VSM: The Most Valuable Organizational Chart You've Probably Never Heard Of
Among the luminaries of Organizational Development, Stafford Beer’s contributions are many and relevant today. Perhaps it’s not a coincidence that cybernetician was both the least academic of his peer group and one that put his methods into practice on a grand scale.
If you’re not familiar with his work, you should be: his most notable legacy, the Viable Systems Model (VSM) remains one of the best examinations of why organizations do and don’t thrive.
The VSM’s premise is that in order for an organization to survive changes in the environment its structure must have five distinctive functions. Moreover, the bi-directional exchanges between the functions must be greater in amplification than attenuation. Beer used two electronic symbols to depict the exchanges between functions. One symbol is amplification, which in the organizational context indicates the clarity, reach and persistence of the exchange. The other, attenuation, conveys the fact that the exchange may be resistive or even blocked.
The concept of amplification and attenuation alone makes VSM a powerful organizational assessment tool. One could assess the nature of the exchanges between functions and layers in the organization to determine if amplification is greater than attenuation. By understanding the simple principles of electronics we know that if amplification is weak and attenuation is strong, the exchange between any of the functions in VSM would indicate trouble.
VSM includes five functions and the business environment. For a for-profit company, the environment would correspond to: the marketplace, the economy, the competition, the appetite of customers for the products or services, the media, analysts and many other external factors that affect the system. In VSM, the exchange between the environment and the system is through the operations function. This function is responsible for the actual work performed. In a company, this would be the business units, functions, departments and employees.
The second function in VSM corresponds to a very important and often missed component of the organization, the “glue.” This function is not a formal organization per say but a set of processes, tools, practices, agreements and relationships that allow departments, functions and business units to collaborate and execute to a common set of objectives. Most organizations that fail have a dysfunctional facilitation and coordination function.
The third function is management. In VSM, management does not directly interact with the second function.
This is a critical concept.
It is easy to assume that management would be the “glue” that is required to have an effective organization. However, in VSM, this glue does not correspond to a set of employees but to a set of behaviors and practices. Management as a function represents the operational guidance; it controls and supports the operation and enables it to be successful, but it is not the glue.
Planning is the 4th function in VSM. It is the window to the future. Planning interacts with the environments and determines the next set of steps for the organization. Its internal exchange is with management. The planning function is fundamental in making the organization future-proof. It must read what the environment is doing and how the organization needs to respond to the changes to the environment. In my personal experience with companies of various sizes, I recognize that most startup companies fail because of this function. They become enamored with what they are doing and fail to see what the environment is telling them.
The final function in VSM provides the vision, cultural foundation and values for the organization. It is where the “soul” comes from. Typically this function is originated from the top leaders of the company. It is not an operational function but one that fuels management and planning. This ultimate leadership can guide the company to success or failure. Note the feedback loops that exist between the upper three functions. They have specific amplification and attenuation signals that impact the cultural, value and operational leadership provided to the Operations function. Indirectly they also affect the evolution of the Facilitation and Coordination (glue) function.
Beer intended for his VSM to be recursive. This means that the five functions in the model exist at all levels in the organization. Each business unit, function, department and team is governed by the same model. Each has an environment it interacts with, an operational function, a facilitation center, management or governance, planning, and ultimately vision and values. Regardless of the size of the team or organization, the principles of VSM hold true, including the effects of amplification and attenuation.