Chapter 4: SYSTEMS THEORY

1. Chapter 4: SYSTEMS THEORY Provides a general analytical framework (perspective) for viewing an organization.

2. Systems Theory • Synergy • Interdependence • Interconnections • within the organization • between the organization and the environment • Organization as ORGANISM • “A set of elements standing in inter-relations”

3. Overview • General Theoretical Distinctions • Misunderstandings • Strengths of Systems Theory • Systems Framework • General Systems Theory Principles • System Characteristics • Contingency Theory • The Learning Organization

4. General Theoretical Distinctions • Classical and humanistic theories prescribe organizational behavior, organizational structure or managerial practice (prediction and control). MACHINE • Systems theory provides an analytical framework for viewing an organization in general (description and explanation). ORGANISM

5. Misunderstandings • Doesn’t focus on specific task functions • Doesn’t directly explore the impact of interpersonal relationships and loyalty on productivity • Doesn’t provide for detailed focus • Changes in environment directly affect the structure and function of the organization.

6. Strengths • Recognizes . . . • interdependence of personnel • impact of environment on organizational structure and function • affect of outside stakeholders on the organization • Focuses on environment and how changes can impact the organization • Seeks to explain “synergy” & “interdependence” • Broadens the theoretical lens for viewing organizational behavior.

7. Systems Framework • Ludwig von Bertalanffy (1968) • Offered a more comprehensive view of organizations • NOT a theory of management - new way of conceptualizing and studying organizations • Four Strengths (“promises”) M. Scott Poole • Designed to deal with complexity • Attempts to do so with precision • Takes a holistic view • It is a theory of emergents - actions and outcomes at the collective level emerge from the actions and interactions of the individuals that make up the collective

8. Principles of General Systems Theory • Laws that govern biological open systems can be applied to systems of any form. • Open-Systems Theory Principles • Parts that make up the system are interrelated. • Health of overall system is contingent on subsystem functioning. • Open systems import and export material from and to the environment. • Permeable boundaries (materials can pass through) • Relative openness (system can regulate permeability) • Second Principle of Thermodynamics (ENTROPY) • Entropy must increase to a maximum • Negentropy increases growth and a state of survival • Synergy (extra energy causes nonsummativity--whole is greater than sum of parts) • Equifinality vs. “one best way.”

9. Characteristics of Organizations as Systems • Input-Throughput-Output • Inputs • Maintenance Inputs (energic imports that sustain system) • Production Inputs (energic imports which are processed to yield a productive outcome) • Throughput (System parts transform the material or energy) • Output (System returns product to the environment) • TRANSFORMATION MODEL (input is transformed by system) • Feedback and Dynamic Homeostasis • Positive Feedback - move from status quo • Negative Feedback - return to status quo • Dynamic Homeostasis - balance of energy exchange • Equivocality and Requisite Variety (Karl Weick) • Equivocality (uncertainty and ambiguity) • Requisite Variety (complex inputs must be addressed with complex processes)

10. Characteristics of Organizations as Systems • Role of Communication • Communication mechanisms must be in place for the organizational system to exchange relevant information with its environment • Boundary Spanners perform this function! • Media Outlets are communication link between system & environment • Communication provides for the flow of information among the subsystems • Systems, Subsystems, and Supersystems • Systems are a set of interrelated parts that turn inputs into outputs through processing • Subsystems do the processing • Supersystems are other systems in environment of which the survival of the focal system is dependent • Five Main Types of Subsystems • Production (technical) Subsystems - concerned with throughputs-assembly line • Supportive Subsystems - ensure production inputs are available-import raw material • Maintenance Subsystems - social relations in the system-HR, training • Adaptive Subsystems - monitor the environment and generate responses (PR) • Managerial Subsystems - coordinate, adjust, control, and direct subsystems

11. Characteristics of Organizations as Systems • Boundaries • The part of the system that separates it from its environment • Four Types of Boundaries (Becker, 1997) • Physical Boundary - prevents access (security system) • Linguistic Boundary - specialized language (jargon) • Systemic Boundary - rules that regulate interaction (titles) • Psychological Boundary - restricts communication (stereotypes, prejudices) • The ‘Closed’ System • Healthy organization is OPEN • Do not recognize they are embedded in a relevant environment • Overly focused on internal functions and behaviors • Do not recognize or implement equifinality • Inability to use feedback appropriately • CO-DEPENDENT

12. Characteristics of Organizations as Systems • McMillan & Northern (1995) on Enabling Co-dependency • Asymmetrical communication status of the hierarchy • Levels of authority • Fear of Punishment • The socially acceptable addiction • Workaholics • Addiction leads to more co-dependency • The organization’s selective attention • Money and power as distractions • Focus on ends instead of means • Skilled communication incompetence • Deprived of useful feedback • Emotion is masked • First extension of Systems Theory into Management Practice - CONTINGENCY THEORY

13. Contingency Theory • There is no one best way to structure and manage organizations. • Structure and management are contingent on the nature of the environment in which the organization is situated. • Argues for “finding the best communication structure under a given set of environmental circumstances.” • Management of Innovation - Burns and Stalker (1968)

14. Two Contingency Theories • Burns and Stalker (1968) Management of Innovation • Organizational systems should vary based on the level of stability in the environment • Two different types of management systems • Mechanistic systems - appropriate for stable environment • Organic systems - required in changing environments (unstable conditions) • Management is the Dependent Variable • Variations in environmental factors lead to management • Lawrence and Lorsch (1969) • Key Issue is environmental uncertainty and information flow • Focus on exploring and improving the organization’s relationship with the environment • Environment is characterized along a certainty-uncertainty continuum

15. Pragmatic Application of Systems Theory • The Learning Organization • Peter Senge’s The Fifth Discipline: The Art and Practice of the Learning Organization (1990) • An organization that is continually expanding its capacity to create its future • Organizational Learning Occurs under Two Conditions • 1) When design of organizational action matches the intended outcome • 2) When initial mismatch between intentions and outcomes is corrected, resulting in a match • Key attribute of learning organization is increased adaptability • Adaptability is increased by advancing from adaptive to generative learning

16. The Learning Organization • Adaptive (single-loop) Learning • Involves coping with a situation • Limited by the scope of current organizational assumptions • Occurs when a mismatch between action and outcome is corrected without changing the underlying values of the system that enabled the mismatch. • Generative (double-loop) Learning • Moves from COPING to CREATING an improved organizational reality • Necessary for eventual survival of the organization • Both are Central Features of the Model of the Communicative Organization (Chapter 6) • Synergy and Nonsummativity are Important

17. The Learning Organization • Through communication, teams are able to learn more than individuals operating alone. • Critics argue that teams inhibit learning • Thoughts? • Leadership is a key element in creating and sustaining a learning organization. • Leaders are responsible for promoting an atmosphere conducive to learning • CREATIVE TENSION • Represents difference between the “vision” of where the organization could be and the reality of the current organizational situation.

18. Impediments to Learning Organization • Complexity of the Environment • Difficult to determine cause and effect • Multiple contributing elements in complex environments • Internal Conflicts • Individuals, teams, departments, and subcultures are often at odds • Energy is drained by conflect • Organization members must be trained in communication and conflict-negotiation skills

19. Summary • Systems Theory is NOT a prescriptive management theory • Attempts to widen lens through which we examine and understand organizational behavior • The Learning Organization • Synergy • Nonsummativity • Interdependence • Equifinality • Requisite Variety • Emphasizes COMMUNICATION in the Learning Process • Organizations cannot separate from their environment • Organizational teams or subsystems cannot operate in isolation

20. Bottom Line The same misunderstandings and problems that continue to occur will eventually cause fatal damage to the system.