Overview of Viplan Method1

Syncho Research 2008 Viplan Method
Overview of the method as developed in Viplan Learning System
TheVIPLANMethodinLinearForm
RaulEspejowithDianeBowling1
Syncho1997
This chapter offers a linear presentation of the software Viplan Learning System
(VLS). The software includes dynamic diagrams and the content is supported by a
case study that cannot be replicated in the linear version included here. However, we
believe, that the advantage of this document is its easy reading. The text is basically
the same that is included in VLS; in some of its parts we highlight that the graphical
version of the software is superior and the advice is to visit it. Versions of the
software in English and Spanish are attached to this text.
Part1TheVSM
Introduction
Part 1 offers a conceptual introduction to the Viable System Model (VSM). This is a
model of the organizational structure of any viable system. Often structure is
understood as equivalent to the organization chart. Since there is a significant
distinction between a formal structure, as implied by this chart, and an informal
structure, as reflected by the way people relate to each other in their day-to day
activities, many people think that the organization chart is a poor instrument to
observe organizations. This VSM offers a more sophisticated model of organizational
structure, one which is not only concerned with lines of authority, but with the way
people relate to each other in their daily work. Today, the trend is to replace
hierarchies by networks. However we think that this change often does not account
for the huge complexity of organizations. Here, we argue that organizational viability
requires complex, adaptive structures. We call them recursive organizations.
The organization chart, Figure 1, is a model that reduces the complexity of an
organization by describing only relationships of authority and accountability. Those at
the top define tasks; those at the bottom are the doers. The links between them define
the chain of command.
Viplan Learning System should be referred as follows: Espejo, R with D, Bowling (1997) The Viplan Learning
System, Syncho Ltd. (www.syncho.com). The following information is included in the software Viplan Learning
System: The Viable System Model is the intellectual property of Stafford Beer. Viplan is the intellectual property
of Raul Espejo. The Viplan book was written by Raul Espejo and Diane Bowling of Syncho Ltd. The tutorial was
implemented by Diane Bowling based on previous work of Oleg Liber of ICTU. The Software offers Espejos
interpretation of Stafford Beers Viable System Model (VSM). Beer does not agree with aspects of this
interpretation such as the account given in Viplan of System 2 and System 3 (the coordination function and
cohesion function in Viplan). Espejo takes full responsibility for the content of Viplan that although undoubtedly
based on Beers VSM offers only his views about the model and its use.

Figure 1 The organisation chart hierarchy
In organizations, often hierarchy means that the viewpoints of most of those in the
organization have little relevance. They are there to carry out the tasks defined for
them by those at the top. This may reduce the organizations ability to create its
environment and to respond to threats and opportunities in this environment.
This is a scenario in which human resources are likely to be under-utilised.
Nevertheless, an organization chart provides an overview of formal relationships. This
information is often valuable for beginning to unravel the way an organization works.
The Viable System Model (VSM) is a different model of an organization. This is a
model of the structural requirements for organizations to maintain their independent
existence, that is, their viability. The model helps to:
(a) diagnose organizational structures, in particular their structural weaknesses;
(b) to design new organizational structures;
(c) to assess structural weaknesses underlying specific problem situations.
The VSM focuses attention on the enormous complexity that, we argue, is inherent to
organizations. A job of management is to manage this complexity.
The model looks like Figure 2. However, before looking at the VSM in detail, we will
study the management of complexity. This is a key concept necessary to understand
the model.
Figure 2 The Viable System Model

Chapter1Organization,StructureandViewpoint
Organizations
In an organization people carry out tasks. For this, they are constantly communicating
and using resources. An institution like a company or a government agency may not
be an organization if people outside the institution give closure to their interactions.
Giving closure to interactions implies that people create their own meanings and take
responsibility for the outcomes.
In the same way that a house is made up of bricks in particular relation to one another,
the structure of an organization is made up of people in particular relation to each
other. The relation between people and resources defines the structure of an
organization. This structure can be modelled. A model of the structure of a house is
the blueprint. A common model of an organizations structure is the organization
chart, which highlights hierarchical relationships. Another, the one developed here, is
the Viable System Model.
Figure 3 Cross functional relations
Performing tasks in organizations requires cooperation. It is natural for these tasks to

be highly interconnected, yet structures like those based on the organization chart tend
to fragment them. Companies that do not support cross functional relations frequently
encounter problems like the one in Figure 3. Functional structures may lead to a
narrow approach to organizational issues.
We can carry out many tasks on our own, but there are many reasons why people may
wish to come together and share work and/or work alongside others.
Organizational tasks are generally highly complex. There are many complexity
drivers, as the following non-exhaustive list shows:
Task requires more knowledge areas than one person can hold
We are constantly demanding more complex goods and services
The task requires more knowledge depth than one person can acquire
We need to cooperate with many others who do not see the world with the same eyes
We need to take care of the environmental effects of our tasks
We are dealing with a wide range of markets
We need to catch up with fast moving technologies
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We have access to wider geographic diversity
The physical dimensions of task are larger than one person can handle
Working out complexity drivers for any organization depends on purposes people
ascribe to it. However, the purposes we ascribe depend on our viewpoints.
Viewpoint
Figure 4 Viewpoint of the observer
Different observers see different things in the same situation. Depending on the
viewpoint of the observer, the purpose ascribed to an organization may differ. For
instance, as the picture in Figure 4 implies, whilst one person may see producing cars
as the obvious output of the factory, another may see environmental pollution as its
output; both may apparently be looking at the same thing but their different concerns,
histories and values are responsible for very different mental constructs. Ascribing a
shared purpose to the organization, with the participation of all its relevant
viewpoints, is a way of focusing its concerns and therefore a means of working out its
complexity drivers. Relevant viewpoints are those of the stakeholders. For instance,
the purpose of producing cars within acceptable environmental standards may be a
shared outcome of the stakeholders interactions. A person may have one or several
viewpoints about a particular issue, so may a group of people.
Chapter1Summary
Organization
Organizations are closed networks of people in interaction; they have identity and
structure. An institution like a company or a government agency may not be an
organization if people outside the institution give closure to interactions.
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Structure
Structure is defined by the relations constituted by the specific resources (e.g. people
and physical resources) producing the organizations relationships. The same
relationship may underpin different relations.
Complexity
Complexity is the outcome of people in interaction. It is produced by their different
viewpoints, by the demands of their shared environment and by the interactions they
want to develop with others; each is a source of complexity.
Organizationspurpose
Organizations have no purposes of their own, it is people who have and ascribe
purposes. Sharing statements about ascribed purposes is a way of making an
organizations complexity more understandable.
Chapter2ManagementofComplexity
Complexity
Complexity surrounds us. The organizations we work in are hugely complex. The
environment of those organizations is likely to be more so. The management of an
organization is accountable for its overall task performance. Yet quite naturally,
managers are unable to be involved in everything personally, let alone to carry out all
the tasks of the organization. Managers must work through other people. To do this
they must manage the complexity of these relations.
We represent the organization by a circle. We represent the environment by a cloud. It
is bigger than the organization and surrounds it. We represent management by a
square, embedded in the organization.
Figure 5 Management of Complexity in Organizations
An organization may exist in a highly complex environment in which its people can
create a wide range of...
- markets
- ideas
- technologies
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- opportunities
by interacting with:
- customers
- suppliers
- collaborators
- competitors
- shareholders.
The environment may offer a wide range of opportunities and threats to any
organization. It is potentially highly complex. On the other hand, the capacity to steer
the organization depends on the functional capacity of management, that is, on the
capacity of managers and the functions or services supporting their action. The
arrangement of these functions is part of the organizations structure and we will
discuss this in later chapters.
But, in any case, more is likely to happen in the environment and the organization
than the organization and management can cope with respectively. Each of them is
more complex than the other side of the interaction.
Figure 6 Relative complexity
The arrows in Figure 6 illustrate this relative complexity. In this illustration, the
organization has only four responses to handle the seven complexity drivers in the
environment and management has only one response to handle the three complexity
drivers in the organization. Assuming that all these complexity drivers have to be
handled in order to remain competitive, or in more general terms, viable, the
organization has to find strategies to cope with seven rather than four complexity
drivers, and management has to find strategies to cope with three rather than one
complexity driver. Our next concern is to discover strategies to overcome these
imbalances of complexity. The VSM offers a way to do this.
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Now we introduce an important diagrammatic convention. We have said that the

management of an organization is part of that organization, which in turn is part of the
environment. To study the management of complexity between the three, we move
them apart diagrammatically (see Figure 7). The circle now becomes implementation
the part of the organization that produces its products.
Management must remain in communication with those implementing its tasks; and
those implementing must remain in communication with the environment.
Management communicates with the environment through implementation. Of course
this does not imply that managers never interact directly with people in the
environment; it implies that they depend on the complexity of implementation to close
the loops they open with the environment.
= Amplifier
=Attenuator
Figure 7 Managements communication with the environment
An important law is:

The Law of Requisite Variety (Ashbys Law): Only variety absorbs variety.
This law applies both to the relation between management and implementation and
the relation between implementation and the environment. Management must develop
strategies to manage all the relevant complexity of implementation; otherwise
implementation will be out of control. Implementation must develop strategies to
manage all the relevant complexity of the environment; otherwise the environment
will overwhelm the organization.
There is an apparent contradiction: on the one hand the relevant complexities of the
environment and implementation are de facto larger than the complexities of
implementation and management respectively. On the other hand, these complexities
have to match each other for viability. Strategies to overcome this apparent
contradiction are fundamental to the VSM. This model helps us see how to use
organizational communication links with the environment to attenuate its complexity,
thus enhancing the organizations understanding of this environment, and to amplify
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the organizations action capacity, thus making the interaction with this environment
more effective. People supported by enabling resources as they go about their daily
work carry out amplification and attenuation. Equally, it helps us see how to
implement tasks with only minimum management interference (through amplifiers
and attenuators) to ensure organizational cohesion.
These amplifiers and attenuators exist in one form or another; the most common
amplifier being delegation and the most common attenuator being sheer ignorance.
The problem is not being ignorant; we are all ignorant! It is being ignorant of the
things we cannot afford to be ignorant of; the cost of this ignorance may be lower
(inadequate) performance or loss of control. Interaction of implementation with the
environment and of management with implementation requires considering
attenuators and amplifiers as the two sides of the same coin. It does not help to
understand the environment very well if there is no action capacity (amplification); it
does not help to have action capacity if there is no adequate understanding of the
environment.
The VSM helps to focus on these interactions and design them to make the
organization more effective. Amplification and attenuation links will be
diagrammatically simplified in Figure 8.
Figure8Managementofcomplexitysimplified
Imbalances in complexity between the environment, implementation and management

are common and must be managed. Fortunately for the organization and management
much of the relevant environmental complexity and organizational complexity can be,
and to a large degree are, soaked up through self-organization and self-regulation in
the environment and implementation themselves. The remaining complexity, or
residual variety of the environment and implementation, must be balanced by the
ability of the organization and management to respond.

Figure9Imbalancesincomplexity
In Figure 9 seven arrows or complexity drivers represent the environmental

complexity. They are critical success factors for the organisation, that is, they are
areas in which it must perform well in order to succeed. In this diagram there are three
complexity drivers in implementation. These are critical success factors for
management, that is, areas in which high performance is necessary in order to achieve
organizational cohesion.
Examples of self regulation in a companys environment i.e. customers doing work
for the company, are: bank customers using high street automatic teller machines;
suppliers doing the work of the companys logistics through Electronic Data
Interchange (EDI), which allows to supply the company just in time.
Examples of self-organization and self-regulation in implementation are given by all
kinds of teamwork with local problem solving capacity on the shop floor.
The residual complexity, which is not managed in the environment itself, must be
managed by the organization otherwise performance suffers. Benchmarking, i.e.
necessary performance, helps to work out the level of this residual variety.
The organization needs to develop functional capacity to cope with this residual
variety; this capacity may relate to any function like R&D, sales, market intelligence,
production of goods and services and so forth.
The residual complexity of implementation is the complexity that is not absorbed
locally by self-regulating autonomous units and therefore relates to unresolved local
problems and the managing of the interfaces among all these units. Management has
to create the context for integration and coordination of all the autonomous units in
implementation; this is the level of response it has to cater for.
UnfoldingofComplexity
A strategy to manage organizational complexity is self-organization. This strategy is
natural to any (complex) successful viable organization; in practice this implies the
emergence of autonomous units within autonomous units (see Figure 10). This
unfolding of complexity is the outcome of self-organization. Autonomous teams and
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teams within teams are instances of this general proposition. The VSM looks at
organizations in this way.
The complexity of organizational tasks implies autonomous (self organizing) units
within autonomous (self organizing) units viable systems in their own right, with
their own management. Exactly what form these units take varies from organization
to organization. These viable systems (primary units), if sufficiently complex, will
have further primary sub-units, and so on, each with their own management, until the
full complexity of the organizations task is absorbed. This is a top-down description
of complexity unfolding. A bottom-up description makes apparent that the
autonomous tasks of individuals or small teams need to be integrated in a cohesive
larger organizational unit, without loss of autonomy, in order to implement the total
task of the organization.
In general we refer to these units as the organizations primary activities; they are the
ones producing the products and/or services of the organization for its customers.
Indeed the organization in focus usually is a primary activity of a larger organization.
Complexity unfolding is often the result of performance pressures and natural efforts
to achieve viability in complex environments.
Each organization has its own relevant environment. Within the organization are the
embedded primary units. We can explode one of these units diagrammatically. This
unit has an environment that is embedded in the environment of the whole. This
process continues for any further embedding necessary to handle the complexity of
the organization. This cascading unfolding shows the organization and its embedding
environments alongside one another (see Figure 11).
When examining an organization we unfold its complexity showing only the
organization and its embedded primary units. This unfolding differs from an
organization chart in that it illustrates a global organisation containing local
autonomous organisations (primary units), rather than a relationship of authority
between managers and subordinates. The environment for each level is not shown and
the embedded primary units are exploded for ease of explanation (see Figure 12).
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Figure 10 embedded unfolding
Figure 11 cascading unfolding
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Figure 12 complexity unfolding.
Primaryactivitiesandregulatoryfunctions
In Viplan, those resources coordinating and integrating the primary activities into a
cohesive whole are called regulatory functions. These are the functions of an
organization that support and enable its primary activities, and provide functional
capacity to:
- develop organizational cohesion
- integrate this organization, as a primary activity, into a larger organization, and
- cope with environmental complexity.
Within each unfolded primary activity of the whole organization there is a set of
regulatory functions that provide this functional capacity. It is important to distinguish
between these regulatory functions and those support functions that are not regulatory
but producing activities focused on the primary activities and not on the business
customers. They are not businesses of the organization; we call them secondary
activities. See Trident for examples.
Chapter2Summary
ManagementofComplexity
This chapter has introduced a way of thinking about managing complexity implied by
organizational communications; their quality can be improved by designing effective
attenuators and amplifiers of complexity.
Residualcomplexity
But by and large, managing complexity relies on self-regulation and self-organisation.
The high complexity side in any communication has to absorb most of its own
complexity, leaving a manageable residual complexity as part of the communication
itself.
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Complexityunfolding
In complex organisations autonomous units emerge within autonomous units; in
practice this implies the creation of different communication spaces, each relates to
total tasks that are parts of larger total tasks.
Primaryactivitiesandregulatoryfunctions
Tasks producing the purpose of the organization are called primary activities;
functions enabling the cohesion of primary activities and managing their performance
and the performance of the total organisation are called regulatory functions.
Chapter3TheVSM
PerformanceManagement:valuechainandtheenvironment
Management manages the organizations overall performance in its environment.
Structurally, management is part of the organization, which in turn is part of the
environment. Diagrammatically, as said before, these have been separated for ease of
expression in Figure 13. The circle no longer represents the organization as a whole,
but the ability of the organization to implement its tasks. Management is managing
the organizations value chain.
Figure13PerformanceManagement
A further modification is made in the drawing of the VSM in Figure 14. Now it is
easier to illustrate that the organizations management must communicate:
- with implementation; this is what we call cohesion management, and,
- with the environment; this is what we call development management.
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Figure 14 Performance Management
Also, management communicates, through implementation, with the environment.

This is the management of the organizations value chain. This relation between
implementation and the environment is what we call achievement management.
Performance management is the total management of the organization in its
environment, that is, the synthesis of development management and achievement
management.
CohesionManagement:themechanism
The implementation-environment interactions define the organizations achievement
in its current environment. Managing the organizations production value chain, that
is, managing its inbound logistics, its production activities and its outbound logistics,
is key to this interaction. To achieve good results, management has to ensure the
cohesion of the organizations inner activities. We call the management responsible
for the integration of implementation resources, cohesion management.
In an organization, many roles may carry out cohesion management activities. Trident
gives examples of these. Cohesion management develops amplifiers and attenuators
to enable effective value chain management,
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Figure 15 Cohesion Management
Organizations are too complex to be managed completely from the top. As has been
said before most organizations have autonomous units, that is, primary activities,
within them. The one illustrated in Figure 16 has two. As autonomous units, they each
have their own management, implementation and relevant environments with their
own amplifiers and attenuators. Whilst autonomous, these units are part-of the whole
organization and, in the interests of cohesion, are managed by the organization as a
whole.
Cohesion management is responsible for the effective use of resources. As such, it is
accountable for the primary activities 1 and 2 in Figure 16. How cohesion
management is exercised is of particular significance to organizational achievement.
Below we illustrate the Control Dilemma in order to explain common problems
encountered in cohesion management. Look at Trident for further explanations.
We think that in organizations structured as hierarchies, cohesion management is
often misunderstood as command and control, giving commands to primary
activities and asking for reports confirming their status.
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Figure16ControlDilemma
Since primary activities are embedded in increasingly complex external environments,

as time passes, they are forced to respond directly, possibly without consulting, to
more and more changes in their local environments. This may lead to a sense of
unease in corporate management; there are more and more things happening in the
primary activities of which they are not aware. Management feels the need to take
firmer control. They issue more commands and demand more reports, eating into
primary activities flexibility. This leads to a situation where, in relative terms, more
of the primary activities resources are spent in dealing with control requests and less
with environmental complexity. This is occurring precisely when more effort is
needed to deal with increased environmental complexity.
In a changing environment it is important that primary activities can respond rapidly
to their relevant environments. However, if the controllers response leads to less
flexibility in responding to environmental demands, achievement as well as overall
performance will suffer. Cohesion management must, therefore, be far more
sophisticated than a simple command and control mechanism.
Management intervention will usually be part of cohesion management. However, this
becomes a problem if it is the main communication mode between cohesion
management and its primary activities.
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Figure 17 Cohesion Mechanism
If primary activities are to be autonomous, they must control resources of their own.
Organizations not only have limited resources but the way these resources are
distributed may vary according to strategic and technological considerations.
Therefore, cohesion management and the management of primary activities need to
get engaged in some form of resource bargaining for instance, the annual budgeting
cycle employed by companies.
The bargaining processes also require accountability reports (see central channels of
communication in Figure 17). These reports must be low variety; otherwise they may
overload management. However, as said before, often managers feel they dont have
enough understanding of the situation and ask for more information, creating the
control dilemma. An alternative is to enrich their understanding of primary activities,
by developing monitoring channels (see left-hand channel of communication in
Figure 17). To achieve a shared understanding of accountability reports and gain a
better understanding of the organization as a whole, cohesion management depends
on using monitoring channels.
These channels are essentially high variety and sporadic communications between
people in cohesion management and people within the primary activities, by-passing
their local management. They may include such activities as financial and safety
audits, as well as ad hoc meetings with people in the organization and visits. They
should be made public to people in the organization. Well-developed monitoring
channels not only provide information to cohesion managers, but also engender the
feeling in primary activities that cohesion managers care about them.
But reducing the use of the resources bargaining central channel implies the need for
communication channels among primary activities for them to solve locally common
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problems without the need for a third party (usually people in cohesion management).
Often, much of the cohesion management of an organization is to ensure that work is
carried out everywhere in similar ways, using similar standards. This reduces the
chances for oscillation between primary activities and ensures that work flows easily
between them (particularly when they are closely interrelated). By and large, these are
interactions of mutual adjustment between primary activities, requiring a context for
their coordination and not their external control.
Much coordination can take place through mutual adjustment and agreements among
primary activities rather than by direct supervision (see right-hand channels in Figure
17). However, whatever direct supervision is necessary from the centre it should be
there to assist those working in the primary activities and NOT to command them.
The complete mechanism for Cohesion Management the cohesion mechanism
consists of resources bargaining and management intervention, supported by
monitoring and coordination channels. The better designed these channels are, the less
reliant the organization will be on the central channel, giving the primary units more
discretion to respond to the environment whilst ensuring overall cohesion.
Cohesion management is only concerned with managing the inside and now of an
organization. However, managing the outside and then of the organization is equally
important to ensure a viable organization. Balancing the inside and now with the
outside and then is the concern of development management and for that, the VSM
offers the mechanism for adaptation.
DevelopmentManagement:themechanismforadaptation
Development management is concerned with organizational changes in order to
achieve viability beyond survival. It is not enough for the organization to achieve
good results in a given environment; this is insufficient for its long-term viability. It
also needs to consider environmental changes and create new forms of operation and
develop new possibilities. For this it needs to be sensitive to environmental changes
and furthermore to possibilities of producing desirable changes. Taking responsibility
for these changes may imply identity changes, that is, in the relationships and tasks
defining the organization. This is at the core of organizational learning and
transformation. This section illustrates the mechanism to increase the chances for this
kind of viability.
Management must maintain communications in both directions; with the
organizations implementation and with the environment in which the organization is
embedded. The complexity of management is much smaller than that of the whole
organization, so this communication must involve amplification and attenuation
working together. The purposes of these communications, as said before, are to
manage the value chain and to maintain the cohesion of the organization as a whole.
We referred to the management function that aims at achieving operational results and
cohesion as the cohesion function in the VSM.
The complexity of the environment is larger than that of its embedded organization,
so this communication must involve amplification and attenuation working together.
The purpose of these communications is to understand and influence the future
external environment of the organization. The management function that does this is
referred to as the intelligence function in the VSM.
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Management must, therefore, communicate with both the environment and

implementation. Look at examples of control and intelligence roles in Trident.
Structural requirements for effective organizational development are balanced
resources allocated to the organizations concerns with the outside and then
(intelligence function) and the inside and now (cohesion function), as well as
effective interactions between them. For particular issues of organisational
significance, resources representing in these interactions the views of intelligence and
cohesion need to be more or less of the same complexity. Moreover, they need to
provide effective checks and balances of each other, that is, they need to be richly
interconnected. Debates between these viewpoints should lead to the vetoing of weak
proposals from the perspective of one or the other viewpoint, and therefore, to
informed conclusions.
These debates occur in the organization as a whole, within the framework of its
values, beliefs, vision and mission as produced by the organizations policy function.
Structurally, policy is of much lower complexity than intelligence and cohesion
management. People in policy activities cannot handle the same level of detail as
those in the other two functions and therefore should not get involved directly in the
details of either. It makes sense for policy to consider alternatives only after they have
passed the intelligence and cohesion veto. This way policy makers are using the
organizations capabilities, including their own, to the best of their abilities. Policy
sets the context within which they work and therefore it monitors conversations
between them (see Figure 18).
Figure 18 Mechanism for adaptation
The structural mechanism to achieve balance between the outside and then and the
inside and now, all within the guidelines of the policy function is the Mechanism
for adaptation, Figure 18.
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Moreabouttheintelligencefunction
Any functional capacity (i.e. resource) of the organization that is focused on the
outside and then is part of the intelligence function. Although the main function of
some units (e.g. R & D) is to provide intelligence capacity for the organization, most
of the time the people providing this capacity are distributed across several units.
Therefore, the intelligence function does not map easily on to the organization chart.
It is important to recognize peoples intelligence activities and how they interact with
the rest of the organizations activities. Intelligence creates and manages the
organizations future environment. To avoid overwhelming the policy function,
intelligence needs to interact with those concerned with the inside and now, that is,
with the cohesion function. This allows many issues to be discussed, resolved and
dissolved from both intelligence and cohesion perspectives before they reach policy
makers.
Moreaboutthecohesionfunction
Cohesion is responsible for the operational management of the organization, and is
focused on the inside and now of the organization. Although some units may have
cohesion as their main function (e.g. finance), it is more likely that people distributed
across several units will provide cohesion capacity. Cohesion manages the complexity
generated inside the organization by its operations, and as cohesion people interact
with intelligence people they filter out inside and now information irrelevant to the
policy process. Thus, to avoid overwhelming the policy function with information,
cohesion needs to be richly connected with the intelligence function.
Moreaboutthepolicyfunction
Policy is responsible for:
- defining and modifying the organizations purpose, mission and vision,
- allocating the resources to intelligence and cohesion to achieve effective interactions,
- adjusting policies as necessary
Usually policy makers, in order to discharge these responsibilities, rely on briefings

and reports produced for them by others in the organization. To get the most out of
these briefings they have to orchestrate organizational interactions (cf. mechanism for
adaptation). For this they need to have a good grasp of:
-
who provides intelligence and who provides cohesion functional capacity for each
policy issue in the organization,
- which resources are required to achieve a balanced interaction between

intelligence and cohesion and
how to bring them together as necessary.
RecursiveManagement:distributionofmanagementcapacity
Combining the adaptation and cohesion mechanisms gives the complete VSM (see
Figure 19). Trident shows an example of the mechanisms for development
management and cohesion management together.
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Figure 19 Complete VSM
However, in addition to these two mechanisms, the VSM is recursive as is explained

below. The organization structure as modelled by the VSM is recursive; the same
structure that applies to the organization as a whole applies to each of the primary
activities (see Figure 20). In other words, each primary activity requires functional
capacity for development, cohesion and performance management. Indeed, each of
them must be a viable autonomous unit in order for the whole to increase its chances
for viability.
The five systemic functions policy, intelligence, cohesion, coordination and
implementation are always present in viable systems. As each primary activity is
(ought to be) a viable unit as well, each has to have the same systemic functions of
policy, intelligence, cohesion, coordination and implementation. This continues to the
lowest level of complexity unfolding in the organization. Trident illustrates recursion.
By clicking on parts of the models in Trident you can see examples of the recursivity
of policy, intelligence, cohesion, coordination and implementation at a number of
structural levels.
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Figure 20 Recursion
All mechanisms of the VSM appear at all levels of recursion.

The managerial implications of this model are significant. We talk about recursive
management. This implies that each primary activity, from the enterprise itself to the
smallest autonomous team in the shop floor, has to develop short and long term
concerns. Each has to have an entrepreneurial outlook, concerned with creating their
future and performing effectively as a whole business. The VSM defines the structural
requirements to achieve a non-hierarchical, highly distributed organization with
cohesion and capacity to operate effectively in its environment.
Chapter3Summary
PerformanceManagement
Organizations need to manage their current environment, that is, the production of
value for their customers. To do this, they have to manage their interactions with
suppliers and customers. They also need to manage their future environment. For this
they need to create possibilities. Performance management is the synthesis of both
aspects of management.
CohesionManagement
An organizations performance will improve if it creates conditions for cooperation
among its participants. The purpose of cohesion management is improving
communications in order to align the purposes of primary activities with those of the
organization.
DevelopmentManagement:Adaptation
An organization needs flexibility and capacity to change and transform itself over
time in order to maintain viability. For this, it needs policy processes that balance the
inside and now with the outside and then.
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RecursiveManagement
The above three managerial concerns apply to all primary activities in the
organization; this implies an entrepreneurial structure, with short and long term
concerns throughout it. The VSM is all about recursive organizations.
Part2TheViplanMethod
Introduction
Having explained the Viable System Model, we now need to use it in the context of
specific organizations. Whether an organizations structure is effective or not depends
on its alignment with the organizations strategy. The Viplan Method is a tool to
assess the structure with reference to the strategic implications of its ascribed
purposes. The Viplan Method to Study Organizations looks at the structure of an
organization starting from these purposes. Since different purposes can be ascribed to
the same organization, a number of different structures may be relevant. Viplan can
be used in two modes to study organizations.
Mode I studies an existing organization. It is descriptive and permits diagnosis.
Mode II designs an organization. It is prescriptive and the design depends on strategy
and expert knowledge.
SummaryoftheViplanMethodsactivities:
1 Establishing the organizations identity: Making clear what the organization is
about from a particular viewpoint. Defining the organizations primary
transformation, that is, the processes producing its products and/or services.
2
Structural modelling: Offering structural criteria to break the organizations

primary transformation into smaller tasks. These structural criteria depend on the
organizations strategy.
Modelling structural levels: Identifying the tasks management wants to make

autonomous at several structural levels, that is, the organizations primary
activities. These tasks define the organizations unfolding of complexity.
Modelling distribution of discretion: Allocating resources and discretion to

primary activities, that is, defining the functional capacity of primary activities.
Modelling the organization structure: Mapping the allocation of resources onto the
VSM and identifying structural issues.
Chapter4Identity
IdentityandPurpose
Identity defines what an organization IS. Its purpose is what it DOES, as seen from a
particular viewpoint. This chapter explains identity based on our earlier discussions
about purpose. Stakeholders articulate identity. It is not fixed. It changes as the
stakeholders constitute new relationships. Stakeholders purposes give meaning to
these relationships. The stakeholders articulate purposes and reach agreements about
them. These agreements help stakeholders to align purposes and to coordinate their
actions. In particular it is useful to reach agreements as to which are the
organizations primary activities.
23

Managers are often exhorted to define their organizations vision, mission and
strategy. Vision and mission help to establish the organizations desired purpose,
which often becomes the managers espoused purpose for the organization. This
purpose is transformed into purpose-in-use if resources are structured to make it
happen. The VSM offers a heuristic to relate resources to a strategy in order to
produce a requisite structure to achieve this strategy. The emergent interactions as this
structure in produced produce the organizations identity.
The identity of an organization is defined by the relationships between those
structuring the organization. In this chapter we offer methodological help to work out
who these stakeholders are and the purposes they see in these interactions.
People ascribe multiple purposes to their organizations. In fact, they are negotiating
their views all the time. This chapter helps to make the link between these purposes,
the related organizational processes and the stakeholders. The key tool is naming
systems.
Stakeholders
All organizations have stakeholders. Who they are varies, but Viplan recognises
FOUR main types of stakeholder. These stakeholders are not just the employees and
owners of the organization, but also those who provide inputs to or receive outputs
from the organization. Beyond stakeholders, we also identify participants on the
organizations transformation. Participants include all stakeholders and also those
who influence the organizations transformation without taking part in it directly.
Each participant views the organization differently. The ideas of stakeholders and
participants are illustrated with reference to a car company, a supermarket and a
charity.
TypesofParticipantsIncludingStakeholders
-
Those carrying out the work.
Those providing the organization with resources
The beneficiaries and victims of the organizations activities
Those managing the organization
Those with an influence on the organization
The following are examples of possible participants viewpoints about a car manufacturing
company, a supermarket and a charity:
Thosecarryingoutthework
CarCompany
Employees An organization to provide jobs for skilled car makers.
Supermarket
Employees An organization to provide full-time and flexible part-time employment.
PovertyReliefCharity
Volunteers An organization to relieve poverty though the donation of time, money
and goods.
24

Paid Staff An organization to relieve poverty by the best use of donated money,
goods and services.
Thoseprovidingtheorganizationwithresources
CarCompany
Parts suppliers An organization requiring parts made to price and on time
Machine maintainers An organization requiring their machines maintained by our
staff to an agreed schedule.
Supermarket
Grocery Manufacturers An organization to distribute goods geographically to final
customers.
Farmers An organization to buy fresh produce in bulk at a discount price to sell to
the general public.
Donors of goods and money An organization to give money to help others and save
conscience.
Suppliers of bought goods An organization that buys our goods.
Thebeneficiariesorvictimsoftheorganizationsactivities
CarCompany
Distributors An organization supplying cars for us to sell to the public under their
terms.
Drivers An organization making cars for private use.
Fleet uses An organization providing cars in volume at a discount for fleets.
Supermarket
Householders An organization to provide locally, at convenient times, a wide range
and choice of groceries.
The poor An organization to provide us with goods and services otherwise not
accessible.
Thosemanagingtheorganization
CarCompany
Managers An organization requiring high levels of technical, managerial and selling
skills to produce and capture a significant part of the car market.
Supermarket
Managers An organization to retail groceries in a catchment area.
Trustees An organization to carry out the mission of the charity.
25

Managers An organization to carry out the mission of the charity and provide
charity workers with employment.
Thosewithaninfluenceontheorganization
CarCompany
DTI A car manufacturer who provides employment and contributes to the balance of
payments.
Ecology lobbies An organization producing vehicles that increase congestion and
atmospheric pollution.
Supermarket
Competitors An organization working in the same business and competing on price
and service.
Shareholders An organization providing a return on investment by working in food
retailing.
Government of charitys home An organization conforming to the countrys charity
laws.
The descriptions of the organizations above are brief. They make a stab at naming the
system as seen from a particular viewpoint when a person observes the company.
These descriptions need to be made more explicit. In the VSM language the car
company, the supermarket and the charity are primary activities. That is, they are all
recognised as autonomous organizations in the framework of their larger industries or
sectors. We can also name systems for regulatory functions. The latter, as said before,
are resources allocated to a primary activity for its management and/or development.
Primary activities and regulatory functions may also be informal units, formed by
people from different units carrying out a joint process. This is the case of virtual
primary activities or virtual regulatory functions.
The supermarket is a primary activity. It is an autonomous business in the retail
industry, recognised as an autonomous and hopefully viable business over time.
The managers viewpoint is shown in Figure 21. This is the system that they are
running.
26

Figure 21 Naming supermarket
The accounting department, Figure 22, is seen as one of the regulatory functions
necessary to run the supermarket as a business. It has been set up to ensure that the
money passing through the company is correctly handled and that the accounts are in
order, to support its management
Figure 22 Naming accounting department
Both primary activities and regulatory functions may not relate to existing formal
organizational units, such as a company or a department. Often they relate to specific
processes and the resources supporting them may be distributed in different parts of
the organization. Sometimes they may even be external resources. The example in
Figure 23 is of production scheduling in the car company. This regulatory function is
not just carried out by the formal scheduling office; it also involves people from
27

different parts of the organization, including schedulers, purchasing staff, dispatchers

and the production staff.
Figure 23 Naming virtual regulatory function
NamingSystems
Viplan uses a formal method to name systems (cf. Checkland, P., Systems Thinking,
Systems Practice, Wiley 1981).
These names are used to refer to an organizational system from a particular viewpoint,
in order to make explicit what the system does (do X), by means of Y, in order to
achieve purpose Z. Different people may name the same organization differently.
Examples:
Supermarket from the viewpoint of the managers: A system to provide groceries in
small quantities to individual consumers at locally convenient outlets (X) by buying in
bulk from worldwide manufacturers and farmers and distributing them (Y), to provide
a profit to shareholders and wages to employees (Z).
Accounts Dept from the viewpoint of the managers: A system to provide financial
control for the supermarket (X) by ensuring that all transactions and monies are
accounted for and financial costs of documents produced (Y) so that the supermarket
management is aware of its financial position (Z).
Car Production Scheduling from the viewpoint of the production staff: A system to
translate customer orders into goods (X), by developing schedules for the company as
a whole which are translated into local schedules for the workforce at all levels (Y), to
ensure correct deliveries can be made on time (Z).
Look at Trident for further examples of this.
28

Each named systems implies a transformation carried out by the system and a network
of people involved in making that transformation happen. Making the underlying
transformation and the network of relationships explicit, reduces the possibility of
misunderstandings.
TASCOIandIdentity
ViplanMethodtoNameSystems
Each name implies a particular systems transformation as well as relevant actors,
suppliers, customers, owners and interveners. We use the mnemonic TASCOI to
make explicit transformation and participants:
TASCOI
Transformation
Actors
Suppliers
Customers
Owners
Interveners
What inputs are converted into what outputs?

Who carried out the transformation?
Who supplies the inputs?
Who receives the output?
Who must ensure that the transformation is carried
out?
Who outside the system influences the transformation?
TASCOI highlights the different ways in which the participants relate to the system
named. The transformation statement clarifies what the system does in the view of the
person naming it. The actors, suppliers, customers, owners and interveners are the
people who should be involved in the transformation. These are the participants.
Now look at the three systems named before and the TASCOI for each of them. These
are names of a primary activity, a regulatory function and process across units.
APrimarySystemTheSupermarket
A system to provide groceries in small quantities to individual consumers at locally
convenient outlets by buying in bulk from worldwide manufacturers and farmers, and
distributing them to provide a profit to shareholders and wages to employees
T
A
S
C
O
I
Internationally bulk purchased groceries are transformed into groceries

available in small quantities locally
All employees of the supermarket
Farmers, grocery manufacturers
Local consumers
The management of the supermarket
Competitors, consumer associations, Trading Standards Office, Customs and
Excise
RegulatorySystemTheSupermarketAccountingDepartment
A system to provide financial control for the supermarket by ensuring that all transactions
and monies are accounted for and financial control documents produced so that the
supermarket management is aware of its financial position.
29

T
A
S
C
O
I
Financial transactions are transformed into financial control

Members of the accounts department
Other departments with information, computer manufacturers
Supermarket managers, other departments
Accounts manager
Accounting standards bodies, managing director of supermarket
CrossUnitSystemTheCarCoScheduling
A system to translate customer orders into machine schedules by developing procedure for
the company as a whole to translate customer orders into local schedules for the work force
at all levels, to ensure connect deliveries can be made on time.
T
A
S
C
O
I
Information concerning customer orders into scheduling information

Members of the scheduling department, also those scheduling orders from day
to day around the plant. These may not all belong to the owners team.
Those collecting customer orders
Those producing the goods
The ownership of a system such as this is often not recognised or is disputed. It
may be that the owner is the head of the scheduling department or it may be the
head of production.
Production department personnel, sales personnel, quality personnel, senior
managers
Look at the Trident examples.
For primary activities, the name is the organizations identity statement. It defines
their transformations and the various participants. Thinking about the relations
between participants helps us to understand the identity of the organization.
In other words, the TASCOI of an identity statement highlights the relevant
participants of the organization so that their relationships can be more fully examined.
At best an identity statement for an organisation may establish the following aspects:
The products or services produced
The technological processes used
The customer needs satisfied by its products and services
Time
Location
Size
Life cycle of products and services
Key environmental issues
Related organizations
Economic variables
Financial variables
For particular organisations not all of these aspects may be relevant.

30

Chapter4Summary
IdentityandStakeholders
The identity of an organization is what it is; isness emerges from peoples
interactions, hence the relevance of working out who are the stakeholders of an
organization. Working out the organizations ascribed purpose by relevant viewpoints
does this.
NamingSystems:TASCOI
Naming systems was introduced as a method to relate purpose to stakeholders. The
mnemonic TASCOI permits us to work out the participants actors, suppliers,
customers, owners and interveners relevant to a particular process or transformation.
Virtualorganization
Naming Systems may be used to name both formal units (e.g. the organization itself
or departments in it) and informal units like processes, with their own identity,
emerging from peoples actual interactions. These are virtual organizations.
IdentityandTASCOI
The concepts of identity and naming systems help people to develop a common
language to improve conversations about their primary activities and organizational
context. This assists the alignment of interests and the alignment of purposes.
Chapter5StructuralModelsandUnfoldingofComplexity
ManagingBusinessComplexity
The transformation named in the identity statement is used as a first step to work out a
hypothesis of an organizations primary activities. The activities producing this
transformation are the components of the transformation itself. These activities can be
influenced by the technological processes of the organisation, their location, their
timing, as well as by possible customers of, and suppliers to, the transformation.
Particular technological processes produce the products of an organisation. Models of
these processes are what we call technological models. A technological model of a car
manufacturing company is shown in Figure 24. Here, manufacturing a car requires a
bodyshop, a power train shop and an assembly line. If this is a descriptive model of an
actual plant, we are in Viplans Mode I. If it is a proposed model, we are in Mode II.
In Mode I observing the transformation helps to produce these models. In Mode II
these models are produced using expert advice. At a higher level of resolution we can
also produce a technological model for the manufacture of engines within the car
company (see Figure 25). However, the drivers of this decomposition into lower level
activities may be more than technological. Different customers, different geographical
requirements and also time considerations may influence this decomposition as well.
31

Figure 24 Technological model of a car manufacturing company
Figure 25 Technological model of engines manufacture
StructuralModels
Our concern is to work out the different structural factors affecting the complexity of
an organizations transformation. One factor is the technology, as is made apparent
above. We referred to these as technological models. Customers and suppliers will
also influence the way in which the owners of an organization will structure their
activities. For instance customers characteristics may support the formation of
primary activities focused on particular market segments. Suppliers may also
influence this formation. In Mode I a customer-supplier model will help to describe
the organizations actual market segments. In Mode II this kind of model will help to
design the organization to carry out an organizations strategy. When owners consider
their strategy, they have to think about the availability of skilled labour (i.e. actors),
its cost and other local factors, like the proximity of suppliers and customers.
Frequently, therefore, geography must be taken into account, and a geographic model
can be produced. An organizations activities take place in time. Where the
production process requires it, it may be necessary to use the same machinery for
different products or use a shift system to run over 24 hours. Therefore time models
may also influence the structure of an organization.
32

Examplesofstructuralmodels
TechnologicalModels
Figure 26 shows a technological model to produce the cars made by Car Co.
Figure 26 Technological Model for Car Co.
CustomerSupplierModels
Figure 27 shows a model to support the divisionalisation of a large holding that at
the time had many unrelated plants. Based on the plants markets it was possible to
see a rationale to create four divisions:
- Steel Foundry
- General Foundry
- Engineering Products, and
- Electrical Services
Each division served a distinct group of customers with as little overlap as possible.
This is an example of using the method in Mode II, that is, the design mode. In a
diagnostic mode, if the four divisions had existed, the model could be used to show
inefficient distribution of markets.
33

Figure 27 CustomerSupplier Model for Holding
GeographicModels
Figure 28 shows either the growth of a supermarket from one shop into several shops
or its restructuring as market opportunities made it possible to open stores in other
areas, or, of course, the strategic growth of an organization as the opportunities
offered by new geographic markets are realised. The availability of suitable personnel
and a range of other factors may also influence the siting of these stores.
Figure 28 Geographic Model for Supermarket
TimeModels
Where a technological process must run continuously, a shift system may be
necessary. Each of these shifts must be able to produce the companys products or
service to the same standard. Each must therefore be a primary activity in its own
right. For perishable products, the time necessary to reach the market may lead to the
creation of units around the country. Some goods and services are produced on a
project basis, where each project lasts for a defined period and is not repeated exactly
34

in the future. All these are examples where time has an influence on the structure of
the organization.
The first example, Figure 29, is of a shift system, based on the need for the factory to
work 24 hours per day. The second example, Figure 30, is production rotating over
time, each using the same machinery, but having different suppliers and customers
and requiring differences in the activities of the actors
Figure 29 Time Model for Shifts
Figure 30 Time Model for Different Products Using the Same Equipment
35

UnfoldingofComplexity
LinkingStructuralModelstoComplexityUnfolding
The various structural models developed for an organization provide the information
to discuss its complexity unfolding. In Figure 31 we illustrate how to pass from a
technological model to a complexity unfolding model. The technological model for
Engine 1 shows the engine making facility a would be primary activity with its
four would be embedded primary activities. The question is: which of these
technological activities does the company want to make viable in its own right?
The highest level in this model is engine making as a whole. This includes all its
nested primary activities and is represented in the unfolding as a circle.
The nested primary activities are then represented as circles within the larger circle. In
our example only three of the technological activities are translated into the unfolding.
The fourth, Cast, is a necessary part of the process, but the company has agreed to
contract it out; it is technological activity but not a primary activity of this
organization. Therefore it is not part of the organization and does not appear in the
unfolding of complexity.
Figure 31 Technological Model and Complexity Unfolding
These models and the unfolding of complexity can be carried out in both diagnostic
and design modes. Trident illustrates this.
Anexampleapplyingthemethodsofar
The full connection between structural models and the unfolding of complexity is
illustrated for GB Quarry. Different complexity drivers can influence the unfolding at
different levels. This is a concrete area where strategy and structure get together.
We will look at GB Quarry to understand the positioning of structural levels within a
company. This is a British quarrying company with interests in Europe. It is part of a
British construction company (GB Construction plc). The structural levels of GB
Quarry relate to the transformation and suppliers and customers named in its identity.
36

Identity Statement
GB Quarry Company Ltd is:
a European, managerially autonomous, quarry based division of GB Construction plc
producing quarried products within the frameworks of the Mines and Quarries Act
and the Factories Act as relevant
on an ecologically responsible basis
supplying in-house and external customers with dry and coated stone and concrete
whilst looking for new outlets for the products of quarrying through technical and
market development, moving downstream as necessary
to retain its position as a leading British company, ensuring a return for GB

Constructions shareholders.
TASCOI
T
A
S
C
O
I
The conversion of rocks in situ into products suitable for the

construction industry
All employees at GB Quarry Co Ltd
Landowners, industrial suppliers of bitumen and cement amongst
others
Buyers in the construction industry, including GB Construction
companies and those using products within these companies
Senior management team of GB Quarry Company Ltd
GB Construction plc, Environment Agency, standards bodies,
regulators, local communities through pressure groups, local
authorities, ecology groups...
The owners must take into account:

the organizations transformation, as agreed by them, that is, producing quarried and
concrete products.
Figure 32 Technological model
37

the customers/suppliers they want to service and work with, that is, the large and
small users of quarried products and concrete and the input suppliers:
Figure 33 Customer-suppliers model
the geographic coverage of their activities, that is, UK regions and other parts of
Europe, and
Figure 34 Geographic model
time.
Construction takes place largely in the open. Customers are very dependent on the
weather. They therefore need suppliers that can have goods on site quickly in hours
or even minutes. Two product categories have short shelf lives coated materials and
concrete. These products must therefore be delivered in as short a time as possible.
In Mode I, a diagnostic unfolding of complexity for GB Quarry is developed taking
into account all these models for the recognition of structural levels.
38

Figure 35 Unfolding of complexity of GB Quarry
The technological process drives the first structural level; Concrete and Roadstone
frequently share the same customers, but the technologies used are different. The
second structural level is then split geographically by region. Roadstone and Concrete
unfold into geographic areas. At the third level, within Central, the unfolding is
driven by technological considerations (sand and gravel, hard materials, surfacing and
coating) and geographic considerations (hard east and hard west). Coating is the
production of black material for roads (coated stones). It uses bitumen and stone
produced by quarrying and has the road surfacing unit as one of its customers. Within
coating, the use and movement of equipment (plant) is determined by time. The plant
must be close enough to the place where the customer will use the product to ensure it
arrives in good condition. The product is useless if the time between its manufacture
and use is too long (this is expressed by the red circles in coating). The unfolding of
complexity of GB Quarry is the outcome of four complexity drivers.
Having offered a hypothesis for the unfolding of primary activities in the
organization, we can then look at the arrangement of regulatory functions throughout
the structure. This is done in the next step of the method.
Chapter5Summary
StructuralModels
These are models to support decisions about the unfolding of complexity in an
organization. They offer a key tool to relate strategy to structure. These models can be
based on technology, customers-suppliers, geography or time considerations.
39

TechnologicalModels
These are models of the activities producing the transformation in the identity
statement. In Mode I these models are produced by observing the transformation. In
Mode II these models are produced using expert advice.
CustomerSupplierModels
These are models of the organizations relations with customers and suppliers. They
help to work out primary activities based on products and market segments. They can
be in Mode I or II.
GeographyandTimeModels
It is often necessary to consider geography and time when defining the organizations
primary activities. What geographic coverage is required? Are shifts necessary? Is
time a fundamental concern in delivering products?
Chapter6DistributionofDiscretionandMechanisms
DistributionofDiscretion
Primary activities are real or virtual autonomous units producing the
organizations products or services. In general they contain, and are contained within,
primary activities. This is reflected in their unfolding of complexity. Therefore, the
resources producing a primary activity are other subsumed primary activities and their
regulatory functions, which give cohesion to, and develop, the primary activity. In a
highly centralised organization most of this functional capacity is concentrated at the
global level. In a decentralised organization the functional capacity is distributed in
primary activities at all structural levels.
Strategies to manage this distribution of functional capacity are strategies to manage
the organizations complexity. Scarce, highly strategic resources are likely to be
centralised, while widely abundant resources are likely to be made available
everywhere in the organization. However, resource centralisation does not necessarily
imply functional centralisation. Today it is possible to have resource centralisation
and functional decentralisation. A globally located expert can be shared by multiple
primary activities and be accountable to several local managements. Communication
technology may even permit the expert to make this contribution from the centre,
without the need to be physically present in all places.
The Recursion-Function table is a tool to discuss different strategies to manage an
organizations complexity. The table can be used in Mode I, when the purpose is to
map the actual distribution of resources and discretion throughout the organization,
and in Mode II when the purpose is to offer an effective distribution of discretion.
Organizations with a functional structure are highly centralised since they depend on
central people to make links between functions. This approach often creates
bottlenecks. Organizations with effective autonomous units within autonomous units
(i.e. recursive organizations) have links between functions within the autonomous
units themselves, thus distributing complexity and functional capacity. Next we will
look at modelling the distribution of complexity.
40

Figure 36 Recursion and Discretion
ModellingDistributionofDiscretion
Regulatory functions are attributed to primary activities. Regulatory functions such as
legal services, capital expenditure, finance, personnel, sales and quality systems are
shown on the horizontal axis (see Figure 37). The vertical axis shows the primary
activities of the two lowest levels of recursion for the car company.
Production Scheduling
Quality Assurance
Quality System
Process Development
Equipment Development
Maintenance
Factory Logistics
Machine
Assemble
Finish
Figure 37 Table Recursion-Function for Engine 1
41
Goods in/out/Stores
Production Management
Buying
Administration
Marketing
Sales
Quoting
Training
Credit Control
Finance
Personnel
Engine 1
Capital Expenditure
Recursion
Legal
Function

Each primary activity has capacity in some functions; these are the symbols (,,)at
the intersection of the vertical and horizontal axes. Functions may be allocated at
different levels. In our example there are resources for training, production
management, quality assurance and maintenance in the two structural levels shown
for Engine 1. Personnel functional capacity, for instance, is only available at the level
of Engine 1 (i.e. first level). On the other hand a number of functions of the company
do not occur at all at these two lower structural levels; the columns for those functions
remain blank.
The Trident case study shows an unfolding of primary activities and the
corresponding Recursion-Function table for a range of functions.
In Figure 38 the symbols show discretion for that function within that primary
activity at that level of recursion:
Administration
Buying
Powertrain
Engine 1
Goods in/out/Stores
Marketing
Factory Logistics
Sales
Maintenance
Quoting
Training
Process Development
Personnel
Quality System
Credit Control
Quality Assurance
Finance
Car Co
Capital Expenditure
Recursion
Legal
Function
Machine
Assemble
Finish
Engine 2
Gearbox
Body
Assembly
Figure 38 Table Recursion-Function for Car Co
This functional capacity may be found within a department or just as part of an

individuals job, or carried out by people in different parts of the organization. In this
latter case, if communications are not good, the function may not be effective. The
function may be completely centralised, as is sales, or completely decentralised, as
shown for production management, or something in between the two as for Goods
in/out/stores. The degree of decentralisation depends on the strategy of the
organization as well as on the technologies available.
People experience problems when there are inconsistencies in the way
decentralisation is carried out. For example, when the management of particular
42

structural levels are jumped. The personnel example shows personnel management at
the highest level of management in Car Co. At the next level down it appears only in
Engine 1, Finish and in Body. Powertrain as a whole does not have functional
capacity for personnel management, however, within it, it reappears at the level of
Engine 1, which is within Powertrain. Personnel managers at the Car Co level can
communicate easily with Engine 1 managers and will tend to do so, by-passing the
managers of Powertrain. This may cause friction within the company and a view that
personnel resources are not being used effectively. Similarly, the personnel effort
within Engine 1 may well be biased towards the needs of Finish as they, and not the
other sister units, have discretion in personnel matters.
Distributionofafunctionbetweenprimaryactivities:
Sales, within GB Quarry
There is no one correct way to distribute the sales function within an organization.
However, depending on the resources available and in particular on the
communication channels available it is possible to argue for or against different
distribution of sales capacity. Highly specialised resources may be totally centralised,
but their use may be flexible and distributed if, for instance, the company has
communication systems to link local salesmen to these specialists. Figure 39 shows a
highly decentralised structure. This does not mean that each primary activity at each
level is carrying out duplicated activities. Each primary activity carries out aspects of
sales relevant to that level and unit.
Recursion Level
Sales Function
GB Quarry
Design of sales structure
Roadstone
Sell dry and coated stone to national accounts
Central Reg
Hard West
Coating
Coordinate product sold at area to be produced here
Surfacing
East
Sell drystone to companies in area
Quarry
Coordinate area salesmen
Win surfacing contracts

No selling activities
Sell coated materials in Region
Plant
Deal with customer order changes
Concrete
Sell concrete to national accounts
Western Reg
Coordinate sales for the region
Central Area
Sell to large scale customers
Minimix
Sell to small customers requiring small loads
Figure 39 Sales within GB Quarry
43

DiagnosisandDesignofOrganizationStructures
This is the last stage of the Viplan Method to study organizations. The first four stages
of the method yield a number of diagnostic points and insights. However, it is only
this last stage, based on the mechanisms for cohesion and adaptation, and the idea of
recursion, that provides the opportunity to think systemically in order to diagnose and
design desirable structures.
In what follows we will show how the regulatory functions of the Recursion-Function
table map onto the VSM. For this, we will ascribe a systemic purpose to each of these
functions. These systemic purposes are to:
- make policy for the primary activity in those functional aspects that are of
competence at that level of recursion
-
provide intelligence capacity, if their purpose is to create within the primary

activity an appreciation of its outside and then
support resources bargaining, if their purpose is to negotiate the allocation of

resources to primary activities
support corporate intervention, if their purpose is to give non negotiable

instructions to the contained primary activities
make monitoring of primary activities possible, if their purpose is to bridge the

communication gap between two levels of recursion, and
enable coordination among primary activities, if their purpose is facilitating the

moment-to-moment alignment of operational activities, without interfering in
those aspects related to their main purpose.
The figures that follow (Figure 40) and the Trident case study give examples of how
to map business functions onto the systemic functions constituting the cohesion and
development management of an organization.
Figure 40 Mapping Recursion Function Table onto VSM
44

CarCo
In this page our focus is on the discretion that Car Co is taking away from the rest of
its embedded primary activities. Car Co has centralised resources that support its total
management. The systemic purposes ascribed to these resources are mapped onto the
lower grid. The purposes ascribed to them are offered only as a means to think
systemically about them. Their systemic meaning may change from situation to
situation.
Resource
Bargaining
Monitoring
Coordination

Figure 41 Systemic Functions and the Mapping of the Recursion Function Table onto VSM
Car Co shows some form of distribution of resources between cohesion and

intelligence. For instance the legal function both understands Car Cos external legal
environment and ensures that the law is complied with through corporate intervention.
However, whether the requirement of balance between these two systemic functions is
achieved depends on specific issues and can only be assessed with reference to them.
Financial management has three systemic purposes in this table. Capital expenditure
has a strong element of intelligence plus aspects of coordination. Finance covers
budgeting, which is resource bargaining and audit that is monitoring. The use of
standard financial systems is helping coordination of Powertrain, Body and Assembly
(i.e. primary activities within Car Co). Dealing with long-term financial requirements
is intelligence. Credit control, as a common system, coordinates the company and
provides a centralised service.
Personnel, through its appreciation of future trends in the labour market, provide
intelligence. They also contributes to the resource bargaining process through a view
on the companys labour needs and coordinates through common personnel systems.
Monitoring occurs through the central personnel teams visits to Car Cos units. From
time to time Personnel gives direct instructions on labour regulations to the primary
45
Goods in/out/Stores
Factory Logistics
Maintenance
Corporate
Intervention
Process Development
Intelligence
Quality System
Quality Assurance
Policy
Training
Buying
Personnel
Administration
Credit Control
Marketing
Finance
Sales
Capital Expenditure
Car Co
Recursion
Quoting
Legal
Function

units; these instructions are corporate intervention. Training also provides

coordination and monitoring.
Sales also span all intelligence and cohesion functions at the Car Co level.
Administration is a function to coordinate the factory. Those working here do not
have direct input into the resources bargaining of the company but support the
process. The buying department monitors and coordinates buying throughout the
company and keeps up to date with potential suppliers.
Buying in Car Co shows a high level of corporate intervention, restricting local
autonomy. Production Management shows all aspects of cohesion management, with
Process Development as an intelligence function, concerned with product and process
development. Equipment Development is also an intelligence function. The Quality
System is coordinating and monitoring.
Factory Logistics both coordinates and monitors whilst the Goods In/Out coordinates
the flow of production.
In Mode I, the diagnostic mode, the symbols shown for policy are for those functions
that de facto influence the policy of Car Co. They define those aspects that are
considered of corporate competence at that level of recursion.
We can then transfer the systemic functions onto the VSM. In Figure 41 the systemic
purposes ascribed to these resources were mapped onto the yellow grid. The purposes
ascribed to them are offered only as a means to think systemically about them. Their
systemic meaning may change from situation to situation. In Figure 42 the systemic
functions are illustrated in a VSM diagram, that is, the functions at Car Co level are
mapped onto a VSM diagram.
Figure 42 Car Co.: Transferring Systemic Functions from Recursion Function Table to VSM
Powertrain:Systemicfunctionsofaprimaryactivityatthesecondlevelof
recursioninCarCo.
The functions at Powertrain level also show a distribution of discretion between
cohesion management and intelligence (see Figure 43). However, the management of
Powertrain is only involved in the manufacturing process. Production Management is
concerned with the cohesion of Powertrains production processes. This includes
aspects of corporate intervention, resource bargaining, monitoring and coordination.
On the other hand Process Development provides intelligence. Production Scheduling
46

enables the coordination of production processes between units Engine 1, Engine2

and Gearbox. Maintenance provides coordination and monitoring of machinery.
Quality Assurance and the Quality System are mainly involved in coordination and
monitoring. Factory Logistics and Goods In/Out/Store provide a coordinating
function. These functions can be mapped onto the VSM.. If any of them is missing or
is lacking resources the viability of Powertrain is going to suffer. This shows the use
of the Recursion Function Table to highlight diagnostic points about an organisation.
Figure 43 Powertrain: Transferring Systemic Functions from Recursion Function Table to VSM
Look at Trident for more examples.

CohesionMechanism
The cohesion of Car Co is affected by a number of regulatory functions as shown in
Figure 44. It is important to see them in relation to the primary activities they are
managing. Cohesion management takes place at all levels of recursion. You are
directed to the equivalent of Figure 44 in the Viplan Software to recognise the
cohesion mechanism as a management loop interrelating resources bargaining,
corporate intervention, monitoring and coordination (This dynamic interrelation
cannot be appreciated in Figure 44).
Figure 44 Cohesion Functions and Mechanism for Car Co.

47

Throughout this page you may wish to refer to the distribution of systemic functions
for Car Co in the Recursion-Function table. From this table it is apparent that the
seven functions shown in the cohesion box together manage the cohesion of Car Co.
Each is concerned with a different perspective of the company.
We examine in Figure 45 the resource bargaining process for the distribution of
personnel between the primary units to illustrate how these functions may work
together. Personnel take part in this resources bargaining process. With expert
knowledge on, for example, local personnel costs, those in this function take part in
the negotiations between the Car Co (overview) level and the three primary units.
Those specialising in finance function have the best knowledge of Car Cos financial
position and can bring this into the debate. Production Management has an overview
of the relative production needs of the three units in relation to the overall production
plans of Car Co. (Each unit contributes its local understanding of the process). These
three functions can be seen (in Figure 45) working closely together, but personnel has
put a unilateral halt on recruiting. (A corporate intervention.) Thus it may be that
Personnel are closer to Finance than Production Management. In this example we see
Quality working closely with Production Management, Buying as a separate entity
with little interaction with the others, Sales interacting mainly with Personnel and
Finance and Legal influencing all other functions.
Figure45Communicationsamongsevencohesionfunctions
Further examples of aspects of cohesion management are shown for the Trident,
Components, Light Pressing, Heavy Pressing and Operator levels of the Viplan
Software, illustrating diagnostic points that can be drawn.
MechanismforAdaptation
In Mode I the adaptation mechanism is intended to diagnose the balance between
development management and cohesion management in each primary activity.
48

The regulatory functions of the Recursion-Function table are transferred to the

relevant parts of the VSM. Those focused on the inside and now map onto cohesion
management and those focused on the outside and then onto intelligence.
Different policy issues emphasise the need for different rich interconnections between
cohesion resources and between intelligence resources. Without these connections
each part of an organization will pull in a different direction. Again, with reference to
specific policy issues, intelligence and cohesion must be richly connected. How these
communications occur varies from organization to organization. Poor communication
leads to poor decision-making (see Figure 46).
Figure46OverlapbetweenCohesionandIntelligenceresources
The example in this page shows typical communication problems between regulatory
functions. Marketing and sales in Car Co are two parts of the same department.
Maintenance and equipment development are also well linked. However production
and process development are on a separate site. The integration of all the functions is
not taking place, as made apparent in Figure 46. The cost of this arrangement is likely
to be: technology with poor grounding in the market, production processes not aligned
with equipment and markets with no satisfactory products.
The mechanism for adaptation tells us that achieving good communications should be
a major concern of the primary activitys policy function. Policy should be aware of
how different ascribed purposes will influence the need for different communications
between those representing cohesion and adaptation requirements. As explained in
Chapter 3, from the perspective of managing complexity the main role of Policy is to
orchestrate necessary debates and conversations between intelligence and cohesion
resources. This orchestration is often issue related. Furthermore, we can expect that
the orientation of existing resources the inside and now or the outside and then
and the quality of their interactions, will trigger some policy issues, whilst ignoring
others. Hence it is relevant the creation of a balanced interaction between these
resources within the organization. In Figure 47, the resources in each of the systemic
functions come from the Recursion-Function table. As with any other systemic
49

function, policy requires resources of its own to be effective. Often these resources
emerge from within the organization by default and not by design, and they are the
same as existing resources for intelligence and cohesion. A significant factor is their
degree of awareness about the primary activitys purposes and values. Also, they
should develop awareness of the systemic purposes of existing resources. Should any
of these conditions fail, their ability to steer the primary activity may be impaired. In
Mode I we diagnose these aspects. In Mode II we work, often through Identity
Workshops, towards this awareness.
Figure47InteractionsbetweenCohesion,IntelligenceandPolicy
Chapter6Summary
RecursionFunctionTable
This is a tool to model the discretion of each primary activity. Vertically, the table has
all the relevant primary activities. In the horizontal line, the table has all relevant
functions as recognised by people in the organization.
AutonomyandDiscretion
Each primary activity is by definition an autonomous unit. They are intended to be
viable systems. However, they have different levels of discretion. Each level takes
functional responsibilities that it takes away from its embedded primary activities.
Diagnosingproblems
The table allows diagnosis of structural problems. It helps us to see the balance
between centralisation and decentralisation. Once mapped onto the VSM mechanisms
it helps diagnosis of cohesion and adaptation problems.
DesigningOrganizationStructures
The table offers a template to discuss organizational development and transformation.
In Mode II it is a tool for organizational design. It helps to design the mechanisms of
cohesion and adaptation.
50

Conclusion:RecursionandtheViplanMethod:AccountingforViability
We have illustrated the five stages of the Viplan Method. Based on the theory of
viability as developed in the first part, we have offered the practice in this second part.
The method offers a structured way of thinking about the management of complexity
in an organization. Once there is agreement about a complexity unfolding, consistent
with the stakeholders strategies, interests and concerns, it is possible to work out the
resource implications of this unfolding. In the end we need to think about the
requirements to keep each primary activity viable, and this can only be done by those
responsible for this primary activity. However, they need to understand the trade-offs,
costs and benefits of maintaining a primary activity within a larger organization. The
Recursion-Function table helps this type of accounting. There is still much to be done
to produce a proper accounting system, however, the Viplan Method offers a first step
in this direction.
51

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Syncho Research 2008 Viplan Method

Overview of the method as developed in Viplan Learning System

Syncho Research 2008 Viplan Method

Figure 1 The organisation chart hierarchy

Figure 2 The Viable System Model

Syncho Research 2008 Viplan Method

Figure 3 Cross functional relations

Performing tasks in organizations requires cooperation. It is natural for these tasks to

Syncho Research 2008 Viplan Method

Figure 4 Viewpoint of the observer

Syncho Research 2008 Viplan Method

Figure 5 Management of Complexity in Organizations

Syncho Research 2008 Viplan Method

Figure 6 Relative complexity

Syncho Research 2008 Viplan Method

Now we introduce an important diagrammatic convention. We have said that the

An important law is:

Syncho Research 2008 Viplan Method

Imbalances in complexity between the environment, implementation and management

Syncho Research 2008 Viplan Method

In Figure 9 seven arrows or complexity drivers represent the environmental

Syncho Research 2008 Viplan Method

Syncho Research 2008 Viplan Method

Figure 10 embedded unfolding

Figure 11 cascading unfolding

Syncho Research 2008 Viplan Method

Figure 12 complexity unfolding.

Syncho Research 2008 Viplan Method

Syncho Research 2008 Viplan Method

Figure 14 Performance Management

Also, management communicates, through implementation, with the environment.

Syncho Research 2008 Viplan Method

Figure 15 Cohesion Management

Syncho Research 2008 Viplan Method

Since primary activities are embedded in increasingly complex external environments,

Syncho Research 2008 Viplan Method

Figure 17 Cohesion Mechanism

Syncho Research 2008 Viplan Method

Syncho Research 2008 Viplan Method

Management must, therefore, communicate with both the environment and

Figure 18 Mechanism for adaptation

Syncho Research 2008 Viplan Method

Usually policy makers, in order to discharge these responsibilities, rely on briefings

- which resources are required to achieve a balanced interaction between

how to bring them together as necessary.

Syncho Research 2008 Viplan Method

Figure 19 Complete VSM

However, in addition to these two mechanisms, the VSM is recursive as is explained

Syncho Research 2008 Viplan Method

All mechanisms of the VSM appear at all levels of recursion.

Syncho Research 2008 Viplan Method

Structural modelling: Offering structural criteria to break the organizations

Modelling structural levels: Identifying the tasks management wants to make

Modelling distribution of discretion: Allocating resources and discretion to

Syncho Research 2008 Viplan Method

Those carrying out the work.

Those providing the organization with resources

The beneficiaries and victims of the organizations activities

Those managing the organization