Sharda UniversitySharda UniversitySchool of Business School of Business StudiesStudies

SYSTEMS SYSTEMS THEORYTHEORY

Provides a general analytical framework (perspective) for viewing an organization.

The Systems TheoryThe Systems Theory

What Is a System?◦ A collection of parts operating

interdependently to achieve a common purpose

Systems Approach◦ Shows that the performance of the whole is

greater than the sum of the performance of its parts Seeks to identify all parts of an organized

activity and how they interact

Systems TheorySystems Theory

SynergyInterdependenceInterconnections

◦within the organization ◦between the organization and the environment

Organization as ORGANISM“A set of elements standing in inter-

relations”

General Theoretical DistinctionsGeneral Theoretical DistinctionsClassical 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

MisunderstandingsMisunderstandingsDoesn’t focus on specific task functions Doesn’t directly explore the impact of

interpersonal relationships and loyalty on productivity

Doesn’t provide for detailed focusChanges in environment directly affect

the structure and function of the organization.

StrengthsStrengths

Recognizes . . .◦interdependence of personnel◦impact of environment on organizational

structure and function◦affect of outside stakeholders on the

organizationFocuses on environment and how

changes can impact the organizationBroadens the theoretical lens for

viewing organizational behavior.

Principles of General Systems Principles of General Systems TheoryTheory 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)◦ Synergy (extra energy--whole is greater than sum of

parts)

Characteristics of Organizations as Characteristics of Organizations as SystemsSystemsInput-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

exchangeEquivocality and Requisite Variety (Karl Weick)◦Equivocality (uncertainty and ambiguity)◦Requisite Variety (complex inputs must be

addressed with complex processes)

Characteristics of Organizations as Characteristics of Organizations as SystemsSystems

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

Characteristics of Organizations Characteristics of Organizations as Systemsas SystemsBoundaries

◦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

Contingency TheoryContingency TheoryThere 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)

Two Contingency TheoriesTwo Contingency TheoriesBurns 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 managementLawrence 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

Pragmatic Application of Pragmatic Application of Systems TheorySystems 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

The Learning OrganizationThe Learning OrganizationAdaptive (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

Synergy and Nonsummativity are Important

The Learning OrganizationThe 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.

Impediments to Learning Impediments to Learning OrganizationOrganization

Complexity of the Environment◦ Difficult to determine cause and effect◦ Multiple contributing elements in complex

environmentsInternal Conflicts

◦ Individuals, teams, departments, and subcultures are often at odds

◦ Energy is drained by conflectOrganization members must be trained in

communication and conflict-negotiation skills

SummarySummarySystems Theory is NOT a prescriptive management

theoryAttempts to widen lens through which we examine

and understand organizational behaviorThe 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

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