Chapter 4: SYSTEMS THEORY

Provides a general analytical

framework (perspective) for viewing
an organization.
Systems Theory

 Synergy
 Interdependence
 Interconnections
– within the organization
– between the organization and the environment
 Organization as ORGANISM
 “A set of elements standing in inter-relations”
Overview
 General Theoretical Distinctions
 Misunderstandings
 Strengths of Systems Theory
 Systems Framework
 General Systems Theory Principles
 System Characteristics
 Contingency Theory
 The Learning Organization
General Theoretical Distinctions

 Classical and humanistic theories prescribe

organizational behavior, organizational
structure or managerial practice (prediction
and control). MACHINE

 Systems theory provides an analytical

framework for viewing an organization in
general (description and explanation).
ORGANISM
Misunderstandings

 Doesn’t focus on specific task functions

 Doesn’t directly explore the impact of
interpersonal relationships and loyalty on
productivity
 Doesn’t provide for detailed focus
 Changes in environment directly affect the
structure and function of the organization.
Strengths
 Recognizes . . .
– interdependence of personnel
– impact of environment on organizational structure and
function
– affect of outside stakeholders on the organization
 Focuses on environment and how changes can
impact the organization
 Seeks to explain “synergy” & “interdependence”
 Broadens the theoretical lens for viewing
organizational behavior.
Systems Framework
 Ludwig von Bertalanffy (1968)
 Offered a more comprehensive view of organizations
 NOT a theory of management - new way of
conceptualizing and studying organizations
 Four Strengths (“promises”) M. Scott Poole
– Designed to deal with complexity
– Attempts to do so with precision
– Takes a holistic view
– It is a theory of emergents - actions and outcomes at the collective
level emerge from the actions and interactions of the individuals
that make up the collective
Principles of General Systems Theory
 Laws that govern biological open systems can be applied to systems of
any form.
 Open-Systems Theory Principles
– Parts that make up the system are interrelated.
– Health of overall system is contingent on subsystem functioning.
– Open systems import and export material from and to the environment.
– Permeable boundaries (materials can pass through)
– Relative openness (system can regulate permeability)
– Second Principle of Thermodynamics (ENTROPY)
 Entropy must increase to a maximum
 Negentropy increases growth and a state of survival
– Synergy (extra energy causes nonsummativity--whole is greater than sum
of parts)
– Equifinality vs. “one best way.”
Characteristics of Organizations as Systems

 Input-Throughput-Output
– Inputs
 Maintenance Inputs (energic imports that sustain system)
 Production Inputs (energic imports which are processed to yield a productive outcome)
– Throughput (System parts transform the material or energy)
– Output (System returns product to the environment)
– TRANSFORMATION MODEL (input is transformed by system)
 Feedback and Dynamic Homeostasis
– Positive Feedback - move from status quo
– Negative Feedback - return to status quo
– Dynamic Homeostasis - balance of energy exchange
 Equivocality and Requisite Variety (Karl Weick)
– Equivocality (uncertainty and ambiguity)
– Requisite Variety (complex inputs must be addressed with complex processes)
Characteristics of Organizations as Systems
 Role of Communication
– Communication mechanisms must be in place for the organizational
system to exchange relevant information with its environment
Boundary Spanners perform this function!
 Media Outlets are communication link between system & environment
– Communication provides for the flow of information among the subsystems
 Systems, Subsystems, and Supersystems
– Systems are a set of interrelated parts that turn inputs into outputs through
processing
– Subsystems do the processing
– Supersystems are other systems in environment of which the survival of the focal
system is dependent
 Five Main Types of Subsystems
– Production (technical) Subsystems - concerned with throughputs-assembly line
– Supportive Subsystems - ensure production inputs are available-import raw material
– Maintenance Subsystems - social relations in the system-HR, training
– Adaptive Subsystems - monitor the environment and generate responses (PR)
– Managerial Subsystems - coordinate, adjust, control, and direct subsystems
Characteristics of Organizations as Systems

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

 McMillan & Northern (1995) on Enabling Co-dependency

– Asymmetrical communication status of the hierarchy
 Levels of authority
 Fear of Punishment
– The socially acceptable addiction
 Workaholics
 Addiction leads to more co-dependency
– The organization’s selective attention
 Money and power as distractions
 Focus on ends instead of means
– Skilled communication incompetence
 Deprived of useful feedback
 Emotion is masked
 First extension of Systems Theory into Management Practice -
CONTINGENCY THEORY
Contingency Theory
 There is no one best way to structure and manage
organizations.
 Structure and management are contingent on the
nature of the environment in which the
organization is situated.
 Argues for “finding the best communication
structure under a given set of environmental
circumstances.”
 Management of Innovation - Burns and Stalker
(1968)
Two Contingency Theories
 Burns and Stalker (1968) Management of Innovation
– Organizational systems should vary based on the level of stability
in the environment
– Two different types of management systems
 Mechanistic systems - appropriate for stable environment
 Organic systems - required in changing environments (unstable
conditions)
– Management is the Dependent Variable
 Variations in environmental factors lead to management
 Lawrence and Lorsch (1969)
– Key Issue is environmental uncertainty and information flow
– Focus on exploring and improving the organization’s relationship
with the environment
– Environment is characterized along a certainty-uncertainty
continuum
Pragmatic Application of Systems Theory

 The Learning Organization

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

 Adaptive (single-loop) Learning

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

 Through communication, teams are able to learn more than

individuals operating alone.
– Critics argue that teams inhibit learning
– Thoughts?
 Leadership is a key element in creating and sustaining a
learning organization.
 Leaders are responsible for promoting an atmosphere
conducive to learning
 CREATIVE TENSION
– Represents difference between the “vision” of where the
organization could be and the reality of the current organizational
situation.
Impediments to Learning Organization

 Complexity of the Environment

– Difficult to determine cause and effect
– Multiple contributing elements in complex environments
 Internal Conflicts
– Individuals, teams, departments, and subcultures are often at odds
– Energy is drained by conflect
 Organization members must be trained in communication
and conflict-negotiation skills
Summary
 Systems Theory is NOT a prescriptive management theory
 Attempts to widen lens through which we examine and
understand organizational behavior
 The Learning Organization
– Synergy
– Nonsummativity
– Interdependence
– Equifinality
– Requisite Variety
– Emphasizes COMMUNICATION in the Learning Process
 Organizations cannot separate from their environment
 Organizational teams or subsystems cannot operate in
isolation
Bottom Line

The same misunderstandings and

problems that continue to occur
will eventually cause fatal damage
to the system.