A well-designed organizational model is crucial for a company's success and survival in the constantly evolving world. Like human systems, a viable system should be able to restructure, evolve, or adapt to remain successful.
Unfortunately, many companies overlook the essential ingredients in their organizational design, resulting in structures that are not viable. This can cause avoidable mistakes, financial losses, and a slow response to necessary changes.
What is a viable system?
Building adaptable and strategic organizational structures is crucial for business agility. The Viable Systems Model (VSM), introduced by Stanford Beer in 1972, applies cybernetics to company management and serves as the foundation for this perspective.
According to Beer's work, a viable organizational system is both fractal and recursive. Fractal structures, such as traditional hierarchies found in many workplaces today, consist of first-level teams reporting to higher-level teams that work together to achieve larger goals. Yet, fractal structures are only one aspect of a viable organizational system. VSM teams are closely connected to their stakeholders and the ecosystem or market segment they operate within. Each team implements a set of common subsystems to provide value to its stakeholders, including daily value delivery, balancing current and future needs, adapting goals based on ecosystem demands, and identifying potential threats and opportunities. These subsystems give each team greater situational awareness and independence within their charter.
Overall, the VSM structure applies to each individual team and can be combined to form a group, division, or company as needed. Before discussing these larger structures, it's important to understand the key heuristics and patterns that make up each team.
The subsystem patterns of a VSM
Each team in an organization displays viable subsystem patterns, whether they are first-level teams or part of the executive office. The difference is that first-level teams focus on a smaller aspect of the overall delivery, while the executive office oversees a larger portfolio of products that includes first-level teams. To better understand this concept, refer to the diagram below, which illustrates the constituent patterns of a viable system.
To ensure the viability and resilience of a team while delivering value to stakeholders, the Viable System Model (VSM) consists of three subsystems that work together. The first subsystem focuses on delivering tactical value to stakeholders in the present, while minimizing the delivery of unnecessary elements. The second subsystem identifies potential threats to the delivery system and seeks out opportunities for greater returns. The third subsystem coordinates between the first two, ensuring that risks are mitigated and opportunities are exploited to deliver the highest overall value.
To apply the VSM in a company, it is important to create independent teams that work together towards a common goal. Each team must have a clear charter and focus, with defined roles and responsibilities. Teams should also gather knowledge about the market ecosystem and share insights to stay aware of market trends and opportunities for higher value. By implementing VSM patterns, teams can work together efficiently and effectively, without wasting resources or slowing agility.
Structured for cunning business agility
By implementing these organizational patterns in all teams of your company, you can achieve a higher level of business agility and strategic thinking. These patterns enable your systems to adapt to stakeholders' needs and assemble groups that can take on greater opportunities.
While there are multiple organizational models you can use, the Viable System Model created by Stanford Beer is particularly useful due to its capabilities. It is important to remember that these patterns make it easier to reorganize, grow, shrink, and adapt, just like how humans have remained viable for 200,000 years. By making each level of your company a viable system that delivers, learns, and adapts, you can build a successful company.
Supporting Agile Adoption Workgroup and ACN
This article is based on the Agile Alliance Supporting Agile Adoption Workgroup discussions. I want to thank Hendrik Esser, Jutta Eckstein, Eric Abelen, Bjarte Bogsnes, Jen Coldewy, Marcin Floryan, John Buck, and Elena Vassilieva for their challenging insights. If you would like to hear part of our conversation about organizational design, you are welcome to listen to a special edition of the Agile Coaching Network (ACN) podcast.