The Viable System Model

• The Viable System Model
  • The Three Elements — Environment, Operation, and Metasystem
  • The Five Systems - Creating a Whole from the Parts.
• Using VSM to design a healthy business
  • 1. Preliminary Diagnosis
  • 2. Designing Autonomy
  • 3. Balancing the Internal Environment
  • 4. Information Systems
  • 5. Balance with the Environment
  • 6. Policy Systems

The following quick introduction to Stafford Beer's Viable Systems Model is based upon Jon Walker's The Viable Systems Model, a guide for co-operatives and federations

The Three Elements — Environment, Operation, and Metasystem

Beer's first insight was to consider the human organism as three main interacting parts: the muscles & organs, the nervous systems, and the external environment. Or a little more crudely, body, brain and environment.

These are generalised in the Viable Systems Model as follows:

1. The Operation — The muscles and organs. The bits which do all the basic work. The primary activities.
2. The Metasystem — The brain and nervous systems. The parts which ensure that the various Operational units work together in an integrated, harmonious fashion. The job of the Metasystem is to hold the whole thing together.
3. The Environment — All those parts of the outside world which are of direct relevance to the system in focus.

The Five Systems - Creating a Whole from the Parts.

The argument goes like this:

1. First of all you need the working bits. This is System 1 (S1) which has previously been called the Operation. S1 is the bit which actually does something. It's the muscles, the engine room, the machines, the producers.
2. Secondly you must ensure that there are ways of dealing with conflicting interests which are inevitable in the interactions which occur as the parts of S1 interact. Conflict resolution is the job of System 2. System 2 is also given the job of ensuring stability.
3. Once the interactions of the System 1 units are rendered stable, it becomes essential to look at ways of optimising these interactions. This is the job of System 3. System 3 works with an overview of the entire complex of interacting System 1 units and thinks "If this one does this and that one does that, then the whole thing will work more effectively." The extra efficiency is called synergy. System 3 is there to regulate System 1 - its function is optimisation.
4. Once you have a stable, optimised set of Operational units, then you must ensure that it can survive in a changing environment. This is the job of System 4. System 4 looks at the outside world, considers what it sees, looks for threats and opportunities, and schemes. S4 is there to produce plans to ensure long term viability.
5. And finally, the whole thing must function within some sort of overall context. Everyone must be pulling in the same direction. This is System 5's job. It provides the ground rules and the means of enforcing them to ensure that the system in complete. System 5 provides the ultimate authority.

The five systems develop into an extraordinarily powerful model of the way things work.

In the Human Body

System 1 — Muscles, organs. Primary activities.
System 2 — The sympathetic nervous system. Its function is to stabilise the activity of muscles and organs.
System 3 — Base brain. Pons and medulla. Internal regulation. Optimisation.
System 4 — Diencephalon Input from senses, forward planning.
System 5 — The Cortex. Higher brain functions.

Generally

System 1 — Primary activities.
System 2 — Conflict resolution, stability.
System 3 — Internal regulation, optimisation, synergy.
System 4 — Adaptation, forward planning, strategy.
System 5 — Policy, ultimate authority, identity.

These five systems form the basis of the Viable Systems Model. Their functions are general enough to make the model applicable to any and all systems which are viable in that they can maintain a separate existence.

You will notice

· the Operation is the same thing as System 1
· the Metasystem consists of Systems 2, 3, 4 and 5
· System 4 interacts with the external environment
· Systems 2 & 3 interact with the internal environment (the Operation)

Using VSM to design a healthy business

1. Preliminary Diagnosis

In the Preliminary Diagnosis you look at your own organisation and examine the units which compose it. That is, you list the bits that do things, the co-ordination functions, the accounting and scheduling functions and so on. You then draw a large VSM which will look something like the pictures on the previous pages to identify:

• the Operational parts
• the parts which have inputs from the Internal Eye, and which deal with stability and optimisation of the Operational units.
• the parts which have inputs from the External Eye and which make long term plans in the lightof Environmental information.
• the Policy Systems.

At the end of this process, you will have a large picture which gives a representation of your
organisation in its totality.

This is the basic model from which the rest of the diagnosis will follow.

In some cases the Preliminary Diagnosis will be the most useful aspect. You may find that your organisation has no way to carry out some of the functions which are vital for viability.

Thus, you may decide to create new jobs to ensure these functions get perfomed. You may also find that some jobs don't seem to have anything to do with the Viable Systems. You may decide they are not necessary.

2. Designing Autonomy

It is essential to create the right conditions for all the Operational units to function with as much autonomy as possible.

Thus they will need

• Individual Mission Statements.
• Budgets for the resources they need to carry out this Mission.
• An agreement that they can decide on their own internal development as long as they are working to the agreed Mission.

There will also have to be safeguards to ensure that the units cannot threaten the overall viability of the organisation of which they are a part.

Thus

• They must be accountable and able to demonstrate they are working to the agreed plan.
• There must be pre-agreed intervention rules which means that autonomy is forfeit under certain conditions. The worst case scenario must be considered in advance.

3. Balancing the Internal Environment

By this stage you will have looked at the various parts of you organisation and decided how they map onto the VSM. You will also have considered the autonomy of the Operational units.

The Internal Environment consists of all the Operational units and those jobs which are dedicated to looking at them (The Internal Eye) and to ensuring that conflicts are resolved and that their performance is optimised.

Internal balance is concerned with these (Metasystemic) jobs and with ensuring that they have the capabilities to function properly. So for example, a committee which meets once every three months would be an absurd idea - most of these jobs need to be done on a continuous basis.

The approach to Internal balance is as follows:

• Maximise autonomy so that the vast majority of problems are dealt with within the Operational units.
• Examine the exchange of goods and services between the Operational units, and see if improvements may be made.
• Examine the bits of the external environment peculiar to each Operational unit and see if changes can be made (perhaps they all use the same suppliers and thus benefit from joint buying).
• Optimise the allocation of resources to the Operational units. It may be possible to cut back in one unit and re-invest in another, thus creating synergy in the whole system.
• Examine the scheduling and co-ordination functions.
• Ensure that the information systems which inform the Metasystem of the goings on at the Operational level are well designed. How complete is the information? How up-to-date is it?
• And lastly, after all the above have been exhausted, it may be necessary to "beef up" the capabilities of the Metasystem in order to ensure it can discharge its functions of overseeing the Operational units. This is the usual way that traditional businesses operate, and in terms of both efficiency and of human working conditions should be seen as the very last alternative.

The essence of the internal balance is to view the Inside of your enterprise as a system of autonomous Operational elements, which need to be overseen (the Internal Eye) to look for ways of generating synergy.

The imposition of dictates from above should only be used when the viability of the whole enterprise is at risk and not, as in traditional businesses, as the usual way of dealing with most problems.

4. Information Systems

The VSM requires thorough and up-to-date information systems.

The perfect information system would measure everything it needs to know continuously, so that a real-time model of the goings on within any part of the enterprise may be maintained.

The compromise between this and the usual management information which is weeks or months out of date is the use of daily performance indicators.

These measure whatever is seen as important within each Operational units (productivity, morale, wastage, sales, breakages ...) at the end of each day. The figures are then plotted onto a time series so that the trends may be assessed.

The essence of the VSM approach to information is that you only need to know if something changes. If everything is going as normal, you can leave it alone. However as soon as something changes (dramatic fall in productivity) it's essential you are notified immediately.

Thus:

• Huge printouts of standard information which say "nothing much has changed" are useless.
• Immediate alerting signals which say "something dramatic has happened" are essential.

These signals, which are called algedonics, are the basis of information handling in the VSM.

They can be designed to provide Operational units with the information they need to learn and adapt to environmental changes, to define clear limits to autonomy, to guarantee that each Operational unit is working as an integrated part of the whole-system and so on.

The design of these information systems is crucial to the effective operation of your enterprise, and can be used as an alternative to authority.

5. Balance with the Environment

The External Eye maintains contact with the relevant parts of the external environment, and enables the future planning systems to develop strategies for adapting to change in the market, or to new technology, or whatever.

Again, the various parts must be balanced:

• The future planning system must have the capabilities to examine and find the relevant information.
• It must be capable of planning and simulating various options.
• It must be aware of the capabilities of the Operational units, and develop any strategies within this context.
• It must be able to agree and implement its plans through the connections to the operational units.
• It must function within policy guidelines.

6. Policy Systems

The policy systems oversee the entire organisation. They constitute the ultimate authority.

Clearly they must be designed with great care.

For a co-operative it is crucial that everyone is involved in policy decisions and this usually involvesa meeting of all members.

However, the practicalities of this need to be addressed.

How often can the entire membership meet?
How effective are big meetings?

The answer to the question of how you involve all members in policy decisions and how you ensure that everyone has to work within these ground rules is perhaps one of the biggest questions for any Social Economy enterprise, and will determine the extent to which it may describe itself as democratic.