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VVhat this book is
ntroducion.

\/

Forevvord
THE VIABLE SYSTEM
SectonOne ........................................................
SectionTwo ........................................................
Section Three ....................................................
Secton Faur .......................................................55
Sechon Five ......................................................73
Section Six .......................................................9
Sec1oriSeven ..................................................
Secton EgHt ....................................................1 23
Completion of the ModeI ...................................135
APpendix.......................................................137

VIABLE:
able to maintain a se parate existence
- The Oxford En. g/ish D;ctonary.
An organization is viable if it can survive ir, a particularstof
environrnent. For aithough its existence is separate, so that it
enjoys sorne kind of autonorny, it cannot survive ir a vacuurn,
he foetus s called viable at the mornent wnen it is ao!e to
'rnairtain a separate existence', which is long before it is actuaiiy
born. And afterwards, ~he individual rnaintains ties with mother
and family, with a locality, with a culture . . existence is never
independent of other existences, even though the individual has a
separate identity.
In the sarne way, other sorts of organization have identty, and are
capab!e of independent existence, even though they can survive
only within a supportive environrnent. A village is a recognizable
and viable organization, with its church and its school, its
butcher's and i ts baker's: but it is ernbedded in a rural societv that
nourishes it, and in a lar ger social system beyond that which
underwrites its cultural identitY.
Similarly, a firrn may be the subsidiary of a larger corporation: it is
a viable entity in itse!f, but in a specialiy defined way it 'belongs' lo
(what is often called) the 'parert' company. lts wealth-generating
profit centres likewise 'belong' to it aithough they could he
hived-off, and sometirnes are.

In using this Viable

o System Model, or VSM, it is therefore
irnportant first al to determine ecisely what is the organization
to be modefled, andtospecify its boundaris - although these
may weH change as the organization adapts.
Next, you will need to specify its viable parts, and the larger viable
system of wHich it is itself a viable part. This takes sorne
disentangling, and time and thought should be devoted to the task.
The big problern is this:
you are not determining absolute facts:
you are estabiishing a set of coriventions.
So renember:
a model is neither true nor false:
it is more or less usefu!.
Then will any sort o description o the organization suffice? No
ndeed. in particular, the standard 'family tre& is quite unhe!pfuf
- except to estabiish who is ultimately to b!ame if things go
wrong! This is because the organization chart makes no attemptto
modelVlAB!LITY.
THIS SKETCH
depicts a viable .system in rough outlne.
But take a close look at it. The total system contains two systems
whrch.are identical with it. Like the foetus mentioned eariier, these
nNo embedded systems are themselves viable systems.
They are RECURSIONS OF THE VIABLE SYSTEM. Wc shali make
use o this mathematical terrn becaijse, while its meaning in
context is evident; it reminds us th.at we are not talking loosely
about any kind o system contained inside another - but about an
absoiutely precise definition o vibility.
Please look moreover at the large dotted square, and note that its
content is identical with the red structure in the twa lower
recursions. This is because the dotted square is a basic component
o the nex higher viable system.

Dt 1 Cil
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Maybe your study of this nidal sketch orovoked the thought that
this version has no connexion with the outside world. Correct: we
shafl turn to this omission r epeatedly. Meanwhile, however, the
diagrarn highlights a most i mportantfeature of viable systems: they
are self-referentiai. Their logic closesin on itseif. In this
characteristic hes theexplanation for
the maintenance of identity
thefaciiityof se frepair

self-awareness
recursivity itseif.

it is worth refiecting on the potency of this arrangernent, and on

the fact that recursions of the viable system can be extended
upward to the terrestrial giobe (within the Universe) and
downward to the ccli (containing molecules, containing
.). In
practce, the best plan is to consider a trio of viable systems at any
one time: the organization we wsh to study, that within which it is
contained, and the set of organizations contained by it - one leve
of recursion down.
Look again at the diagram on the last pageto take this point
fuliy:
the sets of viable systems shown in red themselves contain
viable systems, and so on down. But we shail concern
ourselves with the red ones ALONE.
Hence, if the viable systems contained within the red
organizations call for explicit discussion, the methodology
proposes that we shift the whole trio of recursions to which
we are anending one recursion down.
Then the organization that we originaliy decided to study
becomes 'the next higher recursion', the contained red
organizations are now of prirnary concern, and the blobsand-boxes lost within the red organizations now emerge as
'the next lower recursion'.
Think this through in detail with the heip of the facing dia gram there are four triple-recurson projects shown, each one focussing
in RED on an organization one recursion removed from its
neighbour.
4

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POINTS TO NOTE
Each o these four squares ought to be
envisaged in terms o the VSM sktch
already studied.
How we specify the whole series and
its elernents is a matter o choice, o
utility to our purose.
e There is no hierarchic significance in
the vertical listing o elernents. These
may be strongly or weakyconnected.
In this case, the strong connexion
is actuatly sequential.
Let us re-affirm: any ore
organizational study wili focus on the
RED SQUARE. It wifl take into
account this system's ernbedment in
the higher recursion o the big (back)
box, and the content o the five
(arbitrariiy five) small boxes
embedded in it. The connectivity
between evek o recursion isa major
topi o our study .
. . . for the moment it is surely
exciting to note that (just as the VSM is
aways the same) the connectivity
between any pair of recursions is the
same.
fl The saving in time in
analysis, diagnosis,
computerization - induced
bythis invariance is
enormous.
e ANY ORGANIZATION, although
quite property depicted as belongirg
to 'THIS' set o recursions, belongs to
an arbitrarily large numbenofother
sets o recursions too. For example,
ron and Steel aso breaks up
geographically, or by Companies.

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NOW DO THS:
You are a viable system. In which viable system are you
embedded? H. ow many recursive systems can you list
before you reach sorne kind of 'totality'?

-.

This is to cast your own self in the role of 'fine wire'

in the comparable tabulation of industry we just
exarnined - and to work upwards.

Please make sorne kind of diagrarn, so that these ideas

become familiar and a record of your investigations is
begun.
Experience suggests that you may well have found it difficuit to
decide which chain of systems you wanted to model. You belong
to a family, which beiongs to a village, and so on (that chain was
mentioned earher). But you also have a job - which embeds vou
in a firm or a service or whatever. The chain of systems is now a
dfferent one. You belong perhaps to a church, to a sports club, to
an 'oid schooi' - and so forth. Each of these chains of systems,
which embed each other and ultimately you, we can cali a
recursjve dimension.
Whatever viable system Wc wish to modd exists in a variety of
recursjve dimensions. 'What business are we in?' is the classic
quesnon for a board of directors to consder -- and Ehere may be
severa! answers, So the SYSTEM-!N-FQCUS may have more than
one next higher and next lower recursion. t can be thought of as a
viable system that Js central to a whole sphere of existence: the
sphere is marked out by a coHection of recursive drnensions
running through the system-in-focus at the centre (as the rim of a
wheel is marked out by its spokes).
Had you forgotten the admonition at the foot of the previous page
in doing this exercise?

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Although it is important to develoo an easy famliarity with

recursive dimensions, and with the shifting o the system-in-focus
to another recursive leve!, there wili be no need to make afl the
possib!e mappings implied by the whole 'sphere o existence'. To
the contrary: the whole point is that one should correctly choose
the triple ernbedment on whch to work. Usually it is obvious
enough that certajn narned entities con stitute the system-in-focus,
and the next higher and next lower recursions. It is only a proper
appreciation o dimensionality (as just defined) that permits
most-usefu determ i nation o system ic boundares.
In the experiment just undertaken, how did the dimensions o
your own existence affect the boundaries o the systems o
higher recursion that you were able to specify with
exactitude?
(That k, did you get your legal setf mixed up with your
vocational self, your reiigious self, your aesthetc self, and
soforth?
Since the
ointegral you is the system-in-focus, a perfect
identity al these selves is ideal - at the centre of the
sp he re.
But in terms o management, the way in which a Jife is
conducted dimensionality becomes important: many
psychiatric problems are rooted in iriter-dimensional
conflict that is not understood because boundaries have not
been recognized.
The same goes for yourfirm.)
Secondly, in the completed experirnent, when you reconsider
all the organizations nominated, are you certain that each one
is actually a viable system as defined?

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Let's remember that a viable s y stem is capable of independent

existence
within a specified environment.
Human beings are periect examples of viable systems - BUT suck
al the air out of the room, and then see how viable they are.
On the other hand, the viable system is necessarHy a producer of
the organization, and not just an adjunct to it, however irnportant.
An invoicing department has no meaning uniess the product is
there to be invoiced; and it would surely be perverse to contend
that it is a viable system whose environment is the whple

corporation,
NOW DO THIS:
Think oa manuacturing company known to you as the
S ys te m - i n - oc us.
List the organrzations of the next lower recursion ---- that is,
the ernbedded suhsicliaries or departrnents that hetween
them PRODUCE THE COMPANY.
These are ah to be viable systemsn themselves. They are
essentiahly proft centres. They can in principie be 'hived
off' - soid as going concerns (and replaced by bought-in
products or services),
Next make a hrst of company systems or departments that
are NOT embedded viable, systems.
It is impodant to spend time on this exercise. Most of the incorrect
inferences (and therefore the inopportune diagnoses and
recommendations) made in applying the VSM derive from
nominating activities that are not in themselves viable systems as if
they were.
Look back to Figure 1 and observe that many structures are shown'
that are NOT red embedments - viable systems in themselves.
This exercise begins the process of discovering what they might be.
P!ease do sorne writing or diagrarn sketching before turning the
facing page. The notes on self-reference may However aid the
thinking process.

^-

'
jou Sef-Referenca

Ir

Mention was made earlier of the self-referential nature of viable

systems. Their logic closes in on itself, we said.

If;

This 15 not to say that a viable system is a closed system: we shall

soon be studying its ecology - environmental interaction with an
'outside'.

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For the moment however, al! the emphasis is on what the biologist
calls the interna environrnent
Al of the systems that are not next leve! recursions are dedicated to
STAB!LIZING this interna! enviroflrnent. The biological narne for
this stabihty is HOMEOSTA,ss.
For exam p le, in the bodyr
Whi!e the h-t, Junzs, !'ver, kidriv and so ori are a!!
cccfr
o ansm, c:/er supcortfve

Systems are dedicared to the homeostatic ftinc+ions oF

keeping the temperature stable, maintaining the blood
sugar leve!, managing water leve!s, balancing
hormones
Sirnilariy, in the firm:

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While the profit centres produce the company, cost

control, quality control, managernent inventorv, stock
control - alt these are obvious examples of horneostatc
regulaton, and financia accounting generates the balance
sheet after al!.
But as you do the exercise on the facing pace, sorne activities
ought to give you pause. Wiat about the Board, the sales division,
the engineers, the compute, departrnent, for instance?
This noton is lfkely to be whoHy unfamiliar: try to understand it.
Se! f-ReproductIon is usual!y thought of as the outstanding
characteristic of viable systems. But it is continuous and
regenerative selF-production that undrwrites IDENTITY.

How did the exercise go?

One thing that may well have become obvious is that classical
organizational forrnulae, such as 'production, sales, finance'
cannot be o much help in thinking through the structure o a
viable system. It is wholly unsafe simply to Iist major deparnents
(however essentiaj, however poweul) as constituting the next
lower level o recursion
Here are sorne comrnents on typical problern areas, as mentioned
on the p receding page:
The Engineers
L

Assuming that this is not an engineering company (making

turbines or switchgear or boilers), 'the engineers' are probably
engaged in maintenance and n designing and making special
p urpose bits and pieces of machinery.
The Company could not operate without thern, yet they are not
a viable system. Their job is to facilitate operations notany
operations, but these operations.
Now here comes a vital distinction-. The engineers could form
themselves into a gui!d o jobbing engneers, resign as a body,
and set themselves up as a contract meintenance outfit. This
lile cornpany would be a viable system. The distinction is this:
the men and their joint engineering expertise can be 'hived off'
in this fashion - but they do not take their function, the works'
orders and the p!ant modus operandi with them. They take their
knowledge o such things, but no, whatthey actually do in the firm.
This example makes a gentle start, because these folk do not
often think o themselves as 'separate existences'. This is not
usually true o the next group o people.
The Sales Divis ion
In fact exactly the same considerations apply to sales as to the
engineers
assuming thatthe company is nota selling concern
entire. There certainly are companies that buy in goods, and
then selI them, and do nothing else. In that case, to seli 5 to
produce the cornpany.
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In a manufacturing concern, however, the sales function

facilitates the passage of goods from the viable units that make
them to the consumer. Obviously, this activity is focussed on the
market-place; and the whole operation takes place altogether
outside the doma in of Figure 1 (although it is necessarily
anchored within it).
Certainly the sales function is vital - so is the body's endocrine
system - but it is not normatly a next recursion viable system.
NOTE: So the Sales peo p le were absolutely in order when
(relatively recently) they began to say thatthey
dscharged a MARKETING FUNCTtON.
No doubt it sounds better to be a Marketing
Director than a Sales Manager: this time the instinct
has survival value.

The Computer Departrnent

After entertaining these two considerati.ons, the case of the
computer (which often causes great dissention) will surely fail
easily into place.
Once more we have a facilitator: it is a unit intended to make
things happen more smoothly and more quickly. And once
again we observe that the computer group may leave as a group,
and set up shop as a viable system - as a bureau or as a
c.onsultancy. But they cannot take the stuff of their computing
with them. To take the data relating to company management
would be absurd as well as illegal; to take the software would be
far from absurd and is usual y done, but it rernains theft.
However, distinguishing between software created for the
employer's ownership and the programmer's files of personal
knowledge is beyond the competence of the legal system (which
has not begun to address such matters non-trivially so far).
Next: if the firm is boid enough to have a computer unitthat is
concerned not merely to facilitate more smoothly and quickly,
then its activities will necessarily be concerned with innovation
instead. This innovation will either he directed to managerial
ends (for example, in simulating alternative pc{icies) or itwill
11

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spawi cov: p uter'. based activity that mg become a

subsidiary compan y - and therefcre a viable system itseif. In
either case, the computer department is not a viabe system in its.
own right.
Finafly comes the specal case, which does occur. Just as there are
companies for which engineering or seHing are (atypically)
activites that produce the company, so are computer bureaux
viable systems. Now it may happen that a firrn constitutes i f s own
facility as a hureau
which selis its output. If tbk product, or part
of it, goes toan outside custorner, then - if it is significant it
may best be regarded as an embedded viable system. lf tbe
product is 'sold' only internally, under transfer pricing, then this is
rnereiy conventional. In such a case, as in 'he interna!Iv-used
component of the general bureau case, the un:t is not a viable
system - espectaliy insofar as it nas no exposure to market rorces.
Transfer price s y stems sirnply do not work wben there is external
(and probably cut-throat) competition.
The

Board

The Board cannot possibly be a viable system

The Board is a subsystem serving internal and
homeostasis.
Not 211 Boards know this.

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The outstanding problern in considering the role of the Board is

tied up with the self-reference characteristics of the viable
systm. Whose power does the Board embody? The l aw says
that of the shareho!ders. But the Board also embodies the power
of its workforce and its managers, of its customers, and of the
society that sustains it. The Board metabolizes the power of ab
such participants in the enterprise in order to survive. If it fails in
this, the participants wiii use their power against the so-ca!led
viable system out of selfsh interest: to keep wages u p , to keep
prices down, to preserve the ecoiogy - depending on their
roles. It is a fascinating feature of contemporary society that the
participants (al those mentioned) seem willing to pursue selfish
inteestto the point where the viable system in vvhich the y have

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a profound stake, as employees, as needy consumers, as

regional inhabitants, is actually rendered viable no longer.
If neither the prtici p ants have undestood the viable system,
nor the Board has recognized systemic seifreference, then the
identity - the survival - of the enterprise is under threat. It
a!ways was; but people used to behave in ways that were
consistent with viabiiity most of the time. That they do so no
longer results from the increased social awareness of the
underprivileged, at home and throughout the world, the
archaism and disuetude of the civil and moral iaw, and the
general incomprehension of technologicai advance.
The redesign of institutions, from firms to governments, from
educational establishments to social services, is the end to
which survival-minded people must address themselves. Ifthe
process does not start with properly constituted Boards, it will
start (as we observe) with 'alternatives' - many of which (as we
also observe) involve violence.
It may be that your interest is to model an organization quite
different from a manufacturing company. Unfortunately, it is not
feasibleto run through al the kinds of organization thatthere are.
But if the organization is a viable system at al, it will contain
lower-recursion viable systems that produce it. ldentify them; and
do not be bullied by current practice or power pofitics into
including subsidiaries or units as viable systems when their roles
are supportive rather than productive of the System-in-focus.
In particular, the argument that this treatment 'does not apply to
us' is always spurious, because the approach concerns only those
factors that are inariant in al viable systems. The biggest red
herring of alamong these false contentions is the one that claims
'we do not make a profit'. That makes no difference to the structure
of viability at all. True, it poses problems of measurement, and the
fixing of criteria of success: these will be discussed later. But a
hospital or a school or a government department has to produce
itself, continuously and regeneratively, to maintain the identity
that ithas just like any other viable system.
13

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Cho Ices abouternbedments will stilt have tobe made, and they
will be based on insight into the viable system and the judgment of
utihty in the emergent rnodej. For instance, what produces a
university is its acitvity in teaching and research (and not its
elaborate hierarchy of a court, a senate and a hundred
committees, its famous library, its accommodation and catering
facilities). But whether the teaching and research are embodied in
viable systems called faculties, with embedded departments, or in
courses, with embedded o ptians, depends on the model maker.
5/he rnight ask the question: which account is more conducive to
the need for adaptation? It is often worthwhile to develop more
than one model, and to learn fron its elaboration.
Elaboration there certainly will be. Qn the facin g oa ge vou wUl
recognize the model of total industry, and of its ore ernbedded
viable systern heavy industry, that we used before. Last time we
picked out ron and steel - and analysed that industry through a
couple more recursions: In doing so, obviously, we discarded the
remainrng elements of cadi leve! of recursion, because they did
not belong to the System-in-focus. The new diagram stops at the
second leve! of recurs ion, and graphically ilustrates how the
viable systems pro! iferate in the horizontal plane. The picture is
presented to he!p you 'get the feel' of rnodelling in this mode
and please do not blame the iheory of viable systems for
making fe so elaborate, because fe is that way - but especia!ly
because this approach is in fact a simpflfier of elaboration. The
point was made before about the vertical recursion: all the
embedded systems, and al! their ernbedments, and so on, al! have
the SME structure. Now even the horizontal spread of
replications, at every leve! of recursion, is seen as having that same
structure tao.

14

Ir is bevond
uman that 'total ndusny' s venv larga and very
eabote. No amount of ngenuity can rnake it iess so. What
science CANdo, however, by finding tha invariances that underiy
viabilityl is to make aH of it susceptible to a uniform description.
Contempiate this, then, through the eyes of Figure 1:

Very !arge viable systems indeed, such as the marine and fisheries
administration of Canada, such as the whole social economy of
Chile (in Allende's time), were modelied in this way in lessthan
two years. It is aH due to the parsirnony of natura! invariance.

15

Probably you will not need to take advamage of the widespread

(that is, vertical and horizontal) invariance of viability structures by
rnapping everything in ight evenwithin your own
organization.
Even so, it is an excelient plan to envisage the whole
organizational terrain in these terms befare narrowing down to the
specifics of the model that you intend to construct. This will give
you a comfortable sensation of knowing where you are in relation
to major features of the territory, and sorne confidence thatyou are
using a useful descriptive language of general application in this
zone. (It is al[ too easy to talk in the esoteric terms oan inherited
nomenclature that beg the vital questions.)
NOW DO THS:
Choose and c!early define the Systern-in-focus that you
intend to model.

Survey the sets of recursions o viable systems that

constitute its organizationa! 'eco!ogy', hoth vertical!y and
horizontal! y . Give the System-in-focus a well-chosen name.
(This is not altogether eas y . 4t is vital to dstinguish
THIS system from a!! itsemhedments, and from its
organizational cousins' in the horizontal plane.)

Exactly specify, with a name, the viable system in which

your systeni is embedded.
(lf there is more than one of interest, do the Job twice
and distinguish between names.)
Exactly specify, with names, the viable systems that your
System-in-focus embeds.
You know, alter this, precisely what you are dong in terrns of a
triple recursion: the System-in-focus is in the centre of a higher
level of recursion, in which it is embedded, and it contains a set of
viable systems whch exist at the next lower leve of recursion.

16

SPECIAL TERMS OF ONE

VIABLE

ah/e to maintain a se parate existence.

RECURSION

a next leve! that contains all the !evels beIow it.

SEU-REFERENCE property of a system whose /ogic closes in Qn

itself: each part makes sense precise/y in terms
of the other parts: the who/e defines itself.
HOMEOSTA5/5

stabi/ity of a systern's internal environrnent,

despite the system's having to cope with an un predictable externa 1 environmen t.

/NVAR!ANT

a factor n a complicated situation that is

una fected by al/ che chan ges surrounding it
(such as the speed of lightor the value of').

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The best place to start work is the embedded viable system of the
System-in-focus. Let us pick it out of Figure 1, like this:

The red dagram is the sign of the viable system, and the black
cornponents belong to the System-in-focus. We shall start here
because it is tbk part o the viable system that produces it. Of
course, your list of embedments will contain more than one
subsidiary (Figure 1 contained two of thern, and you might have up
to seven or eight: not many more, 1 hope, or else you may be
rnissing a who!e leve of recursion).
The set of these embedments will be known as SYSTEM ONE of
the System-in-focus. Each component, such as the orie aboy e, wIl
receive the sarne treatrnent as the others.

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To cometo methodo!ogcal grips with the problern of analysis, the

first o our actions is to cut out the red part of the picture. Get rid of
it. This leaves for consideration simply a b!ack square and a black
circie. Leaving aside the fact that this does not leave rnuch for us to
work with (but there is!), p lease pause hereion- enough to answer
this question - which has a precise and important answer:

PLEASE REPLY TO YOURSELF

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tWKy is the red portion of Figure 4 to he ehminated from

-
consideration?

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The answer is that this is not the Systern-in-focus. The red

infrastructure exsts at a iower leve! of recursion than you decided
to consder.
If this was not your own c!ear-cut answer to the aboye red
question, then the meaning of systemic recursivity is
eluding you - it would be advisable to return to the
previous section.
CON VE NTIO NS:
For ease of reference to other writings about the viable system, we
shall keep to ,he dagrammatic conventions that have been in use
for . twenty years.
The square endoses al! the managerial activity needed to
'run' (whatever that may mean)
the circie, which endoses the relevant operations that
produce th (total) viable System-in-focus.
The amoeboid shape represents the environment of a!! this,
which - until now has been kept in the background.
The red arrows refer to the necessary interactions between
the three basc entities: each stands for a mu!tip!icity of
channeis whereby the entities affect each other.

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What can possibly be done with the picture at Figure 5, given that
it is inadmissahie to consider tHe infrastructure discarded from
Hgure 4? It comes down to asking what is reaHy going on in the
dynamics o any enterprise.
Perhaps what is going on is the manipulation o men, materials,
macHinery and rnoney: tbe four M's. Yet there is a more
fundamental manipulation that occurs: it app!ies to the biological
celi as a viable system, as weli as to a giant corporation, orto a
gove rn m ent.
WHat is going on is the MANAGEMENT OF COMPLEXITY.
In order to discuss this, a special term is enrolled. It offers a
measure o the compiexity with whch management Has to deal.
The term is VARIETY.
Variety is a measure of complexity, because it counts the number
of possible states o a system.
21

You may weli say that the number cf pos sble states in a
ccmohcatd entracreneuria systrn s
:cseiy ccuncable.
That is surev COaCt. However, it is cunabia in p:inciQie: it is
therefore amenabieto the making of comparative statements (this
has more variety than that), and to the arithmetic of ordinal
nurnbers (this product is the fUth most profitable).

Adopting ths extrernely practicable usage straight away, we can

state that the square management box has lower variety than the
circle that contains he operations. This is evident insofar as no
management can possibly know everything that Happens. For
exampie, this morning Bili (who was operating the thrd machine
Qn the left as you go in the third bay after No. 7 Gate) had a row
with his VVC, and fumbed about in getting the work started - a
our-minure set-up t!me took six minutes. It is a 'possible state of
the system'; but vou did not know that t happened, and it is not
even usted as a possibiiity.
We can safeiy go on to assertthatthe (circular) operarional system
has lower variety than the environment. For exampie, we
manufacture our kitchen equipment in eleven dfferent colours
(there you are, then: you can sornetimes measure vanety exactly);
but this morning a lady asked for heliotrope with yei!ow spots. You
did not know this - and now you do know you will not do
anything about it: uneconomical, you sv.

So the basic axiom will assuredly hoid, that the variety of the
environment greatiy exceeds t1hat of the o p eration that serves or
exploits it, which will in turn greatly exceed the variety o the
management that regu lates or controls it.
Then what anyone wouid expect to happen does happen. The
clues to this are visible in th.e two examples just recounted.

22

r
1

H!GH VARIETY is necessariiy cut down or attenuated, to the

number of possiHe states that the receiving entity can actually
han di e.
On a diagram ( it is useful to mark the high-variety input with the
(eiectrician's) symbol for an

to show that variety is betng balanced (remember homeostasis) to

the variety that the receiver can accommodate.
ntNsexamp!e:
the works' manager is not going to bother about these
srnai! matters that make for high variety in the lives of
those working on the shop fioor. They are fiiered out.

NOTE: Coniputers are abie to capture, store, and

deliver more data than wiil go into your head.

BUTANSWERTHIS:
is designing an attentuator of variety the
sane th i ng as jettisoning data?
inthisexampie:
the marketing manager knows that he canot expect
his reta!ers to stock more than a smaii range of
colours. They are artificiaiiy reduced in number.

I
I

NOTE: In spectroscopic terms, the chemist is abie to

generate more distinguishabie coiours than the human
being can distinguish!
BUTASWER THIS:
How do you design the attenuator of
variety - by teHing the chemist to be
quiet?
These exampies of variety attenuation belong in our diagram ike
this:
23

Fiu

A N SW E RS:

As to operational variety attenuation, it is a big rnistake - easiiy

made - to confuse data with variety (closely related as they are).
Data are certainly distinguishing possibie states bf the system, but
they are generated b y/through ciassifications, categories,
definmons
These determine variety, and these arewrthin our
power to desgn. !f we do not design them, a common fauit -es p eciaily given cornputers - attenuation JUST HAP?ENS. The
brain and the managerial culture between them will i!ter-outwhat
variety is left-in beyond the capacity, to assirnilate.
Typ ical example a machine-sho p has three ba y s, containing 22. 47 and 31
machines. Allowing for al possibie variations of width,
thickness, quaiity and so forth, there are 40,000 possible
products. The work-study people have been at this, tQ
handle pay-and-producuvty. The cost accountants, too,
caicuiating standard costs, computing variances It is alf in
the computer.
Managers often allow themselves to be nundated with this
lot, but they undertake \'ariery

24

attenution surreptitiously, pea ing at totals and budgets.

Or they may boldly ask only for moving averages on each
of the three bays. Then they suddnly discover the
relevanceofquality .
orsornetHngelse.
As to the example from environmenta! attenuation, the answer to
the question is:
by rnarket research.
Many people suppose (without rnuch thought) that because rnarket
research 'flnds things out' it rnust be an arnpl/fier of manageriai
variety. Maybe this sornetirnes happens: inforrnaton about new
technology, for example, may increase the number of mana-erial
options. But in the case quoted, the idea is to reduce the
impractical and uneconomic expression ofdernand to a range
(variety eleven in ihis case) that the works can handle.
/
T,/
Ls

SUPROSE, however,
that rnarket research
repeatedly advises that
the rnarket is looking
for fourteen
c'nlniirs

,-
/
/
/

1!
E.

SUPPOSE, however, that labour

negotiations keep sturnbling
sornething that is not in the computer: a
general dislike of sorne particular
combination of production orders, for
example.

Ir
ir
'

Now two probiems have been generated, one by each of our

compiete!y different exampes. But in terrns of variety engineering
(as the manipulation of varietes by design may be cafled) they are
identical. An invariant has emerged.

NQWANSWERTHJS

VVhat woud you firs of ah try to do in each situation?

r-What is the INVARIANT FACT that inks the two examles,
and is represenrd by the single question mark completing
the previous page?

A NS W E R:
The invariant is the fact that each attenuator has reduced variety
below the thresho!d of the required response.
We say that the responding system does not exhibit

REQVISTEVARIETY
- a most important notion to whic'n we must often return.
Thus the most obvous recourse in both cases is to reduce the
degree of attenuation recently notifed..The works' manager wiM
want to register the chass of information, not so far registered, that
is causing abour problerns. The marketing manager wiH want to
respond to the expected demand of fourteen cobours.
But suppose that the operation reah!y cannot (as originaHy
postuited) accommodate the necessay stocks. And suppose the
works' manager is sirnphy forbdden to acknowhedge the nauseous
combination of orders (because of possibie legal consequences).
What about the question mark now?
This is for certain: you cannot repeal

THE LAW OF REQUISITE VARIETY

- which says that only variety can absorb variety.

26

LOW VARIETY is necessarily enhanced, or arnphfied, to the

number of possible states that the receiving entity needs if it 15 to
remain regulated.
So we mark the low-variety input on a diagram with the
(electrician's) symbol for an

a5 LJ&(which is a triangie simply, and not a directional arrow). This

completes our repertoire of ba!ancing actions (remember
homeostasis again).
Here then is the completed diagram on which ,ve Have been
wo rk i ng:

I
1

-s

The dotted une comes in for the sake of compieteness. It will be

discussed later. For the moment, the management's interest in the
environrnent is mediated by the actual operations that it
undertakes there (for I reality the operation is embedded in the
environment, and dic management in it).
27

rvdenty the two variety arnphflers have been invoked to

solutions to the two residual prob!ems.

THENDOTHJSNEXT:
Specify how you would use the varety amphflers to restore
requisite variety, and thereby to creae acceptabe
conditions for homeostatic regulation.

NOTE: We are not yet discussng the coHecton o DATA or

the flow o !NFORMATiON. This is about the
that are competent to engineer with variety.

ANSWERS
The works' manager may enrich the structure o the payment
system. He increases its variety to accommodate, through greater
flexlbiht'/ in ca]culating rewards, the probiems that he must
disso)ve without specifc acknowiedgernent o the suppressed
causes. TIie empioyment, in short, rewards higher variety.
The rnarketing manager needs to 'increase' the variety o eleven to
a variety o fourteen wthout an increase in stock. One way is to
decoupe the production me through intermediate stocks (so that
one unpainted pot may be patnted either red or olue). Another way
is by advertisrng - that potent variety amphfier. A 'speciai offer'
can be formulated; a projection implying more colours than are
actually availabie can be mounted.
The reason why Figure 7 did not adHere soley to amplification,
considering this separatey (as Figure 6 sepa cate considered
attenuation), shou!d be emerging in the head of anyone reaUy
working on these exercises. We are deaiing with continuous loops
o variety invovement, not with isoated bits o apparatus.

1
1

28

rHence emphasis has been placed on homeostasis. We are seekng

balance through requisite variety.
Therefore:
many management strategies are
to amplifiers and attenuators

mixed

between adj ustments

(indeed, it 5 often a matter of choice as to whether a

specific contingency is viewed as one or the other,
carrying a different sign - plus or minus)
- we need Ofliy to be satisfied that as the dynamic interactioq
between entities unfolds, we have made provision that no
entity will be swamped - inevitably out of control - by the
pro liferation of another's variety.

In view ofthis, the problem of measurement is minimal. We

shall not find ourselves counting the number of possihle
states, but looking for assurances that counter-balanced
varieties are roughly equal.
To take a vivid and omnipresent example: The human brain
has about ten thousand mullan neurons - nerve celis
in it,
and these are capable of generating who knows how many
patterns. The variety is legion. But whatever it is, another
human brain roughly matches the first's variety. Thus if two
people, who have pul in exacdy the same number of hours'
practice, sit down to play chess, we would be wise to bet
evens on the outcome - and without counting the neurons
first.

The problem of management itself, which is that of regulating

an immense proliferation of variety, is less horrific once the
underlying homeostatic regulators are perceived, properly
designed, and allowed to absorb the variety of each others'
entities.
This is the essence of VIABILITY.

2Q

These explorations should make the fotlowing formal statement

readily accessibie:
The First Principie o Organization

ManageriaI operational and en vironmental varieties,

diusing througi-i an institutiona / system,
TENO TO EQUATE;
they should be designed to do so with minimum dama ge to
people and to cost.
fthis Principie is indeed accessibie, it is by no means orthodox and we have made a breakthrough in our managerial autlook: For
what 'he Principie is saying is that viable systems, and these
include giant corporations, are basicaity self-organizing. If it were
not so, then the management wouid be totalty overwhefmed by
the variety proliferated (as wc say) 'lower down'.
But variety absorbs variety, and systems run to homeostasis,
because al the subsystems are inter-connected - as we have
begun to see -- and complexities cancel each other out. Variety is
soaked up on a football fieid by a redshirt marking a whiteshirt and
vice-versa. The product 'marks' its market, and the market 'marks'
its produdL
By the same token, in proliferation of variety terrns, management
'rnarks' its opeation, and vice-versa. Let's he clear: at a
management meeting called to scrutinize operational results, the
operations people will have managerial attitudes under equivalent
scrutny. Then ideas that would be rejected tend not to be
advanced; and happenings that are disapproved tend not to have
happened at alt - that is (1 have been there) they sornehow don't
show up in the records. In such a meeting there has to be
enormous variety attenuation - otherwise, by the Law of
Requiste Variet y , we shouid operate our businesses on!y in
alternate weeks, and conduct enquiries into the operations in the
weeks that atternate.

'(Ir
Ir
II
IH

Here are iwo points re!ating to this:

are exceHent exam p les o
horneostasis in high-varjety situations:
the meeting wiiI end in due course with sorne show of
agreemen
whether the meeting has been productive or not wiU
depend on how vadety has been absorbed.
Because the situation has high variety, heavy attenuators must
be in use - notably an agreed iow-variety model of the
situation (standard reports, and so on).
Thereafter, the design of the meeting
- agenda, protocol, rubrics - al! variety reducers
is crucial to a productive outcome.

The function & management is emerging, as it must finaHy be

understood, as a subsystem of the viable system - and not as
sorne hierarchic overlord.
A!l five subsystems to be encountered in the VSM have their
own ianguages, their own criteria, their own figures-ofspeech
and their own satisfactions.

Management is one such subsystem, and System One is

another. They, with the remaining three, are mutuaUy
interdependent.
is this point, then, properly made?
Ifa!! subsystems are vitalto viability, then there is no meaning
to 'more impoant'.
That managers 'give themselves airs' is merely a public
notification of their subsystemic role, like carrying a
business card. The good ones, as you would expect,
know this.

Perhaps we have chattered enough to bring these notions horne,

aithough it must take time and a!so exercise t become familiar
with what may weH be a whoUy novel approach. But this can
hard!y be postponed any longer:
RETREVE YOUR !JST
of the embedded subsidiaries or departments that between
them produce ihe company (or whatever elsern-ay he ycur
System -1 n -foc u s).
This list adds up to SYSTEM ONE.

MAKE A LARGE DIAGRAM ONE FOR EACH OF THEM TO LOOK L1KE FIGURE 7.
It s a good idea to omit the red captions (you know what
the symbois mean), and to create enough space

f,

J-

WRITEN
al! the mechanisms that pertain to variety engineering in
pursult of horneostasis, and in recol!ction of the La\v b
Reciuisite Variety.
Nothing of any importance should be !eft out o these diagrams.
For example, the market has been mentioned as part of the
environment for a manufacturing company. But so is the 'eco!ogy'
of raw material supply (how is that attenuated?) So is the socia!
climate a part. You may wish to divide the environment into
sections, and give each separately a box of amp!ifiers and
attenuators t connect it to the operation.
B CREATIVE WITH THESE NEW TOOLS(
3?

By way of refreshment before beginning tHis task, consider how

varieties come to equate in a public service organization with
which everyone is familiar
The poi Ice force exercises two mal functions. One 15 to protect
the citizen from law-breakers, and the other is topreventthe
citizen frombreaking the law himseif.
Since no individual citizen can do more than one of these things at
a time, one policeman could undertake to safeguard him and also
tothwart his misdemeanours. They would seep and eat at the
same time!

4!

This arrangement would provide Requisite Variety, but it is not

practicable. However, as soon as you give onepohceman two
ctizens to watch, one o thern may commt a robbery or get
mugged while the other is under observation. Hence crime, -ven
or received.
It turns out that in fact Britain has about fiveundred citizens icor
every policeman. tfollows that todo their job the pohce need to
amplify their ordinary human capacities by 500 times. Note the
built-in assumption: Whatisit?fTo this end the pohce ampiify their variety - with guns, certainiy,
but more routinely by using fast cars and radio. Computers and
systems o informers are best regarded, perbaps, as attenu ators o
incoming variety: they reduce the number o possible states o
suspicion by eliminating suspects.

It is good practice to examine familiar systems in terms o variety,

and interesting thoughts may be provoked. Here are a coupie or
three:
How is expendituredivided between ampiifying protection,
amplifying prevention?
How does the tradeof between them actualiy work?
E.g.: alarm systems

iversus

u .

33

\'Vhat are tHa trade-ofs where technoogy is concerned?

E.g.: cars gc-t around more with fewer men;
men get around less with far more penetraton o the
public scene.
E.g: do you spend money on the sense-organs - tapping
informaton at saurce or on the 'central nervous system'
- computers and data-banks.
Why al of this about police ampHfcation when homeostsis
may 2iS0 be reached through attenuation of pubUc variety?
That is, p reventative laws ('no access', curfews, identity
papers) w'hich restrict sodetary states imply ess poHce
amplification - because monitoring is a lower variety actvity
than coping with the unexpected.
Howdoes this bearcn freedcm?
- is the second means of obtaining requisite variety
actuaily any more aiarming than the first (just because
the connotations are unsavoury)?
MAKE A PRACTICE
of experimenting (mentally, and on a scribhling pad) '.vith
the new concepts being disclosed here as they are
exemplified in systems (such as the p olice (orce) with the
functions, problems and shortcomhings of which any citizen
is familiar.
Listen to puhhc debates in the media with these cybernetic
consderations in mnd. How much of what you ihen hear
and see becomes fatuous?

SPFCAL TERMS OF TWO

VAR/E TY

a measure of complex'ty: the numberofpossj/

s,ates oa sysem.

THELAWQF
REQJISITE

only variety can absorb variety

(Ashby's Law)

4 DIC

ATTENUATOR a de y /ce thaC reduces variety, depicted thus:

AI\4PLIFIER

a clevice that increases variety, depicted thus:

THE HRST PRINCPLE OF ORGANZATION

Managerial, operational and environmenta! varieties,

ditusing thiough an institutional system, tend Lo equate;
they shoulc/ be clesigned Lo do so with minimal damage Lo
popIe and to cost.

ir
1
R?ght at the start (look at Figure 1) the convention was established
that al! the elements of S y stem One clepencl from a Senior
Management box. rrgure 1 seems to irn p l y that the second uso
depends from the first, the third from the seconcf, and so on. Not
so: the central liMe, which might be ca!ied the 'comrnand axis', is
taken tonteract with each subsidiary management box
independently.
Moreover, what appears in Figure 1 as a single me w i ll obviouslv
consti tute a ,\'hole cable or separate tHreacs.
The next job

to stat considering ',vhat those threacis epresent.

You shoulcl have your System One diagrarns besidevou,

and think about each case, as the (inevitably) more general
discussion unfolds.
\'

First of al! -

GRASPTHIS ETUE:
The management of the System-in-focus, cal!ed the Senior
Management, is IN PRINCIPLE unable to entertain the
variety generated by any one (never mmd a!!) of its
subsidiarv viable systems that constitute System One.
The begmnnings of a theory of autonomy, o de-centralization, he
in this simple fact-

37

rather than in political tbeory. It k a 'nettle to grasp', because the

senior management often assumes - and likes to exercise - the
power to
in the intimate managerial detall of its
subsidiarles in System One.
ButTHINK: the socaHed prerogative to intervene indiscrirninately
does not have Requisite Variety.
It cannot be cornpetently done.
It can be done in the sense that a bully can do what he likes:
Hing'usor puling rank san arnphfer of one's undoubted
authority, and an atenuator of the subservient creature's own
variety. But the Horneostasis that resuits is mornentary, and hence
nc orn peten t.
In a modem organization, the fundamental variety balancers are
those shown in the diagrarn acing:
Legal anci Corporate Requirernents are those variety atten uators
that sig( the idenity of subsidiaries as corporate entities.
Legahy, System One is bound into the parent System-in-focus by
ts Articles of Associ ation, and by al the provisions of the
Companies Act that concern affiliation. But the parent may, and
usuaHy does, specifv other constraints On the pro!iferation of
System Ones vanetv. These range from delirniting technologies to
specifying the modus operandi.
VERY WELL:
List them or each of your embedded System One elements.
The Resource Sargairi is the 'deal' by which sorne degree of
autonomy is agreed between the Senior Management and its junior
counterparts.
THe bargain declares: out of al the activities that S'steni One
elements rnight undetake, IHESE will be

38

'L

1
lE
Ir'
1

ACCQU

AE LIT'(

L.!-

s'

Cor?or
S

,,:.

/.\ C-

rIJ
L rr.

taIeJ (ancl not

wi!! be provided

those). and the r

esources flegotiated to these ends

The h
omeostatjc loop sketched into the diagrarn roper!y
that a d y
i ndicates
namjc process is invo!ved t is essentiaHy attenuatjve
because it exc!udes a buge range of al te,
This is ot to say
that the senior managernent nev
erprovicles v ariety arnp lifjcatjon to
the junior enter p
rise within the attenuating scheme: it rnay, by
superior know!edge or through un ex p
ected financjng open up
op portunitjes not concejvecf by Sys
t
em One on its own initiative.
NOW UST your m
echanisnis for sthking the Resource
Bargain for each subsidiary,

39

NOTE: ShouId it ftirn out that al! tbat Happens n reaHty l i s that the
Boss says: Do This, or These are your norms, then you stiH have a

FI
It:
1?
1
1
7

11)

resource bargain by unihteral edict. But planning ought to be a

continuous process whereby things are done flOvV -expltcitly,
resources are comrnjtted so that the future may be dtfferent.
Note on this Note:
INVESTMENT IS A VARETY

ATTENUATOR.

In any case, and hovvever autocratic or dernocratic (or even

anarcHc) yourResource Bargaining proves tobe. the governing
mode of management is

Accountabilty. Please think about this responsibi!ity or '-esouces

provided in terrns (not of financial probity, not of ernotional
dependency, hut) of variety engineering.
Can you possibiy temize every single thing that the subsidiary
does, dernand a report on t, and expect a justification? Obviously
not. Therefore accountabWty is an attentuation o' high-variety
happenings.

NOW EXAMINE precisety how . accountabiHtv is exercised,

and especiaHy what attenuators (totak, averages, key
indicators . . .) are used. Summarize the findings.
fin the end, you are appaHed to discover that the machinery is
inadequate, that Senior Managernent just does not Have Requisite
Variety, then you had better own up. Your Systern-in-focus has a
System One that simply is not accountable.
Evidentty something must urgentty be done. But there is no need to
panic:yours is the usual case.
People spend small fortunes on systems anaiysis,
computers, and so on, but they don't understand the Law of
Requisite Variety. The effort avaits them nothing.

40

Ir
ir

Ir
I[
uf

Every m
anagement team has sorne sort of office attached to it, but
Figure 9 dignifies i ls a
ctivit'y (and with good reason) ay calling it a
R egulatory Centre.
M

anagement in System One is charged with conducting its

operations according to a Resource Bargain struck with Senior
Managernent Then the transrnission ofplans. programmes and
procedures to the operational circie shou!d be r
egarded as an act
of regulation
This r egulation, as the cilag r

am shows, amplifies hianageria)

variety: the basic details of the Resource Bargain musi be
elaborated THis reguiaton also attenuates operatio,aI variety:
operationa) potentialit'/
rnust be harnessed to agreed objectives,
Thus the Regu!atory Centre (the activities ofwhich
are marked
diagr
arnmaticajjy by a trangJe) is the focus of homeostasis
bet\'een managernent and operations.
NOW DO THIS:
Make a lis' of re g u!atory
actions that mediato hetween
System One m
anagernents and their operations
These exis) in une ocus o t hofl?eo(j br analytical
p urposes: where are ther physicai ocations? Perhaps
you r ennenibered the production control office, and
forg ot the Boss's outer bffice - vhere his ecretary is
the mos) effective variety manipulator u the set-un.
There is a question as to whether al! the regulatory actions, in their
various locations, actuaiiy cohere in providing Requisite Variety
and therefore whether the locus of h
omeosatasis ought to be
more than a ogical concept of the Regu!atory Centre, marked by a
triang!e. Perhaps it shoull have a more physical embodinient as
an orgamzationJ entity

41

ir
.

ir

I
I'
1
1

I
1
I 1
1
1
1
1

This shft in emphasis from manioujations o variety in p rincipie to

their embodrment in pHyscai forrn is a transition worth comrneit
- because people often confuse the two modes o management.
Explicitly:

What strategies offer Requisite Variety?

remember the discussions around Figure 7 about
marketab!e coiours and about wage structures;
What chanrie/s are in plae to contain the variety of
information fiow, and o data transmission?
Both aspects o varietv Hancfling demand the satisfaction of the
Law of Requisite Variety.
EXAMPLES:
. A library contans (guaranteed!) al -he knowledge there
about bees. Then it Has in principie Requisite Variety to
handle al my bee-keeping queries.

Afterjoining the ihrary, discover that every one of the books

is stored onlv in its Chinese version. it Has zero channel
capacity to transmit to me the adequate variet y ir houses.
Rushing to the librar',' next cloor, irfwhich all information is
stored in Enghish, thereby assuring me that the
matches my English-speaking variety, join.
But the storehouse dsell does not have Requisite Variety: there
snot a single item under 'bees' in the whole index.
NO USE

to Have flexible pohicies capabie of generating Hundreds

of product variatons, ifthe computer orrnat albows anly one-digit
discriminaton between products.
NO USE providing enough bits in the computer to.differentiate
every person in the world, if your strategy is to rnarket in your own
country alone.

42

1
u
: e.

OQ&or\S

F'cwE O

THis new figure, then, is clevoteci in thefirst p!ace to fndn the

baiance o Requiste Variet' in the charnels usec( to transnit
variety aready un, erstoocl to be provided in po!icy
ter (cf
Figure 7Y
IN STANCES Qn tHe operational

000:

a Resoui-ce Barajn rhat'knows WC Cdfl

make 1000 units thiS
month Has lo be dinp!i/7ec/ into a p
roduction schedule
poviding Requisite Variet\': e. exactly what each madiine
Has todo shift
by shift.
operational activity tHt inciudes every kind o Happenstance,
from broken bolts to streaniing colds, from hgHtning strikes to
pover fa lures, las to be monitored under varietvapenuatjop
o a repor(Ing system.
In both cases, tHe channeis must convey more than the variety of
the schedu es and reports concerneci, to aHow for a little
reclundancy.
Without a little redundancy (day plus date, machi
te number plus
name, figures plus wor cis, and so on) ambiguitjes will appear (dije
to ornission, bad writfng, mistakes, aoci so on) that cannot be
resolved.

43

INSTANCES on He envIrOnment loop:

a producr strategy offers requrste variety in principie, but it
has to be amp/i,e/towards the market u practice through
channeis carying
- products, .e. the disiribution system
- norrnation e. advertising, premiurns, offers
ALSO u requisite variety.
the environrnent inciudes

I I,
I
1

J
1-

- suppiiers, whose channeis are their (amplifYing)

catalogues, between which an auenuating protocoi
rnust be estabhshed
- customers, whose channeis are depietion o
Inventory (i . e. they purchase things) notified, return
of guaranrees w i th marketsegment data attached,
ietters of cornplaint, and market research itself: ah
a notionahv infinita variety.
Again, the question is no longer vhether ah these activities cn
generate Requisita Variety (as to which we assured ourse!ves
cari ier), but whether there is channel capacity adequare to He date
fiows involved.
For example, do you know how much information can be
transferred rhrough the chan nel o a magazine advertisement
chanceci upon, or throuh a roadside H11-board glanced upon?

NOW DO THIS:

Make lists of your own instances reiating to the two-way

channehs between rnanagement/operations and operations/
environment.

1
1

CHANNEL capacity for TRANSMITTING VARIETY is He

discussion point - not (as befare) He generation of variety,
- strategcalhy, as a source.
What measu res do you have - or need?

44

Now that we have sufficiently cleariy distmguished betweerj

Requisite Variety as manifested in the Iffiree entitites of the
diagram, and Requiste Variety as available channel capacity, by
experiment as weH as by definition, we shouid formalize
The Second

ti.
U.

Principie of Organization

The four directional chan neis carrying information between

the management un it, the operation, and the environment
must each have a highei capacity tu trar;srnt a given
amount of information relevant ro varietv sefection in a
given t;me than the or/ginacing subsystem has tu gene-ate t
u that time.
THe second Princ;ple invokes a time base, whtch the first Principie
did not (except to speak of a tendency on which no !mits are
placed). This is because the capacity of an actual channel depends
absolutey un the rate of data transmsson invoived. Note also that
data are transmtted, not variety tsef. Vanety is ampl!fled or
attenuated hv the nsructons that the data formu late; but those
instructions must he adequate to the relevant variety selection.
EXAMPLE:

II

Wc may seek tu modify a customer's behaviour (from notbuyng to buying),a variety of two, by writing hm a ietter.

The ietter says: 'Dear customer . . advantages . . . flOW BUY'.

The variety matches. The channel capacity required is also two
(make, or not, a photocopy to aH customers: the Post Office
takes care of the increased variety in channels once the batch of
say 1000 etters is mailed). The addressing machine
autornaticatiy seralizes the addresses.

I
1
1

lfwe now personalize each letter, taking account of spe

cial
knowledge about each customer, we sha1. need a channel
capab!e of generating a thousand ietters, nstead of one, in the
time available.

45

It shou!d ins f intly have occurred to you that whether the provision
of this channel caoacity is difficult or not depends aimost entireiv
on the technology in use.

1
1
1.
1
1
1
1
1
1

Ifeach of a thousand !etters invoives data handling by a desk

researcher's consuiting a manilla folder and putting together
appropriate paragraphs (even if each of these is stereotyped, and a
typist is then needed to type out the result, then the channeHing o
aH this selection of states that underwdtes the variety depioyed
accordng to the First Principie w 1 be a major undertaking.
Speaking of rates, it rnight take ten days a l,a hundred !etters a day.
Bu'- o course the whoie job con Id be done in an hour or two inside
a cornputerisecl system,
In drawing up iists of amphflers and attenuators, then, and in
seeking to evaluate homeostatic variety balances, we shouid
consider that VARIETY GENERATORS rnay have to be dealt with,
or may be designed to absorh naturaiiv prohferating vadety. if we
iook on tecnnoiogy as such a variety generator, and not slrnpiy as a
producer of artefacts. rhen out reguiatory, capabiiity is enhanced
- as weM as our abHity to undertake novel things, or to run
processes more econornicaiy.

Considering that our recursive modeiiing procedure does not

permit us to investigate the infrastructure of our three entibes
without changng the Systern-in-focus, quite a lo',of manageriaiiy

powerfui conclusions are emerging. By treating the environrnent,
the operatons, and the management unit simpiy as 'black boxes',
that is as opaque to analysis, and looking oniy at their interactions,
we have been able to enunciate two Principies of Organization and to draw up an accounting of varietal interactions that conduce
to horneostasis If these !istings have been conscientiously made,
and the relevant arnpiifiers, attenuators, and technological
generators considered in terrns of Requisite Varieties, sorne te!iing
discoveries about the viable systernunder study may 'nave been
made aiready,
But we have not finished wi[h System One, even now.
46

1
1
1
I1
1!r

The diagrarnrnatic Coflvenhions are pO\Vekfl. [ven tHough

our
boxes are 'enipty', and our channes merely 1 nes, there has been
much to say: but are the conventions thereby exhausted? No.
There are big red blobs on aH the hgures, and they have a speciai
meaning.

TRANSDUCTION is the vord Wc need: leading, across'. Each red

biob lis a transclucer, and it has this unctiofl:

or

4-* c&n,L

Itr
It.
1

o(t&t3

F/C4L,:

'-4---

Cj

The Third Principie of Organization

Wherever the nformation carriecl on a ciiannel ca pable of

distinguisliing a given var,ety crosses a hounclary,
undergoesransduction; tlie valiety of the transducer must
be atleast equivlent co the variety of che channel.
it is self-evident

If

once pointed out!

Ihe point Is ro draw a clear distinction between channel capacity

and transduction capacity: they are not at al the sanie thing.
People think roo loosely about 'cornmun:cating the message', as if
any sor, of connexion must be abie to do the Job.

47

1
II
I
I
II
I
I
1
11
1
1

There are eight transducers in our basic diagram. fHese

exampies are aH actual cases o inadequare variety in
transduction
given that basic variety (First Principie) is
capabie o absorption, and channel capacity (Second Principie)
can convey that variety.

'.-

G .joL

6--

&

o &4ro

3JJSij
&

r OA

._c_

.4jS

aAo
Pd.-C

f_j( cJfe.E

II

5 '-

Note: Because these exampies concern only the transduction of

messages, the queston whether fe message itse!f intends to
arnplify orto attenuate variety is irrelevant. Ihe Job o the
transducer is to preserve variety, whatever it is.

48

I.:r
Ir
I
'-

prSr
g

.Lc-o-ja

6o
So oL,zr-

rr

-}

-j-

t..rt-

r-L

(o-

-t-)

'c

--

2.
Taking these case exampies as guides:

NOW DO THIS:

Ifj

Make similar anaivtic vignettes o the transducers that

popu late your own System One

1
1

don't orget that you have more than one diagrarn

to consider!
AND TRY TO MAKE

an enormous diagram of the double-loop (management

operations
environrnenl) for each one,
annotating for the THREE PRINCIPIES.

i
49

The whole Collection of dagrarns is now por together in a

particular Composire of very special signiiicance
(Al! other aspects of our work are implicit
in this Figure Th
Law of Requisite Variety bicis us to be selective.)
Here it is:

..4

EFP

.., '!_._

L1/

THe star-iike networks are coHecting information which has very

high variety, anci rnust necessarijy be attenuated by the
managenlent strategies ciesigned to procure homeostasis (First
Principie).
T h e channe!s ae v a r ietyadequa teto Convey the data t h a t seiect
this Re q uisite Variery (Second Principle).
The transducers on the horizontal axis, which havejust been
discussed, use coding rnechanisrns (Third Principie).

50

Ir
ir

In ACCQUNTABI[lTy we meet our firsI transducer on the vertical

axis (compare Figure 9).
Ibis 'leads across' the boundary between S'/stem One and the
Senior Management - and of course it involves massive variety
a tte n u a t Qn.
Precisely:

1
1 1
1
1
1

Each System One mustattenuate its horizontal varietyLthat wbereby its operations are made efective
itS environment
in order to d'schargeti Resource Bargain with the Senior
tvianagement.
Ibis Bargain is concerned with the homeostass o
resourceu/ness. Then accountabwty wouicl, i n a perfectly
designed system. consist sirnply in transmitting a continuous
signal - a monotonous tone - meaning 'everything
proceeds as agreeci'.
Senior Managements are unhkely to accept that so great a
variety attenuation (notifying only two possble states, OK or
not-OK) is Requisite in their terms. But the maximum variety
they can hande for each subsidiary is their own total capacity
divided by the number of subsidiarias in System One.
TH ERE FO RE:

II
II
II

The design of accountabilitytransducers and channeis must

conform to the variety attenuation a(ready huilt in to the
manager] al strategythat 5: the Second and Third Principies can be interpreted
only in terms of the First.
AND:
Senior Management, having agreed to this designed accountabihty
(and subject to safeguards to be discussed ater), must not often
exercise its prerogative to conduct star-chamber investigations or confidence wili be forfeit and autonorny clenatured. In
partcular, it has no access to the subsidiary's Regulatory Centre which fs the local managernent's service domain.

1
i

Finaily, and in pr
eparatiori or the next section (in WHCH
Sy stem
One wiH be synthesjzd) please ook aain
at
Fi
9
anci the
surrounding discussjon of the Rescurce Bargain.
The bargan itself Coflstitutes a massive variety
attenuator: it is a
dynamic process whereby aH the states that the elemental System
One might adopt are chopped down to the programme it is agreeci
to undertake
AFTER this (essentialiy planning)

process is complete, then routine

management must set up a routine interaction whereb y the
Resource Bargain is impiemented
Now no-one is going to arrive on Monday rnornings witb
a sackful
of golcl, saving: 'here are vour r
esources, brin- me the change on
Satu rday:
Wd5 ka. t-? /

5r.
an A CCOUNTABILTY LOOP
whch is dra';vn here speciaHv to
ernphasize that it is a regular
homeostat
we are used to !ooking at it
horizontally.
CJ
AH the Principies of Organization applv to this loop.
The RESOURCE CHANiNEL transrnjts permissions essenfialiy, and
needs ampiif;ers to expian their operation. The accountability
return loop attenuates the whole Continucu5 saga oflife in System
One into requsite variety.
These remarks concern the SECOND Principie.
n

REFLECT NOW on all three Pr i ncipies as exemplified in

this sketch, and as they apply in your own System-in-focus

SPECIAL TERMS OF THREE

CHANNEL CAPACITY a measure of the amount of information
that can be transmitted in a given amount
of time

I
1
1

TRANSDUCER
('Ieading across')

encodes or clecocles a message whenever

it crosses a system boundary - and
there [ore needs a c!i[ferent mode of
expression.

THESECONDPRINCIPLEOFORGANIZATION
The fcur directional channelscarrying information hetween
the management unit, the operation, and Pie environment
rnust each have a higher capacity Lo transmit a given
amount of information relevant Lo variety selection n a
gveri time Pian Pie originating suhsystem has Lo generaLe it
fc that time.
(Relies oc Shannon's Tenth Theorem)

THE THIRD PRINCIPLE OF ORGANIZAT!ON

Wherever the information carried oc a chancel ca pable o
distinguishing a given variety crosses a boundary, it
underoes transciuction; Pie variety of Pie t rans cLycer must
be atleastequiva!ect Lo the variey othe chance!.

With the enunciation o three organizational principies, we have

at last exhausted the spatial potentialities of the basic diagram that
depicts an element o System One, an element that is itseif a viable
system.
However, ,ve have not said rnuch about time. THe temporal
context is obvious enough; ,,ve ackno\vvledge it by soeaking ab-out
tendency in the First Principie, transducton (which is also a
temporal process) in the Third, but abo ye al! in trw Second
Principie where rates of data transmission actuahy define capacity
in a channel. Standing hack to observe the whole o this system in
action, however, we can see that we face more than a spatiai
system ir a temporal context: it is a dynamic process. Here is a
group o vanety generators in contnuous production o systemic
sa1es, so organzedby the Three Prin
cp!es) as to absorb each
other s prohferaton o vanety. Then part ot this organzation must
have to do with the dynamo itself, and ,,ve adcl:
The Fourth Principie of Organization
The opera tion of the first three principies must be cvclica/ly
maintained rhrough time without hiatus or lags.
Why was not tbk Principie inciuded with the others to conclude
the last section? in fact, and aithough each elemental viable system
has its own dynamic on the horizontal axis (wherein its local
managernent enjoys autonomy), the general clynamics of the
System-in-focus derive from the vertical axis, which we are oniy
now ready to examine Fu!ly.
Please turn the page.

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 then consder varyHg ther size as '.vay 131 COfl1muncatng

tHis informatjon.
The eye sees area, not radius. So turnover (or example) is
the area = r 2 , divide the turnover by (oh, roughly) 3, and
take the square root for the circle's radius.
gE&rcQs4

''srEN7 cv E

F/ci_'E Ji'
'-,1

i'

,P(

II
I
Ii
1.
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I
It

A'

Ir

4
f,44 Ft ?

t:

CI1&'-L

.Cc - !L.;

^ LhS;,1.'

1 nothing worth COMMUNICATING is to be gainecl rom this

approach
cIOn't use it. Leave the circles uniforrn, and

ernphasize something else in the clagratH.

(Requ site Variety for vour readers, after al

(u) about the Connecting squigglv unes the basic convention Ol the operational axis is the same as
that Qn the command axis. That is, the simple arrangement
shown in Figure 1 4 does not mean tilat the operations flow
serially into each other: only that there are connexions
for instance, operations may be so loosely couplecl (e.g. in a
conglomerate) tllat the con nexion is no more than a
competition for capital. In such cases, tlle conventions O
Figure 14 are adequate (we shall see how adequate later)
Sornetirnes operations are very strongl y connected, and
indeed do How i nto each other. In such cases, arrange the
operations in the appropriate order ancl enhanc
squiggly lines
(this puts ;nto empirical effect the discusson of
Figure 2)
or matters may be yet more complicated
58

N SHORT:
Always be as creativc as possible. A VSM cHagram tha Iooks
exactiy Hke a stereoype irom one oi the books about tHe VSM
cannot possibly be exploiting tbe model
HO WE VER:
Keep to he diagramnia[ic convention5 tHenreives: uncianientai
blocs anci connectivities - as also the horizontal and vertical axes
- have been found to be powertul in analysis and chagnosis.
ESPECALLY:
Ensure that modifieci diagrams co nol fiout iNc axioms, principies
and laws ofthe Viable System expounded here - which they are
nieant precisely to Illustate.

1
1
1
1

rj.L

rzLf

o-r

iti'-

/1

1
1

59

I
1'
1
1
I
1
1
II

1
1
1
1

Assuming that a suitable depiction o the vertical operational axk

has been drawn (and suitably annotatod), consicler the
enviro n me n ts.
Figure 14 again shows the basic convention:
each elemental viable system has its own uniquely deined
environment.
which however
at the very least, the organization's
in te. rsects
} narne is shared in the public rnind.
the others

se

aitnough the convention (Figure 14, red intersects) joins oniy

neighbouring environments.
Any feasible combination o environments is acceptable. It is
possible moreover to make very creative use o this diagrarnmatic
space
which houses all the variety generators with which the
Systern-in-focus has to cleal - by mncluching in it subsystems and
transducers that you have analysed empirically 'in the
Here are the two limiting cases:
the environrnents o aH the subsystems (elements) of System
One are identical.
Then ah operational circies are connectecl to one and the
same environmental envelope.
cg.: a superrnarket
- whose departrnents are al supphied by one
corporate vholesaler,
- whose customers foral clepartrnents
indiscrirnmnately are the local population.
the environrnents o all the subsystems (elements) o System
One are geographicaliy separate.
cg; a country
whose provinces are run by local governments.
The diagram facing, Figure 1 6, shows iiow to depict
environrnents where the intersections are minimal, but
in this case
Canadian, Canada-ness, Canada-hood, the Maplek Leaf-for-ever.
.3_ ...

Vir
44 -

CO LU\ e

7Nry

L1CR

riP,

1
E Z E C.

aPufl-4w
NOV

F/E /

iL
I

1
I
I

1
1
1
1
El
1
1
1

In Figure 1 6 Wc see huw lo begin sketcbing ib(2 Bg Diagrum \vitH

wHicll we hope lo fin ish.

PRACTICAL NOTE:
IP,vill prove very difficult lo display everything thaI is
important on a single sheet of paper, ho\vever large (and
Ibis makes ibese explanations evcn more difticult un lliese
small sheets). Then clecisions must be taken as lo how lo
break un He total account.
For instance, Figure 16 exernpliiies such a decision. 1
wantecl lo emphasize Pie handling of the environmental

picture - anci so we have quite a respectable niap of

Canada. But because this is rnore-or-less proportionate,
ihere is no space in wliich lo 'make points' wi lb graphics on

the operational axis. The econoniically Llnclerpr!vileged

MariPme Provinces have srnaller circies - but so \hat?
BLP h the environmental 'map' can be expanded lo (say) 6
feet high, Pien He circles can be macle proportional lo He
'GNP' of He Provinces. Try lo visual ize 10W bloated

wea Ithy Ontario and British Columbia Pien lookl VVhen

clisplayed a \/SM basecl on Ihis graphic clevice in
govern ment ci re les i n Ottawa

lo top ci i 1 servan

15 who

knew He acts - there were gasps of amazenient all round.

Simi larlv, hhiave often presented management groups with
wall charts of only bits of He VSM's subsvstems (thaI
convevecl al the details of important honieostatic hoops for
example), or had them poring over a tenfoot chart of
environmental subsvstems.
It is for you lo decide how lo present the Big Diagram when
Pie svork is ah done.
It is at He moment my task lo decide ho\v lo present
ihe Big Diagram lo YOU.
THESE TASKS ARE DIFFERENT.
You know what He Svstem-in-tocus actual y is (1
llave lo general ize and exempl ify).
62

*)'()u have bIs of space - USE IT. ake visual

presentations, rather tlian write reports.
NOW DO THS:
Look agaH al Figure 14.

Look al the dra\'ings you made of your own

OPERATIONAL AXIS - the Iast exercise.
DRAW YOUR OWN FIGURE 14
- making appropriate environmental cOn\.'entions lo
lit lEe operational ories (which you might now
decide lo alter)
- comp!ecing iNc mana-erial hox-a,d-triangle
st ru c tu res
NOTE: You must decide in particular how much cletail
about the double-homeostats lo show: thai is, your
deplovrnent o lEe Princples of Organization in dic
handling of variety
horizontally.
VVhether YOu enci up \vith a single Urge sheet of paper, or a
summarv shcet vith detailed Appendices, you should al tUs poini
be able to sav svith salisfachon:
'TH!S is mv fLil 1 acconnt of Svstem One'. Done.

Now we come lo a new topic with its own new concept. It is a

specific sickness of Homeostasis thai ,ve neeci lo understand.
Take this cliagram lo
represent a horneostat.
TEe bul l's eve Istands
for iNc stable state o
eacli subsystem. So tE
inner red loop sIc 5
the stability of t e wb
VVhen the stabi poin
wanciers o, it is la

p-

laacktoc.
63

X. n

Oc

1
1
1

AH that looks very peaceul. Close insOection suggests why: the

re!ationship is soiiiewiiit incesluous. Tho system is closed.
Ihe s y stem we are studying is not at al! closed. In Figure 17
(facing) we see a version of the familiar System One. Al the usual
conventions apply; but we shall now concern oLirselves with He
elemental subsystem 8
surrounded, as you see, by A on the one
side and C on the other.
B has a role on the Horizontal axis. The 8 nlanagement has a
duty to conduct 8 operations in He 8 environrnent

as eiiectively as poss ib/e.

What are He constraints on this endeavour?

E
1
1
1
[]
1
i
1
1

8 MUSI
(i) obey the dictates (few, we trust) of the corporate
intervention,
(u) operate within He terms of He Resource Bargain,
(iii) acknowledge He squigg!y-line relationships (strong or
\'eak) with He operations oA and C,
ancl

(iv) note whatever environmental intersects impinge on

reeclorn of action as to aclvertizing for instance.
But B, c!espite these four vertical squeezes stil! Has all his
managerial virility . . . off He goes.

THe B management mounts his operations in the B circle.

These repercuss alon,g He squiggly lines, ancl (because of B's
ignorance of A and C operations, of whose total variety he is
nevitably ignorant) they Have expiosive impacts
. THe
operations then produce tHeir intended effects in the 8
environment. And again, there are powerful reverberations in
botH He A ancl C environrnents .
WHat are tHe A and C managements to make of these
explosions? Upsets in both tHeir environmenis anci Heir own
operations are channeled back - ancl obviuusly tHev address
their colleague 8 management in outspoken
terms.

64

1H
Ii
1 _ )4
1.
1
L1
-.
I
1
1
1
1
46 /

__ __

IGL!iE 117

B is a good colleague, and a loyal member of the enterprise.

He tries to take ihese complaints into account.
BUT

Meanwhile,
THE SAME THING is happening to A (who is being
assailecl by B and (say) Z) and to C (in the face of
complaints from 8 and D).

IN SHORT

Because every element is continuously trying to adjust to

everv element, nothing ever settes down.

The sickness o the horneostat

5:

OS CILLA Ti QN.

And the cure for the sickness:

OSCILLATION must be DAMPED.

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Of course, in practice tHese events do lot take place in the ordered
sec i uence useci Here for expository reasons - someone would
intervene (one Hopes) and cal a conference lo resolve rnatters. THE
point is tHat all these influences are 'in tbere pitcHing', and tHat we
can penetrate all the osci!latory confusion to understand (no, not
'tHe cause') that it Has tobe damped. Moreover, ifwe look back to
Figure 14, we can see by a graphical clue that tHe right-Hand side
of the diagram Has al its Horizontal elernents iloating in space:
those triangles obviously need ancHoring sorneHow.
Yes, 1 craftily clrew it hike tHat to bring lome tHe point. It
seems to be necessary; otHerwise tHe Unitecl Siates and the
Soviet Union would see wHy armament pohicies osciHate,
and (as we expected of tHe olk in tHe previous two pages)
would do sometHing about it.
The fact is tHat System Two
tHe viable system's anti-osci 1 latory cievice for System One
is al most tota Hy miso nclerstoocl and u ncicr-represen ted 111
contemporary management tecHnique. It is always present, or tHe
organization wouid sHake itself to pieces. But because it is not
properiy Handled, enterprises come very close to clisintegration:

it
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like tHe EastWest detente,

like He NorthSoutH economic equiibriLlnl,
like the Public Service Borroving Requrement's Homeostasis,
hke tHe budget for HealtH or education,
hke tHe Company's cash-flow stability,
Hke He capital iockech into inter-process stocks.
AH tHese clemand tHe maintenance of balance in System Que. AH
are tHreatened by He clisbalance inclucecl by inter-elemental
oscillation, whicH He Senior Managernent does notcomrnand tHe
Requisite Variet y to resoive by clictat on He central axis (altHough
many sucb managernents try tH is impossibie trick). Al actual y use
System Twa devices -

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inexpertly, because tliey are not reconized [o be precisely ANTIOSCIL[ATQRY So sorne are Iiopelessly inorrnal, and sorne are
too orrnal [o reac[ in time.
It is vital [o understand System Two and its managerial
embodimenis. Here is [he basic diagrarn:

S YS T M

II.

TWo

ft

,Z7,jE /g

r!
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Note irst o aH that the top triangle is the aguaory Ceotre for the
System-n-focus unlike the regulatory centres on the Horizontal
axes o System One, it is in touch with System One asacomplete
entity. The others are in touch with each other separately, as
operational neighbours.
This is wby the top triangle is drawn abo y e Pie restf tHestern in
Figure 18: it belongs to the next leve/ of recursion.
HO WE VER:
System Two does not He on tbe central command axis. Cts
function is not to command, but to darnposcillations.
NOW DO THIS:
Concentrate on your own System-in1'ocus.
Think about the elements of System Que, and concentrate
in particular on the ways in which OSCILLATIONS might
set up between tbem.
There will SUrel\' be more tHan one mude o osci 1 lation, and
usually tbey will not be directiy indicated by the
'organization chart' (which does not acknowleclge the
workings o Figure 17 in departmental correlates as a matter
o necessity).
List tbe modes o osci 1 lation vou expect on the ieft, and
then iist on Pie right organizational correlates or special
activities that seern to exert a DAMPING effect.
Please do not cheat in exercise by glancing ahead. There is no
better way to fix the difficult concept o System Two as it is found
or may not entirely be found - in your own enterprise Pian by
discovering about OSCILLATION from your own experience ancl
insight.
There may be many surprises here.

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The most accessible example oa System Two is

A SCHQQL TIMETABLE.
Think tlirougb lis status and funclion careul y, and you may never
make a mistake in analysing INc role o Systeni Twa in any
appiicaton o the VSM.
These are INc main consiclerations:
' However you describe iba Svstem One o a school or a
universitv, its deparirnenis or lsacuties or its courses Or ,,S
classes are each pursuing (correcdy so) selfisb encis which
engage them in compelition for scarce resources
notbiy
staff but also olber facilities.
if each Svstem Que elerneni \vere lo determine lis OWn
prograninie unilaterally, ihen tbe whole plan for ihe tuture
\vOUlCI be rife \. \'Ith 'doubIe-booking The TtMETABLE taks
care o this.
The timetable rl ecis managerlai policies and cecisions, but
does nol make iNem.
It is accepted as al' thoritatjve throughout System One,
because ji does fbi seize authorjtv, but js gratefullv accepted
as a 5cm/ce.

The tjmetable is rigid ti routine circumstances and js thereore

a most conveneni variety attenuator.
Mere it not for thjs, teachers would Nave no time
to do anything except negotiate with cadi otier.)
The tjmetable js flexible \vhene.ver an e!ement o S y stem Que
5 under cluress
(j not, a teacher coulcl nol go or emergency
dental treatment, say)
and rs aciaotaiions are not den re g arclecl as autocralic.
1H15 ISA REMARKABLE FACT.

ANSWER. THIS:
\'hat is iNc mosi obvious example ol Systeni Two in a
Manufacturin Company?
Pause, and gel it.
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The answer to that question might have baci to do with ono of the
accounhing functions (see later), bu the answer really exoected
was production control..
Read through the considerations on the Iast page, and note how
closely the script wiM match this entirely chfferent context:
We are in the presence of an invariant in the viable systeni
its name is System Two
ts unction is anti -osciflatory.
Bringing back from earber oags the concept &invariance niny
have been startling: but ihere it is, ancl veiv powerftil it 15.
Bringing back ihe anti-osciNatory definition of tunction is more
wearying than starding: but TAKE CARE.

There seems to be a compulsion on users of He VSM to

crani aU Sorts o corporate actvities -,[o System Two
even when He job isnot anti-oscillatory by any stretch of
magination.
This comoulsion, doubtless, derives from the pressure tu
accommodate the institutionahzed organizution chart in
this rendition. It is not a legitirnate pressure.
E SP E C AL L Y:

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accountabi 1 ty does not reside in Sysem T\vo

- riot routinely,
- not through ad hoc enquiry;
accountabi ity, the discharge of He elemental role,
is always to be found on the central axis - ancl is
subject to its so-designed iltralion.
NOW:
Look back three pagos to He list o SiX flicijOr 1SSLJCS where
oscil laiions thrcaten the equihbria mentioneci. \A hat are the
Systef1 T\vo iailures, vulnerablities, ancl potentialities?
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SPECIAL TERMS OF

OSCILLATION lailing Lo
settle down in homeostatic equilibritjm

a dynam,c system over-corrects itseI

Con tinuous/y

FOURTH PRINCIPIE OF ORGANIZATION

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The operation of he lrst three principies mus he cyclicaily

maintained through time without hiatus or fags.

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You are walking down the street, and someone is 'valking straight
towards you. You will necessari!y pass this stranger on his !et or
en his right. You make a tentative move towards your Ieft;
smuItaneousIv he has veered to his right. A col! ision is in
prospect, se each of you 'corrects'. You are new quite close te
each ether. Perhaps YoL wHI both 'correct' again. Sorne peop!e
often Nave the experience, and sometimes end up face te face with
the other person - gggIing nervously. (Others, a minority, say
that they have never experienceci any such tiiing: apologies to any
such reader.)
Attentjon is directed te this example, because it Is quite certain tlat
no-one has a polcv that determines whether te pass en the left or
the right. 'The Managernent' has not'taken a clecision' about ths
- of course not: to do so would be a neurotic comjulsion.
Nonetheless, the resuIt is that the peclestrian cloes not have
recjuisite managerial variety te prevent the osciliation's setting in.
Anyone who took seriouslv the invitation of the last exercise
shouid have begun to see New osci!lations occur either because
there was no policv directive, or because the clirectives were made
autonornouslv at the lewer leve! of recursion and had no corporate
consistency. But when people begin to perceive this in actual
organizational settings, they tr y to supp!y the Re q uisite Variety that
would offset the osci!lations by corporate clictat en the central
command axis. This is quite the wrong response. It uses up
goodwil! and the sense of freedorn te no advantage. Wtness: there
would be absolutely no point in passing a Ia'v te campel
pedestrians te pass each ether en the left. They are not going te
collide in any case - the nervous giggie mentioned is the highest
penalt y . (Because it is different with ships at sea, the equivaient
rules do Nave te be macle.)
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Production control, we saicl, is a major example of an industrial

System Two. It is concerned with a balancing act bekveen He
market demand on He one hand ancl rnanuacturing convenience
on He other. Sales decisions ancl production decisions are inputs
to the production control function; they are not He kincis of
decision taken by the production controller himself. Those are
about the best ways o doing things, given sales and production
constraints. Sales and production directors inside System One
knows tha[ System Two has a better (i.e. overall) vantage point
from which to help them meet their own desiclerata. But it is not to
anyone's advantage to do this at the expense of holding vast interprocess stocks, which tic np both capital and warehousing space.
Most people with industrial experience will hu y e seen dow the
oscillations set in (if the regulatory System Two cloes not work too
well): material bays are stacked as High as He ceiling one dlay and
are empty He next.
NOTE:
The Procluction Controller does riot have higher status than
the System One mdnagers: he has more knowleclge about
what is happenng iii the rest o the organization.
Whiie it is true tdat know!eclge is power, in chi s case as iii any
other, He Production Controller's po'er is limited to antiosciliatory regulation.
The presentation o System Two should therefore not be
threatening. It often is, because its true role is unclear.
Each System One o servecl by more Han one Svsteni Two, because
there are aiways several oscillatory soLirces.
NOW DO THIS:
Make a copy o He facing Figure 19 to represent vour own
System-in-focus. Annotate the square boxes cientIfied
befo, e.
Now fincl at least three Systems Two, entering these
functions in the red boxes A, B ancl C.
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19

tm o the

n i Dr
One.
sense, ancl

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HRST EXAMPLE: Manuacturiig Company

Senior Managernent - Set abo y e the divisional square boxes but often consists o or includes their
managers (cf. self-reference)
Square Boxes,
System One -

The divisiois or cepartments

thernselve.

System Two, A - production control (see text)

(,

System Two, C thepersonnel ethos

System Two, B - the safety environment

No misunderstanding here, piense.

There are SAFETY RULES, which are promulgateci do\vn the
central commanci axis. These are direct variet y attenuators, People
can be FIRED for not \vearing harci hats in appropriate arcas, or fcr
failing to use the guards on a machine tool. So System Two has to
do with a generaHy variery-attenuating environment, whereby
there is no oscillation bet\veen various parts of the works: we do
not expect diferent standards to prevail, nor one manager to take a
stance that would niake another look either slack or overly
punctHious. This kind o safety environment is created by oosters,
accident 'therrnometers' that prornulgate statistics, anci so on.
NOTE that both the command function ancl the anti -osci 1 latory
function are probably handled by the same people. The
distinction drawn here is none the less i niportant. Indeed, the
comrnancl trinctions o otherwise 'advisory' units may ose force
i f the ir System Two fu nc t ions ,ice di srega rded
There will be RULES about enloyment too; but the ethos as to the
firm's atttucle to people also has a strong System Two component.
Think it through

NOW: are the three examples (separately A, B, C) too formal or

too informal?

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SECOND EXAMPLE International Planetary Protection Agency

Senior Management

in ternational Board

Square Boxes,
System One -

NatiOn(]i Boarcis

System T\vo, A

I nternational tirnetabling

System Two, 3 house style

System T\vO, C ethical consistency
t3y now it should be reiatively easy to disentangle the command
unCtions from the anti-osciliatory ones. An agency such as this
viH
certainlv disseniinate policy decisions that partly determine A,
9 anc C abo y e. But the national boards wili demanci a lot of
atitude in their interprletation , claiming autonomy in the ight of
local knowiedge.
hat isfine: but when wili come the point wheie global synergy is
ast or lack of sharecl arrangements that do not IN FACT rob
Sym
ste One of local initiatives?

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imetabling in schools has been cliscussed: similar auments

anoly here - because of limited attention b y the media, and
herefore by che public. Names ancl emblems are valuable variety
'ten uators, for similar reasons. Th i rdly, consistency of major
dcets in anv organization across System One is an attenuator o`
major value; ancl althoLigh all enterprises llave a eneral eth ical
olouration' in this sort of exampie a clampig of osci 1 lations in
ls domain clemands particular care.

PAUSE

NQWT000THJS.

Consider vour own Sv5temin-focLJs

Does it llave something you woulcl cali
' a salarv policy?

Li

o acarooiicy?

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Are these so-c lcd 'poi cies' (wHlcH rc expecteci to be Iow

va riet y under tOs narne, nr ts synonym '( 3 LI id eh nes')
actually high variety RULES promulgated on tOe
central cornmand axis?
e

System Two activities, preserving sorne local

autonomy?

\iVQULD YOU LIKE TO CHANGE THE EMPHASIS?

e How?
e And how would you achieve this?
THIRD EXAMPLE: A Health Service
Senior Management - TOe Heal tO Authority (al whatever leve
of recu rsion)
Scivare Boxes,
S y stem One -

general practce, hospitals, community

medicine, ancl so Qn; or liospitals Alpha,
Beta, Gamma; depending on tOe leve d
recursion.

Here (facing, Figure 201 is another cliagrammatic convention

System Iwo, A, B, C, D, E
Think about these five:

keep things flexible.

who knovs how
rnanv Systems Two you
rnay uncover - OR
conceptuali ze?

A ancl B are [ami l -ir 0v nov. They are accepted and formal.
Though whether de y are well done or not is another cjuestion
Does A make use o rnathematical queuing theory? (Ii not,
maybe de y sOl spel 1 ante-natal wi tO an T.)
Does B make attenuating use of computers? (Ii nol, maybe
OLI are generating another vas( bureaucracv.)
C is interesting. Nursing protocol is no( a maiter of ecl 'ci. It is
essentially an anti-oscillatory device. And yet not even eclicts have
quite this FORCE. ltis variety-attenuaiing to he point of systemic
inanition
ev en cleath.
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How ar is D a niatier o edict, and How lar a matter of accepted

pratice? l the latter is the predominant partner, tben recognize
that TRAINING POLICIES underwrite many Systems Two from a
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higher leve of recurson.

[Ibis is most evident in the dernarcation disputes that arise
between Trade Unions in every industry. Tbink liard, anci
beyond political prejuclice, to reach the machiner y o thisH
E is a perfect example o ihe unexpressed System Iwo. A anci B
were formal, anci recognized for anti-oscillatory clevices. C is
formal, but wrongiy intuited (especially by patients, who see onlv
autocracy). D is more complicated than it looks. So what 5 E?

NOTE: to cali E an anti-oscillatory cievice makes [he issue o

potential litigation open to discussion in cybernetic
terrns. Otherwise it is an emotive anci political matter
FOURTH EXAMPLE

A Family

Senior Managernent

Pater Familias? Usuaby, some

cmbination o Mother and Father.

Square Boxes,
System One-

Mem bers o the fam i y

bu t whom
shou ci ibis inclucie (cf nuclear and
extended families).

Looking back lo Figure 9:

Systeni Iwo, A - mutual respect, inclicated by: bocly
language, explicit emotion, tricks and
games
System T\vo, 8 - sharecl unclerstancling of '\vhat ihe
neighhours vv II sav'
Systeni T\vo, C - sharccl awareness of \vhat a
dead grandfather (e (-Y,.) would have
saicl or done.
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in the lasc Secuon (Four, page 64) an mporrnnt process was begun
It was recogrnzed that [he elemental units of System One are
prohferating variety on the horizontal axis of thediagram, and that
there are verticai constraints on the freeclom of variety generation.
Four were usted:
() the Corporate Intervention,
(u) the Resource Bargain,
(iii) operational (squiggly-Iine) linkages,
(iv) environmental intersects
- and by now these are familiar indeed. So too by now is:
( y ) System Two: anti-oscillation.

CORPORATE MANAGEMENT involves vertical constraint

BECAUSE it too must have REQUISITE VARIETY.
As soon as the vertical linkages carne under scrutiny, we saw that
the PrincipIes o Organization apply justas well to the corporate
(vertical) management as to the elemental (horizontal)
managements of System One. Then what have just been referred to
as variety constraints are part of the corporate management
desigh.

NOW DO THfS:

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Bring the ,'N, etcl-,es o vour ovvn System-inJocus up to date,

ina form thut ummaFizes everything so Gr uuderstood. 1n
particular, ensure that the five vertical 1 inkages are.
sufficientiv \vel l represented.
The question to ans\ver now is:
Does the Senior Management hu y e REQUISITE
\'ARIETY to ahsorb the \! ariety pro! iferatecl by the
Horizontal elernents o System One?
constGinecl as that is by the five vertical linkages.
In trying to answer this, NOTE that all ve linkages refer to
relationships that are routine.

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It wili be difficult to answer that question precisely unless a

measuring system is developed (and that is by no means
impossible). What you should find possible, however, is the
assessment of the relative importance in absorbing horizontal
variety that the enterprise gives to the various vertical channels.
This gives an immedate 'feel' for whether the organization tends
to be autocratic or democratic.

But return to the definite question about the Senior Management's

deployment of Requisite Variety - and recali the hint just given as
toroutine.

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All five vertical channels are filters of variety; ancf of course (1), (u)
and ( y ) have been specialiy designed to filter management
informa t ion.
So the question must arise:
what happens if what the management rnost neecls to know
is FILTERED OUT (by the use of totak, avefages, and so
on)?
Poor managements, having too little insight or training, or suffering
from 'corporate paranoia' that has them feeling constantiy
threatened, disregard the filters, and try to restore Requisite Variety
on the central axis. That is, they disregard the resource hargain
(where in principie the homeostatic message upward needs to be
only 'OK'), and invigilate the horizontal activities with all the zeal
of an Inquistion.
But there is a vvhohe set of acceptabie managernent practices that
do not involve this centrahization of rnanifest power, which properly designed - are capable of generating enormous variety.
Such mechan isms work sporadically (notas a perpetua routine see previous hint), and - by agreement with System One
management - penetrate str2ight to the operations themsebves.
These procedures, which may genericahly be cahled 'audits', are
indicated as the sixth vertical channel in the facing Figure 21 marked in red.

82

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riCvE 21

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Now it is open to us to deduce from the Law of Requisite Variety

that vertical horneostasis rnust obey:
The First Axiom of Management
The sum of horizontal variety disposed by all the
operational elements

EQUALS
The sum of vertical variety disposed on the six vertical
components of corporate cohesion.

Most people worry about the manipulation o varieties that they

cannot precisety measure. Too riuch of the accountahcy culture
has entered into our regulatory thinking:
how do you know that there are 'the right' number of
bricks in a walt, to ensure that its top does not display
gaps? Did anyone count them?
you have just overtaken another car. How coutd you
have appled 'the right pressure to the acceterator
without knowrng the pounds per square inch to exert?
It is the same with match ng comptexity through tlie concept of
variety.
CONSIDER:
Vertical channeis (Figure 21) (iii) and (iv) absorb whatevervariety
the circumstances of ',he enterprise dictate. Channeis (i), (u) and (y)
absorb whatever variety we have designed thern to absorb - given
our management style ((i) and (u)) and the proneness to oscillation
(for ( y), or System Two)
Then because of the Law of Requisite Variety, as expressed aboye
in the First Axiom, it NECESSARILY FOLLOWS that
Variety oAudit Channel (vi)
= Total horizontal variety generated by System One mi7us
Varieties (1) (u) + (iii) + (iv) + ( y).
The Audit Channel CLOSES THE GAP.
84

As the na me 'a ud t' implies, sorne o t1,15 work will be done

roulinely in its sense as regular/y.
But audts do not Have to be
routine in any otber sense o tbe word; and tbis is exactly what
makes tHs channe! both necessary and suficient to 'top up' the
requisfte variety o senior management i n any given state o play.
In fact, ancl \VOUId-be aLichtors in the abo ye wicle-ranging sense
should note this, routine and regular audits surrender aarge part
o the variety they generate tono purpose v hatsoever. Think o the
way in which WVV2 Prisoners-of\'ar escapecl from Germany, by
cloi ng thei r cliggi ng 'u the gaps between rigorous patrol ng

Tr'Z
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2.Z

There are no surprises here

NOW DO THS TOO:

for your own Systern-in-focLis
85

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That aspect o Senior Mcilageflieflt \vh idi denls with al the rnatters
so far discussed emerges rom Figure 22 with He name of Systeni
Three. It is different from System One, because it surveys Pie
System as a totality - which the component horizontal elements
are not placed to do. It is different from System Two, because it
exerts authority on the central command channeL
System Three, Pien, i s responsible for He internal and imrnediciie
functions of He enterprise: its 'here-and-now', day-to-day
man agem en t.
Then t is responsible for, although it does not conduct, Pie antiosciilatory functions of System Two.

it is also responsibie for the activities we have just been

considering, wh idi it may weil conduct, in He sense tiiat these are
sporadic, high-variety, intra-operational, 'task force' acti\'ities
defined in terms of the System Three need to replenish ts own
Requisite \I ariety. Ibis is why they are calleci Systeni Three*
(Thre-Star) - they are not separable from Ihree itseif, except for
Pie fact that they operate
by consensus - APARI from ti-te
comniand function.
( System Three
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'management audit': how are

placed for succession
System Three ) W
a speciai survey o the state of al
our buildings
System Three * x - a Work Study enquiry into He
utilization of electric motors, their
Lmakes and spares.

You may have realizecl, in unclertaking these exercises, that the

ACCOUNTING function offers the rnost obvious exampies of al

aspects of management considered in these cybernetic ways. Ihen
good news and bacl news:
Good: this confirms He overriding importance o
accountancy in managerial reguiation - wh ch 5 a
fact, anci must be reflecteci;
Bad: Ihe accounting profession, not having stucliecl
nianagerial cybernetics, makes no clistinction between
the four roles shown next - ancl gets a reputation for
autocracy in return. 86

it woud be usefu now toci ra-vv thc foHowing diagm

on n Urge
sheet, and to iH it in With yourmain findings. Of Course, my
show ing five examples on each of the rnanageriahvesign0cf
channek rs quite arbitrary.

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P's are essentiaiiy PRORAMM[5.

R's are essentially RULES.

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COMPLETE a copy o il Figure 23 for your Svstem-in-focus

ENSURE that ACCOUNTINC functions are
thoughtu liv represented.

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SOME NOTES QN ACCOUNTANCY

When accountants tLirn their minds to these ways o looking at
their profession (anci quite a few liave been known to do so) they
often declare changes in the presen(ation cf their activities.
The FINANCIAL DIRECTOR cloes not give much o lis time to
System Three, unless he is also the Chief Accountant - who fit
thrs role ('here-andnow') precisely - ancl especially in an
enterpnse that has climbeci out of the straight-jacket of 'historical
casting' in favour of 'managernent accounting'. So we get (Figure
23):
RULES: SYSTEM THREE ONE: R 1 , R, R, etc
These are the interventjon that enable the Senior Management
to discharge its legal resDonsibilities thev determine the form
and meaning (in particular) of the Balance Sheet, ancl the Proit
ancl Loss Statement
RESOURCE BARGALNS SYSTEM THREEQNE P 1 , P, P, etc:
These are the arrangements made to clistribute resources ancl
obtain ACCQUNTABILITY for thern. Prograni Planniny and
Budgetting (PPBS) Syslems typify [hese bargains.

A NTf-OSCILLATOIN .

SYSTEM TWQ: A, B, C, D, E. etc

These are essentially the costrng techniques that supply stanclarci
costs, variances, and so en. The accou ntacv
n principies ancl
practice
s invol ved are OPEN To DISCUSSIQN This can easiiv

be CONSENSUS rather tlian DICTAT management.

AUDIT: SYSTEM THREE-STAR V, VV, X, Y, X, etc:
These ad-hoc, high-variety activities are well understood, and
are to this extent alreaclv consensual.

NOTE tHIS: The Interna Auditor (ol channel 31 k higiilv

know!eclgeable about System One: he mav beso identified with
it as to forfeit indlependence

HOU/E VER The Externa! Auditor comes from a l?ilier leve!

o[
recursion (whether on an i nstr tut oria l or simply a proiessiona i
basis). He gains in independence what he may foreit in detailed
knowleclge . . .
- what a combination!
nm-

A REVISON OF SPECIAL TERMS

Please note that we have come all this way on the strength of onby
a dozen special terms.
Then resist the opposition of those who say: 'this stuff is
incomprehensible' It means simpby that those people are
unwi!hing to stop and think, orto question their own prejudices.
Let us review this smalh vocabulary, and confirrn that we fuhby
understand it:

ONE
p. 17

Viable
Recursion
Se 1 f-re fe reo ce
Homeostasis
lrivariant

TWO
p.35

Varietv
Requisite Variety
Attenuator
Arnp lii lcr

THREE
p 53

Channel Capacity

FUR
71

Oscillation

Transducer

p.

FIVE

P-89

and here we are:

'JONE

The First Axiom of Management

The sum of horizontal variety disposed by all the

operational e/ern-ents
EQLJALS

the sum of vertical variety disposed on the six vertical

components of corporate cohesion.

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The notion of hierarchy cannor be altogerber escaped in discussing

the viable system, a!tbough all our enqudes constantly revea! the
equivalent importance of the five major subsysterns. It reaily is not
surviva!-worthy to have a brain that would support an Aristotle or a
Newtonor a you, if any of the major organs or physiological
systems (such as the endocrine) closes down. Simiar!y, a Senior
Management group whose factory falls down or whose country is
blown up is rendered dysfunctional roo.
The reason that we st!l cannot escape the notion of hierarchy is
the existence in al! viable systems, 'vhich are after al! always
enterprises, of an equation of power. The will for survival seerns to
be what governs this equation. And whether we look at animais, in
which the brain 'commands' the nervous system and (in man at
least) 'rnasterrnjnds' the will to survive, or at socia! nstitutions in
which sorne Truman is always effectively saying 'the buck stops
here', acknow!edged hierarch es emerge.
Hence it is that rnost peopie say o brain-darnaged people that they
are like vegetables, and surely they would be better off dead. Few
are found to wonder, although sorne do, whether these folk are flor
'nearer to God'. Equiva!ently, most folk say that societies must arrn
themselves in order to resist enemies, because t 'vouIcl be better to
die than to lose their freedom, although there s no agreement about the word 'better', and no agreed definition of freedorn
either.
Al!right:This s not a clissertation on phi!osophy, and most readers
are hkely to be happy enbugh with the concept of Herarchical
management. The fact s that! ani not, ancl that the aboye
paragra p hs are spattered with nverted conimas and stylistic
reservations with good reason and serious ntent. Cabinet ministers
and even Presidents of nations have deplored to me their
Jmpotence-inpractjce;and not for nothing s a poem echoed in
many a Boardroorn that begins: '1 wish 1 knew whether I were
Chairman of tbk Company'. But, yes, only the most senior of
senior managers arrive at these nsights, u they ever do;
91

while those who have no cornpunction in abusing as well as

exercising power are certainly able to demonstrate the force of
hierarchy to unarguable effect. THen my final rernark shall be only
to note the lack of wisdorn in using pat'fol'ogca! states of systems
as means of deining (rather than to dagnose) healthy ones.

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We saw tbat it 5 System One, and not 'Senior Management',

which produces the viable system - wbich generates its wealth.
We saw that a System Two woulcl be needed to damp the
oscillatory behaviour inHerent in the structure of System One. And
now we have arrived at the requirement for System Three, wbich
Has the role of observing the One-Two complex from the
privileged position of (intrasystemic) omniscience. THis role is a
necessary condition of viability, and our enquiry Has to treat it as
such
NOTE THEN: System Three is not constructecl as a box to
house people with better suits and bigger cars than anyone
else. That they do have these things is sirnply the result of a
general acquiescence in the hierarchical concept.

A BIT MORE PHILOSOPHY: Go and look iiito a

monastery i you doubt this. System Three still works
without the perks. BUt in real (?!)fe it suits the greedy
to accluiesce in greed: their turn (they Hope) will come.
With al of this introduction we may ask, not that you should find
the company organization chart to see who is running the show
and their relative seniorities, but that you should
MAKE A L!ST
o He System Three components of y our Systern-in-focus.
THat means:
Who are those who partake in Resource Bargaining, He
al loction o! msorirces, He Accountabi i liv Loop;
WHat supportive management does each have lo
administer He A, B, C, D, E ... acllvities of System Two;

92

 V\I hat suoportive management does ecli Ha y o to initiate

and conduct the y , w, X, Y, 7
activities of Systeni
Three Star

1.
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y 'Y , -'-

y a ,'.

/Gj
Figure 24
24 san illustration oan answer.
It is disappointing for two reasons:
It is a generalized statement (it has to be) - yours shoLfld
be muCh more specific, idiosyncratic, YOU-ish.
lt is not, inside itsel, very systemic. Look at the feeble
attempt to ernphasze a needed homeostat between
Production and Sales! What are al the real connexions in
your own example?
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Please: you shcu!d not by now have the !east inhibition about
drawing an elaborate system inside your System Three box - a
boxes and arrows, all homeostatica!ly arranged,
diagram fuli
and al! obeying the (four) Principies of Organization. 1 cannot do
this for you any longer because 1 don't know what your System-infocus is. Eariier on, it was possibie to guess about (what are after
al!) fairly standard nter-relationships on the horizontal axis. The
items in Figure 24 are fairiy standard, too; but the relationships
the vertical axis.
now ref!ect the power equation

NOTE; There is nothing inconsistent here. If we were to

shift a level o recursi6n down, we should ind a System
Three in each elernent o System One
but we dicln't treat it like that: our recursive
vantage point was clifferent.
Finaily, in re!ation to your work on Figure 24 (the last exercise):
make sure that there is no conusion btween the A, 8, C, D, E
activities of System Two and the within-Three senior management
bases that underwrite them, nor between the System T1ree-Star
activities V, VV, X, Y, Z and the within-Three senior management
bases that commission those. There is a risk o confusion here,
because a similar nornenclature is inevitab!y in use, butFEMEMBER the difference between
System Three - cornniancling, making decisions - on
the central axis, and
System Three - enhancing its capacity to absorb
variety, via Systems Two and Three*.

To brin- the !esson home, !ook back over page 88 about the four
modes accountancy regulation, and
ANSWER THIS:
How wo.u!d you demonstrate the minimizaton of
anci the ernphasis on 'service', in financia! aclministration
- as revea!ed by the variety ana!ysrs of Sect:on Five?

94

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A possibie answer is that you might use different colours of paper

for the docurnentation of the four systems, in particular, if the
Intervention channel's colour were red, then System One would
discover how little red paper there is - and how justifiably
important. Senior financia managers often have little idea of the
animosity their 'manuak' often engender
and other senior managers, although they may not issue
'manuais', may well by their behaviour antagonize System One
without having the slightest idea of the reason.
lake a look at ths picture of your owri System One, generating
horizontal variety:

We already know from the First Axiom of Management that ah o

this variety, V i,,,rnust be capable of absorption by System Three
- using the six vertical channels we have discussed.
How this is done, and how it will be seen to be done, are different
matters: the concern is with managerial STYLE.
NOW DO THIS:
Refer to Figure 2 (pa c e 83) on which the (nally) six
vertical varety absorbers are shown.
Determine for your Systern-in-Focus how the First Axmm
(horizontal \'arietv = vertical variety) appears to be met
e as System Three sees it;
as System One sees it.
Be honest. TaIk inforrnally with those concerned. Ihere are
ALWAYS surprises in this exercise.
95

5 it possible that tHe ans\vers look anything like tHi2 ii so, wc have
an example o' ,vhit a psychoiogst woud cal! COE3NiT1VE
DISSONANCE.

2S A4L

KIOM
-1

Pl!

sn
Vzrt

4-1

YSTEfr\

74-'S
1

FI&'<

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The rst Axiom is obeyed in botk cases;

the 'objective' facts are the sane

hut System Three eek saintiy,
System One feek oppressed.
FeeHngs of oppresson are very real when System One's vanety, so
much needed to provide requisite variet on 'he horizontal axs
(however is the managernent box to absorb the higher
vanety of the operations, or to direct [hose so as to
absorh the even higher variety of the envronment? remember?)
is, or even feek as if it is, whoHy absorbed oy System Three.

1L
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;;::;7-;;---

In such case, it would be better to replace 'he System One

management by a computer - because it is not free to face variety
with its ovvn creative variety, but has to pretend that 'the world' is
really ,he outcome of a simple formula.

1
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And this is just what is happening - from the

management of the economy, to he lack of
choice in consumergoods-- !fl contemporary
\A/estern society.

NOW CONTEMPLATE THIS:

s it the case rhat all oncevahie horizontal variet
generatecl by System One needs tu be taken into account in
any of the varity equations?
How lave VOU in fact heen cleciding vvhat is te, count in
he mf
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The question is disrngenuous: step warily.

Variety is rhe number of possib!e states of the system. Iociay, Fred
Bloggs Has cHanged bis shirt
WeH, it is clear that from the start
(when we first began lo consider equations di variety) we rnust
have adopted sorne criteria of relevance. Yes but how Has the
process of r elevancefloting been maturing in recent exercises?
It 5 a familiar managerial question to ask whether ab re!evant
variables that aftect oL'tcomes have been cietected in the
operauor?s. VVas the last question posed reduced to that iso ,
?

does not lead to the rnost fruitfui answer.

it

WHat matters in discnrninatin ore 'state o the system' from other

states s whether the resulting change o state serves. or has no
heari
ng on, the purposes of the system:
NOTE THE DIFFERENCE between bis forrnulaton and the
previous one. It iS much more fundamenta
Now we have not spoken of the system's purposes befare, except
in declaring rs viability -- anci thereore the implied purpose TO
SURVIVE: tbk is the h'separate existence' of i!-,e 'recognizable
entity'. But usua!ly ' e viable system has a purpose imposed upon
it, thus:

Ff'u

ak
c

Look first at the black part o Figure 26.

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It is usual for tke vi able system fo Nave a purpose formulated for it

within a higher recursion, and this purpose must be expressed in
Ge Language that the system (S) understands. Note that in
dropping a recursion, because Gen of the need or transduction,
the staternenf o Ge purpose may change.
Insoired b y this pureose, and required to act by its proper inputs
and Ge perturbarons that assail it, th viable system's State 1
produces act;ons - and for itself a new, resultant, State 2.
A GOOD OBSERVER will impute the purpose othe system rom
its actions and thus from Ge resultant state.
Hence Ge kcy nphorism:

Tfl rhe purpose of a system Ji s what it does. LLL

There 5, after ah, no point in clairning that Ge puruose oa systeni

o fo do '1vhat it consistently fahis fo do.
Again, then, ,ve are hk_-!y to encounter COGNITVE
DISSONANCE. To sug g est how this is in practice resolved,
electrical convenfions are again usen - in t ;(-,e red ocrt o the
diagram.
A comparator, naturahy enough, continuoushy compares Ge
dechared purpose with fhe purpose imputen froro Ge results that
the system dehivers. THs results in the Ieeohack of en error signaJ
(E). 'vhich ',v ih! modifv the origiNa! statement of purpose.
NOTE: 'Feedback' is improperly useN fo refer rnereiy fo
response, wHch 5 How most managers use the
term Feedback generates corrective action
(whether positive or negative).
TH!S SYSTEM WILL CONVERGE QN A COMPROMISE
PURPOSE - it is nether what Ge Higher recursion wouid
mosf hike fo see done, flor ,vhatthe viable sytem itself
wouid most Nke tu indulge in doing.
NOW IDENTIFY
The compromises
o purpose in which your Svstern-infocus is impiicated.
Can

VOL

real setthe for these .

99

Obviously is comphcation about purposes has imphcations For

the process of planning.
For the time heing, these remarks refer to the planning of System
One by arrangementwith System Three---- which we know as
Resource Bargaining, and ticketed in Figure 24 with the label
'strategic planning'. (We are not yet taiking about corporate
plannin g for the whole System-in-focus.)

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A!I planning is a continuous process leading to the commitment o

resources now, that the future may be different
For what pu, pose?
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It s here that our convergence diagrarn (Figure 26) comes in

useful, for many of the planning protocois around ignore purposes
altogether, and assurne a g reed objectves. H owever, the
agreement about objectives is a spin-off from the convergence
purpose.
The purposes o the corporate system and those o System One are
different, because System One consists of viable systems whose
conditions of survi''ai are orrnulated at a different level of
recursion. In principie, the higher recursion can cut off, or seli off,
a System One; and this in turn (because it is capable o
independent existence) can in principal leave.

*
--

So long as the System-in-focus is to remain cohesive, the

compromise convergence rnust continually act. Rs trajectory takes
ittowards
the Iowest varEety compromse possible.
This is not a surprise - since no sort of negotiation piles on
unnecessary complexity - but itis an outcome whose ;rnportance
is often overlooked.
NOWDOTHIS:
lake the compromise on purpose identhed in t,'-,e Iast
e<ercise, and evaluate how far its bias is toward rSe
purposes o tSe whole Systemin-focus, and how far
to'varcis tSe purposes o System Orie.
TSe scale could be:

100/0

80120

60/40
100

50/50 . . . andsoon.

The measure selected (subjectve, rough, though it be) tefls you

about
the authoritarian character of the enterprise.
Alviable systems conform to the laws of viable systems; but they
are markedly different in the number of states of the system (i.e. its
variety) that they regulate.
This isthe underlying reason for the apparent differences between
rand among animateand inanimate systems (e.g.: brains and
computers), individual and societary systems (e.g.: people and
groups), goal-seeking enterprises and service-oriented institutions
(eg.: firms and government departments).
There is NO NEED therefore to have
different classifications, and
different organizational theories, for
ah these systems -SO LONG AS
they are a!! viable systems.

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The differentiation can be done in ter

the amount of variety under regulation ata!!;
the distnbution of regulatory variety between tbe central
cornrnand axis (two) and the other four vertical cbannels.
AND ALL OF THIS wi!I be determined by the convergence of
( purpose for the Systern-in-focus.
PLEASE:
Go back to t'ne question at the foot of page 94, and
reconsider itand also the subsequent questions to this point.

THis question asks you to take part in

a convergence of purpose
exercise

c
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AH that was intended as an experirnent in Iterative prograrnme

learning'. The idea was to get np enough speecl to jurnp a very
considerable hurdie: a. False notion o purpose left in our path by
about 2000 years o categorization anci reductionist thinking and reinforced recently by naive (though expensive) management
consulting.
So where have we arrived; and could yo.0 now accepr these statements -based not only on argument, but on your personal
experience o answering the questions?

WHEN WE KNOW
what is: the purpose of the system
which is: what the system does
(after convergence between
System Three
and System Que

= strategic planning)

THEN \jVE MAY ALSO KNOW

'he criteria for distngLHshing possible states
--mean ng:
how to measure variety.

THIS WILL THEN TELL US

how rnuch variety the First Axiom must necessarily handle,

El AND IT WILL DETERMINE

the minimum variety on the vertical command as
transmitting regulation that guarantees COHESION in the
viable system.
means the freedom remaining to the
management on the horizontal axis
to manage.

102

WHAT IS THE CON VERGENCE OF PURPOSE...

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27

HOW TO INTERPRET THE SLOGANS

IN TERMS OF SUCH AUTONOMY?

rif

103

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The previous page

not offered by way o decoration.

There are statements about the nature o autonomv, which is a

topic o crucial importance in organizational structure, Qn pages
102 and 103 that relate autonomy to systemc purpose. Figure 27
displays six (black) questions about the convergence o purpose
between two levels of recursion, and four (red) questions that
require exactly that sanie background o understanding before the
sogans that they incorporate can be properly addressed.
NOW DO THIS:
Consider the black questions in turn, but aso in relation to
each other:
How do you assess the degree of autonomy o the
embedded system in each case?
Consider the red questions relationaily too:
search out a real eeling for tic sense in which
apparenrly absolute exhortations invo!ve recursive
logrc and ordinal measurement o variety.
There are manifest personal and political inferences that can be
drawn from examinrng emotive topics in a scientific way. One
needs to be rather brave: the idea of 'computable functions'
encroachrng on accepted notions o personal freedorn or artistic
vision or spiritual growth is anathema to mosteople. Yet all three
are subject to lirnitations that can be measured.
To look closely at the structure o organizations, the entailments o
one thing by another, the complexity o problems in relation to
avarlable analytic power . . . Such approaches do not change the
nature o the freedom or art or love that they examine. But they
may offer a degree o sanity in handiing practica affairs, and even
a mode o spiritual realrzatron, that is not automatically accessible
to someone who simply declares himself liberal, liberated or
loving. How aggressive such humility can be
Let us take our own autonomy seriously, at each level o recursion
where we recognize ourselves to be - and recall that no-one can
compel us to choose bet\.veen arts and science, liberty and law,
one love and another: horneostasis is something ese.
04

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SPECAL TERMS OF SIX

COMPARATOR a device tliat compares one numerical value
with another, and marked thus:

FEEDBACK

the return of part oa system's output so as

modify its input.

Co

(Feedback is not 'a.response to a stimulus', as in

popular usage.)
NOTE: fi particular then, as we saw, an error signal
whereby a comparator sends feedback Co the
init/ating recursion ' vill eventually result o the
CON VERCENCE of the st ates compared, such as A and B aboye.
A(JTONOM Y the freedom oan ernbeddecl subsystem to acC 00
ts own iniCiative, but only within the ramework of
action determined by the purpose of the total
system.

105

Al the emphasis recent!y has been on the idea thai the

organizational structure so far examined, which maybe we can
simply cal 'the 3-2-1', deals with the inside-and-now o the
organism - the Systern-in-focus.
Shift your grip on the business o recursions, hold on tight, and
formulate an exact answer to this
QUESTION:
Since the 3-2-1 o iNc Sys tem-imocu ddls vitK the

ancl-now.

inside-

Why clic!we spend so much time looking at environmental

re!ationships?
(Rernember, cg. Figures 5, 6,

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The answer Ts that the environmental relationships concerned

were NOT THOSE o the System-infocus as such. They were the
connexions o System One. As such, these be!ong lo the next
ower recursion.
It is particularly important to keep this point in mmd in considering
all matters o planning and adaptation. The fact is that the sum o
al! the System One envrronments is Iess than the total environrnent
o the System-in-focus Not only is it 'less ihan' in the sense o 'not
including so rnuch'; the environment o System One is (by
definition) the environmeni o the existing operationa! enterprise,
whereas the environmeni o the whole System-in-ocus belongs in
anoiher leve! 01 recurslon.

107

A careful study o the next diagrarn (Figure 28) ought to bring this
home. Remember:
The black part o the picture is the 3-2-1, the inside-andnow o the viable system;
the

whole diagram stands for the Systern-in-focus;

o \'Ve are usecl to taiking about 'the Senior Management'.

VVhat the diagrarn telis us is that SYSTEM THREE
constitutes part o that.
o The rest o Senior Management has to cope with the big
red environnient

Well, all this certainly presses the original point o this Section:
(he environment o (he System-in-focus is not the sum o
System One environments.
As so often happens, our own boches provicle good examples o
viable systems (as well they rnight!).
108

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The vaous organs o the body Nave micro-environn]ents that neecI

to be kept in homeostatic view by the autonomic (good

name)

nervous system. The truly automatic system o adaptation wiU stop

me from faHing over, keep my water balance in good order,
increase my respiration as necessary, and so on. It will also
promote volitional action atan alrnost subliminal leel. 'Cometo
think o it' (1 can say, reviewing (he last hour or so) 1 rnust Nave
switched on my desk Iight, and
put another lo- on the fire, since
startedthjs Section
. 1 didn't really notice .
In this way the organization keeps its day-to-day enterprise going.
But it is abundantly clear that 1 am more than the sum o these
activties - and that is because my environrnent i s more (han (he
set o rnicro-environrnents that work on my externa! organs (like
the skin), and work up from my interna! organs, notifying (he stat
o eqwlibrium in the 'interior rni!ieu'.
1 am gong to Philadelphia on Thursday week, and on to Vienna
after that. My skin does not kno\v this, nor do my intestines.
Something in my viscera does however know: it is reacting to a
premonition of high endeavour, and we cal! it 'excitement', or
'anticipation'
So the red and black systems

are not, schizophrenically, separated.

There are bridges.
Aboye ah, key

black syste

Llsr

:::;^

ontainedjn the red systems.

any key points Figure 28 suggests about

vour Svstem-in-focus AND about (he
next higher ancl lower recursions.

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Al that can be ofered by sorneone not involvecl about answers to

that question is that
the next-Iower recurs ion is in System One (refer to Figure
4), anci its envronment is the 'black' environment of
Figure 28.
It has plans within that compass.
Then what does it NOT perceive about the 'red'
envjronment in which it shares?
What moves rnight the Senior Management be
consiclering that are BEYOND THE IMAGINATION of
System One?

O the next-higher recurson has the RED Box of Figure 28 as

ts System One; and it has an environniental envelope
about two metres high.

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see abo y e, in the opposite direction.

NOTE: Never reckon that 'lower' recursions are iess imortant,

ess able, or (especiaHy) more stupicl than 'higher' ones.
Differences are appropriate: the roles, the histories, the
respansibilities, the technologies, and (in sumrnary) the
LANGUAGES of different recursive levels are clifferent. Soto say
(abo y e) 'beyond the imagtnation' sounds pejorative, hut is not so
intendecf It seems clear from their utterances, for example, that
royalty ancl prime ministers find the lives of orclinary people
'beyond the magination'. That they do not know this, nor be!ieve
it, is a confirmatory pont. At any rate, the sanie points hold in boIi
drectons of the herarchical embedrnents o viable systems.
SERENDIPTY - ADDENDUM

Imagine a plav ti \vh idi a ni nor cha racter has Ofl I

\vOrds lo sa' Ithough nian\' times)
\c, and no.
NO\v imagine a nother play, in \.vh cli

kvO

I rl rector is
rehearsing ihe actor concerned in de first plav. 111
seconci play, ihe actor again has only
nr no lo say manv times.
w

Contemplate the UIi generateJ by C RAHAM GREENE,

whose tventy minute play 1 Heard at this precise point in
the book, when al the yeses and noes belong to two
diferent but entangled levek of recursion

P:Ii1LIi

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29

Life is fui of cybernetic clichs

The orie we now acldress is the abo ye homeostat, and the
argument is simpienough.
uf System Three has been discriminated within Senior Management
as responsibie for inside-arid-now, then we shall also need to
discriminate a Sy5tem Four - to deal with (let's cali if) the outsideand-then.
111

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NOWDOTHIS:
Take a sheet o paper un which to iist aH the activWes o
System Four - tbe ou(side-and-L/jen o your System-nfoc u s.
Make headings llke this:
Un t

AC(ivi(y

Resp o] sihie

THE\i =

Concern

Under 'Then =' put 'C' for current, or a number for the
number o years ahead tha. t iruition scems Hkeiy.
Under 'Concern' put A, B, C, D or E - where A'
recognizes [he highest priority. (Ibis is notan orciering:
everything couid be ciassifiecf as 'A', o-'E'.)
A speciai test in comprehension and/or seriousness o ntent is
bound into this exercise. Therefore it is more than usuaHy
important to do the work before giancing forward in the text.
Actuai!y wrte out the list, or you wiH not be abie to submit
yourseif properiy to the test.
Number the items usted. How many have you detected? is that
ah? f us that enough activity to guarantee adaptaban to the future?

REVISE THE LIST

in the 1 ight o these extra remarks.
if you have by now satisfied yourseif that you have done a good
and thorough job,
TURN THE PACE
and read the hox headed 'Here's the Tet', on page 114.
BACKAGAIN?
It wihi be surprising if you have not made a mistake - and
.correct;ng a mistakeis a powerful way of hearning. Hence ah the
pahaver about conceahng the chues on page 114.
112

flir

WeH, in an extreme case here couid be notiling iet O your list. Or

maybe yen ha-ve been enecuraged te evolve a new ene. Fe any
case (for we have surely grasped by now that systemic diagrams
are more likely o generate ideas than mere lists), here is he next
tas k.

GROUP
he isted ant vi ties iii O ifldjOr c/Cd5 ha( are hemselves
i n ter- re a ted by thi r Conunun 10 lp/ma un 111 he response
system o he enterpnse;

1111

DRAWA DAGRAM
showing how these hrusts ole he

'UlUlO

overlap.

Thls (Figure 30) is he kind of cflagran that really works, aoci that
also repays much re-drawing. Because the TOTAL INTERSECT
(coloured red) defines the centre of he enterprise's real concern
about its future (these may be more han one such centre); and
because each intersect points to He need for coilaboration
(hatched on he diagram to illustrate tVo examples).

-- Pro44

fA

TkacL

.J.

y.

FIu'E 20
113

Not in the interests o creativity alone is the drawing of this

dagram (or set o such diagrams) advised. The managerial
cybernetics is important too.
Consider a few major activities that probably figured in your
lists/diagrams:
o Research and Developrnent (namely, Technical R & D),
Market Research,
Corporate Planning

2D' .s

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114

Ir
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The second, quite disconnected, diagrarn is the most common

and if that is cl ose to yours, then something should be done about
it mst urgently. In fact: how can li t be? Ihe answer has to do with
profssional pride, or even obsession:
R & D is in a well-estabhshed and academically
prestigious area of scientific competence. It tends to
follow its technological fose, regardless of
Market Research findings, which are much more
entrepreneuriafly oriented, and are based on the selfimage of attenuatorlanipfifier on the envronmental
loops.
Corporate Planning has become part of applied
economics. It wiII consider the relative merits of
alternative policies in terms of 'pure' discounted-cashflow budgets - as if the R & D and market research were
simply inputs to a computer programrne.
In shrt, even the dotted red fines (down bel ow;on the facing
page) may ban exaggeration of the reality - a total disjunction.
Wh, we have to do is to constitute orr Figure 30 as a

Ii
Ll

mo4J of its own (that is, System Four) self.

This doncluson is pointed to, with underlinings, because it is
another example of that difficult notion we called seifreference.
Nor i, it an example alone: it is the operational basis for the final
seIf-rferencing, system-closing, System Five to which everything
s no' leading.
SYSTEM FOUR is not only concerned to manage the outside-andthen, but
l to provicle self-awareness for the System-in-focus.
SKETCH A DIAGRAM
- beiore 1urnin He pae - of a notional System Four tha

reflects these niattcrs.

Ho\v do you visual ize it?
WHat are He key eatures?
115

fr

,C74i.E

32

Nodo ibt you captu red the idea o the model o its own activity's
being E rnbodied in a model o tlie whole System-in-ocus. Did you
al so re hze
The account of the inside-and-now is filtered upward via
System Three - arrow A.
THe System Four model of itself arrives in a model o the
whole of System Four - arrow B.
So System Four of the System-in-focus contains a model
of that System Four, vhich contains a recursive model
(see small copies of A and B) indefinitely

As hintd earlier, it is just this infinite regression o se!f-images tliat

seems [o hold the key to the characteristic self-awareness of viable
system.
116

The question as to how System Four should best be embodieci

and made nianifest within tHe Senior Managenient is not one
for this particular book.
ch

At best, we neeci sorne kind of management centre( have

also cailed it an operations room), and the machinery of that
is discussecl in Brain and Hecirt.
At least, \ve shall need to establish l inka ,, es that will do the
best we can about Figure 31 as we have actually found itto
be, workng to\vards the let hand figure.
[But, oh picase, do lot sirnply constitute those red
dotted lines as a bunch of committees. They will nol
have Requisite Variety.[

o
YWA Y:

THe T1ree-Four Homeostat that obtrudes so forcefuliy

on our consciousness in Figure 29 MUST OBEY THE
FOUR PRINCIPLES OF ORGANIZATION.
It cannot be saicl too often.
Nor can it be over-ernphasized that they operate on ah
vertical horneostats (such as Resource Bargaining), as
wehl as on [he horizontal ones where they first becarne
familiar.
So in this case, we hiave to check on cliannel capacity (Principie
No. ), ancl requiste variety in the transducers (No. 3), and the
dyna nics of everything (No. 4) - aH of which propose probienis
impi :it in the recl-dotted sentences aboye.
VER FEVV ENTERPRISES llave a well-functioning System Four.
C\ /C\
V
LL
FEWER conform to the Principies that govern homeostasis.
QUESTION:
What Fappened t Organization Principie NUMBER ONE?
Consider now its impact.

117

 The First Principie o Organization talks about the EQUATION

O VARIETY as it diffuses through an institutional system.
I

41

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New recail the Axiom oManagernent in whch we argued

tht the sum o horizontal variety in System One is absorbed
bythe sum o (the six channeis o) vertical variety. This is a
measure o variety in System Three.

Thn where the Three-Four Homeostat is concerned, it

fol ows from ihe two notes abo ye that:

The Se, ond Axiom of Management

he variety disposeci by System Three resulting from the
peration of the First Axiorn
equals
variety
he
clisposeci by System Four.

CRUDaLY THEN:
nvestrnent o (yes) money, (but also o) time, care, talent,
Irn
attention, reward ust be properly balanced,
bmeostatical y.

I
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oo rnuch o this investment in Four, anci the inside-andow o the enterprise may collapse beneath your feet.
loo much o this investrnent in Three, and you may be
aking the world's best buggy-whips, in which
(notorious!y) tliere is no future. The outside-and-then will
go ahead without you.

ICK OUT A FEW DISASTERS:

ven though you 'know the cause', try running the acts
rough the ThreeFour Homeostat rules
)sually this proceclure will 'give an explanation' ihat
rows managerial 1 igHt on otherwise technical actors.
e.g. Thd Rolis Royce collapse: the RB 211 engine was churned in
the ThreFour vortex, whatever the financial cornplications as
such.
118

Of coLirse we ar Iet wdi this p roblen: howro appy the Epur

?rinc:.Jes of 0ganzati p n o the 'supra-environme' oo. We
frst met this on page 27 (Figure 7), promising to discuss it ater.
Well, here it is, in a minimal enlargement of the loop
ESF of Figure
28.

SYE

An
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FIuE 33
In Figur 33:
The b'iack outline in Four is just one of the set of outflnes
consi ered earher. EACH OF THEM needs its own A!pha and
Beta 1 ops - not shown except for Black.
The Alpha loop projects (amphfier) its image on the environment
of the ouside-ancI-tIien as a continuous concern. What is going
on th t is relevant to Lis?then we must mark that with ou
prese 1 ce and our commanding knowledge and plans. The input
arm othe loop (attenuator) needs desgning as a 'forward
obseration point': no use waiting for fortuitous infoation.
Not only must this loop be closed by the black outline (he area
of this particular interest), it must also be closed - see dotted
lines win the intersect of afi Systeni Four interests.
Al! of this applies also to the Beta loop; but this is anchored in
IHE UNKNOWN FUTURE. Hence the '?'.

119

Ihe Alpha and Beta iOQpS realiy do face quite differem problems.
Monitorng what is actually happening in He hig wide world, and
correct! assessing ihe trends, is different from being alert to
NOVEL Y. Folk too often assume that He future will be an
extrapolation of He past - and then sorneone invents the
transistor. Folk too often assume that they will see He relevance o
the NO\YEL',vithout special preparation: the evidence is that they
will lauh it to scorn - and then get taken over, attacked and
beaten, r simpiy rendered bankrupt or extinct.
So the dtails really rnust be designed. Statt with Figure 30, and
deeIopt th Alpha and Beta loops for the outsicle-and-Lhen. But
c! Figure 32. Figures and Principies and Axioms al!
bear in
come toether, to distribute variety in equal amounts both
verticall' and horizontally. On!y now then can the issues be
addressdd ho!isticaHy that is, withoufgenerating
suboptirizations eithr vertically or horizontlly.
0W DO THIS:
Jake the clearest possible
sLatement about the DESIGN of
varietv handling on
the red unes shown
and as to He machi nery
tq be employed to make the
JlhreeFour homeostat work.
Recollec
e The various variety ba1nces must be held steady.
The rate at which they operate to restore equilibrium
must match the mean rate of perturbation.
e Every attenuatio of variety risks He loss of vital
information, or He introduction of ambiguity.
e The Three-Four homeostat is He organ of ADAPTATION
forthe enterprise.

120

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SPECIALTOSEVEN

Qne again, t/ere are no special terms to ist and remember.

Takback sorne alternative 'homework' from this section, then, by
reviwing the foliowing allegation:
VVhen an enterprise comes under threat, among its early
responses 5 the cutting back of System Four...
. we don't have either the time dr the resources to
worry about alt that now. .
this being supposedly) the organ of adaptation.
Qn the face of it, this reaction is suicidal; if it is not, then
System Four was either unprofessional or ts Senior
Management was not in good faith.

The Second Axom of Management

The variety disposed by System Three reuIting frbm the

operation of the FirstAxiom
equals
the variety disposed by System Four,

121

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The lst actlon called for ',vas a clifficult one. Not much help
possle, because the deslgn o all those filters is contentdepehdent
and just do not know what your business is.

t is rtain, however, that the variety recbuctions involved are

enorlous; ancl that whaever
we do by \yay o attenuation will run
LIS
nt major risks, stemming from the resulting skimpiness o
v a r iet' - and the paucity of information defining that variety.
One c f (he systems in which this problem has been formally
-stucifel for a long time is the game of ches. The number o
possile plays is great, which is what makes it interesting but the
rules proscribe much o the varietv proliferation that wouid
otherise occur:he
t queen cannot swerve in the course of one o
her strighHine sallies, for example and (he knight cannot make
more tan one o those peculiar little jumps u one go. YOLI might
think tlat the anal\'sis o chess, which received a tremendojs
boost fom computerpo\.\er , is too formal or stilted in enterprise
(o h avE bearing en nlanagement .
lot so. It is because o the
m athei*atical invarances o which WC
have spoken before.
Bear with me then; ancl even if vou are riot a proper chess-player
ANSWER THS

U l )p0 5e that a chess- g ame las been weli ouenec

p Lp iicl
lat nether side is at ah obviously u (he ascendent There
a huge numl)er Of Possible moves and strategies Open to
ou.
ow do you think tht Vol, woulcl attenuate (he vary of
e situation?

123

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The epected pause for thought wiH surely have revea led that you
need fo eliminate consderations about certain pieces, certain
areas 6f the board, certain possible tactics o the enerny, and to
concntrate on others. That will reduce vadety, and is a
necesity . . . but how?
Years igo, having formuiated a theory supposing that good chess
playei can recognize patterns, and thereby instantly dscard huge
tracts )f variety, 1 had a series of discussions with one of the
grand athers (and in my case godfathers) of cybernetics - he was a
world authority on the brain. My hypothesis was boistered by the
ex per nental fact that players who had made a iifetime's study of
stand rd plays, and historical games, and the opinions o masters,
were iore successful in ordinary chess than those who had not;
w he re s in versions of chess such as 'kriegspiel' (in which these
advan ages are iargely lost, because the piayer is kept in ignorance
of the )pponent's moves) the expert's pattern recognition was no
hetter han the less expert's.
Warreh McCuiioch's repiy, however, deciared that there was no
way ot recognizing the pattern, whether expertiy or inexpertly,
withoqt considering and grading every possible move. The brain
couid o this easiiy, he contended, though not consciousiy - in
the time availabie. What we choose to cali 'pattern-recognition' is
an acqired skill that can be developed oniy because (at sorne
level of consciousness) we 'know everything'.
Now v3e ieft System Four trying to design a filtration system that
wouidecognize pattern in the unknown (but developing,
irnmannt) future. Can it review everything, however cursoriiy?
Soniehow or other, sureiy, it has to acquire criteria of reievance. in
McCuiloch's chess case, after ah, we know the rules.
1 think iat the rules come from System Five: not so much by
stating hern frmi y , as b y creating a corporate ethos - an
atmosp iere. Sorne firrns have indeed pubiished formuiated
'objecti des', but (from experience) this k not recomrnended. It is
virtual 1' rnpossihie to steer a course

124

bet

n ihese two shipwrecking rocks

rnotherhood staternents:
'we shaH act witHn the
aw', 'guided by the
shareho!ders'
interests'

The ore let us approach the

Syst 1 Five like tbis:

44

7 - ::

4 t
4 e

,.

'\'Ve sHal! do TH S, and

none otber' regardless of what may
happen in an unknown
future?

closure o our viable enterprise in

'e

k:'

1 >-T.1 :

'&&L
So#Lj

-.

_
FGuE

34ff

Even in these cfays (provicling management \vitH an ambience o

ess authoritarian attitucies prornoted by behavioura! science) 'tile
boss' tiI! exists. As ,ve said, using President Truman's phrase: 'the
buck tops here'. Besides, and despite our essentially decentrahzing cybernetics, the heads o enterprise do preserve
certaim rights o decision - aithough sorne o them feel that these
rights re irnted to decorating their OWH ofices nbizarre ways.
But th point about the ehos concept is that it is a variety sponge
o gigntic capacity. Try to think of a really way-out idea in your
organiation -so
-o Lit tilat certainlv no-one has ever
consiered it, a!though it is not man iestly daft.
HOWWOULD THE BOARD REACI TO THAT?
The b4tting is that you kno\ .v the answer exactly. No-one has put
the ic!a forward just because the ans\ver is self-e\ .'ident. This is not
to say hat the answer is correct.
125

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it is nbt dificult to see that this variety sponge in System Five Helps
to attnuate the variety o System Tliree - because System Five
kno4 very weU what tbe exsting business s. But no-ono knows
wbat :he future business wiH be: if they think ihey do, they are
ridinfor a alI (just look at international politics).
HO\A [VER: those people know sometliing about it; and it is this
very s )rnetbing thztt constranis the apparently unconstrained
Syster i.Four. The patiern-recognition emerges McCulloch-like
from n ethos that Has, in sorne sense, 'seen 1 al!'.
NOW DO THIS:
Lrst the Conterits of Systeni Five in your own System-infocus.

1NT

tL5f

44., )t'

The Board is ono clement:

how exactly cloes iH board behave?
WHat are its leveis o power?
VVHo is on it who should lot be en ji?
Wiorn \.vould you add lo it?
Ho\v about tlie Chairman o tlie Board?
We ar realiy finding out about ETHOS now.
Pauseo return to chess.
SinceVarren McCullocli's deatli (anci althougli in bis !ifetirne
Samuls and Shannon and many others devoted great efforts
towarcs computerzing cbess) the Soviet Grandmaster and former
WorldChampion MM. Botvinnik published bis conclusions. It is
conlpltely impracticable to review al! possible permutations o a
ganie:it woulcl take 30-followed-by-twenty-nine-noughts years,
revieing a million positions a second. And managing an
enterpse is far more comp! icated than chess. However, thenumbr o legal moves opon to each player at eacb turn averages
about lo. So analysis to a 'depth' into the future of two bal-moves
involvs 900 possibilitics. Going to
126

four half-moves means studying a million variations, with perhaps

a hunded computeroperations foreach. Since this four half-move
approah is about the lirnit of computer effectiveness in reasonabl
time, and snce important variations in chess often involve more
'depth'than this, then (argues Botvinnik) other means of variety
attenuation than straightforward 'decision-rnaking' must be involved.
The 'strengths and weaknesses' analysis by which managers are
often iqvited to seize opportunities is therefore not strictly possib!e.
The malnager w 1 have to take chances, and this (despite much
propagnda) he 5 rnost unwiiling to do. Chess players are rnuch
the sanje.
Botvrnrlik's conclusion is this:
until the 'depth' picture resolves
iself at a level where one can legitirnately take a decision,
tie proper course Is to strengthen onesef.
Manag. rs seem to intuitthis to sorne extent. Unfortunateiy,
strengt ening 'oneself' is however of ten seen as the need for
strengt ening the nside-and-now, the 3-2-1. i3ut System Four is
also pa t of 'oneself'. Moreover, System Four is the very part that
will de elop the 'depth' picture that has to be resolved. Botvinnik
is perfetly clear that the decision not to act is a current action.
In ternH of the VSM, what we are discussing is the
NTER,ENTION BY SYSTEM FIVE in the ba!ancing activity of the
THREE-FOUR HOMEOSTAT.
0W DO THIS:
ecapture tie 'wayout' idea you considerad on!y twa
age.s ago
'e 'knew' how the Boarci would react to that (although the
oard has not said a word).
race nov 1-xacUy how the ThreeFour homeostat is heing
ftected by the TOP LEVEL ETHOS
by takng the profit-earning Three more seriousty
than the moneyspending Four?
by determining what kind of Four filters with the
environrnent are legtimate?
or what?
127

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It riust now be apparent that we are by now dea!ing with 'ultimate

auhority': System Five. Then why did this Section not blow al! its
trumpets, and announce the primacy o the Board (or whatever) as Py implication does the Organization Chart, with System Five
sitting on top o the dunghi!l and crowing? Why start with off-hand
tal,k about chess, and smuggle in a boss-figure in a fogof 'ethos'?
The fact is that in a viable system al! five subsysterns are dependent
on each other. And if any has a special primacy, it is System One
- because it consists itself o viable systems. This is not
or anization-charttalk at al!. But.it is real-life taik.
RE \' EM BE R?
'The purpose of a system is what it does'.
And what the viable system does is done by System One.
Sytem Five, then, is 'only' thinking about it.
Bult if System Five in me were not thinking about it, ! shou!d not be
gong to Phi!adelphia shortly (as ear!ier announced): 1 should be
staying Here. And ifSystem Four had notfirstentertained a model
ofossible actions, which inciuded going to Malaysia instead,
th4n System Five might have had nothing to think about and no
deision to take. System Five would, by its somnoience, Have
en-1 orsed System Three's decisonto keep the 3-2-1 going on its
curent occupations. 'Somno!ence'? But surely this wou!d have
ben the decision not to act that is the current action
Thb oblique approach to System Five is meant to encourage
cation and hesitancy in a matter in which we are conditioned to
obequious endorsement o the mere c!aims and trappings of
po'er. Yet the power is real enough. So the question is: who really
wi!ds it?
More saving more about that cestion, it wou!d be well to
cobsider how far the argument has come In terrns o Figure 35 fading. Ibis conceeds the inc!usion of a boss figure in System Five,
wo may st!!l decide things, and issue orders on the vertical red
loop shown. But, as was argued earlier, this is not the main
fuction o 'the ultimate authority' 128

wh :h is:
to SuppIy logical ciosure to the viable system; and
to monitor (see the outside redloop) the THreeFour
Ho rn eostat

F/uE 3
The aove structure deals with the outside-and-t7en, It is
metaysternic to the 3-2-1. We may caH it the 3-4-5.
Theseare convenientappeHations:
and t- ey ernphasize a vital fuicrum
at Sysem Three (which, for this
reason usua!ly tKinks it is running
the wole enterprise).

129

3J

Wehave saicl 'closure' severa times in ihe text. Logical closure

me nsaboveali
se f-reference: the assertion o identity.
It al -o means
there is no more.
If anything has been missed, it is - by definition
missing within this framework.
There could not be a 'System Six' - because the five-fold
system is a closed system, in Iogic.
(It is obviously open to boih energy and information.)
On way o looking at this is to see that the 'variety sponge' at Five
is mpping up variety that the homeostasis of OneThree and
ThreFour wiH not liave accounted for. The tidy equations o.
variety presuppose models o everything thatexpresses thatvariety
(eve if they cannot precisely calculate it). But beyond our best
accunts o what happens, is Botvinnikian 'depth'.
So as the First Axiom o Management asserts the horizontal and
vertial variety equivalence o System One, and as the Second
Axicm asserts variety equivalence inside the ThreeFour
hornostat The fthird Axiom of Management says:
The variety disposed by System Five
equals
(he residual variety generated by (he opera ben of the
Second Axiom.

We.ften think of what is 'left over', residual, as being very small.

Thel is nothing to stop it from being very large indeed.
Systni Five may be absorhing more variety than anyone has
realihed. How about doing the work suggested on pages 126 and
127lIoveragain?
bI T

PAUSE for a moment.

It isot for chess this time, but for the third oldest University in the
Unitd. Kingdom: St. Andrew's - it comes third only to Oxford
and ambridge.
130

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S. Andrew's Has a 'boss', cal!ed the Principie, and powerful he is.

Bit the equivaient o the Board in a British University is the Court.
A St. Andrew's the court is presided over, not by the Principie, but
b' the Rector. And the Rector is elected by the students.
Itis a popular supposition that this set-up is a joke because the
stdents eiect (for exampie) comedians: professional comedians,
nut idiots. But whom else shou!d the students elect? THey have
eough Establishment characters in the offing aiready. Two
fahous comed ians liave recentiy been Rectors of the University,
aqd it seems that they did not regard the appointrnent as a joke at
ai. THey regarded themselves as actuaiiy having influenced
affairs. Well: hoth o thern graduated in law from Cambridge
THe Chairman o the Board (like the other Directors) daims to
reresent the shareholders. They elected him or Her.
Te country's President, or Prime Minister in Britain, claims to
reresent the peopie. THey elected him nr her.

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NOWDOTHS:
Consider for.
vcu r O'.vfl Svstern - u -focu s
sorne othc'r sample systems - such as government
,he extent to \.vhicll

CHa! O course: (he Cha irmen of al! our

subsidiarles are Corporate Directors![
THINK

1
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s Gr CLAuMS [E) cF none other than

SYSTEM EiVE
S\u: STE ONE.

ABOUT the relevance

o Wc La\,v di Requ si te Va
THINK ABOUT
E) WC FOUF

rietv.

Wc operation
Principies - particularlv No. 4 about laus.
[Ho! 1 was elected, and my terrn is lo last
for 4, 5, 7 years ...w hen do 1 need to
start worrying about Wc nexi eiectidn?]
131


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It ss , ill be sad if, after reading ftns whoie text to this pOint, and
ha\ifle oroL-ed the nature of 5 stem FR e for nine
the ooint is
no:r'oy

ERE m ermirci S a me
utsic/e-and-chen management.

e-n c;ec 3-4-5. rie

dscover what this truly involves

SHIET the window on the set of recursions of the
viable system that you have been calling the Svstemin-focus UP ONE LEVEL.
The metasystem 3-4-5 is now SYSTEM ONE of the
new Systern-in-focus.
And what is a System One?
Turn to page 1 of this text, ancl start work.
Figure 3, on page 135, puts the whole VSM to(jether, and fully
illustrate the abo ye Hnding which is in my opinion very
exciting, and potentially productive. It leacis straight to:
T}ie Law of Coheson

UTr mu/tiple recursions o the viable system)

Te System One variety accessib/e to System Three o
Rkurs
ion x
1
eciudls
th variety cisposecl by the sum of the metasystems o
Rcursion y for every recursive pa ir.
At"SWER TH!S:
Hve y ou seen this 1'WOF COHESION bufare, in
fom?

anv

Let's hop you got t right. It is none other than the First Axiom of
Manageent, expressed in the language of the Svstem-in-focus.
\'Vhat els would you expect of a recursive syste
m?
132

1
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-

THee isi as: leature of He VSM (o ncorporate: it is extremly

iniportant, hLlt there is nOt niucH lo be said - so clon't fHck the
page too s
We werejspeaking of sornnolence. It is an occu(.)atonal hazard of
System Fve. Afte. r ah, al those filters on He main axis ... maybe
Five \viH hear the \vhole organism droning on, anci simply 'fali
asleep'.
For this rason, a special signal cal it algedonic, for pain and
pleasure)is always idenhfiable in viable systems. It divides (he
ascendin signal which ve know to be entering He
metasvstdmic filtration arrangements - coining rom System Ono,
and uses ts o\vn algedonic fi ter lo decide whether or not 10
ALERT SSTEM FIVE. The cry is 'wake up - danerV
Informal extreme:
He roof Has colled
- phone He bos.
Formal extreme:
He fou r-m 1 nu te m iss ile
varning.

11

:11

1 MAKE A LIST
01 your

nHoiioumc sioi
tl1e; are esun1inl lv miornial,
1)0 l)ctIer 10 Iurmdli/r'

In \.vHnr sonso bm
mabhcmaHcs, or electro idO
cuuicl He !eloni ini he
autornatic?

rica

112

1-1 11

1 )
ji

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1

SPECAL TERMS OF UGHT

METAS YST

a s ystem 'over aocibeyoncl a sytem of lO\'er

Jogical order. (Higher autHority is not the issue,
and may OOt app/y.)

ALCEDONI

(Xyos, pain, -os, p/easure); pertairing to

reulaiioo o a non-aialytca/ mocle; raising alarm.

The Third Axiom of Management

The vriety clisposed by System Five
equals
the reicival variety gonerated by che operation o the
Secocl Axiom.
The Law of Cohesion

for mtiple recursions of the viable system

The S'stem Doe variety accessible to System Three of
Recut's ion x
equais
the variety disposeci by the sum of the mecas ystems of
Recuion y or every recursive pair.
Reference:

Botvi nik, MM. - Cornputers, Chess aH Long-raoge

1 P'anning,

1
1
1
1
1

Loo gman, London, 7971

134

r'-(
O E

J ' $

pio

The diagram on tlie next page ought not to look too claunting now.
It has a s ecla! virtue. Not aniv are the recursions exact rephcas 01
each orh r (-i ich clinerams havn hen p hijh p d hefore, Ho Ho
way in hich
ive subsystems connect with. each other acruss
tlie recu siofls 5 also shown. The cross-recursion inkages o 3-4-5
are part of the ordinary reporting system - but rernember that II1CY
have diff rent spheres of interest (especiaHy System Four). Syseni
Twaand Three-Star require cross-recursion coordination oa
delicate mcl - u autonomy is to be preservad. Hence

FINALLY, DO THIS:

Make o detou c(1 ano lysis, wi tH 1 isis, o He l i nka6, es OCULSS

th three recursuons shown o Figure 37, for each suhsystem
o He viable svstem. if thev cia no) severai)v exhubut
R cluisite Varietv, what shal) YOU (in each sLuch case)
prpoe?

t&,

T-'J

flt

II
II

135

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[i
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TO Yo L

EUTURE
FOUR.
IH
cjCsde ord
urore
se-refererce
srrrufotn
plonrrrrq

Tf-4RLE:
nsideordrrcw
srlforrrzo fon

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a-js sQrs
or

6u R.

37

\AJLE
-

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Rea3ers who iave made a irst pass through tbe book making their
own dravings Nave learned the Hard way How Nresorne it becomes
lo rpeat the rather elaborate designs that reflcct the structure o
the Jiabie Systern. They Nave thc advanlage that tlic structure wIll
Hv stuck in their mjnds.
Mot readers, 'nowever, Nave probably noticed this Appendix in
advknce - and wiU proceed to rob themselveso a learning
exprience
CERTI FICATE
The author o this book, Staord Beer, and ls pubhsher,
John Wiley & Sons Ltd. Heroby authorize Ihe reproduction
of cli the Charts cntained in ihis Appendix. Ths perniission does NOT APPLY lo the text itself, nor to the
Figures 1 lo 37 included in it.

A l ! eaders are in fact encouraged to photocopy the o!Iowing

CHrts, and lo make thernselves a Do-lt-Yourself Kit:
make up oads, or tablets, o each cha l t, so thaI rough analyses
can be made, t o m up, and improveci upon withoub fuss.
Nole: you wiU need more copies of sorne charts than
others. Give ibis sorne thought before
proceding.
i vou Nave access lo eniargernent facHities, by a 1 means USE
7HE
Note: on a VSM chan 'blown up' lo severa feet Nigh,
it is often possible lo give a succinct account o
an organization, and its diagnosis, thai wou!d
take a repon severa 1 hundrecl pages long lo
'explan'
137

ra
1
1
1
U

1
1
1
1
1
1
1
1

Z.

THis char should be named for your System-n-focus

total charit.

that is the

Then anrotate tHe chart to show clearly what are Wc included

viable sytems (although only two of them are depicted). Make a
few note Qn these ernhedments, too, so that d is clear, for
instance,what Wc tiny operational circies are suppQsed to be.
Next, an!iotate the chart in the area of Wc big square box, which is
the management unit o the next higher recursion in whicH your
viable Syte-in-focus is embedded.
N te: A!though the topolog y of this diagram is quite
correct, Wc visual presentation really calls for this
hox to be standing Qn one comer. Ihere was no
room for this: don't be misled.
It is more difficult than people imagine to keep the System-inFocus in ocusI Therefore a fair copy of an enlarged Chart One
should go up Qn tHe project room wall, preferably in COIOLJr, to
keep dI doncerned alert to the set of recursions that has ben
chosen.
A S9ECIAL PLEA:
Y will obvmusly be using Figure 37 as a c uide to
anotating your own Chart One, as well as eariier Figures
But piease don't just copy down Wc generalized words 1
hve been forceci to use. Try to make your annotations
secific to Wc organization you are modeHing.
AN D REMEMBER:
Tese boxes are not boxes on en organizational chart, into
which you might expect tu fit indvcluals or clepartments. In
p articular, senior managers al liave dealings in Th.ree, Four
aid Five.
138

CID

1
\
H -

co)

NME O F THE VO8LE

1 SYSTEM IN FOCOS.

L-

1- Of'IE-

-- Cec 1985

139

11
1
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1
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ri

Thk Lha.rt, s p read over two pa-es, is the main account that you
wiH donstruct o He viable systems included in your organization
at eah leve! of recursion.
For te sake o iHustration, think of a corporailon, having
diisoris, having companies.
RECIJJRSION ONE
\Vrite 'Corporaton in He box opposite, because this is He
Systern-in-focus.
all it Recursion No: 'ONE'.
Its Name remains 'Corporation'.
ftlow many Divisions are There?
hree divisions are clepicted en the racng page, inc! two
more on He page that foHows. We are one division short,
''hen ,ve stick He pages together.
y photocopying the facing page wice, and using scissors
p aste, iour rather than three divisions canbe created to
d to He two clivisions on He foilowing oage. And so on:
Eind
qaybe y ou need ten.
tOW START WORK

on He hve sub;vstems
and yOu variet analysis
see Chart Three.
ALL TIMES keep the System-in-focus n mmd. This is
cursion One, the Corporat:on.
,ose ernbedded systems are divisions, nt companies.
ampanies do not figure at this leve of recursion, What is
ore:
E EN THE DVIS1ONS

a bIack borres.
any detail you write in t.he O E spaces wiII.relate to
C )RPORATE management of those divisions, and not to
\!ISIONAL management itself.
40

-9

1
1

9ST CHRT OF
SEMN E000S

Ir rtvO

i F?CURSF)N NO
AME.
s. Beer 985

141

I
I

Divsio1 nal management itself is of course to be Handied al

RECURSONTWO
TFere are six divisions (we said), so we need six charts.
Tke the first of these charts.
\Arite in the box under Sytem-in-focus, 'Dvision'.
Write Recursion No: 'TWO/A'
rite the NAME of tbe first divkion.
Te ernbedded Systems One are now the rnem.ber Companies
oftHe Division. We must construct he scssors-and-paste
Ciart Two from tbis facing page and the next lo refiect tbe
apropriate number of Companies in the Divsion.
T-e rest of Ihe nstructions afteady given appy again.
Ydu wWend up with Charts for Divisions TWO/A through lo
T'vO/F if you are undertaking an exHaustive modell:ng.
CNSIDER HOWE\'ER
tht it may (for whatever pLirpose) be necesary lo m, odel only
a DIFHCULT Division-in-focus, or a TYPICAL Division.
RECURON THREE
Th Systern-in-focus is now the Corn.pany, tHai belongs to tHe
Diikion,that belongslo tHe Corporation.
Jus suppose that each Division Has s x member companies.
Thn tbere wiU be thirty-six cHarts for i Recursion Three
. . uniess it is unnecessary to study (say) more than one in
eath division.
It cli a question of Requisite Variety. It 5 tbe reality-outthre, and fol tbe cyberne. tic technique, tbat generales the
work.
RECURSON NOUGHT
This is the name conveniently used for the industry (say) in
which he Corporation is ernbedded. It neecis lo be siudied, as
arged in the text; but fol lo cal! the Corporation itself
Reursion Cine may be confusing.

142

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5,

S. Bee( 1985

143

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rLT

___

There i sno 'correct interpretaon of the VSM. We have spoken

instead lf more or less useful rnterpretatrons.
Even so, there ni-ay weH be incorrect Interpretations, in He sense
that the nodel's power to account for viabrlity may become
denaturd by their use.
In practie, this is nowhere more ikely to occur than in Systems
Two and Three Star.
CHartTree is provided to heIp with the analysis. It is dose to
Figure 2 3 on page 87, and the arguments in He ext shouid.suffice.
Use as lany boxes as needed.
R EM EM IR

15 Sys ' ern Two is concerned only with the reguiation of

oscHatory behaviour;
e THe Three Star channel represents
-- sporadic
- high-variety
inie vention in actuar operatlons.
Auit rs a typrcai 3* function.
R ECA L L
The FIRST AXIOM OF MANAGEMENT (p. 84).
On hart Tkree \,ve have two o the six vertical channels
avaiIable to managernent to absorb horizonai variety.
The' realy do neeci to be designed, in relation to He two
corTmand channeis that are central to regulatron n Charts
Onel and Two.
NOTE: The two remaining channeis onthe vertical axis are He
'squiggly-Iine' operational Iops, and He environmemai
connexi ns. Botn of these require speciai design treatrnent,
dependir g on He situation studied. That is wh y He environmental
box in Cliart Two has been Ieft blank. It requires elucidation and
proper Ii king (on He model of Figure 37).
144

Ln

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id

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N(f)

rO

gj

1145

Ir
1

Qn the jundamental Figure 37appeared this reminder:

1
I

o(ways
fo r

wHic h, is to depict a horneostatic loop.

THE FOtiJR PRINCWLES OF ORGANIZATION

\vere dnunciated so that homeostasis couicl be quantitativeiy
evaIuted.
Thev deat with \/ARIETY
between biocs
aiong channek
cross transclucers
and wth the '1'hoIe process as exhibiting
appropriate cyclical dynamics.
Qn CHars Two and Three, any straght hne joining twa points
rnarked with a large dot stands for a homeostatic loop. Hence
in anv \/SM with its multiple recursions, there are
iteraHv thousands of homeostats that we expect to
\vorK, each being susceptible to cybernetic anaiysis.
This is a obering thought: but managernent is not the chd's play
its critics Hppose.
WHEN N DOUBT about ihe efectiveness oa homeostatic loop,
analyse it with ihe aid of the facing Chart, and check that the
FOUR PRINCIPIES apply - and are actuaily effecve.

- - - - - - - - - - - i-LI1TI
-

I-IOMEQSTC LOOP
PONT TO POINT

S Beer I95

CIII4 LT fo

------1

LMIN FOCUS
SJQN NO

AN EX MPLE OF CHART FOUR IN USE

p
r

poose tat Chart Two yieids in part tHe abo y e. Seven points are
mnate; they, with tbe Hnesbetween, depictfour homeostats.

3 is tHe managernent-to-process loop

D o tHe System Three loop 3*, marking audit-style
nterventions in processes
is the homeostatic loop COnneCtiflg the process to
the general environrnent

R more s p ecifcaily connects to (let us say) the market

sub-se t the general environment.

ien the dhart Four tabulation on the acing page is an andlysis of

e Homestat connecting points P and R.
Ilow ea ah loo p round, and note
attnuator5 and ampliiers are 'two sides of tH same coin';
req isite varety (R.V.) 1 the quantifiebie unit involved at
al irnes.
tH4hree (arbitrarily three) rings ',vi in practice impinge on
eac1h other -- tberefore
casality' is a concept of little use in systems theory or,
cvbernetics.
L

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SYSI EM INI FO WS:-

CORPORATION ALPHA
RCUHSION NO. TWO/B
NAME: DIVISION GREEN