have anything to do with viability.

This concludes the Orient phase of our analysis.

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Deal with observed and future changes in the environment

Abstract

There is no point in having a superbly organized internal environment if the enterprise as a whole is completely out of touch with the environment in which it operates. The rate of change of technological advance continues to accelerate, and businesses cannot afford to stand still and ignore the changes in the market.

The focus for these issues is System 4 which is responsible for future planning in the context of environmental information which it gathers.

System 4 must provide the balance between the internal Operational units and the outside world and must ensure that the organization can adapt to change.

Tasks

C5.1 Review your Outside Awareness

Look at your methods of finding out what’s happening in the external environment which is of direct relevance to your organisation. Do you continuously monitor changes in the market? Do you attempt to identify areas in which novelty may have a direct impact?

C5.2 Review your Ability to Change

In the light of the information about the external environment, look at the way your System 4 formulates plans which are meant to ensure your organization can adapt to change. Does System 4 have enough resources? Does it have a focus for continuous Operation? Can it simulate possible future situations?

C5.3 Review the Communication of Systems 3 and 4

Look at the communications between Systems 3 and 4 (the external and internal eyes). Do the future planners have a thorough and up-to-date model of the Operational parts of your organization? Is System 3 regularly consulted in the formulation of future strategies?

C5.4 Monitor the Integration of Systems 3 and 4

Make sure that this process is monitored by the Policy bodies to ensure that future plans are within the guidelines specified by System 5.

C5.5 Check the Policy: Balance of Systems 3 and 4

Look at the allocation of resources between Systems 3 and 4. Is there a balance between the needs of an efficient internal environment and the need for an effective System 4 to ensure adaptation to change?

Notes

The relevant aspects of VSM for the System 4 are:

• the external environment
• the connection between the external environment and System 4
• the intense involvement between Systems 4 and 3 shown by the large semi-circular arrows
• the over-seeing of the System 4-3 involvement by System 5 (policy)
• the connection from System 3 to the Operational units which was covered in the preceding Sections of the VSM Guide.

The questions to considered are are:

• How does System 4 keep in touch with the outside world?
• What capabilities does System 4 need in order to formulate its plans which are needed to ensure that the enterprise can adapt to the changes in the environment.
• What is the role of System 3?
• What is the role of System 5?

Connection to the External Environment

System 4 is charged with dealing with future planning in the context of the external environment. Clearly, the first job for System 4 is to decide which part of the (infinite) external environment is of direct relevance.

The VSM distinguishes between two kinds of external environment:

The first is the Predictable which can be monitored. Trends may be identified and decisions made accordingly.

The obvious example of this is the way that a market is changing.

In most businesses, it is clear that as market trends alter, the business must adapt. Most large corporations spend enormous amounts of money on Market Research and on running experiments in selected areas to assess the mood of the consumer.

The second is the Novel. Things may be proceeding just as you expect and then someone invents the light bulb. Clearly, every Viable System must have some provision for coping with the novel, even if it’s only being aware of development programs in the relevant areas.

Connection to the Internal Environment

System 4 has to be an integrated part of the Viable System. Its main internal connection is through System 3 which is charged with stabilizing and optimizing the internal environment.

The intense interaction between Systems 3 and 4 was mentioned in the Preliminary Diagnosis. This is essential as all plans must evolve in the context of both external threats and opportunities and of the internal capabilities of the System-in-Focus.

The example of a new warehouse was given earlier – System 4 needs to look outwards (at possible sites, financing options, etc., etc.) and to look inwards (necessary square footage, headroom, hygiene standards, etc.) and to decide in light of both sets of information.

In practical terms, this means that the need for good communication between Systems 3 and 4 must be recognized.

There is no point in having these two essential aspects of viability working in isolation.

• The people making future plans must be in touch with, and take account of, the internal capabilities of the organization
• The people charged with the overview of the internal environment must be aware of the plans being formulated by the future planners.

The Role of System 5

It’s clear that at some stage, decisions will have to be made about the investment to be made in System 3 and System 4.

If the balance is not made correctly disaster may ensue:

Too much emphasis on System 3. Internally, the systems may work wonderfully, but without System 4 the products may become irrelevant E.g. perfectly designed and manufactured Sedan Chairs.

Too much emphasis on System 4. The future planning may be impeccable but the Inside and Now may be incapable of producing the goods. In this case, the kind of product may be exactly what the market needs but their quality or price may make them unsaleable.

An example of this kind of imbalance is illustrated by Clive Sinclair’s production of electronic calculators. His research and development was superb, but the organization was not viable as his production cost were too high. Too much System 4: not enough emphasis on System 3.

It should be noted that his next venture got the balance right. The ZX computers were well-conceived and well-produced.

It should also be noted that his Electric Cars displayed his first error in System 4: they were not what the market wanted and despite good quality and prices were (in the UK at least) a complete flop.

The decisions about the investment in Systems 3 and 4 have to be made at the policy level. The decision will have to be made in terms of the nature of the business, and the speed with which the market changes.

This is a job for System 5.

Monitoring

System 5 must also play a crucial role in overseeing the interplay between Systems 3 and 4.

System 5 is responsible for policy and as such defines the ground rules, or ethos, within which everyone must function. System 5 says “We are the kind of organization which works like this, so you can do this but not that.”

System 5 should not interfere in the day-to-day running of the organization, but it needs to keep an eye on what is happening and to ensure it is within the guidelines it has established.Thus System 5 oversees the interplay between Systems 3 and 4 as they formulate plans in the context of both the external and internal environments.

The post Step C5: Design the Balance with the External Environment appeared first on Grado.

Create information systems which are capable to provide real time information loops

Abstract

A good information system, providing up-to-date transparency and helping to concentrate on the important information, is an alternative to authoritarian management – it can render unnecessary organizational techniques based upon excessive management involvement.

If the appropriate information is measured and feedback is used to modify the way people work, then many organizational issues take care of themselves.

This Section covers real-time information systems based on performance indicators, self-assessment using these indicators, and the generation of the alerting signals called algedonics.

Tasks

C4.1 Evaluate current Systems

Consider your current information systems. How do you measure what is happening within each department? How do you ensure that each department is doing the things it is supposed to do? Do you need systems that alert you when something goes wrong, or would it be immediately obvious anyway? How up-to-date is your financial information? If you started to lose money today, how long would it take for the systems to realize?

C4.2 Identify Deficits

In the light of the answers to these questions, you should be able to address the crucial issue: How complete and up-to-date is the model of the operation?

C4.3 Collect Information NeedsIf you have qualms about the kind of information systems you currently use, it may be sensible to define and measure performance indicators daily and see how your organisation changes.

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