Dr Neil Béchervaise

NB Consulting (Australasia) Pty Ltd

Systems Theory

Andrew Irving

© 1999

Summary of Systems Theory

The traditional scientific approach and causal thinking aims to study the interplay of complex variables through reduction to a small number of elementary variables that can be investigated in isolation .

Systems theory on the other hand, which has it’s origins from the work of German biologist Von Bertalanffy who understood the limitations of these traditional approaches. He saw the need to create a revised approach and hence emerged systems theory. Systems theory developed as an approach which set out to:-
· view the whole as opposed to the parts,
· understand the interactions and inter-relationships of the parts within a systems, with other systems and with the surrounding environments
· deal with increased number of variables and complexity that existed

Von Bertalanffy and several others recognised the multi-disciplinary approach that systems theory offered which was not restricted to traditional sciences but is also applicable to the humanities. Systems Theory offered the ability to explain concepts such as feedback, self-regulating and interdependence of variables which preserved the complexity of the whole system(s). Many on the initial applications of systems theory focused on the change, change management and the decision making processes used within an organisation

In addition, von Bertalanffy put forward the view that human organisations and societies are open systems. They are open systems because they:-
1. consist of component sub systems that are inter related and interdependent
2. connected by feedback links to they environment

This contrasted with a closed system, where the systems existed and operated with minimal or no interaction with the surrounding environment. Without this interaction with the environment, a consequence for a closed system is either extinction or termination (biologically speaking, death).

This interconnection between the system and it’s environment means that a system imports energy and information across it’s boundary, transforms the energy and information is some way then re-exports the transformed result back into it’s environment & other systems within the environment. This feedback systems is important to an organisation as it enables the organisation to maintain a degree of equilibrium with environment.

Open Systems are thought of as having both maintenance sub systems and adaptive mechanisms. The maintenance is to sustain the relationship between sub systems and hold the system together while adaptive mechanisms promote change so as to keep the system in dynamic equilibrium with the organisation. Successful systems are able to deal with the paradox of stability and instability.

Turning to the point of feedback loops in systems theory, Karl Weick explained the operation of the organisation in terms of positive and negative feedback interactions. The implicit recognition of the non linear relationships that exist within systems can cause autonomous change between stable/unstable depending upon the dominant form of feedback.

Weick also points to added levels of complexity in inter-relationship that exists between groups within an organisation. Weick suggest that groups or systems are tightly coupled - where clear cut direct connections exist between then loosely coupled - where a buffer exists between groups resulting in delays and changes

Since the work of Von Bertalanffy and Weick systems theory has emerged as a strong methodology which has branched into many areas and derivatives to explain the links between the system, other systems and the environment.

The strengths and weaknesses of systems theory are summarised below:-

Strengths
Incorporates the role of the environment
Includes the satisfaction of needs for survival
Needs of sub system satisfied within overall system

Weaknesses
View the organisation and environment as concrete items
Functional unity and harmony not always possible
Metaphor of an organism becomes an ideology

Application of Systems Theory

As we approach the new millennium, the business environment is constantly being challenged and pushed in new directions. Much of our research and thinking that has governed the understanding of the organisation throughout the 20th century has been built around the mechanistic view which stems from the industrial revolution. As we now move from the industrial revolution to the next revolution, that being information and knowledge, so our understanding of the organisation and its role can be model using systems theory. We will no longer see the organisation as a single entity striving to achieve it’s own goals and objectives. The organisation is now a integrated part of an extended value chain. By value chain, we mean organisations that are inter-related in the value adding conversion of raw materials to final product which meets the need of the ultimate customer(s). This application of a systems theory approach of the value chain has a number of implications for the organisation. Firstly, leaders of the organisation are no longer able to control the business environment in which their products and services compete. As governments reduce barriers for competition, new entrants are continually entering traditional markets which were once dominated by major organisations. Hence, systems theory enables leaders to deal with the issues of complexity and potential chaos of the market place in dealing with numerous variables in plotting a future strategy. Secondly, organisations can no longer stand alone and complete with the potentially aggressive and nimble new market entrants. In responding to such challenges, established organisations have been out sourcing, partnering and entering alliances which have all challenged the traditional boundaries of the organisation. What was once a clearly defined boundary for the organisation and its environment is no longer the case. The internet, e-commerce now see organisational boundaries shrinking and changing to the inter-relationship & inter-actions with the environment. Systems theory is useful in this context as the organisation can adopt a number of strategies (ie loose or tight coupling) in either responding or challenging the environment. Systems theory when applied in this context provides the organisation and its leaders a holistic approach to view the complete value chain and the impact of the organisation in creating a favourable environment in which to achieve the stated goals. Being able to either understand market trends and or create market trends through the use of feed back loops will provide the organisation a potential competitive advantage for the value chain and organisation. Microsoft, Motorola, Intel, Procter & Gamble, GEC and many other organisations are all good examples of organisations that have been able to deal with their respective environments to either create or adapt in short periods to changing environments.

Whilst traditional thinking, especially from science deals with the linear relationship of cause and effect, the new business environment will no longer support such a position. Even today, many market segments operate in a non linear fashion as organisations all seek to create competitive advantage to suit their own particular objectives. In some instances, new products and services are being introduced before competitors can respond to the new environment. A good example being 3Com and its Palm computing products. Hence tomorrow’s organisations are no longer able to predict with any degree of certainty as what is likely to happen and at best all they can do is attempt to remain flexible in their thinking, products and services. Successful organisations will be able to deal with such uncertain conditions as well being able to interpret the business environment signals faster, effectively and efficiently when compared to their competitors.

However, despite the strong benefits for the application of systems theories in this new emerging business environment, there are some potential disadvantages in the application of systems theory.

A disadvantage of systems theory suggests all variables have some equality in the extend of impact and control over the business environment conditions. We know this not to be the case as some variables are bound to have a greater impact and degree of control when compared to other variables. Never the less, circumstances can change and hence it is quite possible that what was once considered irrelevant can as quickly become a major force and vice versa. Dealing with so many variables may not be possible and is often a criticism in the application of systems

Determining strategies and the importance or otherwise of numerous variables given the degree of uncertainty in which organisations now operate is not a simple task. One must question as to whether systems theory can actually capture the complexity of interactions and inter-relationships that exists, whether formally or informally.

Dealing with such information will require a consistent re-evaluation of the desired business objectives of the organisation to ensure that are still in line with the market forces and trends, both current and future. If the organisation is constantly adapting and or reacting to such influences this may have unforseen implications in other areas within the organisation that could be detrimental to it’s overall success.

Annotated References

Berman, M. 1996, "The Shadow Side of Systems Theory", Journal of Humanistic Psychology, vol. 36

issue 1, pp27-55.

Despite the popularity and use of Systems Theory to produce a world view and mode of explanation, the theory does in fact have significant disadvantages. The author reflects back on the origins of the theory particularly the linear/causal/rational/empirical modes of explanation and paradigm shifts. He discusses how it is impossible to have absolute distance between the observer/observed and it’s impacts on systems theory. The discussion then moves to consider the issue that if systems theory does believe that you must understand the whole then in some instances it is impossible to map or view the whole. There is some discussion on the universe, not being but becoming with spontaneous changes. In addition, another concern in the application of systems theory is the gap between the laboratory research and the philosophical extensions. Authors using systems theory often over look this aspect of the difference between theory and practice. The conclusion is that systems theory is a tool to look at the mechanistic paradigms. Hence the suggestion is that more development work will continue. However, the suggestion is that such investigation will become totally dysfunctional and will continue to produce new theories as opposed to developing the exiting knowledge base.

Evered, R. 1980, "Consequences of and Prospects for Systems Thinking in Organisational Change", in

T.G Cummings (ed), Systems Theory for Development, John Wiley & Sons, Chichester.

This article introduces the reader to some of the features associated with Systems Thinking as it relates to the management of change in organisations. A brief history is provided on systems thinking which commences with the work of Von Bertalanffy, a biologist by profession who linked the organism and it’s environment as an alternative way of viewing social sciences to the more traditional approach of using scientific methods to understand such links. With this basis, the author believes that system theory can be applied to the organisation. The key theme being the links between the complex & fluid environment coupled with ‘normal’ casual thinking to better understand the organisation. A major attraction of the article is that the author provides a comparison on the advantages and disadvantages (what he calls "negative fall out") of systems thinking. The article avoids the more complex issues associated with systems thinking as it tends to over look some of the more challenging issues of complexity and implementation.

Forrester, J.W. 1995, "The Beginning of Systems Dynamics", McKinsey Quarterly, Issue 4, pp4-17.

A paper adapted from a speech given by the inventory of Systems Dynamics, Jay Forrester in 1989. The discussion commences from a simple applications that systems theory could be used in corporate modelling to broader social systems work. The learning in one field of research, learning will become applications in other fields.

Jurich, J.A., Myers-Bowman, K.S. 1998, "Systems Theory and it’s Application to Research on Human

Sexuality", Journal of Sex Research, vol. 35, issue 1 pp72-78.

Discussion about how Systems Theory can be used to analyse human behaviour with particular reference to human relationships. There is a good overview of systems theory with many definitions and interesting examples on the use of systems theory to explain irregular human relationships and possible methods for treatment. The authors stress the importance of ‘holism’ or looking at the system as a whole rather than trying to analyse the or treat one symptom. The article discusses how one system is always part of another or larger system, therefore it’s importance to treat the individual with reference to their family, workplace etc. The author goes onto explain how systems operate using feedback mechanisms. The article looks at the different forms of feedback and there relevance to altering human behaviour. In summary, a good introduction to systems theory and the usefulness when applied to a social science subject.

Pondy, L.R, Mitoff, I.I 1980, "Beyond Open System Models of Organization", in T.G Cummings (ed),

Systems Theory for Development, John Wiley & Sons, Chichester.

This article takes the unique approach to discuss system thinking through the conversation of two career academics, Alpha & Beta. The blend of the discussion covers both the theoretical and practical aspects of systems theory The discussion between the two individuals is written in such a way as to encourage the reader to consider the implications, gain a better understanding and seek for themselves the "truths" of general systems thinking. The discussion does provide sufficient detail of a systems theory approach that we are left in no doubt that the complexity, dangers (and benefits) coupled with gaining a complete understanding is no easy task. Despite this challenge, one the strength of the discussion between the two academics is very much in the practical orientation which can easily be extended pasted the article setting and into the business world. Aspects such as feedback, loosely and tightly coupled systems are explored from a practical perspective. The authors have attempted and achieved the stated aims of ensuring that the reader is not just a passive reader and consumer but instead is an active participant in the ongoing debate surrounding systems theory

Stacy, R.D. 1996, "Strategic Management & Organisational Dynamics" 2nd Edition, Pitman

Publishing, London

Whilst written around an organisational perspective, in part 3 of his book the author provides an excellent overview of systems theory. Starting from the links with cybernetics’s which provide the basics from which systems theory emerged, the linkages with biology and Von Bertalaffy provides a good discussions on many of the definitions, concepts of systems theory. The author then reviews the notion of an open systems from a number of different perspective’s. These being negative feed back, paradox and conflict, differentiation and integration. Open systems can be used to view the organisational dynamics in which information is transported across the organisational boundary in both directions (ie in/out), the relationship across the boundary is changing and that leadership is about being able to adapt to the changing circumstances given this interaction. Another area of interest is the work of Karl Weick which extends Von Bertalanffy’s work by combing the both positive and negative feedback loops to study the inter relationships of systems within systems theory. Weick’s work introduced the concept of tightly and loosely coupled systems and is used to explain the links with the environment through which managers create the reality when they respond to information coming in across the organisational boundary. The concept of open systems and feedback loops as being systems in equilibrium is compared to systems which could be considered far from an equilibrium state. Such systems are viewed as being influenced by complexity, chaos and considered as being realistic examples of the challenges facing the organisation. Such systems are considered as non linear feed back systems as the cause & effect relationship is not applicable in such an environment.

Vancouver, J.B. 1996, "Living Systems Theory as a Paradigm for Organizational Behaviour: Understanding

Humans, Organizations and Social Processes", Behavioral Science, vol. 41, issue 3 pp165-205.

A very detailed discussion on Systems Theory, it’s use in modelling and understanding human behaviour both within an organisation and generally. The article provides excellent definitions and relevant examples particularly to organisational behaviour of humans. Discussion on self-regulation of humans, hierarchy’s of human systems, and the need to understand that humans live within these hierarchical structures that have connections to organisational hierarchies. The author discusses feedback loops, communications and other regulatory mechanisms for humans. The article touches on the relevance of essential, non essential units with the systems, the role of memory and time lags in the regulation process. The author states that while all humans are individuals, there are essential variables and certain reference signals that are likely to exist across all individuals, these being causes of re-organisation, system efficiency and social processes. The author concludes that Systems Theory is a work in progress and looks at processes of modelling such theories along with the methodological considerations that could be studies further.

Warren, K., Franklin, C. 1998, " New Directions in Systems Theory: Chaos and Complexity", Social

Work, vol. 43, issue 4, pp357-373.

Chaos and Complexity Theory are said to help understand and advance systems theory with sophisticated mathematical models for studying complex human systems. Such theories are often called "non linear dynamics" as they seek to understand systems that change in ways which can not be easily explained in linear cause & effect models. Discussion of change modelling includes linear, non-linear and feed back within such models. The author provides definitions, explanations and distinct characteristics of chaotic behaviour, complexity as well as the role of memory within a system theory context. The discussion also included comments on ordered systems, chaotic systems and the use of such in modelling human behaviour. With this background, the discussion then turns to how humans interact to produce human development and how different sub systems within a human can develop at different rates leading to a chaotic state. The conclusion is that systems theory and chaotic states can be used to help in the treatment of human behaviour. How periods of life upheavals, often small behavioural changes can produce rapid changes in the systems structure and its functioning state. Finally, discussion on the use of group therapy to further increase the rate of change and explanations that the same interventions can often produce different effects depending on when it’s used.

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