tag:blogger.com,1999:blog-8022127790730374502024-03-08T07:12:47.693+00:00SynchoRaul Espejohttp://www.blogger.com/profile/09391792256183440492noreply@blogger.comBlogger14125tag:blogger.com,1999:blog-802212779073037450.post-46113550434838636242020-04-21T12:14:00.000+01:002020-04-21T21:35:00.507+01:00<h2>
COVID-19: </h2>
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<span style="background-color: white; color: black; display: inline; float: none; font-family: "times new roman"; font-size: 24px; font-style: normal; font-variant: normal; letter-spacing: normal; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">Getting out of the lockdown. </span></h2>
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<span style="background-color: white; color: black; display: inline; float: none; font-family: "times new roman"; font-size: 24px; font-style: normal; font-variant: normal; font-weight: 700; letter-spacing: normal; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">Variety Engineering </span></h2>
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<span style="mso-fareast-language: EN-US;">I´ve been writing about “Enterprise Complexity Models” recently (Espejo, 2018). I have grounded this model in the Viplan Methodology (Espejo, 1993, Espejo and Reyes, 2011), and think they have something to say about COVID-19 as a huge problematic situation. Graphically the </span><span style="mso-fareast-language: EN-US;"><i>Viplan methodology</i> is built up with two concentric learning loops (Observing, naming, designing and implementing); </span><br />
<ul>
<li><span style="mso-fareast-language: EN-US;">the inner (cybernetic) loop which elaborates the structure of an enterprise relevant to a problem situation, like the sustainability of our society and planet, or more diretly like COVID-19. The enterprise needs <i>good structural conversations</i> to handle effectively problem situations. </span></li>
<li><span style="mso-fareast-language: EN-US;">The outer (problem solving) loop is focused on particular problem situations, such as the enterprise's contribution to the sustainability of social health in its environment, or more directly to the health of people. </span></li>
</ul>
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<span style="mso-fareast-language: EN-US;">The Viable System Model -VSM- (Beer, 1979) clarifies necessary conversations that often restrict proper communications between organisational actors and work out <i>who are the right people to participate in these conversations throughout an enterprise </i>to discuss the problematic issue. The VSM help visualisation the structural conditions most conducive to appropriate conversations leading to effective action. In the Viplan Methodology, </span></div>
<ul>
<li><span style="mso-fareast-language: EN-US;">t</span><span style="mso-fareast-language: EN-US;">he cybernetic -inner- loop encourages stakeholders to question the structures underpinning their problem solving relationships in the context of the enterprise's purposes. The common situation is that these structures inhibit to different degrees these problem solving processes and the purpose of the cybernetic -inner- loop is making the enterprise's structure more effective. As this happens the enterprise's improved cybernetics, facilitates better conversations to improve the enterprise's management of problem situations. </span></li>
<li><span style="mso-fareast-language: EN-US;">In the learning - outer loop- stakeholders take advantage of the enabling structures to engage in processes of continual learning about this situation, such as sustainable individuals' health. They engage in problematic issues, agree about any changes that they want to make to improve the situation. </span></li>
<li><span style="mso-fareast-language: EN-US;">The two loops are reflexive in the sense, that as the cybernetics of the enterprise improves in the inner loop, the collective appreciation of their problem situations becomes more sophisticated in the outer loop and better appreciation of these situations are reflected in changed conversations and structures in the inner loop, recursively. </span></li>
</ul>
<span style="mso-fareast-language: EN-US;"><br /></span><span style="mso-fareast-language: EN-US;">I will focus applying Viplan to COVID-19 on </span><span style="mso-fareast-language: EN-US;">the UK National Health Service (NHS) as the enterprise in the Inner Cybernetic Loop. The Outer Loop is the hugely complex management of COVID-19, the pandemic that we are experiencing at the present time. The situation is one of an extended network of enterprises, including many government enterprises, dealing
with COVID-19. </span><span style="font-family: "times new roman" , serif; font-size: 12.0pt;">From
the perspective of complexity, and in particular of the NHS, this enterprise is experiencing a situation of huge imbalance of its complexity with that of the population being affected by the pandemic. From the perspective of <i>variety engineering</i> (Espejo & Reyes, 2011) the challenge is working out a selection of <i>variety
operators to balance the NHS complexity with that of the population experiencing the corona virus</i>. The design and selection of
these operators is particularly relevant in today’s globalised and
environmentally sensitive, societies. Most of this variety needs to be absorbed within the <i>communities themselves</i>, leaving a <i>residual variety</i> manageable by the enterprise's variety operators. These operators define an enterprise’s
new strategies to produce and make available their products and services,
intertwined with the technologies-in-use. Each of these decisions generates
complexity that the organisational system needs to contain structurally in ways
that enhance its capacity to respond to environmental pressures. The current
pandemic offers an instance of mismatches between variety operators;
the diagnostic tests necessary to work out numbers of infected people, and also
numbers of people already possessing antibodies, <span style="mso-spacerun: yes;"> </span>seem to be out of sync with the operational
capacity of the health service (capabilities of hospitals and research laboratories). Increasing hospital
capabilities, to receive infected people, requires amplification of variety of hospitals and other services, such as ambulances and medical general practices. At the same time, learning about
infected people and people with antibodies requires reducing the variety of the
overall population to those at risk and those with limited risk if they remain at
the front end of health and other economic services. The overall performance to
counter the COVID-19 pandemic requires managing the balancing of ongoing
interactions between people in the community and health services, that is,
between people demanding services (amplifying demand) and health delivering
services reducing the variety of those in need (attenuating demand). As the Viplan
Methodology suggests, structurally this implies going beyond the National Health Service
to create a much larger Enterprise Complexity Model (ECM), enabled by powerful scientific
models and by autonomous units, within autonomous units (i.e. <i>a recursive
structure</i>). </span><br />
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<ul>
<li><span style="font-family: "times new roman" , serif;"><i>V</i><span style="font-size: 12.0pt;"><i>ariety
operators</i> for the NHS are other enterprises, support of better scientific models and communication
and management systems to produce a <i>cohesive, adaptive and innovative</i>, organisational system to respond to community needs. <span style="color: black; font-family: "arial" , sans-serif; font-size: 10.0pt;"><a href="https://www.youtube.com/watch?v=yZhOTsoNOUc&fbclid=IwAR3HdpBmPBar0Ymjn6EEcjtlYMN6lNzPBGSy-zc44mE6ozwiiwxHUKhHGq0"><span data-mce-style="font-size: 10pt;">https://www.youtube.com/watch?v=yZhOTsoNOUc&fbclid=IwAR3HdpBmPBar0Ymjn6EEcjtlYMN6lNzPBGSy-zc44mE6ozwiiwxHUKhHGq0</span></a></span><span style="color: black; font-family: "arial" , sans-serif; font-size: 12.0pt;"></span></span></span></li>
</ul>
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</span></span><span style="font-family: "times new roman" , serif;"><span style="font-size: 12.0pt;">
This is a heuristic in the generation of ECMs. As new technologies and
scientific models suggest alternative structural and technological models, most
likely their structural mapping will require an alternative unfolding of
complexity that is, new considerations about the distribution of autonomy and
discretion (Espejo and Reyes, 2011). These are platforms to work out necessary
structural changes in the NHS, using the VSM, to increase reflexively the quality of the network of enterprises responding to COVID-19. In the extreme the situation may show that the current extended transformation of the NHS is
unviable, suggesting that before reconfiguring its resources, it may need
questioning its identity and purposes altogether; I hope that this will not be the case for COVID-19. </span></span><br />
<span style="font-family: "times new roman" , serif;"><span style="font-size: 12.0pt;"><br /></span></span>
<span style="font-family: "times new roman" , serif; font-size: 12.0pt;">ECMs
offer different strategies to manage an enterprise’s complexity. New scientific
models and technologies are changing the nature of these enterprises. From the
point of view of attenuating the pandemic, people’s distancing has been driven
by scientific models, and the construction of new health facilities has been driven
by amplifying building complexity through new technologies. In these cases key
business functions such as finance, personnel are likely to remain centralised
reducing the scope for entrepreneurship at lower structural levels. In this
example, at a first glance, the unfolding of complexity is likely to be skewed
towards the top. In other words the scope for local autonomy appears to be
restricted by the product and its technology. However, this needs not be so.
Similarly, these local enterprises might well be networks of more specialised
enterprises, whose viability is equally necessary, and so forth. </span><br />
<br />
<span style="font-family: "times new roman" , serif; font-size: 12.0pt;">These
examples highlight the amplification and attenuation of an enterprise’s
complexity driving the emergence of an ECM. In the NHS’s case, it is clear that
in addition to the amplification of its activities it needs attenuators of
environmental complexity. Without effective means to reduce undesirable local variations
as a result of people´s behaviours and resources (e.g. people’s distancing to
2m.), that is, as a result of weak amplification of government’s policies to attenuate
local communities’ behaviours, the overall performance of the NHS and society will suffer (e.g. more infections and deaths). This latter aspect shows that developing
mechanisms for organisational cohesion, which respect the autonomy of their
suppliers but also standardise their products, are necessary for services
viability. Furthermore, it needs to manage relationships between
subcontractors, customers and a range of other agents. The more the
NHS and its regional and local units enable direct interactions among local
suppliers and between these and people in the community, the more of its
environmental variety will be absorbed in the environment itself,
reducing the residual variety that the Government and the NHS needs
to manage directly. Similarly, there are a range of variety operators that the
NHS needs designing in order to have an effective ECM. Also, it needs making
viable its own enterprise transformation; that is, its orthogonal
transformation to those transformations of the hospitals and services constituting
the organisational system it leads. Say, it needs capacity to create, design and
implement networks (i.e. its own primary activities) to support local clinical
services, which are the platform for the ECM own learning. These platforms are<span style="mso-spacerun: yes;"> </span>its strength and also its Achilles heel. It
offers the strength of the great flexibility to reconfigure resources and
develop new capabilities should the circumstances so require, but it has the
challenge of building up relationships with distributed enterprises which use
different standards and make, among other aspects, more difficult complying
with safety and security <span style="mso-spacerun: yes;"> </span>requirements. </span><br />
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Based on the above considerations, supported by variety engineering the Viplan Methodology suggests managing people's current situation of lockdown towards a strategy aimed at reducing costs to society and people. Beyond the excessive centralisation of decisions at the level of the UK's Cabinet, it is necessary to consider more targeted measures under <i>local organisational systems</i>, constituted by decentralised local health authorities, local authorities and local enterprises integrating <i>their responses</i>. I'm proposing to discuss the integrated use of variety attenuators and amplifiers in the communities. In other words, getting out of the lockdown requires considering together variety attenuators of community aspects such as age, health profile, geography and sophistication of local services and variety amplifiers like levels of testing in the community and also sophistication of local services, to really be able to isolate cases and more effectively identify where transmission is happening to support with reduced risk getting out of the current lockdown.<br />
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References<br />
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1979 Beer S. The Hearth of Enterprise. Wiley, Chichester<br />
2018 Espejo R. An Enterprise Complexity Model: Enterprises, Organizational Systems, and Dynamic Capabilities in F. Stowell <i>Systems Research for Real-World Challenges.IGI Global. Hershey, USA</i><br />
2011 Espejo R. and A. Reyes Organisational Systems: Managing Complexity with the Viable System Model, Springer, Heidelberg <br />
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<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike><b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>Raul Espejohttp://www.blogger.com/profile/09391792256183440492noreply@blogger.com0tag:blogger.com,1999:blog-802212779073037450.post-43233019512301748742016-09-17T11:17:00.004+01:002016-09-17T11:47:42.330+01:00An Agenda for social transparency: making sense of big data<o:p><span style="font-family: "Calibri","sans-serif"; line-height: 115%; mso-fareast-font-family: Calibri;"><span style="font-family: Verdana, sans-serif; font-size: small;"><span style="font-family: Verdana, sans-serif;">Brexit and the American elections this November provide examples of the art of lies in advanced democracies. It can be argued that we encounter this problem with referenda and elections in all democracies; effective interactions between citizens, experts and policy-makers are a major challenge.<span style="mso-spacerun: yes;"> </span>Representative and participative democracies need further development to be effective. We find that there is a significant distinction between the “emotional truth” emerging in citizens minds and the “real truth” as constructed by solid debates supported by experts, think tanks and political parties and also by the serious press.<span style="mso-spacerun: yes;"> </span>This distinction touches key aspects of communications in a complex world, today dominated by big data, which in practice implies data overload for citizens and politicians. For both it is increasingly difficult to distinguish lies from truths. For the former big data may support conflating aggregated trends, such as inequality and zero hour contracts with deciding whether or not being part of the European Union in the UK.<span style="mso-spacerun: yes;"> </span>Politicians, also overwhelmed by data -in an uncertain world- may construct and impose their truths influenced by ideology, weak expert advice and short term political interests. The challenge is reducing the gap between sound evidences and emotional constructions. It may be argued that it is a social responsibility, similar to having a Justice System, to create aiding procedures to contextualize fairly that that is heard through the media and social networks. In advanced democracies, for social issues whether of global or local relevance, it is irresponsible not to challenge the arguments advanced by those forming public opinion with the sieve of authenticity, legitimacy and truthfulness (Habermas, 1979).</span> </span></span><br />
<span style="font-family: "Calibri","sans-serif"; line-height: 115%; mso-fareast-font-family: Calibri;"></span><br />
<span style="font-family: "Calibri","sans-serif"; line-height: 115%; mso-fareast-font-family: Calibri;"></span><span style="font-family: "Calibri","sans-serif"; font-size: 11pt; line-height: 115%; mso-fareast-font-family: Calibri;"><span style="font-family: "Calibri","sans-serif"; font-size: 11pt; line-height: 115%; mso-fareast-font-family: Calibri;"><span style="font-family: Verdana, sans-serif;"><span style="font-size: small;"><span style="font-family: Verdana, sans-serif;">But, it may be argued that the huge complexity of social processes make impossible dealing with this challenge. However, this is not necessarily the case. Complexity management tools, such as variety engineering (Beer, 1979, 1985, Espejo & Reyes, 2011),<span style="mso-spacerun: yes;"> </span>should expose in daily conversations the damage produced by those charismatic demagogues that give evidences lacking in authenticity, legitimacy and truthfulness. Not only it is necessary to keep open checks and balances between multiple viewpoints to bridge gaps between emotional and real truths, but also it is necessary to count with the moral guidance of experts regulating on-going dialogues, offering judgements about precisely the authenticity, legitimacy and truthfulness of those constructing social opinions. These judgements of the dialogues constructing “real truths” -enmeshed in moral mazes- should be distributed throughout society; they are necessary at multiple levels from the local to the global. This proposal may appear as a utopia; however I propose that its realisation is necessary for mature democracies. This proposed utopia is an invitation to move in the direction of more transparent societies (Wene & Espejo, 1999).</span><span style="mso-spacerun: yes;"> </span></span><o:p></o:p></span></span></span></o:p><span style="font-size: large;"><span style="font-family: "arial";"></span></span><br />
<span style="font-size: large;"><span style="font-family: "arial";">References <o:p></o:p></span></span><br />
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<span style="font-size: small;"><span style="font-family: Verdana, sans-serif;">S. Beer, (1979) The Heart of Enterprise, Chichester: Wiley<o:p></o:p></span></span></div>
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<span style="font-size: small;"><span style="font-family: Verdana, sans-serif;">S. Beer, (1985)<span style="mso-spacerun: yes;"> </span>Diagnosing the System for Organizations, Chichester: Wiley<o:p></o:p></span></span></div>
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<span style="font-family: Verdana, sans-serif; font-size: small;">R.Espejo & A. Reyes (2011) Organizational Systems: Managing Complexity with the Viable System Model. Springer Heidelberger </span><br />
<span style="font-family: Verdana, sans-serif; font-size: small;"></span><br />
<span style="font-size: small;"><span style="font-family: Verdana, sans-serif;">Habermas, J. (1979). Communication and the Evolution of Society. Boston, Beacon Press.<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif; font-size: small;"></span><br />
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<span style="font-family: Verdana, sans-serif; font-size: small;">Wene C. and Espejo R. (1999). A Meaning for Transparency in Decision Processes, in Proceeding of Conference on Values in Decisions on Risk (ed. Kjell Andersson), Sponsored by European Commission/DGXI, Swedish Nuclear Power Inspectorate and Swedish Radiation Protection Institute, Stockholm, 13-17 June 1999</span></div>
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Raul Espejohttp://www.blogger.com/profile/09391792256183440492noreply@blogger.com0tag:blogger.com,1999:blog-802212779073037450.post-38785747981982769102015-06-18T11:43:00.000+01:002015-06-18T11:43:54.633+01:00Good Social Cybernetics is a Must in Policy Processes<br />
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<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;"><span style="font-family: "Arial","sans-serif"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB;">In a recent paper, to be published later this year, I </span><span style="font-family: "Arial","sans-serif"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB;">Illustrate
supported by Beer’s Viable System Model and four vignettes, the relevance of
self-organisation, recursive structures, self-reference and reflexivity in policy
processes. For me these are concepts to </span><span style="font-family: "Arial","sans-serif"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB;">ground policy processes in good
cybernetics. The four vignettes illustrate the cybernetics underpinning 'real-world' policy failures. Through this post I want to involve you, the reader, in the development of our understanding of the cybernetics of policy processes. I propose we try together discussing aspect of self-organisation, recursive structures, self-reference and reflexivity in policy processes. I suggest that </span><span style="font-family: "Arial","sans-serif"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB;">Beer’s recursive
structures and second-order cybernetics have much to contribute to their
understanding and betterment. </span></span></span></div>
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<span style="font-family: "Times New Roman","serif"; line-height: 115%; mso-fareast-font-family: Calibri;"><span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">Policy processes such as development of clean energy, local child care,
transparent marketing, economic development and so forth bring together multiple social and
economic agents in the creation, regulation and production of these
policies and through their interactions, mostly by self-organisation, they
may produce organisational systems. <o:p></o:p></span></span></span></div>
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<span style="font-family: "Times New Roman","serif"; line-height: 115%; mso-fareast-font-family: Calibri;"><span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">Self-organisation
brings together social agents as they find common purposes and recognise the
need to interact. But chance interactions may take too long to form policies and
some form of guidance, such as political leadership, incentives for particular relations,
resources allocation, applications of disruptive technologies and others may help
in these processes. These are catalysts of <em>organisational
systems </em>(Espejo and Reyes, 2011<em>). </em>
However, it is common for agents to have a poor appreciation of the resources
and interactions that are necessary to make particular policies viable, leading
to painful shortcomings for people and society. Beer’s Viable System Model
offers a heuristic to construct policies through effective
communications. This model highlights requirements to enable the emergence of
organisational systems from fragmented resources. Among these requirements are
organisational closure, structural cohesion, value co-creation, structural recursion
of autonomous units within autonomous units and others. These are requirements
for a good cybernetics of policy processes. <o:p></o:p></span></span></span></div>
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<span style="font-family: "Times New Roman","serif"; line-height: 115%; mso-fareast-font-family: Calibri;">In the paper I illustrate these
requirements through four vignettes; child services in England, a small
company's marketing activities in the English Midlands, alternative energy technologies
and global financial services. The child services’ vignette illustrates weak
communications between national regulators, local policy implementers and
stakeholders. This is an instance of inadequate <i style="mso-bidi-font-style: normal;">relational self-organisation</i>. The marketing vignette is an instance
of a company that fails developing value co-creation with customers, with the
consequence that customers impose their requirements and the company fails to
create products of its own design. This is an instance of weak <i style="mso-bidi-font-style: normal;">relational</i> <i style="mso-bidi-font-style: normal;">reflexivity</i>. The third vignette is an instance of a weak identity
of the energy sector as it fails to integrate under the same policy framework
energy technology development and energy production. This is a case of a <i style="mso-bidi-font-style: normal;">fuzzy</i> <i style="mso-bidi-font-style: normal;">self-reference</i> as necessary relations between actors focused on the
“outside and then” and on the “inside and now” fail to be
developed. The last vignette relates to the 2008 financial crisis. This is an
instance of a market driven <i style="mso-bidi-font-style: normal;">self-organisation
process that </i>failed to recognise that financial services had to go hand in
hand with the <i style="mso-bidi-font-style: normal;">recursive structure</i> of
the economy<i style="mso-bidi-font-style: normal;"> </i>from the global to the
local. These are all instances of situations driven by poor cybernetics.</span></span></span><br />
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"></span><br />
<span style="font-family: Times, "Times New Roman", serif; font-size: large; line-height: 115%; mso-fareast-font-family: Calibri;">I would be delighted to hear your reflections about particular policy processes that illustrate problems with organisational closure, structural recursion, structural couplings and so forth. What can we say about improving the cybernetics of policy processes. </span><br />
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Raul Espejohttp://www.blogger.com/profile/09391792256183440492noreply@blogger.com1tag:blogger.com,1999:blog-802212779073037450.post-47310474629727388582012-09-17T17:39:00.000+01:002012-09-17T17:43:13.608+01:00<br />
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<span lang="EN-GB" style="mso-ansi-language: EN-GB;"><span style="font-size: x-large;"><em><span style="color: #f6b26b;">The Viable
System Model and Structural Recursion<o:p></o:p></span></em></span></span></h2>
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<span lang="EN-GB" style="mso-ansi-language: EN-GB;"><span style="font-family: Calibri;">Stafford
Beer’s Viable System Model and in particular his Recursive System Theorem are
often the subject of discussion. In this blog rather than explaining Beer’s
work I want to explain how I use it. Indeed I’ve used the VSM for a long time,
since the old days in Chile, and in particular I’ve applied the idea of
structural recursion to enterprises of all kinds.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></div>
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<span lang="EN-GB" style="mso-ansi-language: EN-GB;"><span style="font-family: Calibri;">I see
structural recursion as a possible consequence of the often tacit strategies
used by members of an organisation to manage the complexity that they create,
regulate and produce as they deal with a self-defined problematic situation in
their medium/environment. I use the term create to point at the meanings
(policies, purposes, values and products) that they define to guide their
collective actions. These actions produce the organisation’s meanings as
experienced overtime by stakeholders. Aligning meaning creation and production
requires regulation supporting the organisation’s cohesion and adaptation to
its medium/environment. <o:p></o:p></span></span></div>
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<span lang="EN-GB" style="mso-ansi-language: EN-GB;"><span style="font-family: Calibri;">It is
apparent that members of any organisation, whether they are senior managers or
shopfloor workers, share the same biology and therefore have similar complexity
management capabilities, but often their potentialities are very different.
Since potentially problematic situations can imply exceedingly large
complexities, a strategy to deal with them is chunking the global problematic
situation into chunks (or primary activities as I call them in my work) that we
may expect people strive to align with global policies, purposes and values. If
these aligned chunks manage to be autonomous themselves and succeed creating,
regulating and producing their particular policies and products, the structural
and processual implications are amplifying, perhaps in orders of magnitude, the
mutual constitution of organisational and environmental complexities. In the
end achieving a constructive synergistic ‘unfolding of complexity’ hugely
increases the overall situational and organisational complexities. This implies
that in the same way that the global organisation articulates its problematic
situation, the aligned chunks create, regulate and implement their own meanings;
in other words are autonomous themselves creating and dealing with much more
complexity than if they were following hierarchical instructions. Indeed this
unfolding (i.e. chunking) may now happen within each of the chunks and
therefore we are now witnessing a proliferation of situational and
organisational complexities relying on the creativity, flexibility and
inventiveness of their members. The number of structurally recursive levels in
an organisational system is the number of autonomous structural levels
producing the organisation’s self-defined meanings.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></div>
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<span lang="EN-GB" style="mso-ansi-language: EN-GB;"><span style="font-family: Calibri;">Thus, each
of the chunks needs resources and competencies to create, regulate and
implement their self-defined products; these are systems 5, 4, 3, 2 and 1 in
Beer’s VSM or the systemic functions of Policy, Intelligence, Cohesion,
Coordination and Implementation in my own language.<span style="mso-spacerun: yes;"> </span>These functions must recur in all viable
chunks at all structural levels. More significantly, communications among them
in the organisational system and with agents in their medium/environment
produce recursive relationships of performance, cohesion and adaptation. In
viable organisations these relationships emerge from effective complexity
management strategies, which rely as much as possible on self-regulation and
self-organisation for balancing what in general are asymmetrical varieties (I’m
using variety in the Ashby’s sense). This recurrence of systemic functions and
relationships for each autonomous chunk is for me the meaning of structural
recursion.<span style="mso-spacerun: yes;"> </span>The platforms for this
recursion are the meanings or policies created by the members of the
organisational system, which give them the closure of an autonomous
organisational system. These policies are their purposes, values, norms
emerging from their communications with agents constituting problematic
situations and also most significantly, from their cultural contexts. These are
multiple loops of circular causality, boot-strapping and so forth.<o:p></o:p></span></span></div>
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<span lang="EN-GB" style="mso-ansi-language: EN-GB;"><span style="font-family: Calibri;">Beer’s
first insights about this model came from his appreciation of the complexity
management strategies of our nervous system as humans co-evolved with their
medium. Methodologically, the insights coming from a scientific situation
(neurophysiology) helped him to offer a model relevant to organisations and
management. This methodology, which connects nature’s evolution and learning,
is used in artificial intelligence and engineering today (e.g. mimicking the
behaviour of ants, bees and birds).<span style="mso-spacerun: yes;"> </span>With
adequate methodological support, particularly accounting for people’s purposes,
it can also be a most useful methodology for social situations. <o:p></o:p></span></span></div>
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<span lang="EN-GB" style="mso-ansi-language: EN-GB;"><span style="font-family: Calibri;">I’ve
applied structural recursion in a wide variety of situations; there are easy
cases where the managerial situation clearly recognises autonomous chunks; this
is the case of large corporations that over the years have evolved from
functional, centralised structures, to autonomous divisions and strategic
business units.<span style="mso-spacerun: yes;"> </span>But, for smaller units
in SBUs as well as for small and medium sized enterprises it is not uncommon to
find that there is no structural recursion; simply, often, chunks are the
outcome of hierarchical relationships. Indeed, empirical evidence may suggest
that no recursion is happening.<span style="mso-spacerun: yes;"> </span>Indeed
in all cases recursion can only be established empirically. Of course we can
always recognise shortcomings in these ‘unfoldings of complexity’ but in one
form or another we start hypothesising chunks and levels creating, regulating
and producing their own meanings and then test the hypothesis. There are
structural and identity shortcomings that tend to be archetypical, which in
practice limit the scope of recursive chunks (see Organisational Systems;
Managing Complexity with the Viable System Model, by R. Espejo and A. Reyes,
Springer 2011). <o:p></o:p></span></span></div>
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<span lang="EN-GB" style="mso-ansi-language: EN-GB;"><span style="font-family: Calibri;">More
interesting examples of complexity unfolding happen with reference to
government policies,<span style="mso-spacerun: yes;"> </span>such as health,
education, nuclear waste management and so forth, where we find that processes
of self-organisation evolve towards some form of structural recursion of the
multiple institutional parts creating, regulating and producing that policy,
which overtime develop connectivity that eventually may give viability to the
policy.<o:p></o:p></span></span></div>
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Raul Espejohttp://www.blogger.com/profile/09391792256183440492noreply@blogger.com0tag:blogger.com,1999:blog-802212779073037450.post-58710870249389975792012-03-22T16:07:00.003+00:002012-03-22T16:12:46.651+00:00Review of Cybernetic Revolutionaries by Eden Medina, MIT Press, Cambridge Mass, 2011March 2012<br /><br />In this book Eden Medina offers a historic review and reflexion of an unlikely project; Cybersyn. It happened in the Chile of Presidente Salvador Allende in the early 1970s. The book offers a most compelling account of an attempt to use science and technology in support of the management of a highly turbulent political process. I was its operational director and therefore had a privileged participation in its unfolding.<br />Cybersyn, the brainchild of Stafford Beer, was conceived and developed at the same time of publishing Brain of the Firm, the first of his trilogy about the Viable System Model (VSM). He had been pondering about this model for some years and Chile offered the opportunity to use it. <br />Eden’s historic account is well researched and balanced. As a participant, this account resonates fairly well with my memories. Indeed I disagree here and there with particular recollections and in occasions, as I illustrate below, I would have put the emphasis differently, but overall I feel comfortable with her account even if sometimes it is not favourable to individuals or the project as a whole. Yes, I would have emphasised differently the roles of the Operations Research and Design teams in the project. I would have liked to read more about the huge contribution of the Operations Research group at the State Technology Institute. This team was responsible for modelling some of the technological processes of the public and nationalised enterprises and for designing performance indices to support managers. On the other hand I felt that the role of the team that designed the Operations Room (also operating from the same Institute) appeared over emphasised. No doubt that this latter team made a most powerful contribution to the project, but its overall scale was smaller than that suggested by the book. <br />Cyberstride, the idea of managing in real time the economy, was the driving force of Cybersyn and in my view it was Stafford’s most powerful vision at a time when global and local management were dominated by historic reporting operating with huge time lags. His concern was reducing the complexity natural to the industrial activities of the country to meaningful levels for effective managerial action, respecting the autonomy of the people, enterprises and overall industrial economy. He referred to this concern as variety engineering. In this engineering he saw computers as nodes in action networks rather than as number crunching machines. At a time when computers were used to routinize operational activities, Beer saw the role of computers in society and the economy as machines to give information to the people for them to act and control their destinies. <br />Eden rightly gives to Beer’s Viable System Model an important role in the project; however she makes apparent that “Beer was more interested in studying how systems behaved in the real world than in creating exact representations of how they function.”… “Beer’s emphasis on action over mathematical precision set him apart from many of his peers in the academic operations research community who, Beer believed, privileged mathematical abstraction over problem solving” <br />Stafford arrived to Chile with the manuscript of the book “Brain of the Firm”, which instantly captured the imagination of all of us and also of people further afield. Eden clearly states that from a historic perspective her explanation of the VSM had to be rooted in that book and not in its further developments after Cybersyn and she offers a good introduction to the model. Perhaps what this introduction does not make apparent is that Stafford had not spent much time in methodological considerations for its application and that in fact an important contribution of the local team was unravelling its use. However, the VSM was not used to model the Chilean economy but as a reference for engineering its variety. It gave us a heuristic for designing indices of performance at a number of structural levels, which were hypothesized as recursion levels of the industrial economy in line with the insights of the VSM. <br />Eden gives compelling evidence about the unavoidable interdependence of technology and politics. Cybersyn, as a technological device, could not free itself from the on-going politics of the day. Its relevance to politics is clearly instantiated by the increasing influence of Fernando Flores - the political leader of Cybersyn- on President Allende’s decisions. At the same time her account of the project itself makes apparent the limited relevance of Cybersyn in the Chilean economic scene. This was the case in spite of Beer’s efforts to catch up with the political chaos. She illustrates this conflict between politics and technology with reference to the publicity received by the project at the time and the project’s schizophrenia. Stafford’ main public speech about Cybersyn at the time was the Richard Goodman Lecture in the UK and she states with reference to this lecture that “By emphasizing technology instead of Cybersyn’s relationship to the social and economic goals of Allende’s nationalization program, Beer failed to definitively separate himself from the technocrats he criticized.” <br />This book offers a wonderful story about unlikely events that happened 40 years ago that are still relevant today. Personally, with the benefit of hindsight, I could make many criticisms to the work of those difficult but adrenaline-charged days, but in a book with a historic emphasis it would be unfair to criticise Cybersyn with the eyes of the 21st Century and certainly Eden Medina does not do that as she offers a balanced a well contextualised account of Cybersyn.<br /><br /><br />Raul EspejoRaul Espejohttp://www.blogger.com/profile/09391792256183440492noreply@blogger.com2tag:blogger.com,1999:blog-802212779073037450.post-29698286370978553652011-04-14T11:14:00.002+01:002011-04-14T11:16:49.032+01:00The Viable System Model, Cybersyn and the Financial CrisisThis blog was triggered by a friend’s comments about the value of models and the need to have them for planning purposes. I don’t ignore the value of models, but rather raise the need to connect them to effective action capacity. This point seeks to emphasize the need to embed modelling activities in processes capable of supporting individual and organizational learning thorough the use of models. <br /><br />The risk I see in the activities of think tanks is that they often are not underpinned by learning mechanisms aligned with the purposes that they manifestly seek to serve. This view emerges from the contrasting experiences I had in the 70s, first in Chile, in the context of Stafford Beer’s inspired CyberSyn Project, and later on at the International Institute for Applied Systems Analysis (IIASA), in the context of my contribution to the Large Organizations Project that included work in the Soviet Union. For almost two years I had the opportunity to experience (albeit at a distance) GOSPLAN’s massive planning processes. <br /><br />The Chilean experience was an attempt to avoid large planning models in the benefit of models clearly focused on decision groups at the appropriate structural levels, supported by performative indices monitoring the consequences of their use. At least that was the intention. Unfortunately, in addition to the 1973 military coup, which gave no time to underpin structurally these models for effective organizational learning, this project was ahead of its time and lacked the necessary technological infrastructure to be successful. In the Soviet Union planning was supported by very sophisticated models but in practice these were models that reflected the perspectives of scientists at the global level and failed to incorporate the experiences of those affected by them at the intermediate and local structural levels. They had thousands of planners who were planning from the centre the activities of millions whose problems they vaguely understood. This goes without saying that not then, not today, nor in the future they could have the technological infrastructure to make viable this centralising dream.<br /><br />The complexity of social systems, because of their human fabric, is so large that efforts to manage it with mathematical representations, developed at privileged central positions, are a mirage. In free societies the generation of complexity is distributed and so needs to be its management. This is the complexity management strategy offered by Beer’s Viable System Model; this is the strategy of recursive organizations. Rather than the delusion of large sophisticated representational models to manage social complexity, the strategy is a reflective matching of global, intermediate and local models with organizational response capacity. This matching is a performative strategy that recognises the all too common and often unavoidable errors where there is cognitive (response) capacity to deal with them, and these are errors that reflect socially agreed purposes, which support individual and organizational learning over time. <br /><br />Ironically, the same mistakes that made planning ineffective in the Soviet Union for decades appear to have played a role in the financial crisis of 2008. These mistakes are evidenced by the behaviour of centres of excellence for economic research and economists before its inception. They supported building complex mathematical models divorced from the complex entanglements of the multiple institutions constituting the global financial system. They failed to see the organizational system, let alone its huge unknowable complexity. They failed to see that this organizational system required the alignment of their tacit global, intermediate and local modelling efforts, on behalf of multiple institutions, to social structures with requisite action capacity. This global organizational system had to be consistent with the visions, purposes and values of political, social and economic policy-makers, beyond the insatiable thirst for profits of financial institutions. This organizational system was necessary to enable structural capacity for distributed learning. This would have given their financial models the capability to support action in the direction of desirable political, social and economic outcomes. This proposition may be seen as idealistic, however we are now hearing from people like Gordon Brown, a past UK prime minister, institutions like the IMF and others the need for global financial regulation, but no one appears to recognise that without, at least, aligned economic projects this regulation will be rudderless and therefore ineffective to avert future financial crises.Raul Espejohttp://www.blogger.com/profile/09391792256183440492noreply@blogger.com0tag:blogger.com,1999:blog-802212779073037450.post-56706411490694122512010-05-26T15:14:00.002+01:002010-05-26T15:28:33.584+01:00Systemic and Cybernetic Views of the Euro<div xmlns='http://www.w3.org/1999/xhtml'> <p>At the time when Europe was debating adopting a single currency one of my Swiss colleagues asked me about the Euro’s likely success in the longer run. My answer was not an optimistic one. Now, when Europe’s concerns about its currency are increasing by the day, we hear more and more about better fiscal checks and more penalties for those countries that do not comply with the requirements of prudence. Furthermore, some see in the recent decisions to prompt the Euro a whiff of political integration. Let’s reflect upon these concerns and decisions in systemic and cybernetic terms. </p> <p>It is becoming increasingly apparent that the European Union (EU) is facing a systemic problem; either it accepts that some individual countries, unable to pay their debt, abandon the Euro and take their own decisions or accepts that there is a systemic bond among its members and is prepared to support each of them as they face the relentless and unforgiving forces of the financial markets. In my view the problem is to go ahead with this second option -apparently the preferred one- without proper acknowledgment that it implies far more than setting stronger controls over the fiscal behaviour. This is a crucial moment for the European project; is it about a European union, as some want, or is it about economic collaboration as some others want? I discuss below the cybernetics of these options. </p> <p>Are European countries accepting to use a single currency unaware of the operational implications of this acceptance? Is it not that the European Union appears blind to the costly longer term consequences of this acceptance? Let’s discuss the cybernetic argument.</p> <p>To visualise the argument let’s think about the old Deutschmark at the time of the unification of West and East Germany. At that time Germany made apparent that it was prepared to accept the cost of unification. There we had two countries with significant institutional and economic differences; however the political will to bring them together was unequivocal. West Germany was prepared to allocate the resources, take the time and move relentlessly in the direction of an integrated democratic German state. Over time two states with different degrees of development were prepared to accept the pains of achieving a shared institutional framework, symbolised by the Deutschmark. For the Euro the situation is indeed different. EU countries not only have larger historical, institutional and economic differences but furthermore don’t have the will of an effective integration. Simply, reducing the problem to financial policies supported by strong checks and gruesome penalties is not going to make the trick. The complexity of the situation is far greater; balancing historic, cultural and institutional difference does not happen simply by an institution such as the European Central Bank (ECB) imposing common rules to all member countries. Different institutions in the participant countries imply different meanings for the same rules; some of these institutions may not have the operational depth to produce necessary distinctions nor the practices to achieve expected performance. Even if politicians and economists in these countries shared a similar grasp of these rules the likelihood is that the moment-to-moment actions of millions of citizens in each of these countries will not be aligned. In practice this implies different degrees of compliance with the ECB’s rules and norms. This situation would be very different if countries joining the Euro were ready to leave it as operational stresses suggested that it was better for them, and for the rest of the European Union, to face the situation individually. They would have a larger repertoire of responses; for instance they could devalue their currency, apply local idiosyncratic fiscal policies and even accept a carefully managed default (see Crisis watch by Simon Johnson and Peter Boone, in Prospect, April 2010).</p> <p style='text-align:justify;'>The issue is the degree of cohesion that is expected between the countries belonging to the Euro. The Euro is an institutional mechanism that coordinates operational transactions throughout the countries that accept it as their currency. However, in the end it has to reflect an operational coherence among these countries. If the productivity of some of them is lower than that of others, sooner or later this will be reflected by imbalances in the operational domain. Some countries will succeed exporting their goods and services at the expense of the relative failure of the others. For sometime this imbalance may be absorbed by exports to third countries, however in the end a chronic relative low level of productivity within some countries in the Euro zone will be reflected in financial imbalances. But, the mechanism of devaluation to balance differences in productivity will not be available. Whether or not the financial markets understand the cybernetic underpinning of these imbalances they will taste blood, smell profits and act accordingly. </p> <p style='text-align:justify;'>Audits and checks of the countries’ financial behaviors will not be enough to produce the required balance. Audits may be useful in the informational domain but, unless they are supported by investment and institutional changes the necessary operational adjustments between the member countries will not happen. The loose political arrangements of the Euro zone seem to be a long way from the unification experience of the two Germanys. Operational imbalances are being exacerbated by the recent expansion of the European Union, as well as by the relatively slower economic development of some of the old members. Resources that had supported the development of some of the Mediterranean countries are now flowing to Eastern Europe. The wealth of the union is being spread too thinly and the longer term implications of these policies are glaringly clear; the necessary operational coherence for a shared currency is further and further away. </p> <p style='text-align:justify;'>In summary, in my view, now that the European Union includes 27 countries (and 3 in prospect) of significantly different institutional and economic development, the goal of a unified currency is more and more remote. The cybernetics of this situation supports a looser currency arrangement, where some of the current members of the Euro should be ready to abandon it and where the acceptance of new members into this Club should only happen after passing successfully significant <em>operational</em> and financial tests. </p> <br/></div>Raul Espejohttp://www.blogger.com/profile/09391792256183440492noreply@blogger.com1tag:blogger.com,1999:blog-802212779073037450.post-40853321692366766062010-04-29T10:05:00.001+01:002010-04-29T10:07:18.941+01:00Centralization and DecentralizationMy last posting reflected upon “What’s System Thinking” and referred to the issue of centralization and decentralization in organizations. Is it always desirable to make decisions locally? When are local decisions more advantageous than global decisions and vice-versa? Indeed there are multiple factors impinging on these choices. In particular new communication and information technologies are changing the balance in both directions for different issues. The cost of communications has been falling dramatically in recent years. Today more people than ever before can be involved in local decisions. Equally, today more people than ever before can contribute with local knowledge to global decisions.<br /><br />Structurally, it is desirable to have relatively small teams responsible for the full value chain of a business process. They can operate from inputs to outputs through a transformation process that is theirs. These teams absorb most of the customers’ variety locally. This approach allows these customers to recognise the ‘faces’ of those responsible for the products and services they consume. For instance citizens in need of housing services would be able to interact with the unit responsible for assessing their needs as well as for delivering the services. This avoids fragmenting service delivery; proximity allows for the right hand to know what the left is doing. However, the increasing complexity of people’s demands and the constraints imposed by culture and resources tend to force some degree of centralization as organizations look for synergies and economies of scale. People are distributed in varied geographic areas, require different types of services, have different urgency and so forth. These are complexity drivers guiding the structuring of housing services and if this structuring is not thought through the chances are that poor service delivery will dominate their interactions with citizens. <br /><br />Most significantly, local teams need global information to close effectively local loops. Among others, policy priorities are decided globally, specialised knowledge and resources are often pooled together beyond local teams and the economies of scale offered by available technologies may tempt centralisation. But, centralization increases the chances of functionalism at the expense of holism. Service delivery teams risk becoming customer service units with limited appreciation of, and responsibility for, the total service they offer. <br />Beyond managing the value chain, those providing services at the local level need to have flexibility to define their own policies. This is necessary to respond to local needs and avoid the uniformity of ‘faceless’ bureaucrats following the dictate of global policies. Distributing the activities of the value chain at different structural levels, beyond the flexible response of autonomous local teams, increase the chances of reducing local officials to the role of post boxes distributing to other groups the responsibilities to deal with customers’ requirements. As they do this officials lose contact with the very people that they are supposed to service. This is why local services for large markets require creating local policies within the framework of a global policy. They also require negotiating and accepting specific programme requirements, including the use of scarce resources. To avoid fragmentation it is necessary truly systemic, synergistic, organizations that succeed balancing local responsiveness with global coordination of policies. Organizational systems need cohesion and adaptation to manage the complexity of their tasks. <br /><br />In this effort for holism the cost of communications is changing the balance between centralization and decentralization. Today’s decreasing cost of communications makes possible creating virtual teams that facilitate decentralisation. Members of centralised groups with specialised knowledge can be effective contributors for the creation and implementation of local policies. People responsible for the use of expensive centralized resources can be made (virtually) part of local teams and thus accountable to the team. These are cases of resource centralization and functional decentralization. Equally, those working in these groups, with local knowledge of stakeholders can influence more effectively global policies by communicating to policy-makers local responses to exiting policies. <br /><br />From the perspective of organizational design the challenge is fostering a cascading of self-contained product/service teams which make possible the progressive integration of functions into larger self-contained groups that match customers’ needs at different performance requirements. For instance, for housing services, local teams focused on providing particular types of services can be embedded in regional units with functional capacity for the deployment of building and maintenance resources according to local needs. What is particular to this proposition is that building and maintenance resources provide a more global performance requirement, namely building and maintenance capabilities, at the same time that they are contributors and accountable to local teams for local services. As the cost of communications is reduced the allocation of resources can be reconfigured transforming the organization’s capabilities. Constituting effective local teams and coordinating these multiple teams in a global context becomes increasingly challenging but also, with the support of new information and communication technologies, manageable and potentially more effective.Raul Espejohttp://www.blogger.com/profile/09391792256183440492noreply@blogger.com1tag:blogger.com,1999:blog-802212779073037450.post-15079752806875122692010-04-14T14:42:00.004+01:002010-04-14T14:50:46.879+01:00What is Systems Thinking?I have just finished reading the book “Systems Thinking in the Public Sector; the failure of the reform regime and a manifesto for a better way” (2008) by John Seddon, Triarchy Press, Axminster, UK. This book has received good reviews from politicians, seniors civil servants and specialised journalists. And, indeed, Seddon's understanding of systems thinking is compelling; it makes apparent through many examples in the public sector the always present tendency to fragment policy implementation. In particular his focus is on the current tendency to fragment services between the front end work and the back room support. He illustrates abundantly how front end civil servants take off their sight from customers’ request by passing them to back end workers. No one person or team deals from the beginning to the end with the particular customer, fragmenting the service and leaving in no one’s land responsibility for its performance. The voids in between the end-to-end time for the service grow and grow, transforming a service that could have taken days in one that takes months. This kind of performance is a consequence of the targets imposed to local providers by central government (the regime in his words); these targets are focused on performing activities rather than on the purposes of the service. An activity can be the number of customer calls that are discharged within a certain time, regardless of whether this discharging meant satisfying the client’s needs or not. Following Deming's work Seddon argues for a statistical measurement of the system's capabilities to work out what the current configuration of resources permits the system to do for its customers rather than for the civil servants in central government. <br /><br />He makes the very useful distinction between failure and value demand. The statistics he gives are frightening; most of the activity of civil servants is responding to failure and not adding value to the client's needs. Seddon's argument, following Toyota's experience, is that a focus on the value adding flow of the service is the essence of systemic thinking. For this he argues it is necessary to understand the customer's needs. For public services, perhaps differently to manufacturing activities, the variety of these needs is very large indeed and it is necessary to design a service that absorbs this variety rather than trying to constrain it through predefined processes. People suffer as a consequence of this predetermination; the service delivery takes too long, costs are too high and the available resources are squandered to the detriment of better services. The purpose should be offering services that match the customers' variety. It is essential to understand in depth these needs and organize the activities' flow in such a way that they match these requirements. And, in his view, the use of IT for these purposes has been counterproductive in recent time. Usually this technology has reinforced the operation of badly designed processes. <br /><br />He is aware that changing the regime is almost impossible; the only option is dismantling it. The rules and legislation in place make it very difficult to alter the service delivery procedures in place. Service providers are torn between satisfying counterproductive targets and being assessed poorly by contrived inspections. The whole machinery for service provision is inadequate and squanders a huge amount of resources. In spite of these views he ends up the book offering a list of situations where the use of systemic thinking has produced significant improvements. <br /><br />Though my overall assessment of the book is positive I think that it offers a superficial view of systems thinking and little methodological guidance to use it. This is paradoxical since throughout the book Seddon insists that the problem with the regime is that for policy implementation offers no methods beyond the dogmatic delusion of what he calls deliverology. For those being initiated in this way of thinking the book is useful but there are some issues that need further reflection:<br /><br />-Centralisation-decentralisation; which structures make beneficial the sharing of resources? No doubt fragmentation is a risk when a service process is divided between front end and back end activities, but the issue is how to overcome this fragmentation at the same time of making possible the sharing of scarce and expert resources.<br /><br />-How to absorb front end variety? Accepting variety face value is likely to overwhelm service providers. Service providers must find ways of limiting this variety without hindering the main purpose of the service. In the end there must be a trade off between accepting customers' unconstrained variety and restricting it with ingenuity to avoid being overwhelmed by its proliferation. Variety engineering is a key issue in service provision that should take into account purpose, resources and acceptable performance. <br /><br />-relevance of IT in service delivery; no doubt there are multiple examples of a counterproductive use of ITs. However Seddon's advice to turn off IT changes to understand and design work as a system and to 'pull' the necessary IT when the new design is stable, makes apparent a lack of appreciation of the co-evolution of service processes and technology. Ingenuity in the design of services is deeply related to technological changes and new processes should take into account these new technologies. Politicians, experts and civil servant need this ingenuity badly in their own spaces of action.Raul Espejohttp://www.blogger.com/profile/09391792256183440492noreply@blogger.com2tag:blogger.com,1999:blog-802212779073037450.post-32628895818245789892009-03-02T09:38:00.001+00:002009-03-02T09:42:32.677+00:00Enterprise's vulnerabilityBeyond measures of achievement and potentialities (possibly emerging from business intelligence), organisational cybernetics is principally concerned with the ‘body’ of the enterprise. It is perfectly possible for an enterprise to be doing well (i.e. it is selling well its services, making profits and so forth) at the same time that a proper cybernetic study of its organisational structure makes apparent that its ‘body’ is not healthy. I have called this type of revision ‘second order auditing’; this is the auditing of the enterprise’s organisational processes, which is done using Beer’s Viable System Model and Espejo’s Viplan Method. Outcomes of this auditing may well be the diagnoses of over centralisation - thus making the enterprise’s businesses less flexible-, poor monitoring of these businesses - thus increasing chances of decentralised businesses failing without any warning (see previous blog)- and so forth. This kind of auditing has been done in hundreds of enterprises. It is through ‘second order auditing’ that I have proposed identity and structural archetypes of, shall we say, archetypes of enterprise’s vulnerability (see www.syncho.com).Raul Espejohttp://www.blogger.com/profile/09391792256183440492noreply@blogger.com6tag:blogger.com,1999:blog-802212779073037450.post-12183279504054392142009-02-10T16:14:00.002+00:002009-02-10T16:20:07.405+00:00Financial Crisis and Organisation Structure<strong>Financial Failure and Systemic Enquiries</strong><br /><br /><strong>The House of Commons and the ‘near’ collapse of two British Banks</strong><br /><strong><br /></strong>This morning the recently resigned chairmen and chief executive officers of the Royal Bank of Scotland (RBS) and Halifax Bank of Scotland (HBOS) were grilled by members of the UK Parliament’s Treasury Committee. The four ex senior managers apologised for the turn of events and the fact that tax payers had to bail the banks out of the crises. The Committee’s Chairman stated that either the bank bosses were incompetent or <em>systemic reasons</em> were responsible for this turn of events. Since the track record of these senior managers were well known the first option was not credible, leaving the option of systemic failures as the main reason. Also, much was made of the fact that the two chairmen were not bankers at the time of their appointments and that of the main four UK banking institutions only the two under scrutiny had had the tax payers bailing them out.<br /><br />Unfortunately there was nothing in the questions and the evidence given that suggested that either politicians or managers understood the nature of systemic failures. They all stated that the events could not have been anticipated; things happened too quickly and they could only recognise their errors with the benefit of hindsight. A strong line of questioning was along their apparent inability to assess the risks of the products they were selling; did they understand these risks? Where they up to the complexity of the products they were offering? What struck me were the difficulties that the Committee members had to articulate the necessary questions to unearth the systemic aspects underpinning the managers’ failures. <em>Both politicians and policy-makers don’t have an adequate training to visualise the structural underpinnings of their decisions. </em>It is not difficult to appreciate that their judgments are supported by far more resources than those of lay citizens but they seem to be more at ease talking about concrete events and situations than to scrutinize the structures supporting their judgments. It became clear that the RBS had significant banking activities in the USA, and worldwide they had more than 25000 employees outside the UK, yet no question was directed to establish the quality of their knowledge of the USA subsidiaries; how well had these subsidiaries recognised the depth and magnitude of the sub-prime lending problem? Were they receiving good quality information about the situation of sub-prime mortgages as the situation was unfolding in the USA? Did they have adequate capacity in Headquarters to monitor the performance of these companies? Did RBS have mechanisms to cross check their experts’ assessment of the evolution of the markets with the results reported by their subsidiaries? These and many more systemic questions could have been asked but they did not emerge at all.<br /><br />The problem was not that the RBS’s Chairman was an ex-pharmaceutical industry boss; in systemic terms the problem was that he and the other people in the bank’s Board did not share <em>a good model of the organisational structure they were responsible for</em>. This structure was responsible for inadequate distributed risk assessments that finally underpinned their judgments. Unfortunately, they and we (tax payers) are paying for the consequences of these bad assessments. The Chairman and the CEO could not know the details of the businesses they were running; their better chance for success was to improve their judgments by using the bank’s thousands of the highly paid executives and employees to the best of their abilities. Hopefully the effect of these structures should be better than adding or cancelling the individual abilities of these people; indeed this is what organisation structures are for. Competent people, supported by effective structural mechanisms, should be responsible for submitting good policy options for the consideration of policy-makers. Of course risks can never be eliminated but they can be ameliorated, in this case, by the collective work of thousands sharing the benefits of an unlighted leadership that enables their communications to the best of the stakeholders’ interests (not to the benefit of their own interests!). From this proposition many questions emerge that could provide light about why things went wrong and how things can go better in the future. Somehow I’m suggesting that both MPs and senior managers have much to learn about this kind of systemic inquiry.Raul Espejohttp://www.blogger.com/profile/09391792256183440492noreply@blogger.com2tag:blogger.com,1999:blog-802212779073037450.post-90125736083709153092009-02-05T11:15:00.001+00:002009-02-05T11:19:57.451+00:00CyberSynA novel about Cybersyn<br /><br /><strong>SYNCO (2008) by Jorge Baradit Ediciones B, Santiago de Chile</strong><br /><br />I’ve just been in Chile where I found the novel SYNCO. It was one of the local literary events of the end of the year. The novel is about the CyberSyn Project that took place in Chile during the Salvador Allende’s government in the early 1970s. I was the operations manager of that project and responsible for the project’s local name: SYNCO. The name came about as a composition of the word Synergy and the Spanish word cinco (‘five’ systems of Stafford Beer’s Viable System Model). Naturally I bought a copy and read it.<br /><br />It starts with an introduction to the CyberSyn Project, including a photograph of the Operations Room (you can see it in my paper ‘CyberSyn and the re-construction of a holistic nature’, offered as a download in this website: <a href="http://www.syncho.com/">http://www.syncho.com/</a>). The project’s objective is defined as “...converting Chile in the first Cybernetic State in history, underpinned by a network which anticipated in decades the Internet as we know it”<br /><br />It is a ‘retro-futuristic’ novel that takes place in 1979. Its assumption is that the coup of 11th September 1973 did not succeed and that the Allende’s government continued with the support of General Augusto Pinochet. In this note I don’t want to develop its argument but to comment the extent to which it fails conveying what a Cybernetic State would look like.<br /><br />Baradit portrays Chile after the six years of the attempted coup as a neo-fascist State, dominated by the SYNCO machine, which controls all aspects of private and public lives. One of the protagonists who is trying to counteract the state’s drift towards a technocratic rightwing society, says: “SYNCO, a god made of wires and a shared mind, a beehive, will establish the first technological dynasty in history...But we are building up an army of code breaking children. We have educated them in the secrets of SYNCO ... a battalion of mind focused soldiers which will face up with their keyboards a new type of war for which they (the government) are not prepared”. Furthermore, some else states in relation to the government’s socio-economic direction that “The third way is an illusion” produced by a network of black covered cooper wires. Overall it appears that Baradit accepts as the lesser evil for Chile a successful military coup; the alternative was too awful to contemplate.<br /><br />It is sad that this popularisation of the SYNCO project appears to give credence to the fears expressed by the right wing political press just before the coup in 1973. It re-enforces the view that information and communication technologies could only have led Chile to a neo-fascist, totalitarian outcome. This is a trivialisation of the argument that betrays lack of grasp of organisational cybernetics as a science of effective governance and not of autocratic control.<br /><br />In my paper ‘CyberSyn and the re-construction of a holistic nature’, which as I said above you can down load from this website I say:<br />“Did the CyberSyn project succeed in re-constructing the nature of the Chilean society? This project, an invention of Stafford Beer, was an alternative to the extremes of running a centralised planning system or an unrestricted free market. This third way wanted to favour governance for social cohesion and distribution of power.”<br /><br />Furthermore I say:<br />“CyberSyn was a project ahead of its time. Its creation was visionary; however its intended implementation did not have requisite variety. The necessary social and organisational contexts to re-construct the nature of social relationships did not exist; however desirable it might have been to provide information in real-time and by exception, the necessary relationships for cohesion and adaptation had not evolved enough to reinforce effective autonomous action throughout the social economy. A mooted point is whether a longer period of implementation, uninterrupted by the coup d’état of September 1973, would have supported this requisite learning. Some participants in the project had an appreciation of the need to embody these relationships in the social fabric of the economy but collectively most of us did not see CyberSyn beyond being a powerful theoretical framework and our practice was biased towards a technical implementation at the expense of the values of building up a truly autonomous decentralised industry and furthermore an inclusive democracy. In conclusion, my view is that CyberSyn did not succeed in reconstructing a more humane and just social nature in the Chile of the 1970s.”<br /><br />However, the safeguard against any technocratic tendency was precisely in the very implementation of CyberSyn, which required a social structure based on autonomy and coordination to make its tools viable. Without a culture of autonomy and resources for coordination these tools were too weak to have any social impact. The control against autocratic tendencies was intrinsic to the design itself. Of course politically it was always possible to use information technologies for coercive purposes however that would have been a different project, certainly not SYNCO; not only its political and conceptual underpinnings were those of a democratic society, but its tools were orders of magnitude less resource consuming than those required for centralised control. With the benefit of hindsight I believe that had the 1973 coup failed, and should the people and its socialist governments had supported the 3rd way offered by the CyberSyn project, Chile would have experienced years of painful development of which it would have emerged as a more equal and just society.Raul Espejohttp://www.blogger.com/profile/09391792256183440492noreply@blogger.com8tag:blogger.com,1999:blog-802212779073037450.post-92081534905066514072008-12-10T17:28:00.005+00:002008-12-10T17:40:48.587+00:00The Cybernetics of RelationshipsDear Graziano,<br /><br />Many thanks for your comment. From a structural point of view it is apparent that in the UK social services are devolved to local authorities and therefore that it is their responsibility to enable conditions for good services. This requires not only that they allocate sufficient resources but also that they develop trustful relationships within the authority. This is necessary to increase the chances of setting in action support networks before incipient problems generate a crisis, like the death of the Baby P (that is, this is a strategy to reduce risk). These relationhsips should be the outcome of on-going (but not too frequent) communications that respect the services’ autonomy as pre-condition to allow their self-organisation and self-regulation. In contrast to this approach the picture that emerged from discussions in the press was that a national regulator, who by definition is far from the local social service units, was attempting to do this monitoring based on reports (i.e. information) and not on communications (i.e. utterance, information and understanding) and that to improve the situation it wanted to visit these units one a year as if these visits were enough to develop trustful relationships (rather than just fear to a distant controller) and reduce future risks.<br /><br /><br />This example illustrates my point that organisations don't understand the "cybernetics" (communications and control) of the situations they are in.Raul Espejohttp://www.blogger.com/profile/09391792256183440492noreply@blogger.com3tag:blogger.com,1999:blog-802212779073037450.post-57844690389345595322008-12-04T10:29:00.003+00:002008-12-10T16:40:53.362+00:00<strong>The tortured life of Baby P<br /></strong><br />Trained observers usually recognise that things go wrong in government and enterprises simply because policy makers and managers don’t understand the ‘cybernetics’ of the situations they confront. In this blog I intend to discuss these situations as they emerge in the public domain. My aim is explaining these situations in simple terms and at the same time making apparent the cybernetic reasoning underpinning their problematic aspects. Often, these are archetypes that recur in multiple settings.<br />In recent days news headlines in the UK were focused on the death of an 18 months old child in the hands of his mother and two others. The child was in the list of the children ‘at-risk’ of Social Services in the London district of Haringey. In the last six months of his life the child had been seen not less than 60 times by doctors, social workers and others. In spite of that the child had a cruel death. This dreadful event was compounded by the fact that in the same district a similar event took place few years earlier, where a little girl Victoria Climbié died in similar circumstances at the hands of a relative. At that time an Inquiry recommended an overhaul of social services in the whole country, which was duly carried out. However, sadly, it was not good enough to avoid a recurrent event. This time new inquiries are in progress, however one of them, by the UK Social Services regulator, has already reported its outcomes; as expected they reported receiving every year ‘performance information’ from all social services in the country but now they realised that that was not good enough, visits to every social service department in the country will now take place once a year to recognise on the ground their problems and performance. This seems fine however the regulators are again off the mark;<br />1) Social services departments are part of local authorities and not of a national social services body, thus in cybernetic terms we expect that the monitoring of their activities will be done by their respective local authorities and not by a national body. The reason for this is simple, one must assume that corporate managers in local authorities negotiate with social services departments (as with all other service departments) the allocation of resources for their programmes and therefore they should be the ones assessing their capabilities and monitoring their performance. In the end, it should be the responsibility of each local authority that their services’ performance is adequate. Local authorities, where this resources bargaining is weak, are more likely to experience poor performance. Unfortunately the recurrence in one authority of such dreadful events points the finger to that authority. Personally I have not heard or read anyone asking for a revision of Haringey District Council’s processes and organisation structure. In the mean time it was interesting to hear that Haringey Director of Social Services did receive much support from the local community. I don’t have enough information to assess the meaning of this support however it is fair to conclude that Haringey’s Social Services is not universally blamed.<br />2) At a more general level the fact that a national regulator is monitoring the performance of hundreds of local social services suggests a degree of micromanagement, but more significantly, it suggests a lack of appreciation of what monitoring should be all about. It should not be a means of hierarchical control, but a means of building up trust among people in the local authority as well as coaching and supporting the development of the service and all these outcomes are unlikely to happen with only one annual visit.Raul Espejohttp://www.blogger.com/profile/09391792256183440492noreply@blogger.com2