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System Theory March 19 2012 The contents of this document collectively, direct web-based searches of general systems theory and systems theory. Reference is made to management related texts in addition to construction related texts. Comprehensive review and evaluation of System Theory MSc in Project Management

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Page 1: SYSTEM THEORY

System Theory

March 19

2012

The contents of this document collectively, direct web-based searches of general systems theory and systems theory. Reference is made to management related texts in addition to construction related texts.

Comprehensive review and evaluation of System Theory

MSc in Project Management

Module 77-7848-00S-B-20112

PROJECT MANAGEMENT SYSTEMS

Page 2: SYSTEM THEORY

VINCETAN BASIL SOORIYAARACHCHI21055731

TABLE OF CONTENTS

Index Page

1. Introduction....................................................3

2. Organisation structure and Organisational Systems................................4

3. Business Process..........................................6

4. Management Functions.................................8

5. Conclusion....................................................13

6. References....................................................14

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1. INTRODUCTION

A system is literally a group of interacting, interrelated, or interdependent elements

forming a complex whole. Systems theory is an interdisciplinary concept that attempts

explaining the complex entities such as business enterprises where each and every

specific function has been interrelated and coordinated to a network and sustain. It can

be used to investigate or describe any group of things; be them natural or manmade,

that work together to produce a result, from a single organism to an entire society. In

other words, systems theory is the study of systems in general, with the goal of

elucidating principles that can be applied to all types of systems at all nesting levels.

The term does not yet have a well-established, precise meaning, but systems theory

can reasonably be considered a management approach.

Systems theory was proposed in the 1940's by the biologist Ludwig von Bertalanffy and

furthered by Ross Ashby. Bertalanffy stressed that real systems are similar to an

evolving body that reacted to external stimuli and adapted accordingly. Instead of

focusing on the parts played by each element in a body, systems theory focuses on the

interrelationships that connect them as a whole. It takes into account system-

environment boundary, input, output, process, state, hierarchy, goal-directedness, and

information.

A common feature of all systems is that knowing one part of it enables us to know about

another part. In terms described by Kuhn the content of a "piece of information" is

proportional to the amount of information that can be inferred from the information (A.

Kuhn., 1974).

.

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2. Organisation Structure and Organisational Systems

Any organisation composed of more than one person needs a form of organisational

structure. For instance, organisational charts display the chain of commands within an

organisation and also show task allocations, coordination and supervision, all focused

on a single goal.

General systems theory offers an alternative to the conventional hierarchical structure of

a company.

Matrix of Subsystems - Instead of creating one system where decisions flow downward from the boss through employees who are lower on the organization chart, you can create several systems that work together.

Goals - Under general systems theory, your organization can pursue multiple goals. Each department creates its own goals that serve the company in general but operate as motivators for the department only.

Project Orientation - Within general systems theory, you organize your independently operating departments by creating projects. These projects become the focal point for information and resources, and the project manager serves as the leader that coordinates the requests for input from various departments.

Transformation - General systems theory provides for an organization that will adapt according to the feedback from both outside and inside the organization. Thus enabling the organisation to learn, how to be effective.

Permanence - While traditional hierarchies tend to grow to the point of ineffectiveness, an organization built on general systems theory can continue indefinitely. The reason for this is it changes over time and becomes increasingly responsive to developments in the marketplace.

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Systems theory views organizational structure as the "established pattern of

relationships among the parts of the organization" (French, Kast, and Rosenzweig,

1985, p. 348). Of particular importance are the patterns in relationships and duties.

These include themes of 1) integration (the way activities are coordinated), 2)

differentiation (the way tasks are divided), 3) the structure of the hierarchical

relationships (authority systems), and 4) the formalized policies, procedures, and

controls that guide the organization (administrative systems).

It is not surprising to find much of General Systems Theory and its antecedents in the

theory and research of organizational behaviour. As business organizations have

recognized the limitations of conventional structured, closed system models over the

past century, incorporating General System theory has provided many emerging

perspectives, enabling better organizational models and studies of behaviour to be

done. There have been a few notable figures responsible for advocating General

Systems Theory in the field of organization and management.

More recently, systems theory has been used to approach smaller, more specialized

areas of organizational behaviour. For example, Gilad Chen and Ruth Kanfer published

"Toward a Systems Theory of Motivated Behaviour in Work Teams," in Research in

Organizational Behaviour. The authors acknowledge current motivational theory's

ignorance of contextual influences of team processes on individuals, as well as

individual differences within the team.

Since the world is continually changing, organizations need to act accordingly, and

update themselves or risk becoming obsolete. Leaders need to constantly monitor the

organizational structure and provide a platform for improving itself.  A non threatening,

development focused performance appraisal process can be an effective organizational

learning tool.  

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3. Business Process

A business process is an activity or set of activities that will accomplish a specific

organizational goal. Flowcharts display it as a sequence of activities with interleaving

decision points or with a Process Matrix as a sequence of activities with relevance rules

based on the data in the process.

Contemporary organizations need to be more agile to keep up with the swiftly changing

business environment. The Normalized Systems theory has proven to introduce this

required agility within an organization. However, in order to realize an agile enterprise,

also business processes have to exhibit this evolvability. Currently, the relevance of

Normalized Systems theory at the business process level has been demonstrated,

however no equivalent to the software elements at the organizational level have been

developed.

As a consequence, all constructs of an organization—structure, business processes,

information systems—have to evolve at an equivalent pace. The Normalized Systems

(NS) theory has proven to introduce this required agility within an organization. First, the

theory prescribes how to design and implement information systems that are able to

evolve over time, and are thus designed to accommodate change [1]. It is based on the

systems theoretic concept of stability and on the prevention of so-called combinatorial

effects, i.e., changes of which the impact is not only dependent on the kind of the

change but also on the size of the system.

Systems theory in the modern era is defined by the technology used as well the

managers whom use the process to improve upon the business process. The necessity

of processes and procedures has been used since the beginning of time. There are

different system modules for different businesses (Wren/Bendein, 2009). Some systems

work best for smaller businesses that will not work for larger, and vice versa. All in all,

systematic theory has revolutionized business and the function of many organizations.

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In systems theory there are problem elements that must be addressed in order to gain

the best possible outcome for a business decision. Demand factors are a constant

contributor to systems theory. Specifying the problem objective, identifying possible

actions, states of business nature of competitors, the probabilities of the states of

competitors and overall nature are all contributed factors for making decisions

(Dunn/Ramsing, 1981).

Niklas Luhmann, a prominent German social in the 20th century, mainly formulated

functional systems theory with autopoiesis as a central element. His main assumption

was that society and every functional system in it is built up by communication, not by

human beings, and that system coherence is ensured only by the connectivity of

communication operations.

In the first comprehensive explanation of his history, in the book Social Systems first

published in Germany in 1984, Luhmann supplied the instruments for observing a

variety of social systems. The book is occupied with the “how” questions instead of the

“what” questions, and this made his instruments applicable to other analyses of social

phenomena. Concerning decision making in organisations this approach allows to see

actual forms of process as selectable in a sphere of innumerable other possibilities and

functional equivalents with different communication media can be found out.

Systems theory instruments enable decision making process to be seen as temporally

formed systems inside organisations, whilst the system consists of communication

events. The human beings are members of the organisations, not of the systems.

Functional systems are entities, which exist as long as the communication lasts and as it

answers to past communications. Business processes seen as communication systems

have all the characteristics, which social systems in this functional sense show.

The systems theory concept of communication is not specifically bound to language.

“Communication by means of standardised gesture is no different, in principle, from

communicating through words; it merely expands a given repertoire of signs.” [Luhmann

(1995), p. 19].

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4. Management Functions

Henri Fayol 1916 book Administration Industrielle et Generale defined five functions, or

elements of management: planning, organizing, commanding, coordinating, and

controlling. (Source: Encyclopaedia of Management, ©2006 Gale Cengage)

Management has been described as a social process involving responsibility for

economical and effective planning & regulation of operation of an enterprise in the

fulfilment of given purposes. These activities are different from operative functions like

marketing, finance, purchase etc. Rather these activities are common to each and every

manger irrespective of his level or status.

Systems theory has had a significant effect on management science and understanding

organizations. First, let’s look at “what is a system?” A system is a collection of part

unified to accomplish an overall goal. If one part of the system is removed, the nature of

the system is changed as well.

Quote:“Most business failures do not stem from bad times. They come from poor management, and bad times just precipitate the crisis.” . . . . Thomas P. Murphy, Journalist

Systems theory although seemingly fundamental has never been followed. Only

recently, with tremendous changes facing organizations and how they operate, have

educators and managers come to face this new way of looking at things. This

interpretation has brought about a paradigm shift in the way management studies and

approaches organizations.

The effect of systems theory in management is that writers, educators, consultants, etc.

are helping managers to look at the organization from a broader perspective. Systems

theory has brought a new perspective for managers to interpret patterns and events in

the workplace. They recognize the various parts of the organization. This is a major

development.

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Managerialism is the representative political mode. Clearly, the management function is

in some sense definitive of modern societies. Yet, perhaps because of this very

dominance, the function of management remains opaque. The nature of management

may be conceptualised from a perspective of Systems Theory as the process by which

an organisation generates a global representation of its own processes. In other words,

management depends upon modelling an organisation.

Systems Theory is based upon the analytic division of the natural world into

environment and systems [1, 2]. This division constitutes the major foundational,

axiomatic philosophical assumption of Systems Theory. Systems are engaged in

processing information. Management systems (where they occur) are a form of social

organisational system which is engaged in modelling the organisation it manages.

From the perspective of Systems Theory, management has a primary and necessary

management function, and further secondary and optional functions. The primary

function of a management system, as for any system, is its own replication (or

autopoiesis). Without this attribute management would neither be observable, nor would

it be a system - because all systems by definition process information in order to

reproduce themselves.

Modern management is characterized by two approaches, the systems and the

contingency approach. The systems approach views the organization as a total system

comprised of interacting subsystems, all of which are in complex interaction with the

relevant external environment (Lerman & Turner, 1992). Organizations are pictured as

"input-transformation-output systems" that compete for resources. The survival and

prosperity of an organization depend on effective adaptation to the environment, which

means identifying a good strategy for marketing its outputs (products and services),

obtaining necessary resources, and dealing with external threats.

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Survival and prosperity also depend on the efficiency of the transformation process used

by the organization to produce its goods and services, on worker motivation, and on

cooperation. Top management has primary responsibility for designing an appropriate

organizational structure, determining authority relationships, and coordinating operations

across specialized subunits of the organization (Yuki, 1994). A system can survive only

when it delivers an output that can be exchanged for new inputs as well as for

maintaining the system. Similarly, an extension service is expected to produce some

beneficial output.

The systems concept can be a useful way of thinking about the job of managing. It

provides a framework for visualization internal and external environmental factors as an

integrated whole. However, management via systems concepts fosters a way of thinking

which, on the one hand, helps to dissolve some of the complexity and, on the other

hand, helps the manager recognize the nature of the complex problems and thereby

operate within the perceived environment. It is important to recognise the integrated

nature of specific systems, including the fact that each system has both inputs and

outputs and can be viewed as a self-contained unit. But it is also important to recognize

that business systems are a part of larger systems-possibly industry-wide, or including

several, maybe many, companies and/or industries, or even society as a whole. Further

business systems are in a constant state of change-they are created, operated, revised,

and often eliminated.

It seems therefore that a general system theory of systems would be a useful tool

providing, on the one hand, models that can be used in, and transferred to, different

fields, and safeguarding, on the other hand, from vague analogies which often have

marred the progress in these fields.

The isomorphism under discussion is more than mere analogy. It is a consequence of

the fact that, in certain respects, corresponding abstractions and conceptual models can

be applied to different phenomena. Only in view of these aspects will system laws apply.

This is not different from the general procedure in science.

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There is, however, another and even more important aspect of general system theory.

Concepts like those of organization, wholeness, directiveness, teleology, and

differentiation are alien to conventional physics. However, they pop up everywhere in

the biological, behavioural and social sciences, and are, in fact, indispensable for

dealing with living organisms or social groups. Thus, a basic problem posed to modern

science is a general theory of organization. General system theory is, in principle,

capable of giving exact definitions for such concepts and, in suitable cases, of putting

them to quantitative analysis.

Meanwhile, conventional physics for example deals only with closed systems, i.e.

systems which are considered to be isolated from their environment.

However, we find systems which by their very nature and definition are not closed

systems. Every living organism is essentially an open system. It maintains itself in a

continuous inflow and outflow, a building up and breaking down of components, never

being, so long as it is alive, in a state of chemical and thermodynamic equilibrium but

maintained in a so-called steady state which is distinct from the latter.

It is only in recent years that an expansion of physics, in order to include open systems,

has taken place. This theory has shed light on many obscure phenomena in physics and

biology and has also led to important general conclusions of which I will mention only

two.

The first is the principle of equifinality. In any closed system, the final state is

unequivocally determined by the initial conditions: e.g. the motion in a planetary system

where the positions of the planets at a time t are unequivocally determined by their

positions at a time t°. This is not so in open systems. Here, the same final state may be

reached from different initial conditions and in different ways. This is what is called

equifinality.

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Another apparent contrast between inanimate and animate nature is what sometimes

was called the violent contradiction between Lord Kelvin's degradation and Darwin's

evolution, between the law of dissipation in physics and the law of evolution in biology.

According to the second principle of thermodynamics, the general trend of events in

physical nature is towards states of maximum disorder and levelling down of

differences, with the so-called heat death of the universe as the final outlook, when all

energy is degraded into evenly distributed heat of low temperature, and the world

process comes to a stop. In contrast, the living world shows, in embryonic development

and in evolution, a transition towards higher order, heterogeneity, and organization. But

on the basis of the theory of open systems, the apparent contradiction between entropy

and evolution disappears. In all irreversible processes, entropy must increase.

Therefore, the change of entropy in closed systems is always positive; order is

continually destroyed. In open systems, however, we have not only production of

entropy due to irreversible processes, but also import of entropy which may well be

negative. This is the case in the living organism which imports complex molecules high

in free energy. Thus, living systems, maintaining themselves in a steady state, can avoid

the increase of entropy, and may even develop towards states of increased order and

organization.

Systems theory is thus a view, that emphasis certain perspectives and relatively ignores

other perspectives. It is always important to consider what the consequences are of

ignoring certain perspectives. In studying libraries, one can apply a systems perspective

and thus ignore the specific attributes and the specific historical circumstances. This

may be fruitful for some purposes such as automation and cooperation, but I may be at

the cost of loosing, for example, specific experiences in developing special services.

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5. CONCLUSION

While in the past, science tried to explain observable phenomena by reducing them to

an interplay of elementary units investigable independently of each other, conceptions

appear in contemporary science that are concerned with what is somewhat vaguely

termed 'wholeness', i.e. problems of organization, phenomena not resolvable into local

events, dynamic interactions manifest in difference of behaviour of parts when isolated

or in a higher configuration, etc.; in short, 'systems' of various order not understandable

by investigation of their respective parts in isolation. Conceptions and problems of this

nature have appeared in all branches of science, irrespective of whether inanimate

things, living organisms, or social phenomena are the object of study.

Not only are general aspects and viewpoints alike in different sciences; frequently we

find formally identical or isomorphic laws in different fields. In many cases, isomorphic

laws hold for certain classes or subclasses of 'systems', irrespective of the nature of the

entities involved. There appear to exist general system laws which apply to any system

of a certain type, irrespective if the particular properties of the system and of the

elements involved.

General System Theory, therefore, is a general science of 'wholeness'.

(1) There is a general tendency towards integration in the various sciences, natural and

social.

(2) Such integration seems to be centred in a general theory of systems.

(3) Such theory may be an important means of aiming at exact theory in the

nonphysical fields of science.

(4) Developing unifying principles running 'vertically' through the universe of the

individual sciences, this theory brings us nearer to the goal of the unity of science.

(5) This can lead to a much-needed integration in scientific education.

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6. REFERENCES

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