A METHOD TO STUDY THE ORGANIZATIONAL

DIMENSION OF REGIONAL PROGRAMS

Raul Espejo

March 1976 WP-76-l4

Working papers are internal publications intended forcirculation within the Institute only. Opinions orviews contained herein are solely those of the author.

2361 ILaxenburg International Institute for Applied Systems AnalysisAustria

A METHOD TO STUDY THE ORGANIZATIONAL DIMENSION

OF REGIONAL PROGRA~1S

1. Introduction

Our current research activities at IIASA provide theopportunity to study five cases on the organization of regionaldevelopment. These cases are TVA, Bratsk-Ilimsk TerritorialProduction Complex, Scotland, Vistula-Lublin and Guayana inVenezuela. The aim of this paper is to present a research methodfor this purpose independent of the particular characteristicsthat each case might have. This method is supportedlby a modelof the organizational structure of any viable system. In thiscase the 'regional system' is postulated to be a viable system.If the program is going to be successful it should be viable.This suggests the need to define the 'regional system' withprecision. The elucidation of the components of this system isseen as a fundamental research step in this method. A secondstep focuses on the organizational functions that these partsfulfil, and on the linkages among them. A third step relates tothe consistency of the regional organization and its effectiveness.The second step seeks to provide the basic structure to supportthe search for information. A set of questions, supported bythis structure, will be presented for explanatory purposes. This'questionnaire' is by no means comprehensive and it is hoped thatimprovements will be made on it along this research process.

2. The Model of the Organizational Structure of any ViableSystem

A very short summary of the organizational model of anyviable system is presented in what follows. I have pres2ntedin a previous paper the scientific support to this model . Theaim now is to provide the reader with the conceptual tools usedin the applied sections of the paper.

If a system is to be viable it needs to develop five basicfunctions, namely

- Policy function

- Development function of the system, e.g. planning andresearch

- Operational management of the system's operations

- Coordination of the operations, and

- Operations (subsystems).

lStafford Beer: Brain of the Firm, Allen Lane 1972

2Raul Espejo: "A Cybernetic Paradigm for Organizational Assessment"LOP Working Paper 1975

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The operations represent the 'implementing' capacity of thesystem, and they themselves need to be viable in order to besuccessful in the very complex environment around them. In otherwords, the function of 'doing' needs to be autonomous, just becausewe cannot expect that the management above is going to controlevery single action of these operations. This means, that the'operations' themselves have the five mentioned functions i.e.policy, development, operational management, coordination andoperations at a lower level. This is the concept of 'recursion'(Fig. 1). This means that the whole is encapsulated in the parts.Of course, the first system under our attention is also encapsulatedat a higher level viable organization i.e. the metasystem.

The linkages (communication channels and information transfer)among these functions are the basic elements that support thesystem's effective operation (e.g. a case in which the developmentfunction has little influence on the policy process is clearlyaffecting the long term survival of the system). Figure 2 presentsthe organizational model of any viable system and we can see on itthe type of linkages we postulate are necessary for an effectiveinteraction of the functions.

Of course the model has nothing to do with an organizationalchart. It is quite feasible to have many institutional parts,institutions or existing mechanisms fulfilling the same function.If we want to apply this model to the regional system it isimportant to understand this point. In this context it is equallyrelevant to have good integrating mechanisms of the differentinstitutional parts fulfilling the same function as to have wellstructured relationships among different functions.

The basic structural linkages are:

Command linkages (the central lines of Fig. 2), theyconnect the different functions on a hierarchical basis.The policy function is above all others. The developmentfunction is on the line of command, though not necessarilyabove the operational management (that is the meaning ofthe dotted lines). The operational management is abovethe operations. (Of course there are no hierarchical linesamong the operations though they might be more or lessinterconnected on their operations, this is representedby the quivered lines.)

Linkages with the environment; the 'development functions'at the different recursion levels are providing the inter­action with the relevant environment and therefore support­ing the ~ystem's adaptivity to changes.

- Coordinative linkages (the right side lines below theOperational management); these are the main structuralmechanisms to reduce oscillations in the simultaneousactivity of the operations. At the same time they arefiltering information for the operational management(management by exception). No doubt, within the different

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·- 5 -

functions there are many coordinative problems, but theydo not have the saIDE systemic implication as the one thatis pointed out here.

- Auditing linkages (the left hand lines below the Operationalmanagement); they represent the management prerogative toget information on the 'operations' by-passing theircorporate managment functions i.e. the top three functionsof this lower recursion level.

- Linkages supporting the top decision process (the non­command linkages among the top three functions). Theyrepresent a continuous transmission of information betweenthe Development and Operational Management functions, whichare monitored by the policy function. Development isconcerned with the long term viability of the system.Operational management with its present viability. Theyare competing for the allocation of limited resources intheir own sphere of action, and eventually they are inconflict. One of the main functions of 'policy' is toallocate the scarce resources among these two functions.

Summing up, the concept of recursion as developed above andits implication in terms of the organizational functions andlinkages, should help us to define what we mean by 'regionalsystem. '

3. The Regional System

For the purpose of the case studies we have used a definitionof regional development which is consistent with the aims of theorganizational analysis. Basically, we are considering regionalprograms.where there is an explicit political decision to developa region, i.e. there are explicit goals, and these decisions implychanges in the regional activities and organizations. The wholesystem is tuned to make the programs implied by these goals viable.

One of the characteristics of this system is that it embracesa set of organizations. The inter-organizational dimension hasto be understood in order to understand the 'organization' of theregional program. The normal situation is that a set of insti­tutions are relevant to explain the regional development andnot just one. Even many of them will not be regional organizations,although in this respect we can find a large range of possibilities.The basic point is that the 'regional system' does not necessarilymap the geographical boundaries of the region. On the contrary,we can expect that it will often include trans-regional institutions.But of course, this is something that changes from country tocountry, and is in itself a basic issue of research. The modelwhich has already been presented provides us with a usefulparadigm for these purposes.

A first step is to postulate the 'regional system' as aviable system. This has two immediate consequences:

1. That a Regional System has the five mentioned functions;

- 6 -

policy, development, operational management, coordinationand operations.

2. That it is embedded in the national system and of course it ise~bedding subsystems (the operations) that are viable too.

In order to find out the relevant institutions and mechanismssupporting the regional development, we trace the 'goals' up to thelevel where the unfolding of goals into subgoals still representsonly a trade~off internal to the region. Above this level is thenational system. Once we have delimited the regional system, ourtask is to study the institutions supporting the regional program,in particular their managerial and structural characteristics.Of course in cases where multi-organizations are supporting eachfunction of the regional system, their level of integration isof significant importance to understand the consistency andeffectiveness of the whole program. The 'questionnaire' presentedlater in this paper will take into account these conceptual points.

In addition to the 'regional system' we are interested inits links with its relevant national system. If the regionalprogram is a national policy probably its embedding is going tobe different from if it were the result of a regional policy.The intelligence capacity and the operational mechanisms avail­able at the national level are related to the precision and elabo­ration of the set of goals that the regional institutions aregoing to receive. The control mechanisms more or less definethe regional discretion in unfolding goals.

As for the subsystems of the regional system, i.e. theoperations, in general we will not consider them in detail. Weare mainly interested in the multi-organizations and this impliesa constraint in developing in-depth organizational studies. Butthis might change according to the characteristics of the differentnational settings and the concrete research approaches. TheTennessee Valley and Guayana settings suggest in-depth studiesof TVA and Guayana Corporation. The field trip to Bratsk permitsan in-depth study of Bratskgesstroi, one of the many organizationsinfluencing the regional program. The Soviet, as well as theBritish and Polish settings, are clear cases in which the regionaldevelopment cannot be explained unless we develop a methodologyto study the multi-organizational dimension.

The previously mentioned concepts of 'viable system' and'recursion' provide us with the tools to develop a common metho­dology to study within the 'Regional System' any particularorganization. It just depends on the level of resolution wewant to achieve.

4. Consistency Analysis

The concept of consistency is one of the basic elaborationswe can develop from the definition of a 'regional system'. Thisrepresents a second area for our research activities.

- 7 -

Consistency analysis is aimed at elucidating the organizationalmechanisms created to support the regional program and at examiningwhether these mechanisms can be used effectively by the 'regionaloperations' (subsystems), considering their linkages with theirmetasystems (the policy, development, and operational managementfunctions of the regional system). Therefore we are talking aboutthe influence of the behaviour of the Regional System on thebehaviour of its subsystems. We are postulating that if theorganizational mechanisms created to implement an integratedregional program are going to be effective, they should be supportedbehaviorally by the other organizational functions i.e. policy,planning, operational management. For example, if CorporateManagement of the regional program is the newly created organi­zational mechanism and at the same time the metasystem keeps adepartmentalized behaviour, it will not be possible to make thecorporate approach effective. Thus we are interested in under­standing the consistency of organizational mechanisms used at twodifferent levels of recursion. If the metasystem does not supportwith its behaviour the level of integration that it wants or thatthe systems think is necessary, the result is that the behaviourof systems, de facto, is going to be that which is induced by themetasystem, even if this is inconsistent with the created mechanisms.

This problem of consistency is particularly interesting whenwe are studying multi-organizations as opposed to the situationof different divisions in the same institution. In the firstcase this problem is less obvious. From the multi-organizationaldimension this consistency analysis implies a basic understandingof the integrating mechanisms in use internal to the differentsystemic functions, i.e. the internal integration of the fivefunctions.

5. The Problem of Organizational Effectiveness

This step aims at the elucidation of the actual behaviourof the 'Regional System'. This aspect is related to the natureof the linkages among the structural parts that define the system.This analysis adds to the previous one the dynamic assessment ofthe regional function. Mapping the actual inter-organizationalrelationships on the organizational model of a viable systemshould provide criteria for finding out the strengths and weak­nesses of the 'Regional System'.

Although we are interested in the assessment of the 'RegionalSystem' effectiveness, our priorities at this stage, are concernedwith defining the system and studying its consistency. I considerthis latter step, i.e. consistency, the most general test ofeffectiveness, ~ut of course it does not cover an in-depth studyof the structural effectiveness.

6. The Use of the Model

Up to this stage, we have:

a definition of Integrated Regional Development;

a conceptual model to study organizations;

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- a definition of 'Regional System';

- a definition of organizational consistency, and

- a tool to study organizational effectiveness.

Now, we want to operationalize these concepts and definitions.In practice we want to suggest a thread that can support our datacollection efforts. Basically, any organization is the result ofthe explicit or implicit efforts to cope with the complexity ofits environment. For that purpose, it develops mechanisms toreduce the environmental complexity and to increase the managementcomplexity. The elucidation of the organizational mechanisms andmanagement practices that support these filtering and amplifyingprocesses is the main thread for our own data collection efforts.

We can think of structural, planning and operational mechanismsto reduce the environmental complexity. On the other hand, amongothers there are structural, augmentation and informationalmechanisms to amplify the management complexity (see Fig. 3). Thisis a common problem to all cases we are studying and it seemsimportant to find out the practical solution to it in the differentregional settings. In practice our data collection efforts arestructured around this problem. An outcome of our studies on thisdata collection stage should be a table for each case with theamplifiers and filters of complexity in use in each setting. Tohelp this activity we shall present the structure of a 'question­naire'. No doubt the questions themselves are context-bound andtherefore any extended list would be just an instance, for ex­planatory purposes. The structure of the 'questionnaire' suggeststhe 'boxes' that need to be sorted out, normally in a non-sequentialprocess, until we are satisfied with our understanding of them.A second characteristic of this structure is that it is recursive.If we want to develop in-depth analysis of particular organizations,e.g. Bratskgesstroi, we can apply the same structure, now at thislower level of recursion. This recursiveness is supported by thenature of our organizational model. In fact the structure of the'questionnaire' is a mapping of that model in the particularspace of the mechanisms that support the organizational behaviouri.e. filters and amplifiers.

7. The Structure of the Questionnaire

We conceive the questionnaire as a basic tool to elucidate:

1. The Organization of the Regional System,

2. The structure and fundamental characteristics of theregional metasystem, and

3. The internal consistency of the Regional System.

There is no way to have a linear development of these threeaspects. Basically, our interactions with different operationsshould lead us in a heuristic process, of which the questionnaireis just a tool, to a reasonable understanding of the overallorganizational aspects of the Regional System.

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The structure that we propose is focused on the aim ofdefining the Regional System. Although we might not know inadvance the nature of the regional system, we will hypothesizethat it is a viable system and therefore we want to inquire aboutthe following functions:

a) The Policy Function (of the Regional System)

1. Goals that define the operation of the policy units.

2. Internal structure of the Policy function; Integrationof the policy units. The multi-organizational dimension.Decision mechanisms.

3. Nature of the linkages with the national system (Thislatter is defined by the set of organizations concernedwith the particular IRDF for which this program is justone among other alternative decisions).

4. Nature of the linkages with the development and operationalfunctions of the Regional System. Monitoring of theseinstitutions.

b) The Development Function

1. Internal structure of the function. Analysis of thedifferent relevant units and their level of integration,e.g. multi-organization or single organization.

2. Tools to filter the environmental complexity e.g. planningmethods, longterm, shortterm plans, use of mathematicaland other models.

3. Influence of the development function on the policy function.Elucidation of linkages, e.g. advisory role, on the lineof command ....

c) Operational Management of the Regional System

1. Internal structure of the function and mechanisms ofintegration, e.g. if there are many organizations feedingthe regional operations with cormnands, do they havecoordinating mechanisms?

2. Linkages with the development function. Mechanisms toreceive and transmit information to the development units.

3. Linkages with the regional operations. Are there manychannels feeding the regional operations or just one?What sort of mechanisms do they use to transmit commands?Level of delegation. Mechanisms reducing the complexityof the information generated by the operations.

4. Mechanisms supporting the operational management, e.g.legal units, financial operations, auditing units, specialunits.

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d) Coordinative Function

1. Structural characteristics of coordinative mechanisms.Set of regional operations covered by different coordinativemechanisms.

2. Nature of the coordinative mechanisms, e.g. informationsystems, coordinative bodies.

3. Role of the coordinative function in supporting thereduction of the operations complexity and thereforein helping the operational management.

e) Regional Operations

1. Goals and subgoals of the Regional Operations. Level ofautonomy ln structuring these goals.

2. Structure of the Regional Operation 'doing' the IRDP.structural linkages.

3. Management practices; the policy, development andoperational management characteristics. (If the aim isan in-depth study of the Regional operations, the abovefour points should be developed in detail for each case) .Basically this point seeks an overall assessment of themechanisms they use to reduce environmental complexityand to amplify their management capacity.

4. Linkages with the operational management. Perceptionsof the regional operations on their linkages with theregional operational management.

8. One Example of Unfolding the 'Questionnaire Structure'

With the aim of relating the above structure with the sortof information we can normally gather on a field trip, we presentone example of the type of 'questionnaire' that can be generated.

a) The Policy Function

1. Goals that define the operation of the policy units.

- What are the goals of the Regional Program? (At present) .- Which are the programs and projects related to the goals?- Which are the main decisions under consideration that

are related to the above defined goals for the regionaldevelopment?

2. Internal structure of the Policy Function

- Which are the organizations relevant to the policyprocess?

- If many organizations are related to the developmentprogram, what is the level of integration of the policyunits? Are these policy units operating at different

- 11 -

structural levels in the overall administrativesystem? What is the influence of the politicalsystem?Are there Regional Management Boards/Councils?Are there different structural mechanisms to supportthe policy process of the many policy units?Which are the mechanisms supporting the policyprocess? Think Tanks?Which are the norms of operation of the differentpolicy units? Are there big differences in timescales?

3. Nature of the Linkages with the National System

Which are the relevant institutions defining _regional policy? Where are the above mentionedpolicy units embedded? Is there any particularinstance related to 'regional policy' at the nationallevel? Is the particular IRDP under development theresult of national or regional goals?Which are the mechanisms used in the national systemto decide on regional development? Which are themechanisms used for this particular IRDP? Do theyuse think tanks? Do they use lAd hoc ' Commissions?Are. there I permanent I Commissions? What is theinfluence of regional bodies in this process? Whatis the relevance of planning and research organizations?Which are the mechanisms to transmit goals and sub­goals to the regional system? Are they extensivelydeveloped at the center? Are they transmitted to,theregion in broad terms? What is the level of autonomyof the regional system?Which are the permanent mechanisms at the center tomonitor the policy development? How do they allocateresources? What sort of controls do they have overthe IRDP? In which time scale do they operate?Relevant to the IRDP, is there a similar level ofintegration at the national and regional policyprocesses?

4. Nature of the Linkages with the Development andOperational Management Functions of the Regional System.

What is the influence of research and planning in thepolicy process of the different units? Are researchand planning functions structurally independent ofpolicy making? Do they have an advisory role? Whatare the interfaces between research and planningand the policy functions?Is the policy process mainly related to operationalissues? Does it have a more strategic function?What is the nature of the interactions of policymakers and operational managers?Is there a clear mapping between the issues decidedby the policy function and the issues which are naturalto the regional operations? What about innovations inthat case?

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b} The Development Function

1. Internal Structure of the Function.

Which are the planning and research organizationssupporting the regional policy process? What istheir internal structure? What are the availablemechanisms to integrate their activities? Can werecognize a synergistic operation of them, or ofany subset of them? In which institutional settingare they embedded.

2. Influence of the Development Function on the PolicyFunction.

Do the planning and research units have directinfluence over the policy function? Do they operateby influencing the metasystemic relationships of theregional system? What is the nature of their rela­tionship with the planning and research institutionsat the metasystemic level? Is planning indicativeor compulsory?

3. Influence of the Development Function over the Operational11anagement.

Is there any structural linkage between developmentunits and operational management? Are they undertheir control? Are the development units tuned tothe operational problems or are they defining newventures? Is there a permanent transfer of informationbetween these two types of units?

4. Tools to Filter Environmental Complexity.

What type of specialization does research have on theregion? What sort of models do they use? Is planningshort-, medium- or long-term oriented? Which are thecriteria for delegation of development problems? Whatare the planning instruments? Is planning very detailed?

c} Operational Management of the Regional System

1. Internal Structure of the Function.

Which are the organizations in charge of transmittinginstructions and commands to the regional operations?Are all of them at similar hierarchical levels? Arethere mechanisms to integrate the different unitsrelated to operational management? Which are these ­management boards, information links, conferences ... ?

- 13 -

2. Linkages with the Development Function.

Which are the informational mechanisms linking thesetwo organizational functions? Are they designed tooperate on a permanent basis or are they ad hoc?Do the operational management bodies have internalresources to operationalize the results transmittedby the development function?

3. Linkages with the 'Regional Operations'

Are there many channels feeding the regional operationswith instructions or commands? If so, is one dominant?What sort of mechanisms do they use for these purposes?Budget mechanisms? Detailed instructions? Operationalindices? Are there broad definitions of goals thatneed to be amplified in the region? What level ofspecificity has the setting of targets?Which are the control mechanisms? Are there wellstructured information systems? Is there a well devel­oped monitoring system? What are the practicalexpressions of the auditing activity? Are thereenough control mechanisms as compared to the level ofdetail in instructions? Management by exception?Are there well developed communication channels toreach the operational management?

4. Mechanisms Supporting the Operational Management

How do the operational managers amplify their manage­ment capacity? Do they use consultants, experts?What is the criterion used to develop the controlcapacity? By function? By type of operation?

d) Coordinative Function

1. Structural characteristics of coordination

How extensive are the communication networks? Arethere many different communication networks? Whatis their institutional coverage? What is the structureof these networks? Are they supporting more verticalinteractions than horizontal interactions? What arethe capabilities of the communication network? Towhat extent are these communication networks supportedby the cultural characteristics of the regional setting?e.g. Meetings.What are the main differences betweenintra~organizationalcoordination and inter-organizationalcoordination?

2. Nature of the coordinative mechanisms.

What sort of information do the networks convey?Are there well structured information systems? Arethey particularly related to a specific function?

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Are they mainly related to strategic operations?What sort of mechanisms are used to filter data?What are the normal time lags in transmitting data?What sort of criteria are used to aggregate data?If coordination is supported by meetings, what sortof information is normally exchanged there?

3. Role of the Coordinative Function in Supporting theOperational Management

Are the mechanisms for coordination feeding theOperational Management with well structured information?Do they represent an effective reduction of the opera­tions complexity? Are the interfaces information­managers well designed? To what extent have decisionrules been made automatic? What are the supportmechanisms if the automated system fails?

e) Regional Operations

1. Goals and subgoals of Regional Operations

In what level of detail do goals arrive at the regionaloperations? Do they structure programs and projectsfrom scratch? What are the goals and subgoals of thedifferent Regional Operations? What are the practicalexpressions of these goals? Which are the institutionsinvolved in the implementation of the programs andprojects?

2. Structure of the Regional Operations

Which are the regional operations? Are all of themat the same hierarchical level? What are the linkagesamong them? Are these linkages well structured? Whichtype of institutions are involved - private companies,state agencies, local authorities, nationalized industries ..

3. 1. Management Practlces

What are the policy mechanisms of the Regional Operations?What can we say about the interactions of the operationswith the regional environment? What are the mechanismsthey use to reduce the environmental complexity? Whichare the mechanisms they used to increase the managementcapacity? What sort of models and planning techniquesdo they use? Do they use direct or indirect operationalmechanisms? What are the internal coordinative mechanisms?

lIf the intention is to develop an in-depth analysis of anyparticular 'operation' then the whole questionnaire as developedabove should be used.

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4. Linkages with the Regional Operational Management

What is the perception of the operations as regardstheir relationships with the Operational Management?Is the information they transmit to the upper leveluseful to them? Are the communications mainly on thecommand, coordinative or auditing lines? Is there anyway to assess their effective level of autonomy? Whatare the types of regulations and controls affectingthe operations of these institutions? Do they perceiveconflicting objectives?