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THE VIABLE SYSTEM MODEL by Stuart A. Umpleby Research Program in Social and Organizational Learning The George Washington University Washington, DC 20052 [email protected] December 15, 2006 Prepared for the International Encyclopedia of Organization Studies 2 Viable System Model The Viable System Model (VSM) was described by British cybernetician Stafford Beer in his books Brain of the Firm (1972), The Heart of Enterprise (1979), and Diagnosing the System for Organizations (1985). The VSM is a model of organizational structure that is based on the structure of the human nervous system. Beer notes that the human nervous system as a device for information processing and decision-making is the result of millions of years of evolution. Imitating it may have some advantages. The Viable System Model is based on Ross Ashby’s theory of adaptive behavior and his Law of Requisite Variety. For a further explanation of Ashby’s work, see the definition of “cybernetics.” Conceptual Overview The Viable System Model 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 if there is a balance in ...

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