University of Cassino Faculty of Economy

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University of Cassino

Faculty of Economy

BUSINESS MANAGEMENT

A.A. 2008 -2009Prof. Francesco Polese

Viable System Approach - VSA

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Viable Systemic ApproachContents

The System Framework

Business in Systemic Framework

The Viable System

Focus “Systems”FoundationsFormulationInfluences Perspective Approach

Definition Related TheoriesEnvironmental InteractionsEvolutionCharacteristics

Complexity

The “Viable System”The SystemThe Structure

SurvaivalIntersystemical Relationships

Government

Sovra and Sub Systems

Operating Structure Viable System Enterprise

Viable System Enterprise

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The Systemic FrameworkFocus

The Systemic Framework represents a focused revolution that shifts the attention from the parts to the whole, perceiving the truth like integrated unicuum and integrating of phenomena in which the individual properties of the single parts become indistinct, while the relations between the same parts and the events, that these generate, assume importance for their reciprocal interactions.

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Biology, Science that studies the various forms of life conceived as complex and integrated living systems

Ecology, Science that studies the interactions between operating systems on our planet

Tectology,Science that studies the structure of living and non-living systems (A. Bogdanov )

The Systemic FrameworkInfluences

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Formulation

1. from the elementary components analysis of a phenomenon it is possible to go back and then to explain the phenomenon in its entirely;

2. the systems general theory is a logical mathematical framework based on a logical - formal (reductionism) and heuristic-General (holism ) approach

L. Von Bertalanffy:

The Systemic Framework

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The boundary The border is as a filter for the input, selecting them and making them consistent with the system

The structural changes Compared to the context we observe the ongoing structural changes as adaptive responses in the system

The context A system can not be studied separately from its referential context,

The events The events are perceived not as isolated event but as a result of a series of dynamics reports

The system Any living system is identified as a sub-system for a more extended system

Foundations

The study of phenomena Any phenomenon is not an isolated event, so it is interpreted through the interaction between its components and the environment reference

Environment It is relevant to the objective sphere, in according to this approach, the boundary and context concepts are strictly dependent by observant / observed relationship and they are the result of perception differences


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“Systems”

Open Systems They maintain exchanges with the energy, matter and information environment

Closed systems They have not matter and / or information exchanges, but only energy exchanges

Homeostasis

Self adjustment Balance

Same aim

The ability to retain its vitality and stability characteristics even in the non-equilibrium conditions

Mechanism that allows to the system to keep itself into a balance condition through adaptation, within the limits of its structure and through information exchanges with the outside world

Ability to provide an appropriate contribution to the needs of over-reference systems

Possibility to reach a final status starting from different initial conditions or through alternative routes

Completely open systems The environment interactions are uncontrolled and unconditional and the external influences may occur without any hindrance

Systems partially open (or open / closed) They are characterized by a barrier (border) to the system entry that acts as a filter


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Perspective change

In system framework, it is needed to focus the attention on the characters together rather than on the parts characteristics and on its component sections.

The shift of perspective observation, from the items (a) to the reports (b)


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Approach

c) It is a continuum between the analytical – riduction reality approach and the holistic view of the phenomena

b) It is a pervasive and interdisciplinary concept (as a philosophy of various disciplines)

a) It is not a formalized and structured discipline (unlike a theory)


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Business in Systemic FrameworkBusiness Definition

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The enterprise is an open system, aimed, organic, autopoiethic, cognitive, cybernetic

It is aa complex system of interacting elements rationally connected

Enterprise as an open system, immersed in the environment, with which it interacts exchanging information, matter and energy.

The enterprice is a system with its purpose and it aims to survival.

It is characterized by a life cycle similar to that of living organisms, which pursues own survival in a selective environment

Biology: the environment is a complex (full of knowledge, resources and activities), in which the enterprise is encouraged to selective mechanisms to increase its complexity and align it in an orderly and balanced external complexity

The cognitive approach suggests that the main source of value creation lies in knowledge and stresses the importance of learning mechanisms

From cybernetics it comes the idea to interprete the enterprice as a system capable of self control homeostatic

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Characteristics

It has several components

It respects the interdependence and communication concept

It respects the concept to a common finality

Enterprise


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By Fordist Business To Viable System Business

Business black box Viable Business (the role of social responsibility)

Historical evolution

There is greater vitality for the sub-operating system

The organizational units are as micro-business viable systems

Customer-supplier Logic

There is a government of more distinctive competences originated from organizational units


Environmental Interactions

Input

Environment

Openness Degree

Output

Synthesis of over systems interacting with viable business

Resources

Capacities

Energy

Skills

Products with tangibility and intangibility characteristics

It depends by several factors of enterprise and it is determined by the Government


Impacts

Exchange relationship

IndirectDirect

Social economic elements

Political elements

Cultural elements

Business in Systemic FrameworkEnvironmental Interactions

Environment Synthesis of over systems interacting with viable business

Government Decisions oriented by sustainable development

Business and entrepreneur search social legitimacy

Corporate Social Responsibility

Social responsibility

Business in Systemic FrameworkEnvironmental Interactions

Environment Synthesis of over systems interacting with viable business

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Related Theories

Stakeholders Theory

Dependencies from external Resource Theory

Contingencies Theory

The environment is a stakeholders set with interests and influence power

Finding resonance with Stakeholders

Primary and secondary Stakeholders

Environmental dynamics monitoring

The environment is a complex phenomena that periodically determine the adaptive and responsive attitudes of enterprise

The resources are limited because they have a cost and they are contended

The environment is a set of sources from which the company draws substantial resources for their survival

Importance of enterprise ability to influence the environment


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The Viable SystemThe Structure

The structure is a set of elements in which roles, activities and tasks, in respect of rules and constraints, are assigned to specific elements. These elements are in relation with themselves to can achiev a common goal through the implementation of a system.

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Structure Development

Mix

Identification of elements and homogeneity links

Set

Specifying role in relation with a behavior linked to a final purpose

Structure recognition

Structure

Structural relations distinction

Components

The Viable System

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Logical Structure

Set of logical components able to play a particular role, according to standard rules and on the basis of ties / reports

Physical Structure

Set of physical components with communication skills for the connection with other elements

Widened Structure

It is related to the capabilities and potentiality to interact with external organizations.

The conditions are:• Connection capacity between internal and external components

•Routes choice to activate relations with outside

Tipologies of Structure

The Viable System

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Structure Characteristics

3. Its components are static. They become active if they are addressed and guided by the Government

4. The physical structure (related to static moment) differs from the expanded structure (related to potential relationships with external physical structures)

1. It is a Set of tangible and intangible materials that the Government designes and realizes

2. It is Composed by components and connection relations.

5. A certain logical structure can be concretized into a variety of physical structures

The Viable System

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Structure Elements

Relationships

Constraints and behavior rules

The set

The components

Communications network

Interaction

Human and technical factors

Role, activities and tasks for a common purpose

Survival

Structure Instruments

The Viable System

The aim

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The System

The system is a physical structure, with physical components (each one has a role), considered as a qualification of default logic components, interacting with each other, oriented to a specific purpose

The Viable System

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System Development

Structure System

Relationship Interaction Activation of Relations

Definition of Specific Organizational Scheme

The Viable System

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System Evolution

Business Idea

General Organizational

Scheme

Logical Structure

Physical Structure

Business System

from parts

to whole

Specific Organizational

SchemeWidened Structure

The Viable System

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The “Viable System”

“The viable system is a system that survives, remains united and it is integral; it is homeostatically, internally and externally balanced and also it has mechanisms and opportunities to grow and to learn, to develop and to adapt, (i.e. to become increasingly effective in its environment)"

The Viable System

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VARIETY AMPLIFICATION

VARIETY ATTENUATION

Decisional Area

“Viable System”Areas

Viable System has the capacity of isotropy

Action Area (operations)

The Viable System

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Governmental Decisions

Area

Residual Area for managerial decisions

Decisional Area

The Viable System“Viable System”Areas

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Government Area Management

Area

Management Decisions

Operations Area+ =

Specific Operating Structure

Managment Area

The Viable System“Viable System”Areas

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1. The enterprise is an open system inserted in a context ( "read" by the government)

2. Companies (industrial, commercial, services) have the same identity

3. The Government analyzes and meets the expectations and motivations of sub-systems and over-systems

4. The interaction with the over-systems: towards a single system with shared aims and values

The Viable System“Viable System”Postulates

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Compared to Government

Reality Interpretation about major phenomenon, events, interdependencies, risk

Exhibition of events

Phenomenon Randomness

Influence by several external Actors

Compared to Sistemic Framework

The phenomenon can not be only partially understood (interconnections and interdependencies, multiplicity, variability, circular cause-and-effect )

The observer is not outside nor neutral

Partial and approximate knowledge and not final and complete

From complexity discovery to the complexity method

Complexity

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The Complexity size

Variety

Variability

Vagueness

Variety

Elements Abundance and interdependencies

Attributes that explane the effects

Aspects of identified character

Characteristics of phenomenon differentiation

VariabilityChanges that affect the quantitative measure of a phenomenon

New attributes previously unknown

Possible variations with which the phenomenon appear to the observer

Other varieties that can appear with pass of the time

Ability to understand the phenomenon in its entirety

Viable System EnterpriseComplexity

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Comprehensible

Observer Understanding(personal perception)Non

comprehensible

Personal Understanding of variety


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Complexity Model

Comprehensible

+Ignorance Area Knowledge Area

non Comprehensible

Vagueness

0Observer personal understandig of variety


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Instersystemical Relationships

They have imperative nature and general validity

Constraints

Rules

They achieve technical requirements aimed at collective interests (regulation)

They derive from the government will to link the business System to one or more entities (self-regulation)

Standards

Result of activation of a structural relations

A single relation can produce different interactionsRelationships


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Consonance

Opening Capacities

Opening Degree (Level)

Resonance

System Potentiality, derived by a capacity of the structural framework to deal with the outside

Government Decision decides how to adjust the capacity utilization of openness inherent in the structure

Harmony and effectiveness in interacting systems

Ideal Development of Consonance

Compatibility between systems able to allow the business System, its sub-systems and its over-systems can relate and connect with themselves

Acceleration of consonance (related to dynamic moment)

Viable System EnterpriseInstersystemical Relationships

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Survival

Capacity of adding value to generate competitive advantage

Conditions

Consonance with over-systems

Consonance between sub-systems

Resonance with over-systems

Resonance between sub-systems

Resonance Level


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Systemic relevance

Resources Mapping

Qualification and selection of relations with external systems

Capacity of external System to influence prospects for business survival

Identification and description of individual resources

Identification and classification of entities

Identification / classification entities

Qualification of critical attributes and influence

Allocation of weights

Assessment of their relevance

Interpretation of constraints / rules

Setting consistent targets

Viable System EnterpriseSurvival

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Over-Systems and Sub-Systems

DIRECT OVER-SYSTEM of S1

SYSTEM S1

DIRECT SUB-SYSTEMof S1

ExpectationsInfluencePrizes/Endorsements

InfluencePrizes/Endorsements

Expectations

Expectations

Feed-back from indirect over-system

Mutual reinforce between Direct and indirect Over-Systems

Indirect over-system of S1 e Direct Sub-System of S1


Prizes/Endorsements

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Government

The Government dynamic is influenced by over-systems and sub-systems. If they are dissatisfied, they can influence the decision-making

The Government is an expression of Property decisions. The government effectiveness depends by its ability to select managerial competents

The kind of relationship between Property and Government can influence the conformation of the Government and establishe the level of autonomy

The Government must seek to establish harmony and resonance conditions with over-systems and sub-systems


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Governmental Decisional Processes

Total Resonance Level

two conditions

Government Decisional Processes Effectiveness

Operating Sub-System Effectiveness to give strategical guidelines


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PROPERTY

GovernmentOVER-SYSTEMS

OPERATING SUB-SYSTEMS

Decisional Processes

Action Effectiveness

Viable System EnterpriseGovernmental Decisional Processes

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Governamental Actions

The Ability of government to deploy their creativity is dependent by intra and inter-systemic relationships

Necessity of government and its entrepreneurial skills

Government action is a set of decisions capable to change the operating structure and its evolution

Necessity of Government to gain legitimacy and leadership


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1) SATISFY 4) DELETE

2) WATCH 3) NEGLETInfluence

CriticalityHigh Low

Low

High

Viable System EnterpriseGovernamental Actions

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Operating Structure

The Operating Structure is the logical component necessary to translate the Government decisions into action and to achieve consonance / resonance


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Evolution Dynamics

Adaptations related to the relations change of components in constancy of the principle and defined organizational scheme

Trasformations related to actions that affect on defined organizational scheme

Governament Actions

Restructuringconcerning actions that change the principle organizational scheme (physiological), or the business idea as identity (patological)


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Government Decisions

Preliminary Decisions

Governmental Decisions

Operative Decisions

Preparation of the principle organizational scheme

Choice of structural components

Relations setting

Definition / Modification of specific structure

Definition / Modification of the defined organizational scheme

Structure Using

Monitoring and Feedback

Viable System EnterpriseEvolution Dynamics

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Costs

Structure Costs

Use of Structure Costs

qualified for the strategic value of the corporate goals without considering the choices about the acquisition, transfer, negotiation and / or remuneration

qualified on the base of the specific options concerning the efficiency use of a particular resource

Viable System EnterpriseEvolution Dynamics

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STRUCTURE INCORPORATION

VALORIZATION

Governmental Centre

The Cycle of vitality

Conclusions


Documents

University of Cassino Faculty of Economy