Closed System Approach

Conceptual Overview

In the field of organizations, the CSA type of approach has evolved in parallel with the developments in organization theory and management. For the purposes of this entry, these developments may be divided into three periods. In the first period (roughly from 1900 to 1940), organizations were conceptualized as closed systems, i.e., as systems having either no external environment or having one that does not affect in relevant ways the organization's effectiveness and efficiency. In keeping with this view of organizations, the design and managing of the CSA focused mainly on the organization's internal interactions and the emphasis was on internal order and control. A mechanistic conception of organizations became dominant in this period and guided most CSA design and management methods. In retrospect, we can say that Weber's bureaucracy and Taylor's scientific management were typical examples in this period of the CSA applied to organizations.

In the second period (beginning around the 1960s), organizations were conceptualized as open systems, i.e., as systems possessing an external environment whose elements could not be controlled and yet they affected the system's performance in important ways. Greater attention was paid in this period to shielding the organization from external elements, particularly those threatening its efficiency and effectiveness. Accordingly, organizational strategies of the CSA were directed to isolate the organization from its environment. However, more and more managers and designers as well as organizational theorists began to realize that keeping the organization “closed” to outside interference was becoming an impossible task in the increasingly complex, interdependent, and turbulent environments of industrial society. A new type of approach emerged, the so-called open system approach (OSA). This kind of approach conceptualized organizations as unavoidably open to their environments, in constant interaction with them through inputs and outputs. Since those external elements could neither be blocked nor controlled by the organization, the OSA's main strategy was to design adaptive organizations, that is to say organizations that can modify their structure and processes in accord with environmental threats to assure continued function. Theorists realized that stable environments did not require adaptive change and innovation, and hence organizations in such environments could continue successfully using CSA design and managing strategies. In contrast, rapidly changing environments required “organic” organizations, i.e., organizations that could, as living organisms do in their environments, rapidly differentiate and integrate their structures in order to survive. In the third period (from the 1990s on), organizational forms began to be conceptualized as “fluid.” Network, virtual, and boundaryless organizations are examples. Back in the 1970s, networking organizations began as a CSA strategy to control and mold an organization's external environment formed by other organizations. Through partnerships and alliances, the interactions with these external elements became manageable, thus making them virtually internal (and therefore making the organization a closed system). Today, with the growing developments of information and communication technologies (ICT), combined [Page 171]with increasingly complex environments, new types of networking are emerging. Virtual organizations are a case in point. They are characterized by the fact that their main functions are (thanks to ICT) distributed throughout cyberspace. In fact, in these organizations, all (or nearly all) places of work are virtual. The organization contracts out almost all of its functions to other organizations (which in turn also may be virtual), thus creating multiple networks (and networks of networks), with the entire operation being managed mainly through the Internet and other ICTs.

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