Viable System Model

Conceptual Overview

The VSM identifies five management functions within an adaptive system. System one consists of the units that do the basic work of the organization, for example, manufacturing products or delivering services. System two consists of units that handle coordination and scheduling among the system ones. System two activities include allocating space and equipment and enforcing rules and procedures. System three is the middle management function except that its primary activity is to make a resource bargain with the system ones. That is, system three makes resources available in exchange for a commitment by the system ones to meet certain objectives that are agreed upon. System four is responsible for long-range planning and the design of new products and services. Whereas system three is responsible for activities “inside and now,” system four is responsible for activities “outside and then.” System five manages the interaction between systems three and four and embodies the corporate ethos. Hence, system five decides the identity of the firm and its governing principles and norms. This includes decisions about the kinds of businesses to be developed by system four and to be put into operation by systems three, two, and one.

A key feature of the VSM is the management of variety. The people in an organization need information to perform their jobs effectively, but too much information can be a distraction. What is needed is both variety attenuation and variety amplification. An example of variety attenuation is the environmental scanning activity. Some people in an organization must keep up with new technology, new government regulations, and what competitors are doing. From a great variety of sources of information, they select the information that is most important for the decisions the firm must make. Variety amplification, on the other hand, refers, for example, to the distribution of the organization's messages. Advertising messages go outside the firm. Plans, policies, and procedures need to be distributed within the firm. The VSM is very useful as a guide to studying where variety is attenuated, where it is amplified, and whether there is a balance in the varieties of interacting subsystems.

The VSM is recursive, meaning that it applies to all levels of an organization. For example, consider General Motors. Within this large corporation, the primary divisions or product lines are Chevrolet, Pontiac, Buick, and Cadillac. At the corporate level, each division would be considered a system one. System two would coordinate activities and policies among the divisions. System three would allocate resources among the divisions. System four would consider starting or stopping various product lines, such as sport cars, sport utility vehicles, or hybrid vehicles. System five would make the final decision and hence regulate the rate of innovation and the kind of businesses to engage in.

...