Systems Theory
Sunday, June 19, 2011
Systems and macro-systems defined
Types of systems
From Systems Theory |
So let's examine what types of systems there can be.
Monday, June 13, 2011
predicting system outcomes
Wednesday, June 8, 2011
Organizational Engineering: General Systems Theory and the Analysis, Design and Management of the Enterprise
Preface
For the past thirty years, I have been an educator, businessman and student of the practical application of General Systems Theory[1] to business problems. For about fifteen of those thirty years I have been proselytizing the word of General Systems Theory, and have been told innumerable times by students, colleagues, friends and associates - “you should write a book.” Well, this is that book.
Why should I write a book on General Systems Theory (also known as "GST")? There are two reasons:
First: The rules described by General Systems Theory are the “glue” that holds our universe together and the fuel that makes it move. It is the adherence to the rules of General Systems Theory that makes things in business and in life predictable, and the absence of adherence to (or lack of knowledge of) those rules that makes things in life unpredictable.
Second: For all of the literature published about General Systems Theory over the last 50 years, there is no "How-To" manual for the GST practitioner.
Whenever we make a decision, whether personal or business, the outcome of that decision will be governed by the rules of General Systems Theory. Therefore, GST should be the cornerstone of the foundation upon which that decision is made.
From Systems Theory |
The Core Hypothesis
The core hypothesis of this book is that most business executives do an excellent job of reporting on the historical effectiveness of their businesses (the whole "pro forma reporting" debate notwithstanding), but a much less effective job of designing them, or adapting them to changes in the business environment.
While many managers and executives design new business functions and organizational units, most enterprise expansion is ad-hoc, and governed by trial-and-error implementation. In polls of executives taken in the late-1990s at a series of business conferences, fewer than 25% had a formal, empirical process for determining the dependency of business processes, or the enterprise-wide impact that modifications of a particular business process would have on the rest of the organization.[2]
Predictability of a Structured Universe in Motion
It has never ceased to amaze me that we can predict the tides, the position of planets in their orbits, and even the aerodynamic attributes of a new jumbo-jet still on the drawing board - yet we cannot predict the completion date for the average IT project, or the impact of a new business process design.
The universe is alive in constant motion. Photons (quanta) move through space and time at the speed of light. Spinning quarks bang together to form protons and neutrons that make up the atomic nucleus. Electrons orbit the nucleus of an atom. Atoms twist around each other, sharing orbiting, gyrating electrons to form molecules such as DNA that form the basis of life.
Life moves about the planet, digesting, respiring, working, warring, loving, communicating, and, to the point of this book, creating value, buying, selling and bartering in the motion of commerce. Raw materials, capital and labor move into enterprises, which transforms them into goods and services, and moves those goods and services into the market in return for compensation.
Planets rotate on their axis and revolve around their suns that revolve around the center of the galaxy. Galaxies cartwheel through space in a grand, cosmic choreography. Without this cosmic and quantum motion there is no energy, no matter, no life, no great thoughts to ponder, and no big sales.
In addition to the choreography of motion, planets, suns, and galaxies, atoms and subatomic particles, each have a structure and a definite and predictable organization.
As complex and chaotic as it seems, all of this grand and sub-microscopic motion is generally predictable, because it follows certain rules. Planets orbit suns in a particular manner and at a specific distance, following the "rules" called celestial mechanics. Understanding celestial mechanics allowed us to land men on the moon, spacecraft on Venus and Mars and send Voyager on a celestial journey out of the Solar System.
Likewise, atoms and molecules are organized in a specific way. The number of protons in an atom determines its physical properties. The orbital distance of an electron and the number of electrons in an orbit determine its affinity for bonding with other elements. Electrons orbit atomic nuclei in a particular way, and when jostled out of their orbit, vary their behavior according to the rules of quantum mechanics.
Because we understand certain of the rules of quantum mechanics we can alter the state of electrons, protons and other sub-atomic particles to our benefit. Computers, telephones, radios, X-rays, CAT scans, microwave ovens, regular and cable television, fax machines and Blackberry pagers exist because we understand certain of the rules of quantum mechanics.
Pharmaceuticals, plastics and a myriad of other "life essentials" exist and work reliably every day, providing us with comfort, safety and convenience because we know the rules of electron motion and the structural rules for molecules and can therefore, alter the way an electron moves to gain a benefit.
What Does All this Have to Do with Business?
Suns, planets and solar systems and molecules, atoms and electrons, are at opposite extremes - from the cosmically large to the infinitesimally small. Systems of suns and planets and systems of protons and electrons are physically, extremely different. The amazing thing is that many (but not all) of the rules of these extremely different systems are isomorphic, which means that, even though the systems are, physically, very different (heteromorphic) many of the rules governing their behavior are very similar in structure.
Business enterprises exist within that large chunk of the universe that exists between galaxies and atoms. From plants, animals and ecologies to schools, politics and commerce, these physically heteromorphic systems, just like atoms and galaxies, all have two sets of rules: A set of isomorphic rules that govern their structure and behavior, and a set of heteromorphic rules that differentiate one system from another.
General Systems Theory is the knowledge and understanding of the set of rules that are isomorphic across ALL systems -- from the cosmic to the subatomic and everything in between. By studying, analyzing and understanding the isomorphism of the rule sets that apply to very different objects and systems, we can begin to use those rules to design, optimize and operate within the systems of trade and commerce.
By applying General Systems Theory in design, we can build and implement stable and productive enterprises, business models, processes and organizations. By applying these rules in analysis and decision making, we can predict outcomes and make optimized and profitable business decisions.
Why Understand General Systems Theory?
General Systems Theory is the body of rules that apply to all systems, from quantum to cosmic, from chemical to biological, from human interaction to inanimate computer and telecommunications systems. The rules of General Systems Theory govern the organization of cells, the propagation of ocean waves, the organization of corporations, terrestrial weather patterns, the organization of solar systems and galaxies, the success or failure of an ecology, and the organization of philosophical and religious thought.
Why understand General Systems Theory? The knowledge and practice of General Systems Theory gives the individual tremendous advantages in life … from social interactions, to success in the work place, and in general, to problem solving and self-actualization. Yet for all of its power and value, General Systems Theory has remained relatively obscure … the province of a few specialists operating in a few disciplines - such as computer science, engineering, medicine, and to a lesser degree cognitive psychology.
1. WHAT:
Enterprise Evolution & Design
1.1. The Organization of this Book
This book is organized into three distinct parts: 1. What? 2. How? & 3. Why?
Part 1. WHAT? The first part of this book addresses the problems, which this book attempts to resolve, and lays out the "key issues", or fundamental problems and challenges facing managers and executives of ongoing enterprises. Part 1 explores some of the pitfalls of contemporary management theory and practice, and a variety of paradoxical outcomes that regularly accompany common management decisions. This part also lays a basic and fundamental foundation in the General Systems Theory approach to enterprise management, design and governance.
Part 2. HOW? The second part of this book presents a series of recommended changes in management practices, organizational principles and decision-making processes based on the rules of General Systems Theory and the advances in communications and information technology. These changes enable immediate and dramatic increases in enterprise efficiency (the rate at which labor, capital and raw materials can be converted to goods and services) and enterprise effectiveness (enterprise productivity, or the value produced for the value invested).
To maximize readability of this book, Parts 1 and 2 avoid detailed proofs, theorems and mathematics associated with General Systems Theory. These are included in Part 3. Why? Part 3 is for the inquisitive, the skeptic and the student.
1.2. The Problem: Rational Business Design
Enterprises are inherently man-made constructs, organizations of people, equipment, capital, raw material designed to provide goods and services. Enterprises are "designed" by their founders, although the level of conscious design varies widely from enterprise to enterprise. Enterprises also exhibit traits seen in biological organisms (not surprising, since people make up a large portion of enterprise "capital"), such as growth, evolution and adaptation - without, and occasionally in spite of, conscious effort upon the part of management.
The key issues addressed in this book are:
1. Enterprises are under-managed, despite the myriad of policies, principles, procedures, reports , controls and layers of management - which often distract from overall management of the enterprise.
2. Enterprises are poorly designed and organized, based on out-dated and ineffective management principles which significantly hampers organizational efficiency and effectiveness.
1.2.1. Under-Management
Enterprises are "under-managed". With all of the controls, processes, procedures, reports and communication, many people feel enterprises are "over-managed". However, under-management is a paradoxical condition. Most "management" processes, procedures and controls focus on departments, work groups, divisions and business functions - which are often heavily managed. However the organization of enterprise itself - the macro-management of the enterprise is more-often managed by "the seat of the pants".
Enterprise organizations often exhibit untamed growth - like an ornamental shrub that allowed overgrowing. Processes, procedures, departments, teams, committees and task forces expand to fill the time and resource available. The corpus of the enterprise quite often grows faster than revenues. ###An enterprise, to maintain its form and function must be pruned, guided and directed according to some overall (albeit changing) design. Most organizational and enterprise redesigns (or reorganizations) do not follow, and in fact often are in direct conflict with, fundamental principles of design.
1.2.2. Poor or Outdated Enterprise Design
Enterprises are ineffectively designed and organized. Most managers, in designing or redesigning their enterprises, follow, indeed often ruthlessly adhere to, classical organization structures, such as those espoused by Henry Ford and Alfred P. Sloan at the turn of the last century. Unfortunately, these enterprise archetypes, held by many managers as gospel, often evolved by trial-and-error methods (a "great" manager became "great" because his methods, not necessarily resulting from scientific analysis, happened to survive through a sort of "commercial Darwinism"). Furthermore, those classical archetypes were constructed around the level of technology available at the turn of the century. The explosion of technologies in the late 19th and early 20th centuries precipitated a similar explosion in management theories, practices and principles. However, management principles, organizational models and enterprise governance have far lagged behind the advances in technologies - especially information and communication technologies - from the 1980s to the present.
A few enterprises have broken out of the industrial-age model. A tremendous period of organizational and enterprise design experimentation occurred during the "Business Process Re-Engineering" period of the early- to mid-1990s. Also, "dot.com era", from the late-1990s through 2001, produced a plethora of new organizational and management theories - some of which advanced management science, but many of which, thankfully, expired with the dot.coms.
1.2.3. The Evolution of Management Theory and Technology
1.2.4. The Evolution of Technology
1.3. General Systems Theory and Enterprise Design
1.3.1. What is General Systems Theory?
1.3.2. What is a System?
1.3.2.1. Definition of a System
We hear the term system often, applied to a variety of subjects - political systems, computer systems, educational systems, transportation systems, weapons systems, business systems, etc. Many people use the term "system" without stopping to think about the actual definition. For out purposes - improving the efficiency and effectiveness of the enterprise by applying a knowledge of system behavior, we must have an operating definition of a system. For our purposes, we will borrow from Prof. Ludwig von Bertallanffy's definition:
A System is a set of components, working together in a set of relationships, to achieve a common objective[3], where the properties of system are greater than the sum of the properties of the components.
In this definition there are five key terms: System, Components, Relationships, Objectives and Properties.
· Components are any parts of a system from objects in nature (such as a waterfall in a hydroelectric system), to man-made objects (such as gears and light bulbs), to people themselves. The components can be primitive (such as hydrogen gas as part of a fuel cell system) or complex (such as the engine in an automobile, or a computer in an airline reservation system). Complex components are often referred to as subsystems.
· Relationships are the connections between the system components -- how the components are linked, how they communicate, how they interact. Relationships can be forces (such as gravity), or they can be physical connections between the components. Relationships can be tight where the related components are rigidly linked together or loose where the components can operate somewhat independently.
· Objectives define the mission of a system - to educate individuals, to provide medical care, to govern, to produce a profit, to manufacture a product, to provide transportation. Systems are designed and optimized around the objectives.
· Properties are the characteristics of a system, component or relationship. A system may be fast or slow, durable or perishable, strong or weak. Properties can be inherent, such as roundness and resilience are characteristics of an automobile tire, tensile strength and flexibility are properties or characteristics of steel, potential energy is a characteristic of gasoline. These are properties of the components whether or not they are assembled into a system. Some properties are emergent properties or properties that cannot be attributed to a component, but only emerge when the components are assembled into an operating system. For example, acceleration and speed are emergent properties of an automobile. Acceleration is contributed to by all components of the automobile system, but is not a property of any single component. Several components must be arranged in a particular set of relationships for speed or acceleration to become available. An engine must be connected to a fuel supply, a chassis, axels, wheels, an ignition system and some type of guidance system before speed and acceleration can be observed as attributes. Automobile components lying in a heap in a shipping container do not exhibit these emergent properties (unless of course, you dump the container of parts off a cliff - at which they will accelerate at 32 ft/sec2 until they reach terminal velocity or hit the ground).
We often think of the term "system" as associated with computers and information technology, However,
1.3.2.2. The Enterprise as a System
An enterprise, for purposes of this book, is any organized and related group of people, equipment, capital, intellectual property and procedures that transform labor, capital, raw materials and/or information into goods and services for consumption.
An enterprise may take a variety of forms such as for-profit or not-for-profit, commercial, governmental, political, educational or philanthropic.
As we can see by the definition, an enterprise has the essential elements of a system:
· Components (people, equipment, capital, intellectual property)
· Relationships (defined by the procedures)
· Objectives (goods and services) and
· Emergent Properties (the transformation from raw materials and/or information into goods and services)
Enterprises are artificial systems that contain both organic components (at a minimum people, but also potentially other plants and animals) and man-made constructs. In some instances, enterprises act like organic systems, growing and evolving, and at times like artificial constructs.
Because organizations are systems, they have a set of predictable behaviors, and can be designed and modified with intent - or allowed to evolve. More often than not, enterprises experience a combination of both organic, evolutionary growth and intentional design.
1.3.2.3. System Models
A model is a scaled-down or partial representation of an object. The model contains just enough information about the modeled object such that modification or alteration of the model can enable the modeler to predict the effect that the modification will have on the object itself. For example:
· A clay model of an automobile is a partial representation of the automobile, with just sufficient detail to be able to determine the wind resistance of the design by placing the model in a wind tunnel.
· Computer models of aircraft now contain enough information for aircraft designers to predict the behavior of the final aircraft to near perfection.
· Accounting is a partial representation of an enterprise where money is a metaphor for the components and relationships of the business.
Models are smaller, less complex, cheaper to build, and easier to manipulate than the object or system they represent.
However, a model must contain the necessary and sufficient information about the object to perform the required analysis. A clay automobile model contains the necessary and sufficient information to determine wind resistance and thus predict the impact of body design on fuel consumption, but the insufficient information to determine crashworthiness, handling characteristics or operator and passenger comfort. Attempting to deduce or infer these characteristics from the clay model will most likely yield disastrous results.
Models of the Enterprise
Likewise, the financial model of an enterprise is necessary and sufficient to determine capital requirements and report profitability - but most of all, the financial model, with its origins in 14th century Italian commerce, is a mechanism to prevent management from cheating investors.
### INSERT MY RESEARCH ON ACCOUNTING HERE ###
The financial model of the enterprise is neither necessary nor sufficient for predicting performance, determining optimal organizations, or forecasting the effectiveness of changes in business models and processes. Financial models do not include sufficient data about organization, management control of production and resources, or operational dependencies and bandwidth.
Process-Flow Models
Process-flow models depict the input-process-output relationships between components of a system.
Hierarchy Models
The Three-Tier Model
Integrated Models
1.3.2.4. Macrosystems
1.3.3. Managing the Enterprise System
1.3.4.
1.4. A Systems View of the Enterprise
1.4.1. Enterprise Business Models
1.4.1.1. What is a Business Model?
1.4.1.2. Survivable and Non-survivable Models
1.4.2. Business Processes
1.4.3. What is a Business Process?
1.4.4. Business Context
1.4.5. Components of the Enterprise System
1.4.6. Optimization and Sub-optimization
1.4.7. Organizations
1.4.8. Business Ecologies
2. HOW: A Methodology for Enterprise Design and Adaptation
2.1. Enterprise Business Models
2.1.1. The Macrosystem
2.2. Business Processes
2.3. Organizations
2.4. Business Ecologies
3. WHY: Principles of General Systems Theory as Applied to Business Enterprises
3.1. Open and Closed Systems
3.2. Systems Organization
3.2.1. Systems Networks & Process Flow
What is a Process?
What is a Flow?
Miller's Magic Number
3.2.2. Management & Control
Transition from Process-Flow to Hierarchy
The Three-Tiered System Model
3.2.3. Organizational Structure
Coupling
Cohesion
3.3. Equilibrium
3.4. Optimization
3.5. Emergent Properties of Systems [von B 55]
3.6. Species, Number and Relations [von B 54]
3.7. Assembly vs. Segregation
3.8. Isomorphism
3.9. Inheritance
3.10. Hiding
3.11. Finality
[1] theory
\The"o*ry\, n.; pl. Theories. [F. th['e]orie, L. theoria, Gr. ? a beholding, spectacle, contemplation, speculation, fr. ? a spectator, ? to see, view. See Theater.]
1. A doctrine, or scheme of things, which terminates in speculation or contemplation, without a view to practice; hypothesis; speculation.
Note: ``This word is employed by English writers in a very loose and improper sense. It is with them usually convertible into hypothesis, and hypothesis is commonly used as another term for conjecture. The terms theory and theoretical are properly used in opposition to the terms practice and practical. In this sense, they were exclusively employed by the ancients; and in this sense, they are almost exclusively employed by the Continental philosophers.'' --Sir W. Hamilton.
2. An exposition of the general or abstract principles of any science; as, the theory of music.
3. The science, as distinguished from the art; as, the theory and practice of medicine.
4. The philosophical explanation of phenomena, either physical or moral; as, Lavoisier's theory of combustion; Adam Smith's theory of moral sentiments.
Atomic theory, Binary theory, etc. See under Atomic, Binary, etc.
Syn: Hypothesis, speculation.
Usage: Theory, Hypothesis. A theory is a scheme of the relations subsisting between the parts of a systematic whole; an hypothesis is a tentative conjecture respecting a cause of phenomena.
Source: Webster's Revised Unabridged Dictionary, © 1996, 1998 MICRA, Inc.
[2] Studies were conducted among a sample of 2,000 management attendees at three Applications Development & Management Conferences and two Gartner Symposium conferences held by Gartner, Inc. between 1996 and 1999.
[3] Von Bertallanffy's definition ends at "…to achieve a common objective." We have enhanced the definition by discussing properties of the system because these properties must be managed. It is possible for a group of components to "work together" to achieve a common objective without necessarily being a system. For example, I can throw a lead pellet at a bird to chase it away from my garden … or I can throw a handful of lead pellets to improve my odds of hitting or scaring the bird away. A handful of lead pellets, while increasing the probability that I will scare or hit the bird, can hardly be considered a system, for there are no emergent properties to the group of pellets. However, if I put the pellets in a shell casing with gunpowder, and load the shell in a shotgun and fire it in the vicinity of the bird, the emergent property of the loaded firearm is greater than the properties of the individual components. Hence, a loaded firearm is a system and the shell containing the pellets is a component of that system. Unless we can distinguish between true systems and coincidentally related objects, we'll waste a lot of time trying to optimize things than cannot be optimized.
Preface
For the past thirty years, I have been an educator, businessman and student of the practical application of General Systems Theory[1]. For about fifteen of those thirty years I have been proselytizing the word of General Systems Theory, and have been told innumerable times by students, colleagues, friends and associates - “you should write a book.” Well, this is that book.
Why should I write a book on General Systems Theory (also known as "GST")? There are two reasons: First, because the rules of General Systems Theory are the “glue” that holds our world together and the fuel that makes it move. It is the rules of General Systems Theory that makes things in life predictable, and the absence of adherence to those rules that makes things unpredictable. Second, for all of the literature published about General Systems Theory over the last 50 years, there is no "How-To" manual for the GST practitioner.
Whenever we make a decision, whether personal or business, the outcome of that decision will be governed by the rules of General Systems Theory. Therefore, GST should be the cornerstone of the foundation upon which that decision is made.
The Universe in Motion
The universe is alive in constant motion. Photons (quanta) move through space and time at the speed of light. Spinning quarks bang together to form protons and neutrons that make up the atomic nucleus. Electrons orbit the nucleus of an atom. Atoms twist around each other, sharing orbiting, gyrating electrons to form molecules such as DNA that form the basis of life. Life moves about the planet, digesting, respiring, working, warring, loving, communicating, and otherwise being mobile. Planets rotate on their axis and revolve around their suns that revolve around the center of the galaxy. Galaxies cartwheel through space in a grand, cosmic choreography. Without this cosmic and quantum motion there is no energy, no matter, no life, no great thoughts to ponder.
As complex and chaotic as it seems, all of this motion is generally predictable, because it follows certain rules. Planets orbit suns in a particular manner, following the "rules" called celestial mechanics. Electrons orbit atomic nuclei in a particular way according to the rules of quantum mechanics. Because we know the rules, we can use them to our benefit.
Understanding celestial mechanics allowed us to land men on the moon, and spacecraft on Venus and Mars and send Voyager out of the Solar System.
Because we understand certain of the rules of quantum mechanics we can alter the state of electrons, protons and other sub-atomic particles to our benefit. When you know the rules of electron motion, you can alter the way an electron moves to gain a benefit - such electric light, or a CAT scanner at a hospital, or a laser light to play your CDs. When you understand atomic motion, you can create a fuel cell or nuclear power plant or a new medicine or a new meal-time snack.
The Value of Understanding Similar Rules
These "rules of motion" in celestial mechanics and in quantum mechanics are at opposite extremes - from the motion of cosmically large objects and systems like suns and planets to infinitesimally small objects and systems like atoms, molecules and photons. The truly amazing thing is that many of the rules of these extremely different systems are, in the terms of systems theory, isomorphic, which means that, even though they are, physically, very different systems and objects, the rules of their behavior are very similar in structure.
By studying, analyzing and understanding the isomorphism (or similarity of structure) of the rule sets for very different objects and systems, we can begin to apply those rules to even more apparently unrelated systems.
Why Understand General Systems Theory?
General Systems Theory is the body of rules that apply to all systems, from quantum to cosmic, from chemical to biological, from human interaction to inanimate computer and telecommunications systems. The rules of General Systems Theory govern the organization of cells, the propagation of ocean waves, the organization of corporations, terrestrial weather patterns, the organization of solar systems and galaxies, the success or failure of an ecology, and the organization of philosophical and religious thought.
Why understand General Systems Theory? The knowledge and practice of General Systems Theory gives the individual tremendous advantages in life … from social interactions, to success in the work place, and in general, to problem solving and self-actualization. Yet for all of its power and value, General Systems Theory has remained relatively obscure … the province of a few specialists operating in a few disciplines - such as computer science, engineering, medicine, and to a lesser degree cognitive psychology.
[1] theory
\The"o*ry\, n.; pl. Theories. [F. th['e]orie, L. theoria, Gr. ? a beholding, spectacle, contemplation, speculation, fr. ? a spectator, ? to see, view. See Theater.]
1. A doctrine, or scheme of things, which terminates in speculation or contemplation, without a view to practice; hypothesis; speculation.
Note: ``This word is employed by English writers in a very loose and improper sense. It is with them usually convertible into hypothesis, and hypothesis is commonly used as another term for conjecture. The terms theory and theoretical are properly used in opposition to the terms practice and practical. In this sense, they were exclusively employed by the ancients; and in this sense, they are almost exclusively employed by the Continental philosophers.'' --Sir W. Hamilton.
2. An exposition of the general or abstract principles of any science; as, the theory of music.
3. The science, as distinguished from the art; as, the theory and practice of medicine.
4. The philosophical explanation of phenomena, either physical or moral; as, Lavoisier's theory of combustion; Adam Smith's theory of moral sentiments.
Atomic theory, Binary theory, etc. See under Atomic, Binary, etc.
Syn: Hypothesis, speculation.
Usage: Theory, Hypothesis. A theory is a scheme of the relations subsisting between the parts of a systematic whole; an hypothesis is a tentative conjecture respecting a cause of phenomena.
Source: Webster's Revised Unabridged Dictionary, © 1996, 1998 MICRA, Inc.