The Viable System Model and its Application to Complex Organizations
Allenna Leonard, Ph.D.
The Complementary Set
Viable System Model is the best known of the many cybernetic models he
constructed over a career spanning more than fifty years. He explored the necessary conditions for
viability in any complex system whether an organism, an organization or a
country. Although the model was first
applied in his work in the steel industry, many further applications were made
during his later work as a consultant.
The best known of these was when he was invited by President Salvadore
The model itself draws on mathematics, psychology, biology, neurophysiology, communication theory, anthropology and philosophy. It was first expressed in mathematical terms in ‘The Cybernetic Factory’; next it was described in neurophysiological terms in ‘Brain of the firm; and finally according to logic and graphic presentation in Heart of Enterprise and Diagnosing the System for Organization. This last version is the one that is most accessible. It enables people to address organizational issues in a way that skirts the usual categories and organization charts and gets down to the actual necessary functions, no matter who is performing them.
With this model people can diagnose or design an organization; making sure that the principle homeostats, management functions and communications channels are in place and can function effectively. A crucial aspect of the VSM is that it is recursive; that is that the same relationships can be traced from the shop floor to the corporation or from the village to the country. Two examples will be discussed: a small business and the Chilean work from the 1970’s. It is hoped that this will encourage people to imagine a world that works much better than it does now and where management is not defeated by complexity.
I am pleased to
have been invited to give the first Stafford Beer Memorial Lecture to the World
Multiconference on Systemics,
Cybernetics and Informatics in
The first thing
to say about
He joined a
branch of United Steel, working first as a production controller. After reading Norbert Wiener’s book
Cybernetics, he wrote to say, “I think I am a cybernetician”. This led to contacts and friendships in the
field with Wiener himself, Warren McCulloch, Russell Ackoff and Heinz von
Foerster in the
Ross Ashby’s work on requisite variety provided important insights to this early work. (Ashby, 1956) Ashby defined variety as the number of possible states of a system. The Conant-Ashby theorem is perhaps the best known and most succinct of his formulations. (Conant, R. and Ashby, W.R. 1970) It says every good regulator of a system must contain a model of that system’; that is to say; the regulator needs to have as much variety at its disposal as does the system to be regulated.
The simplest variety containment strategy is one-to-one, such as the eleven members of a football team ranged against eleven similar opponents. This isn’t efficient in most circumstances, so a good regulatory model amplifies the variety of the regulator to a one-many ratio, sometimes through very simple structural designs that regulate group behavior. Traffic control is an everyday example: cars going one way stay on their half of the road and stop or go at intersections according to the traffic light. Other approaches attenuate the variety of the system so that the model includes only those matters of interest to the regulator. ‘What’ is of interest depends on the situation, and how much can be left to a system’s capacity for self-organization. Dee Hock’s design of a chaordic structure for Visa is a good example of centralized regulatory apparatus pared down to the minimum.
situations can be described by building out from one’s area of concern and
looking at the policy implications.
Cybernetic models differ from others in that they focus on relationships that are dynamic. Ross Ashby showed that only a few simple decision rules in a model could lead to complex interactions. Often they centered the maintenance of equilibria called homeostasis with the ‘mechanisms ‘referred to as homeostats. A complex organism, like the human body sustains itself through the operation of a great many homeostats. Body temperature, electrolyte balance, blood sugar and many others operate for the most part out of our conscious awareness although if they fail, they do intrude on consciousness and the consequences can be serious.
The Viable System Model
System One and Its Environment
Every system, often described by a circle, operates in an environment, described as an amoeba shape to denote that its boundaries are not fixed. It can be further divided by making distinctions between, say, the transactional environment and the contextual environment or the natural environment and the social environment. The system is buffeted by events in the environment and it must have the capacity to adapt in order to cope with them. The success of that adaptation depends on the quality of the system’s intelligence about the environment and the resources available to make use of that intelligence. Management, whether by a set of bosses or by self-managed teams, is the function that metabolizes the intelligence about the environment and the energy of the system to act upon it. It is shown as a small square in the operation. The square needs to remain relatively small so that it does not use up the resources needed by the system to engage its environment. Note that this is the same function that is used by a single cell organism as it senses and moves toward a food source. It also has homeostats that attempt to keep essential variables – enough food, a comfortable temperature, etc. within healthy limits.
A business or a
government is much more complex than a single cell organism. It has many more essential variables to
consider and many more connections with its environment to monitor. The
transactional environment of an organization includes its customers or clients,
its suppliers, its regulators, its employees and its other stakeholders. Its contextual environment includes both
direct influences like competitors and indirect influences such as available
complementary technology and public taste.
business will make several products or will offer them in different
markets. These operate in parallel,
sharing more or less overlapping environments and stronger or weaker
communications among them.
The homeostat that balances the operations with their markets along the horizontal axis of the model is the first aggregate homeostat in the VSM.
However, that autonomy has limits. Any time you have two or more activities being operated together, the possibility exists for them to get out of synch with each other or get in each other’s way, leading to oscillation in the larger system. A System Two exists as a service to damp this oscillation and to coordinate common services for consistency and efficiency. Here’s a short list of the services in a complex organization that may come under System Two:
Access for disabled persons
Employee assistance and benefit programmes
Hazardous materials rules
Scheduling of common facilities
Training in existing practices
Use of shipping and handling facilities
There are several things to note about this list. First, none of these activities earns a penny, although doing them efficiently rather than inefficiently may save money. Second, depending on particular circumstances, most organizations of any size will be engaged in most of them, and perhaps others as well. They do not, after they are established, require much in the way of executive attention unless there is a radical change in the situation. They are administrative, and exist so that things run smoothly. Some are mechanical, some administrative, some physical, some formal, and some informal but together they absorb a lot of variety so that people don’t have to reinvent the wheel. Finally, none of them are viable systems in their own right for this organization, although in these days of outsourcing, provision of some of these services, like catering or cleaning or security, might be viable systems in someone else’s company.
There are executive functions and decisions to be made, given that this particular organization has more than one operation. The viable organization should be run in the interests of the whole, which may not always be the most advantageous for one or more of the parts at any given time. This circumstance leads to resource bargaining among the parts so that demands can be met, opportunities seized or threats avoided. In an organism, this resource allocation usually happens smoothly. More blood flow is directed to the legs when running and to the stomach when digesting a big meal. This doesn’t necessarily happen in an organization. There may well be competition among the parts for resources of management attention, additional personnel, finances and advertising campaigns. Furthermore, there are laws that must be complied with and contracts that must be negotiated and honoured. Management accounting, budgeting and production control are typical of functions provided by System Three.
System Three Star
From time to time, System Three will see a need to probe more deeply into System One operations to satisfy particular needs or to cope with a disaster like a flood or a blackout. System Three Star fulfills this need for an audit channel that can delve into detail without taking over and micro managing. The financial audit is the most obvious example, but there could be an energy audit, a security audit, an IT compatibility audit, a study of customer complaints and others. Sporadic employee satisfaction surveys and needs analyses are other examples.
Taken together, the management functions of Systems One, Two, Three and Three Star account for the inside and now of an organization, operating in the present tense. Note that the only direct connection to the environment exists in the linkage between it and the System One operations. Note also that these are functions, not names on an organization chart. It is possible, even likely, that an individual could play a role in delivering a product or a service to a customer and in managing that operation. System Three often includes representatives from management at System One and almost everyone enacts roles in System Two, at least by observing the protocols.
Although time lines vary from seconds to decades, organisms and organizations need some capacity to anticipate the future and prepare for it. System Four’s role is to observe the anticipated future environment and its own states of adaptiveness and act to bring them into harmony. To do so, it must also have a clear picture of System Three’s present state so it can offer alternative paths from the present to the future. Changes in the natural, social, economic, technological and political environments and their interactions determine the conditions that the organization must be ready to face if it is to survive. An organization must keep its information about future developments flowing and must act internally to be ready for them. This involves not only working to improve its present products -we all know about the buggy whip syndrome – but also to develop new ones to meet the needs of emerging markets. Recruitment, staff development, benchmarking, participation in trade shows and conferences, market research and lobbying are concerned with learning about and affecting the outside and future. Research and development, strategic planning, borrowing policies and marketing use that knowledge to make internal modifications to be ready for coming changes. An effective System Four engages in continuous dialogue between its model of the anticipated future and its model of itself.
The Three/Four Homeostat
Maintaining a good balance between System Three’s concern with the day to day running of affairs and System Four’s concentration on the anticipated future is a challenge for every organization. It is difficult, because the balance isn’t the same for every organization, the same organization at every time or every part of the same organization. A great deal depends on the rapidity of technological advance and changing tastes in each industry. For the high tech world, getting the first working prototype developed and to market means that the proportion of energy directed toward System Four will be a high one. In a mature industry, such as forestry, supply and demand might remain fairly constant for years – until a new insect arrives on the scene or tariffs make exports uncompetitive.
As a general
If we go back to the homeostat between the well and the ill, we can reflect on our own experience of going for a basic medical check-up. If no concerns are raised, a relatively small number of measurements are made: weight, blood pressure, temperature and blood tests for diabetes, anemia and cholesterol. Eyes and ears are examined and abdomens pressed. If everything is ‘normal’ no further work is done but if not, that aspect is pursued in more detail.
The Three/Four Homeostat is the second of the three important aggregate homeostats in the VSM.
Closure is provided by System Five. Its active job is to monitor and adjust the Three/Four Homeostat. Its broader function embodies identity and coherence and underwrites the viability of the whole. An organization is faced with many requirements for choices and decisions, and some technical help is available to make good ones. This is where the emphasis is on doing the right thing rather than doing things right. But, all ‘good’ choices aren’t good for or compatible in every organization and even doing the ‘right’ thing for reasons that are wrong or unclear puts an organization at risk. Questions such as ‘what business are we in?’ or ‘who are our clients?’ must be asked continually to avoid losing touch with oneself and one’s markets. Today, organizations are making products while busily researching their transitions to a service economy. To be sure, much of the actual exploration is carried out in System Four, but its work has to be consistent with the evolving identity of the organization.
Taken together, the organization’s Five/Four/Three represents the metasystem of the One/Two/Three present activities.
All the management functions, One through Five, represent the vertical variety management that balances the horizontal variety between the System Ones and their environments. This is the last important aggregate homeostat in the VSM.
Perhaps the most useful feature of the VSM is that its structure and communications channels are repeated from the smallest productive unit to the largest. It is a recursive model in which parts are nested within the whole like a series of Russian dolls. This allows for a great deal of economy in the analysis as well as easy comparisons among System One through Five’s activities along both horizontal and vertical lines. By convention, the most comprehensive recursion is referred to as recursion zero and subsystems by one, two, etc. If we think back to the list of activities under the heading of System Two, we will see that they attach to different levels in the VSM. Functions like security, common use of physical resources like meeting rooms or loading docks and parking are likely to be site specific. Others such as accounting, branding, recordkeeping, tax compliance and personnel functions are often done in common across the whole legal boundary of the organization, although some sensitivity to local variety is needed. Questions should be frequently asked about whether the location of these administrative functions is appropriate under changing conditions or when operations are initiated in new jurisdictions or with different types of employees.
Let’s take a brief look at a small business – a mom and pop gift shop that has two operations: a section that buys and resells products run by Mom and another, run by Pop that sells work from its onsite pottery. Each of these also has two operations: sections for year round merchandise and for seasonal merchandise in the one and useful and decorative pottery in the other. Mom and Pop play roles in all five systems at recursion zero – the whole gift shop - and each pitches in to help the other at recursion one. System Two’s duties are divided between the two recursions with accounting, scheduling, shipping and security happening at recursion zero and safety, energy efficiency, cleaning and maintenance occurring at recursion one. System Four will also be highly differentiated as the environment for new developments and changing tastes is not the same for the two lines of business, or, necessarily for the product lines at recursion two. System Five is more tacit than explicit in such a small business but it is strong nonetheless. This small business operates with the same functions as a much larger business or non-profit, although probably less attention needs to be paid to maintaining communications channel capacity.
The General Picture
Although I’ve been talking so far about organizations in the business world, government, non-profit and informal or non-institutional providers of goods and services share similar concerns with a larger number of variables and broader criteria of success. The examples so far have also concentrated on organizations with a single legal boundary but that is not necessary and many participants contribute to the viability of larger entities up to and including whole countries.
The Work in
several features of the project. The
first was the use of the VSM. Twelve
levels of recursion were identified from the individual worker to the country
as a whole. In practice, Cybersyn
focused on the levels of the product line, the sector, the branch, (there were four –
perishable consumables, non-perishable consumables, heavy industry and
only a technical project.
Much of what would be considered standard operational research was included too. Quantified flow charts were prepared for a given product line from the raw materials, production processes, containers and order fulfillment to distribution to the customer.
From six to twelve indices were established for each product line. Values that were outside the normal range were fed from the System One units to System Three for examination. The determination that they were out of range was made by a set of programs based on the Bayesian statistics of Harrison and Stevens. Systems One to Three had a time period within which to address the changes. If the issue could not be resolved within that time, that was an indication that a more comprehensive picture was needed and it was fed up to the next level. In this way, issues like shortages could be addressed for the whole product line and supplies moved around among them.
An operations room facilitated oversight at System Five. This was, literally a room with from seven to ten chairs where decision makers could meet. Its walls had multiple screens: one its VSM, at several levels of recursion; other set contained data from quantified flow charts; a third held outputs from various indicators and a fourth had Forrester’s Dynamo output. Others showed maps and pictures of facilities and computer plots of trends.
fed to the operations room on a daily basis – what
All these processes were focused on Systems One to Three. System Four ran in two tracks. The traditional planning processes were continued while experiments were made with Forrester’s System Dynamics. The experiments with Dynamo were not conclusive for two reasons. The whole Chilean situation was changing too fast along too many parameters and the experiments were cut short by the coup.
difficulties, the project enjoyed considerable success.
The Cybersyn project remains today the broadest application of cybernetics to government and the management of affairs. No country since has been so willing to try such an innovative approach although the less than satisfactory performance of most governments would lead a reasonable person to wonder why not something new shouldn’t be tried.
The return of
Governments and international bodies don’t face any fewer challenges now than they did in the 70’s. It could be argued that the world has not become less but more complex since that time. The situation that Allende addressed, that of making a country work for all its people, has not been resolved in many places. Indeed, the income disparity within and among countries has grown. Post conflict states continue to try to find equilibrium using low variety models of their situations and antecedents.
Moreover, a high
proportion of our global system problems are only partially addressed by
official bodies with traditional lines of authority. A hierarchy based on comprehensiveness of
information is needed and could be designed using the VSM. For example, measurements tell us that sea
level is rising and projections based on glacial melt tell us that the trend is
likely to increase. We must prepare to
address this problem and others such as the health care costs of air pollution
that are often are experienced outside the jurisdiction where it
originated. Policies that deal with the
interaction of our natural and social environments fall far short of what is
needed for our human societies to remain viable. It is certainly a time to try to communicate
how useful and necessary our tools can be.
The integration of operational research and its sophisticated statistics, simulations,
participation, culture change and the emotive power of the arts could make a
difference today, as they might have done in
Beer, S. (1966) Decision and Control.
Beer, S. (1975)
‘Fanfare for effective freedom’ in Platform
Beer, S. (1979) ‘ In search of health’. Unpublished report.
Beer, S. (1981) Brain of the Firm, 2nd Ed. Chichester: John Wiley & Sons,
Beer, S. (1985) Diagnosing the System for Organizations.
Beer, S. (1989) ‘ National government: disseminated regulation in real time
or ‘How to run a country’ in Espejo, R. and Harndon, R. Eds. The
Viable System Model: Interpretations and Applications of Stafford Beer’s VSM.
Beer, S. (1994)
‘The Cybernetic Factory’ In Harnden, R. and Leonard, A. Eds. How
Many Grapes Went into the Wine.
Conant, R. and Ashby, W.R. (1970) ‘Every good regulator of a system must be a model of that system’, Vol. 1. # 2 pp. 89-97.
(1989) Collected Works, Ed. R.McCulloch.
Pert, C. (1997) Molecules of
‘Cybernetics in government: experience with new tools for management in