Systems Theory of
Organizations
Today we're gonna look at how we can see organizations as systems. Ludwig von Bertalanffy and J.G. Miller established the foundations of General Systems Theory in the 1960s and 1970s. And researchers in the Organizational Studies area imported the systems metaphor of the living biological organism and the key terms that go along with it to pursue a richer understanding of how organizations worked.
In 1966, for example, Daniel Katz and Robert Kahn published The Social Psychology of Organizations that applied systems theory's concepts to organizational life. I think it's most helpful to see systems as an alternative perspective.
Classical management era of organizational studies were really the dominant view, and it saw organizations as machines and that was the fundamental way to view life in organizations for many decades. The goal of that classical management school of thought was they wanted efficiency, productivity, and control.
They were looking for the one right way or, as Frederick Taylor said, the one best way to do every single task in the organization. And so when systems theory came along it was really a whole another way to view life at work. A systems approach looks at the whole organism, not the little pieces of the machine, but how it all fits together as a whole.
GOAL OF THE SYSTEMS APPROACH
So, the goal of the systems approach is to describe and explain how organizations work. They don't have a control mindset. And they wanted to pursue multiple ways to accomplish the various goals of the organization. They're not looking for the one right way. So I think it's best to understand this systems approach as a counterpoint, or an alternative, or even a reaction against the classical management era and school of thought.
So, in an organization, we have three major parts. We have a set of inputs where we have resources, information that is needed to supply the organizational system. We also have the processes or throughputs. That's all the activity within the system that we need to do to accomplish work. And then we have the outputs.
Those are the outcomes, the products, the services created or delivered by the organization. A typical pizza place, for example, has inputs you might expect. The people that are doing the work, the food, the ovens, refrigerator, pizza boxes, and all the other materials. And then you have your processes, or throughputs, where you make the dough, you cut the vegetables, mix the sauce, answer the phones, take the orders, make the pizza, delegate the tasks.
Lots of work in a pizza place! And then you have outputs which are hopefully pizza delivered to happy customers. You have a profit from the shop. Hopefully, your employees are getting good paychecks. You put the trash in the dumpster and all the other kinds of waste material.
We also considered those outputs of a system. And those are the three principal parts. So systems here are clearly open. That's one of the fundamental concepts in systems theory. They're open to their environment. When we say environment, we don't just mean things like the weather. Of course, we're not excluding that weather but the environment more broadly.
So you have permeable boundaries where information comes in and out, resources flow both in and out of those boundaries and around the organization. And you have an exchange with the environment that's not just happening, but it's essential for the health of the system. So, constantly things are coming in and moving out of the system to keep it healthy, to keep it functioning properly. And your environments that you're in are very unpredictable.
You can't say for certain exactly
what's gonna happen with competitors, and exactly what's gonna happen in the
future. So you have the leaders that are scanning the environment, they're
called boundary spanners. And they're looking at the environment to see what
the vendors are up to, what the customers are looking to do, what the
competition is up to, where the general economy is headed.
HOLISM IS AN IMPORTANT PART OF THE SYSTEMS APPROACH
And they're keeping an eye through an environmental scanning on all the things that are happening in and around the organization to make better decisions. Holism is an important part of the systems approach where systems are viewed as a whole, not simply as a collection of separate pieces. So, you wouldn't view yourself, your entire body as just a collection of cells, you're much more than that.
Another way to say it is a system is greater than the sum of its parts. Some people use the term synergy here, which
has a bad rep in some circles. Those parts of the system are interdependent and
they interact through mutual feedback processes. So, feedback is a dynamic
process where the pieces of the system, of that whole, are all interconnected.
INTERDEPENDENCE A LEADING CONCEPT
Interdependence is another leading concept in the systems approach where organizations are in a dynamic and interconnected relationship with their environment. For example, there're sub-parts within the system that are also interrelated, they're not isolated.
The organization is not simply isolated and plopped down in the community, it's connected to that community and the pieces, the parts within that organization, are also interconnected. They comprise interconnected sub-systems. So, you have an entire organization and then you have, let's say, some major departments within that organization, and then within those departments, you have work teams that are also interrelated and overlapping.
SYSTEM DIRECTLY OR INDIRECTLY INFLUENCE OTHER PARTS
So, changes to one part of the system directly or indirectly influence other parts. For example, if you had some people call in sick on one team, then other people in the organization would be at least indirectly affected and have to maybe pick up some of that work. Maybe you hire a bunch of people in one part of the organization and everybody is gonna have to get on board and train them and adapt when you add people. So, everything is interconnected.
All the parts either
directly or indirectly influence the other parts. Systems also have goals but
the goals, again, are not like classical management goals of finding the one
best way. Goals are contingent and negotiated. That means it depends on what
exactly the organization is facing and where it's going. It'll have to adapt
along the way as the situation develops.
EQUIFINALITY IS A POWERFUL CONCEPT
Equifinality is a powerful concept to describe how systems people approach goals. The first part of equifinality is it is no one best way to organize, and this, again, flies directly in the face of people like Frederick Taylor who are looking for the best way.
The second part of equifinality, however, makes the concept that much more powerful, always of organizing are not equally effective. So, what they're not saying is look, there's no one best way so let's throw it all out.
What they're saying is there may be not one way to do everything. However, there are some ways that are better than others. You just can't always know ahead of time as you pursue your goals what those several good ways are. However, for example, if you want to travel from New York City on a road trip to Los Angeles, you cannot find one route at all times that's the one best way depending on weather, time of year, traffic patterns, road conditions.
Look for a
variety of ways to get there in that specific case. However, they're not all
the same. For example, if your travel companion, your co-pilot says, "Let's
go from New York City "to Los Angeles on a road trip, "but let's go
all the way up "through Canada first," you're probably gonna say "That's
not one of the better ways "to do things."
FEEDBACK AND SYSTEMS APPROACH
Feedback is also an important part of the systems approach. We have negative feedback that seeks to correct or reduce deviations in the system's processes to reestablish a steady course back in the system's direction's goals.
That's negative feedback that corrects. Then you have positive feedback that changes or grows the system in desired ways that amplify and enhance the system's current processes. So you have positive feedback that gets you going in the direction you want to go faster. However, if you think about it, just like with kids, you can't reward the wrong kinds of behavior accidentally.
So, positive feedback in this sense is not necessarily always good for a system. You might have a boss that's screaming and yelling at everybody. And if that boss gets a promotion that might be seen as positive feedback that would then amplify that boss's approach and maybe the people around that boss would scream and yell at everybody cause they're seeing that that's what's being rewarded.
And then eventually, people
would have to give some negative feedback, say "Hey, let's tone that down.
“We don't want to be like that," to get the system back on track.
ENTROPY THAT IS CENTRAL TO THE WAY SYSTEMS WORK
Entropy is a term that is central to the way systems work. It's one that adds a lot of depth to this approach, and that is systems run down, they deteriorate and move toward disorganization. So left on their own, systems will run down. For example, if you just left your apartment and didn't clean it, and you're still living in it but you left it on its own and didn't do the dishes and pickup, it would only take a day or two before it looked like a completely rundown deteriorated system.
And that's why we seek more balance. There's energy, resources, information coming into the system to help it reach homeostasis, or equilibrium. Those are both ways to say balance. So you have a lot of effort and work and time put into maintaining a balance in the system so it doesn't on its own run down.
And the same way, if you stopped showering your body as a system, you stopped bathing, brushing your teeth, your friends would notice you. They would say, "Wow, you're not maintaining. “Do that, otherwise you're gonna "continue to deteriorate and fall apart."
It has not used systems theory in a lot of very specific ways as it is. It was more like
an opening. An open door to lead up to a whole other set of precise theories to
look at organizations.
So, for example, complex
adaptive systems, or chaos theory as it, were built upon the foundation of systems theory.
LEARNING ORGANIZATIONS SCHOOL OF THOUGHT
Learning organizations is another school of thought that came out of systems thinking. And of course, Karl Weick’s research on loose couple systems is a direct outshot of the systems point of view on organizations.
So systems theory has
provided a powerful set of concepts and a vocabulary and an entire way of
thinking about organizations that is a direct counterpoint to the classical
management era.
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