The Viability Canvas has been created for an easier start with the Viable System Model (VSM). It allows a quick start with diagnosing the structures, the decision making and the information systems of an organization.

• The Canvas Material supports you with templates for working with the Canvas
• The Playbook provides an example how to conduct a preliminary analysis
• The Workshop example gives you an idea how to organize your own journey with the VSM

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The post The Viability Canvas appeared first on Grado.

Purpose

To select a unit as the System-in-Focus and clarify its boundaries.

Abstract

The VSM is a recursive model, i.e. it describes units on each abstraction level in the same way. This reduces greatly the complexity of the context that we focus on.

On the other hand, this requires some discipline: we restrict our findings or change initiatives to one unit at a time. We call this unit our System-in-Focus. The purpose of this step is to identify the System-in-Focus and its superior system.

Tasks

A1.1 Sketch some Recursions.

Draw the candidate unit, e.g. “Bike Repairs” – or better, write the names on sticky notes for easier moving them

Then draw the higher-up unit (R+1 or the next recursion level), at least the next level (or as many levels as necessary to get a clear understanding). Maybe you will find several possible candidates for R+1 units.

Draw a larger shape around the Bike Repairs and draw in the next recursion upwards in which you are embedded. Perhaps it is “bike shop”. Again, put a larger shape around this one, and write in “The Sports Mall“, and so on.

During this process, you may want to add other units within the original set of nested recursions, like opening a Russian doll to find several identical smaller dolls. For example „bike sales“, „parts store“, and „bike repairs“.

Play with these and add units to the diagrams until you have a clear idea of what’s going on. 

You might want to add the unit hierarchy until you reach the complete company. At the very least, it’s essential to map the recursions immediately above and below the System-in-Focus.

A1.2 Define the System-in-Focus.

You should now have a hierarchical diagram with organizational units that are embedded in others. Look at your diagram of the various recursions. Now decide which system interests you currently. This is your System in Focus.

The System in Focus might be your whole organization or one department or it may be a proposed federation of co-ops. But whatever, you have to be clear about what you are concentrating on. Later there may be lots of diagrams at various levels, and it’s easy to get distracted into the details of any one of these.

Now prepare the Canvas for the System-in-Focus. Use a large format, e.g. DIN A0, and pin it to a wall in your workshop room.

A1.3 Write down the Purpose of the System-in-Focus.

At this point, a statement of the purpose for the System-in-Focus should be written down below its name. Make sure you describe the real purpose of the system an do not fall into the trap of wishful thinking.^[1]

This will help to clarify several issues as the analysis continues.

Currently, this is being referred to as the Mission Statement, although Aims and Objectives is an equally clear way of expressing it.

Again: the point of this is clarity. Once the system-in-focus is defined with a name and a purpose, it’s much easier to keep your attention on the relevant issues.

A1.4 List the various parts and stakeholders.

Before starting the identification and analysis of the systems needed for viability, you should list all the parts of the System-in-Focus as you see them. This includes the list of stakeholders inside and outside the organization.

Collect the parts and stakeholders you know. Some of them will turn out as part of System 3, some as part of the environment, or as part of a unit higher up.

The list should be exhaustive as it will be referred to throughout the Analysis. It will contain the Operational parts, the accounting functions, the management functions, and so on.

Pitfall: In compiling the list, keep one eye on your sketch of the various recursions and ensure that the items on the list refer only to the system-in-focus. It’s likely that your first list will need revision and that one or two items will belong to another recursion. Check it carefully.

As the Analysis proceeds, you will be able to take the items on your list and allocate them to one or several of the 5 systems within the Canvas. Thus, the list will gradually disappear.

If your organization is perfectly Viable, the list will disappear completely and there will be 5 well-defined systems giving the basis for viability.

If not, some new jobs may have to be invented – or – some existing jobs are not needed for viability and can therefore be considered redundant.

Notes

Finding the appropriate abstractions for the System-in-Focus is not as trivial as it appears at first. For example: we focus on a business unit, say „Dishwashers France“. This unit could be part of a product organization „Household Appliances “ and of a distribution organization „Private Customers France“. Remember, we do not analyze the organization chart – and not the product flow. We are interested in the flow of information and decisions, and our focus will have an impact on our analysis later.

In some cases, we will find ourselves repeating this step for several alternative scenarios.

The analysis of your organization will be filling out the Canvas for the System-in-Focus. In some steps; you will create additional living documents which will be integrated into the global view in a later step.

At this stage, we start to get a grasp of the three main parts of the VSM – Operation, Metasystem, and Environment. Between them, they represent the overview of your System-in-Focus in its totality.

The Operation carries out the system’s basic activities. It will consist of several Operational units. It is the muscles, the production units, the parts that generate wealth.

The Metasystem is there to provide a service to the Operational units. It is there to hold the organization together. It is the brain, the regulator, the management.

The Environment includes all elements outside the control of the System-in-Focus: customers, suppliers, competition, regulation, and everything else.

The details of what goes on within each of these three shapes will be filled in as the analysis proceeds.

^[1] The issue of purpose is not as simple as it first appears, and for those of you who wish to read further there is a provocative bit of The Heart of Enterprise in which Beer discusses his ideas. The essence is that Purpose can only be defined as “What a system actually does”. It’s of no use having a purpose of “Bringing down the Capitalist Monster” if what you actually do is sit around and drink coffee all day. What matters is what actually happens. Beer therefore concludes that the purpose of the British railway system is to dissuade him from travelling by rail.

The post Step A1: Define the System in Focus appeared first on Grado.

To specify those parts of the system-in-focus which undertake System One (primary) activities.

Abstract

The system is what it does.

Stafford Beer.

We start now investigating the inner workings of the System and we start looking at the operational parts.

As a first step, we want to get an overview of all value-creating units.

Tasks

A2.1 List the primary activities

Take the list from A1.4 and write down the jobs that are primary activities of the System-in-Focus. These are the Operational elements. Sketch small VSMs within the large Operational ellipse – one for each unit.

A2.2 Describe the local environments

Draw in smaller overlapping environmental shapes – one for each Operational element – within the large environment.

A2.3 Annotate the diagram.

Annotate the diagram, e.g., for Operational unit 1 write on “warehouse”, and in its small environment write “suppliers, machinery maintenance, racking engineers”. Think about those parts of the external environment which are specific to the warehouse.

Notes

The first system in the Viable Systems Model is the entire Operation which will be composed of several Operational units. In Lean Thinking this would be the value-creating parts of an organization. In VSM these are one or more Systems 1 or Operational Units.

The Operational Units perform the System-in-Focus’s basic activities.

They will all be (smaller) Viable Systems in themselves and thus must be able to maintain a separate existence.

A System One generates wealth and in a business, each element can be considered a profit center. 

If you are a manufacturing business, System One is the production units, the teams of people and machines that do the manufacturing.

If you are a software development business, System One is the programmers or teams of programmers.

If you are looking at a more complex organization, you may have a System One which includes manufacturing, distribution, and warehousing.

System One sounds straightforward but is actually one of the most difficult areas to define clearly. For example, in the examples given above the computer department was a System One in the programming firm, but the computer department in the manufacturing company would have a support role and would therefore not be part of System One. Some people who are in service areas such as engineering maintenance may consider themselves important enough to be System One.

The question is: are they part of what the organization is really about, or are they back-up, facilitators, or support? If the answer is the latter, then they do not qualify as System One.

You are now in a position to go back to the original list of jobs carried out by your System-in-Focus, and to list those that between them makeup System One.

Note: Each Operational unit is a VSM at the next recursion down and thus will include both the physical aspects and the management of one aspect of the Operation. So, for example, the trucks and drivers and the management of the transport department are found within that Operational Unit.Tip: In this phase, we are only interested in units that create direct value, i.e. profit centers. If a unit looks like a cost center, not like a profit center, it is very likely not a System One.

The post Step A2: System One, the Operation appeared first on Grado.

To identify those parts of the System-in-Focus that ensure that the Opera­tional units interact in a stable manner.

Abstract

Find the tasks which cannot be executed locally by the Systems 1.

Do not underestimate this step. A strong System 2 is one of the most effective ways to absorb variety.

Tasks

A3.1 Review your Operational elements

Look at your list of Operational elements aka Systems 1.

Note that you look at interactions, did you miss a System 1? Did you find some artifacts that are not really System 1s?

A3.2 Identify potential conflict

Think about any conflict of interest or instabilities, (or oscillations) which may occur as the Operational elements interact. How are these conflicting interests resolved? List the instabilities and the ways that they are dealt with.

Specifically look at common environment components, e.g. common customers and dependencies in the operation, e.g. common resources or ways of work which need to be harmonized.

A3.3 Look for elements of System 2

Find elements that are designed for horizontal coordination.

These might be

• Artifacts, e.g. documents where common procedures are defined
• Technical artifacts. In software development, this will include the version control system.
• Roles and people, e.g. the coordinating responsibility of a System Architect 
• Meetings, e.g. a Scrum-of-Scrums meeting

The same element can occur in more than one subsystem. After all, we are concerned with information flow, not the organization diagram. It helps to be more specific, e.g. „System Architect (align interfaces)“

Notes

Why think about stability?

Without exception, all systems with interactive parts, regardless of their nature, need to take actions to remain stable. What stability means is not so simple as it appears at first glance.

Anyone who’s had the misfortune of trying to ride a bicycle with a buckled wheel down a steep hill will know how an unstable system can behave, and why considering stability criteria is an essential part of any design.

Instabilities between people are just as universal. Look at young children in the playground, marital breakdown, or how communities collapse.

Nation States exhibit extreme instabilities, the arms race being the most concerning outcome.

The need for some way of dealing with instabilities is therefore essential, otherwise, the organization will shake itself to pieces.

The argument goes:

1. The parts of a system will invariably have conflicting interests.
2. These conflicts will tend to lead to instabilities.
3. Instabilities left unchecked become destructive, and the system will begin to oscillate. (I want it! Give it to me! No, I won’t!)

To deal with this, any viable system must have mechanisms to maintain stability:

• resolving conflicts
• dealing with instability
• damping oscillations

We call the collection of these mechanisms System Two.

The post Step A3: System Two, Stability and conflict resolution appeared first on Grado.

To identify the relations between the organization as a whole and its units, i.e. Systems One.

Deal with aspects that cannot be handled by the Operational units or through horizontal coordination.

Abstract

We look first at the elements of System 3. We will describe the operational management. Also, most of the cost centers like HR, marketing, and the finance department must be allocated to System 3.

With System 3, we introduce some vertical channels. After having identified the System 3 elements, we focus specifically on these channels.

Three communication channels are considered necessary to achieve its purpose:

• A corporate intervention channel or command channel that ensures the actions of Systems One are in line with the goals of the whole system.
• A resource bargain and accountability channel through which resources are distributed among Systems One and, in the other direction, Systems One demonstrate their performance.
• The inquiry channel of the Three Start (3*) channel, through which operational management actively collects direct information.

Tasks

A4.1 Identify the System 3 Elements

Identify the relevant units belonging to System 3.

Remember: we are mainly interested in our System-in Focus, not all units of the whole organization.

A4.2 Analyze the System Three channels

Draw two lines from this box through all Operational units.

The first line is the Corporate Intervention Channel. It is concerned with mandatory System Three matters, with the issues that the Operational elements must obey. In the inverse direction, the channel is concerned with mechanisms for accountability.

The second line is concerned with Resource Bargain programs and with the methods used to ensure the Operational units are accountable, i.e. how they demonstrate to System Three that they are doing the jobs they agreed on when the resources were allocated.

A4.3 Analyze the System Three Star and its channel

Identify the elements belonging to System 3* and the inquiry channel.

A4.4 Add the System Three Agents

Write down the System Three stakeholders, people or departments that carry out these functions.

NotesRemember this is the Preliminary Analysis which is concerned mainly just with the identification of the five Systems. So you do not need to go into too much detail. Be content at this point to only specify which parts of your enterprise do System Three stuff. We will return to the channels at a later step.

The post Step A4: System Three, Optimization appeared first on Grado.

To identify those parts of the System-in-Focus that are concerned with future plans and strategies in the context of environmental information.

Leading Question

Which parts of the System in Focus produce strategies for future planning.

Abstract

Dealing with the future and the external world.

Tasks

A5.1 Look for relevant external factors and trends

System 4 adds a separate environment bubble in the VSM diagram: the domain of Scenarios aka possible futures.

Review critically how the elements of the environment can change or influence he future of the organization.

A5.2 Collect the System 4 activities

List the activities of System 4. These include planning, research and development, actions to improve the resilience and adaptivity of your business, and so on.

The list contains all the activities that your System-in-Focus is undertaking in order to guarantee adaptation to the future. Is it complete?

Make sure the list refers to the System-in-Focus. Go through it and identify the items that refer to the embedded System 1 Operational elements.

Example: If you have a bio-food trading business in a large city.  Relocating goods to the optimal location refers to the System-in-Focus. Buying an additional Fork Truck refers to one of the Warehouses which is System One). Remove the items that belong in System One. You can perform a separate analysis at the next level.

A5.3 Cluster activities

Cluster the activities of System 4 under the headings like

• Activity: What sort of planning?
• Responsibility: Who has to do it?
• Time Scale: C for current. One year if it needs to be dealt with in a year.
• Priority: A, B, C, D or E (A the most urgent – They could all be E)

Several of the items on the list may be concerned with (say) Product Design, Technological Development, or Market Potential.

A5.4 Add People and Departments which are concerned with the Future

Write in the parts of your organization which are responsible for these tasks.

A5.5 Draw a diagram showing the overlaps.

This should be a separate diagram to visualize a specific situation: the interaction of different parts of System 4.

The table and the diagram below is an example taken from Jon Waters’ VSM Guide. At the time the company was in the process of relocating and the other major areas were rationalizing the machinery (selling some, buying others) packing for new customers, and their relationship with their single major customer.

The areas of overlap indicate how the various issues relate to each other, and the bit in the middle which has three areas overlapping (the move, new machinery, and relationship with a major customer) is the center of real concern about the future.

Each shaded area indicates where collaboration may be needed.

You will probably need to re-draw this diagram several times.

If the diagram you drew has no areas of overlap, then something should be done. It means that the members of your organization concerned with future planning are working in isolation, and this is obviously not a good idea.

However, it is not uncommon for Research and Development to become obsessed with technological issues and to ignore Market Research. And for Corporate Planning to degenerate into purely economic terms that pay little heed to R&D and Market Research.

Notes

The VSM diagram shows now Systems 1, 2 and 3 and the newly added System 4. It also shows that part of the external environment which is the specific area of interest for System 4, some of which is unknown.

System 4 also has to be in touch with the internal part of the VSM via System 3. This refers to the realistic scenario in which System 3 and System 4 focus on different priorities and will develop a healthy conflict.

Remember that we currently deal with an analysis of your System in Focus and that it might not have a System Four. For this function to work properly it must have a continuous focus: somewhere in the System-in-Focus someone must be looking at the environment and thinking about ways of dealing with a largely unknown future or even multiple scenarios aka possible futures.

The post Step A5: System Four, Outside and Then appeared first on Grado.

To identify those parts of the System-in-Focus which are concerned with Policy.

Abstract

System 5 is the mechanism that formulates the Identity, the Mission, or the North Star.

Tasks

A6.1 Note the Identity statement of the System-in-Focus

Write down the identity statement of the System-in-Focus (or confirm that the SiF does not have one).

A6.2 Find the Policy Makers

Write the people or departments responsible for policy making.

Notes

Policy concerns the ground rules that affect everyone in an organization. It may best be described as “Top Level Ethos”,  and in a sense, it defines the identity of the system.

In the Viable System, System Five has an active influence on the organization while it normally refrains from handling day-to-day operations. Its role is to become involved in the complex interactions between Systems 3 and 4. System 5 has two main functions:

• Firstly, to supply “logical closure”: The loop between systems 3 and 4 includes conflicting views and priorities and is therefore potentially unstable. It must therefore be overseen Metasystemically.
• Secondly, to monitor the goings on in the whole organization. These must be constrained by policy.

There is, of course, nothing to stop System 5 wielding its own authority (for example … demanding that System 4 begins to study a particular issue and that System 3 responds to this … and that the eventual outcome is passed to the Operational units to be elaborated into a production plan) but this is a rare occurrence.

System 5 provides the context, the ground rules, the ethos.

Who is the real System 5?

If your mind works like most of us the answer to this question will be something like Henry Ford or Walt Disney or some other hero who dominates the policy of the enterprise. (Any color as long as it’s black …). Beer has written at length about the way that all elements of the Viable System are mutually dependant, and that giving one any more importance than another is clearly wrong. (How viable would Aristotle have been if any of his major organs had closed down??).

The question of who System 5 actually is has to be answered very simply as everyone involved in the system.

At the governmental level it should be described as “the Will of the People”, within the co-op it’s the same and systems must be designed to ensure that’s how it works.

In organizations, it reflects the will of the shareholders.

System Five Examples

A few examples of possible implementations of System 5:

• A small Co-op: Weekly meeting of all members
• A Start-Up: the founders

Typical large Company: Either the owners or shareholders. No employee involvement.

The post Step A6: System Five, Identify the policy making appeared first on Grado.

Achieve an understanding of the System from a VSM perspective.

Abstract

Review the results of the analysis/preliminary diagnosis steps and draw first conclusions.

Tasks

B1.1 Review

Review the system: you should have identified the major parts of your System-in-Focus which render it viable.

B1.2 Missing

Note which parts are missing, i.e. do not have a valid representation in the existing organization.

B1.3 Inadequate Parts

Re-consider the parts which seem to be inadequate.. Do you have an initial idea how to handle them? No, do not yet act. You need some more critical input.

B1.4 Parts which don’t map

Did you identify any parts that don’t map onto the VSM and therefore don’t have anything to do with viability? Just note them, do not act yet. We will come back in the Decide steps.

Notes

By now you have:

• Listed the Operational elements.
• Identified System 2.
• Listed the five functions of System 3 and identified it.
• Listed System 4 activities and considered who does them.
• Considered policy and the extent to which it represents the views of the members.

You have also put all of this together on a large VSM diagram, which will give a picture of your System-in-Focus in its totality.

Now cross out those parts of your organization which appear on the VSM from your original list.

Remember to be clear about the System-in-Focus. Anything about the internal workings of the Operational elements should not appear on this diagram. (e.g. if you are analyzing a value stream, you do not add details of the individual teams The boxes 2, 3, 4 and 5 refer to the whole of the value stream).

If you can’t put anything in some of the boxes: this is quite normal for an initial diagnosis. For example, there might be effectively no System 4: alas, you have identified a dysfunction.

At this point you should take some time to consider the implications of the preliminary diagnosis.

Some of the five functions will be performed by people or departments which clearly don’t have the resources to do the job adequately.

In some cases the entire Metasystem will be performed informally, and that may be fine.

There will be some jobs which are left on your list after filling in the VSM. Are they necessary? Some will be support jobs, like machine maintenance. The computer department is a facilitator, which makes things happen more smoothly and quickly. Both these jobs are clearly useful.But what about some of the committees? Are they really essential to viability?

The post Step B1: Review the results of the observations appeared first on Grado.

The Canvas and the accompanying playbook focus on the viability of organizations. They help to master the Viable System Model (VSM). Viability encompasses more than just survival; it involves sustaining a meaningful existence, complete with distinct goals and identity, while also preparing for the future and playing a sustainable role within its environment.

Navigating the challenges of a complex world requires a mindset akin to sailing. It demands making swift decisions in the face of changing situations, all while remaining vigilant about upcoming conditions.

Steering, in this context, is a complex, multifaceted task. This entails not only making decisions but also creating the structures that facilitate these decisions and ensuring the necessary flow of information. This holistic approach is key to effective organizational management in today’s dynamic world.

To accomplish this goal, we employ systems thinking principles derived from Cybernetics, the science of control and communication. Specifically, our approach is grounded in the Viable Systems Model (VSM), which applies the principles of Cybernetics to organizational structures. This model offers a sophisticated framework for understanding and managing the complexities inherent in organizational dynamics.

Embarking on the journey of understanding and applying the VSM can often feel like navigating through a maze of intricate and interconnected concepts. For newcomers, this complexity can be daunting, presenting a myriad of challenges and questions. This is where your need for a reliable guide becomes paramount—a guide that not only illuminates the path ahead but also empowers you to make confident strides in the world of VSM.

Enter the VSM Canvas, your pilot in this exploratory journey. Designed to simplify your initial steps into the VSM landscape, the Canvas acts as a compass, helping you steer clear of common traps and pitfalls. Accompanying the Canvas is this companion booklet, a detailed roadmap that complements your journey from understanding to application.

Structured to maximize ease of learning and practical application, this booklet is divided into two comprehensive sections:

1. VSM Basics and the VSM Canvas: This section lays the foundation. Here, you will find a detailed explanation of the fundamental principles of the Viable System Model. It serves as a reference point for all VSM concepts, complete with a glossary to familiarize you with the terminology, followed by an overview of the VSM Canvas.
2. Working with the Canvas: The Canvas itself uses an iterative process with distinct steps, based on the OODA loop. The sequence of the process steps is by no means mandatory: you might be new to the VSM and only be interested in a preliminary analysis. For this use case, the sequence of numbered steps gives you a guideline. You might have more experience in using the VSM and follow-up insights from analysis steps directly to design decisions.

With the playbook as your companion and the VSM Canvas as your tool, you are well-equipped to embark on this enlightening journey. Whether you are a student, a professional, or an enthusiast of organizational theory, the insights and guidance provided here will open new horizons in your understanding of complex organizational systems.

Welcome to the world of VSM – let your journey of discovery and mastery begin.

The post Welcome to the Viable System Model appeared first on Grado.