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Target Setting, Lean Systems and Viable Systems: A Systems Perspective on Control and Performance Measurement Author(s): A. J.

Gregory Reviewed work(s): Source: The Journal of the Operational Research Society, Vol. 58, No. 11, Part Special Issue: Risk Based Methods for Supply Chain Planning and Management (Nov., 2007), pp. 1503-1517 Published by: Palgrave Macmillan Journals on behalf of the Operational Research Society Stable URL: http://www.jstor.org/stable/4622844 . Accessed: 06/02/2012 03:26
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Journal of the Operational Research Society (2007) 58, 1503-1517

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lean setting, systems a systems perspective on performance measurement

Target

and

viable

systems:

control

and

AJ Gregory*
Universityof Hull, Hull, UK The paper startswith a critiqueof the reductionistapproachto control and performance measurement that emphasizesthe partsof a system in isolation.The critiqueprovidesthe basis for a shift in focus to a systems perspectivethat emphasizes the interactionsbetween the parts of a system. It is argued that this shift is because the behaviourof a system is a productof the interactionsof the partsnot the behaviour important of the partsin isolation.Two systems approaches controland performance to are management comparedand Beer's viable system model and Seddon'slean systems.The paperconcludeswith the advancement critiqued: of a model for controland performance measurement that not only integratesthe work of Beer and Seddon but also compensatesfor the weaknessesin these approaches throughthe inclusionof a process of boundary critique. Journalof the Operational Research Society(2007) 58, 1503- 1517.doi:10.1057/palgrave.jors.2602319 Published online27 September 2006 viablesystemmodel; measurement; Keywords:management; systems;control; performance lean systemsapproach; boundary critique

league tables (naming, blaming and shaming). Chapman (2004) refers to 'mechanistic and reductionistthinking as Evidence of the UK's failing public sector institutions is It being deeply embeddedin the cultureof government'. has widely reported (BBC News, http://news.bbc.co.uk/1l/hi/ been that the effect of this way of thinkinghas been argued 5 education/4237679.stm, February2005, last accessed 19 to stranglethe public sector: June2006; http://news.bbc.co.uk/1/hi/health/3911413.stm, 20 'Targetshave now become prevalentin our schools, hos2004, last accessed 19 June2006; http://news.bbc.co.uk/1/ July pitals, local authorities, government agencies and police 21 hi/uk/4112427.stm, December2004, last accessed 19 June forces.. .(they focus) managers'attentionon avoidingbeing 2006): bottomof the league tables-an entirelydifferentmotivation leading to entirely different behaviour.Targets, standards, * A total of 213 schools were placedin 'specialmeasures'in service levels, activity measures and budget are the lingua the year 2004; a rise of 30% on the previousyear's figure; franca of current managementmeasures.' (Seddon, 2003, * Fourof the government's flagshiphospitalslost their3-star p. 79). statusin 2004; another11 hospitalswhich were in line to We see similarreductionist methodsat work in the service join them also failed to securethe top rating; sector; work practicesin our favouritefast food restaurants * Just 17 out of the 43 police forces in Englandand Wales (althoughtherehas been a concertedeffort by one fast food have reachedHome Office standards recordingcrime; for outlet to tackle prejudicesabout its McJob image, see for a inadequacy in reporting procedures calls into question discussionof this call Thomas,2005) and the now ubiquitous reportedcrime levels. centre(for a discussionof whetherworkpracticesin call centres represent 1990s versionof Taylorism,see Arkin, 1997) a The above may be taken as evidence that a tighter grip to mind. Managers'concern for standardization and spring needs to be asserted to get the public sector under conis expressedin such organizations control efficiency through trol. To this end, ministersand public sector managershave measurement methodsinvolving strict toprevisited reductionistmethods of control and performance and performance down target setting, gatheringof feedback informationremeasurement:target setting leading to the publication of of gardingthe performance the system and the use of reward andpenaltymeasuresto bringthe system performance closer AJ *Correspondence: Gregory,Hull UniversityBusiness School, Univerto the desiredtarget.Caulkin(2002) criticallyreflectedon the HU6 7RX, UK. sity of Hull, CottinghamRoad, Hull, Yorkshire E-mail: a.j.gregory@hull.ac.uk use of such control measuresand received 'a post-bag that

Introduction: targetsettingage the

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overflowedwith the rage, fear, loathing,derision,contempt, Jackson(2000, p. 1) states: scorn, ridicule, disgust, dismay and despair (it's catching) involve sets 'Complex problems richlyinterconnected of 'parts' felt by people trappedin such energy-sapping, demoralising, and the relationships betweenthe partscan be more impordemotivating and disempowering work systems... Several tantthanthe nature the partsthemselves. of New properties, readerswrote bitterly about the effort they were compelled arisefromthe way the partsare orgaproperties, 'emergent' to waste in creating a simulacrumof efficiency for audit nized.Evenif theparts a can constituting complexsituation be purposes-as if it were possible to fattena pig by measuring identified separated therefore, may of little help and this out, it, as one memorablyremarked.' 7). becausethe most significant the (p. features, emergent properties, How can it be that actions taken to improve the perforthen get lost...The significant factorsinvolveddo not easily and situation itself can seem mance of the system are actually detractingfrom it? Part identifythemselves the problem to haveno boundary.' of the malaise is surely attributable the notion that perto formance measurementhas become a job for experts, and If proof is neededthatmanagers'obsession with maximizing the collection of information enable them to evaluatethe to the performance the partsof systems leads to unintended of performanceof the system imposes a heavy administrative consequences,then perhapswe should consider one of the burdenthat actually serves to detractfrom the system bemost topical and perhapsprevalentemergentpropertiesthat ing able to do what it is supposed to do. Furtherit is peroccupies concernin our social and work systems: stress. to haps important distinguishbetweenqualityassurancewith The UK Health and Safety Executive (HSE, http://www. its emphasison provingwhat has been done and how it has accessed 12 January2005), a hse.gov.uk/stress/index.htm, been done ratherthan quality enhancementwhich is more commissionsponsoredby the UK Government's Department about taking action to improve currentpractices (Harvey, of Workand Pensions,defines stress as 'the adversereaction 2004, http://www.qualityresearchinternational.com/glossary/, people have to excessive pressureor other types of demand 20 September2005, last accessed 19 June2006). Also, qualplaced on them' (2005). Modern organizationsare stresstendsto focus on the shorttermand 'big events' ity assurance ful places and stress is an expensive cost to business. HSE such as the qualityauditinspection,whereasqualityenhancecommissionedresearchhas indicatedthat: ment implies a continuouseffortto improvethe performance * about half a million people in the UK, out of a working of the system in the long term. It is easy to be seduced by of 28.5 and audit-driven tables but it is worthwhile population approximately million,experienceworkexpertise league relatedstress at a level they believe is makingthem ill; at the reductionist mind-setthat such praclooking critically * nearlyone in five of all workingindividualsin the UK feel tices are based upon. Caulkin(2002) remarkedthat reductionistapproaches,in 'very' or 'extremely'stressedby theirwork;and * work-related stress costs society about ?3.7 billion every of on theperformance theparts,cannotworkbecause focusing arebasedon breakinga systemdown into its component year (at 1995/6 prices). they parts and then attemptingto control and maximize perfor- A whole industryis evolving to help us manageand develop manceby settingtargetsfor the parts.The criticalassumption our understanding stress and its various manifestations. of of the reductionist approach, though,is thatthe performance Some approaches stressfocus on the individual,while othto of a system is based on the performance the partsin isolaof ers adopt a systems perspective.Seddon (2003, p. 36) adtion but Ackoff (1981) notably observedthat 'The essential vances a systems view of stress with referenceto condition of properties a systemtakenas a whole derivefromthe interin service centres,thus: actions of its parts,not theiractionstakenseparately.' 16). (p. 'To hold the workeraccountable theirperformance for when of Anyone who has experiencedthe frustration standingon a in fact their performance governedby the systemcauses is railwayplatformwaitingfor a connectingtrainwhose arrival hold themaccountable the stress.Becausetheirmanagers for of is doubtfulwill appreciatethat the performance a system workthey do, servicecentreworkersoften believe, as their is a productof managingthe interactions between the parts for When do, managers thattheyareaccountable performance. and not maximizing the performanceof any single system havea bad day they leave workfeelingguilty,ashamed, they part. responsible.' Further,Caulkin (2002) recognized that emphasizingthe How managers approach control and performance manpartsof the system throughtargetsettingcauses managersto of a system's behaviour. agement clearly reflects their assumptionsabout employee neglect important emergentaspects motivation. McGregor (1960) distinguished two very difSimilarly,Ackoff (1981) pointedout, 'whena systemis taken ferent approachesto workforce motivation and their conapart it loses its essential properties.'(p. 16). Hence, in a of sequences: Theory X 'assumes employees are inherently complex system,the interaction the partsmay produceunthatmay be regarded desirableor as intendednew properties lazy and will avoid work if they can. Because of this workfor undesirable. ers need to be closely supervisedand comprehensivesysUnfortunately, managers, complexsystemsdo not operatein a predictable mechanisticway and this is what tems of controlsdeveloped' (Wikipedia,http://en.wikipedia. As makesthe resultantemergentproperties unpredictable. so org/wiki/TheoryX_and_theory 1 June 2006, last accessed _Y,

AJ and Gregory-Target leansystems viable setting, systems 1505

19 June 2006) and TheoryY 'assumesemployees are ambianxiousto acceptgreaterresponsibility, tious, self-motivated, and exercise self-control and self-direction...There is an for by opportunity greaterproductivity giving employees the freedom to do their best.' (Wikipedia).These assumptions are reflected in Miller and Skidmore's (2004) distinction and Miller and between hyper-organization disorganization. as Skidmore (2004) define hyper-organization 'the restless pursuit of greater efficiency and the most rational way to pursue objectives', whereas disorganization'reflects workwhich ers' desire to associate themselveswith organizations them more autonomyand the facility to develop their give own skills and ideas.' While Miller and Skidmorerecognize that internaldesires are often currentlysacrificedto external as they regarddisorganization pressuresfor accountability, more viable' (2004, p. 16) and cite ThomasMalone in 'ever his book 'The Futureof Work',who opined;

of perpetuation members' sharedvalues and in which there be a stronger thancontrol.Miller may emphasison trustrather with referenceto the development andSkidmorequotedKelly of such companies, 'When you have a zillion differentopOne tions, you have to have differentways of cuttingthrough. of the ways you cut throughthose options is you use value sets. You have a set of values thatenableyou to navigate,because it automatically says, 'Don't botherwith these choices. You don'thave to worryaboutthese.' (2004, p. 55). It may be to that trustis a viable alternative controlin the organization of the futurebut such a changewill requiremuchof management.Miller and Skidmorearguedthat 'grown-up'trustdoes not so much requirea leap of faith on behalf of management but rathertheirgainingan understanding the good reasons of for trustingone anotherand learning about how to operate in a trustratherthan auditand inspectionmode. The reasons include understanding trade-offs and enabling learning the abouthow to managefailurebetter.As Skidmoreand Harkin in 'Weareat the earlystagesof... a revolution business-that recognized, 'Trustcan help us managethe uncertainties that in be as profound the democratic as revolution the modernworld places in our path. Since we can't know mayultimately again,the resultwill be a worldin which everything,we need to let trustdo some of the work for us.' government...Once A peoplehavemorefreedom. worldin whichpowerandcon(2003, p. 2). trolin business spread are morewidelythanourindustrial-age The less desirable aspects of our modern organizations, ancestors wouldhaveeverthought possible.A worldin which excessive controland lack of trust,can be seen as emerging moreandmorepeopleareat the centreof theirown organizafromthe employment reductionist of controlandperformance tions.'(MillerandSkidmore, 2004, p. 35). measurement methods.From a reductionist perspectivecontrol precludesa need for trust.However,work conductedby Miller and Skidmoreemphasizedthe pluralisticaspectsof Skidmoreand Harkinshows that trust is extremely importhus: disorganization, tant in many modern organizationsand, it may be argued, trustprecludesa need for control.From a systems perspecleaders to makethewholepuzzle is 'Thetaskfororganizational control is tive, though, control and trust go hand-in-hand; less to morevisibleandtherefore threatening; findnewwaysof exercisedto maintainthe integrityof the whole, using 'manthe and of surfacing combining views andaspirations as many as agement by exception' and trust is exercised in relation to peoplewithintheirorganizations possible.We believethis to at impliesan approach experimenting, leaston the margins, individuals and groups who will mostly not exhibit 'exwithnewwaysof involving (2004, ceptional' behaviourrequiringclose oversight and control peoplein decision-making.' p. 70). (following Beer, 1985). How such an approach may be made practicablefor managerswill be critically discussed in the It is widely accepted in managementthat it is expedientto next section. involve affectedpeople in decision makingbecause they are then more likely to be committed to seeing a decision to The need for a systems approach in which they have been partyimplemented practice.Hence, the need for controlmeasuresin such situationsto ensurethat In associatingpopularcontrolandperformance measurement people are doing the right things may be minimal.Skidmore methods such as targetingwith the reductionistapproach,it Harkin(2003) regarded trustto be 'a basic humanneed: each may be assumedthatthe systems approach, being the logical of us relies on others acting as they say that they will, and offers freedomfrom such methods. oppositeof reductionism, we need others to accept that we will act likewise.' (2003, This is a false assumptionbut before we go on to discuss when people are attractedto organizations why this is, it is, first of all, importantto define what we p. 2). Similarly, that reflecttheir own values, is there not a greaterdegree of mean when we talk about a system. Drawingon Flood and trust?People may not even feel the need to be involved in Jackson(1991), a systemconsistsof a number elementsand of decision making about issues that affect them because they the relationshipsbetween the elements. A richly interactive can trustpeople to make the 'right' decision. Skidmoreand from those in which few group of elements can be separated Harkinrecognized this in referringto Michael Power's arand/orweak interactions occur by drawinga boundary which as gument that 'Trustreleases us from the need for checking' effectivelydefineswhatis regarded being inside the system andwhatis regarded externalandformingthe environment. as (2003, p. 7). The faith-basedcompanyrepresentsa good extowardthe The system identifiedwithin the boundarywill have inputs ampleof a type of organization stronglyorientated

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and outputsacrossthatboundary the systemperforms and the of transforming into outputs. purpose inputs For a system to performthe purposeof transforming inputs into outputs,controlis necessary.Freedomfrom control, from a systems perspective,would lead to fragmentation and of ultimatelythe destruction the systemitself (Luckett,2003). Whatis important fromthisperspective to achievethatlevel is of controlwhichoffers maximumfreedomfor the partsof the system while maintainingthe integrityof the whole (Beer, 1972). Hence, controlis a key systems concept and systems that work thinking can help managerscome to understand is all aboutchangingand managingthe interactions between variablesin orderto bringaboutmoredesirableemersystem of gent propertiesand maximize the performance the whole ratherthanthe parts. A good understanding controlfrom a systems perspecof tive is essentialif this is to be achieved.Wiener(1948) placed muchemphasison the need for systemsto be effectivelycontrolledthroughthe process of 'negativefeedback'.This process involvesthe rapidandcontinuous relayingof information about any divergenceof behaviourfrom the predetermined goal. In response to this information,correctiveaction can be initiatedimmediatelywhich will bringbehaviour back towards the goal. This form of control can be regardedas an ideal modelas it is very muchfocusedon espousedstatements of what the system is designed to achieve. In reality, control measuressometimesbecome distorted, if one studies and them in a criticalway then differentactualgoals to those espoused may be derived(see, eg, Zadek, 2004). Hence, from a systems perspective,criticalreflection(see Mingers,2000, for a discussion of what it is to be critical) is necessaryto ensure a clear link between the actual goals of the systems, in the work that is undertaken pursuanceof those goals and performancemeasures.If these links are realized, then the datacollected with respectto performance measurement will be regardedas integralto the work itself ratherthan an administrative becauseit helps faciliburden.This is important tate a shift in focus from short-term qualityauditinspections to long-termsystems development. This shouldbe purposive in bringing about a change in thinking about performance measurement; away from the short-term reward/punishment mind-setto thinkingabout it as somethingthat is construcin tive in helping achieve an improvement the organization's in capacityfor performance the long term. Such a change in thinking about performancemeasures may also be facilitatedby involvingpeople in designingthem. From a systems perspective,participation not merely for is reasonsof expediencybut also there is good theoreticalreain soning which is well articulated Churchman's aphorisms that refer to the systems approach(Churchman, 1979). Acthere are many possible worldviews cording to Churchman, based on differenttaken-for-granted assumptionsand managers need to recognize this because 'differentworldviews give rise to completely different evaluations of purposes Churchman and performance'. Further, recognizedthat each

individual view is limited and only by bringing together differentworld views can an approachto a whole systems view and a claim to objectivitybe made. Hence, it is a good idea to 'sweep in' as many views as possible. For managers this implies the adoptionof a 'heroic mood'; firstlybecause the attemptto take on the whole system is not achievable but remainsa worthwhileideal and secondly because it goes against the dominantmanagementthinking that designing control measures demands expertise. From Churchman's perspectivethough,when it comes to decision makingabout aims and objectives, which inevitably involve ethical and value claims, there can be no experts. Managersneed to recognizethis because it has important implicationsfor their status as professionals and the rights of others as regards makingdecisions that affect their lives and work. Having now, in a most general way, outlined a systems we approachto control and performancemeasurement, are in a position to derivea set of generalsystems principlesfor measurement. Measuresshould: * focus on the performance the whole system as defined of by a boundary judgement; * relateto what the system actuallyexists to do; * serve to improveperformance; * considerthe long-termviability of the system; and * be designedin a participatory way. There are a variety of differentapproachesto performance measurementthat reside under the systems banner and in the next section two such approachesare described. The first, Stafford Beer's viable system model (VSM), is a well-established model that was derived from theoretical first principles, whereas the second, John Seddon's 'lean' is thathas systems approach, a relativelyrecentdevelopment from practice.The general systems prinprimarilyemerged set ciples for measurement out above will providea basis for the two approaches. comparing The viable system model The name 'cybernetics'was first appliedto a field of study by Wiener.He definedcyberneticsas the 'science of control in andcommunication the animalandthe machine'.Notwiththat standingWiener'sdefinition,it was apparent cybernetics could be applied to the study and control of all extremely complex systems. Beer took cyberneticideas into the organizationalcontext and made them useful for managersthrough the developmentof the VSM. Thereare threekey books that trace the developmentof Beer's work:in Brain of the Firm, principleswere derivedfrom analogy between the firm and the workingsof the humanbody and nervoussystem; in The Heart of Enterprise,Beer derivedthe VSM from cybernetic
first principles; in Diagnosing the System for Organizations,

Beer provideda manager's guide to the VSM. It is fromthese three sourcesthatthe following accountis drawn.

AJ and systems 1507 Gregory-Target leansystems viable setting,

of Table1 A summary VSM systemlevelsandassociated activities


System level Activities

SystemI

System2 System3

* has partsdirectly connected with implementation; * has partseachof whichis autonomous its ownright; in * has partswhichexhibitall the features a viablesystem,including five functions of the (recursion); * absorbs muchof the environmental variety. * coordinates parts the thatmakeup System1 in a harmonious manner; * dampens oscillations. * is a control function triesto maintain and internal stability; * interprets of policydecisions highermanagement; * allocates resources the partsof System1; to * ensures effectiveimplementation policy. of * auditchannel accessto the operations. givingSystem3 immediate * takesan intelligence and role relevant information abouta system's gathering reporting thatcaptures and environment maintains overallhomeostatic stability; * distributes or environmental information to upwards downwards according its importance; * brings and information. internal external together * is responsible policy; for * arbitrates betweenthe sometimes and on demands the organization as internal external antagonistic represented respectively System3 andSystem4; by * represents essential the of qualities the 'wholesystem'to any 'widersystem'of whichit is a part.

System3* System4

System5

The model is made up of five systems that performfunctions necessaryin any viable system (see Table 1). Beer not only focusedon the functionsnecessaryfor viabilflows operatingbetween systems ity but also the information 1-5 and betweenthe system as a whole and its environment. These can be seen in Figure 1. Accordingto Jackson(1991), following Schoderbeket al model (1985), therearethreebuildingblocksin anycybernetic such as the VSM: varietyengineering,black box technique and negativefeedback: * From a cyberneticperspective,varietyis a measureof the numberof possible states that a system is capable of excan and hibiting.Managers only controlorganizations make them responsiveto environmental if they can perturbations commandthe same degree of variety by either reducing the varietyof the environment increasingtheir own vaor Law of RequisiteVariety,1956). riety (following Ashby's This process of 'balancingvarieties' is known as 'variety engineering'. * The best way of treatinga complex system is not by seeking to analyse its parts and the interactionsbetween the parts because this type of analysis will not shed light on how to managesuch a system.Rather, such systemsshould be treatedas black boxes with only the inputs and outputs clearbutthe internalworkingsof the system shrouded from view. As such, the black box techniqueinvolves the of manipulation systeminputsandclassificationof outputs over a temporallydrawnout protocolthatenablesregularities to be discernedthatconsequentlymake the behaviour

of the system more predictable.Being able to view comfor plex systems in this way is liberating the managerwho does not have to get involvedin the detailedoperationsof the system in orderto understand behaviourin termsof its inputsand outputs. * The processof 'negativefeedback'involvesthe relayingof informationabout any divergenceof system outputfrom the predetermined goal. In response to this information, correctiveaction can be initiatedimmediatelywhich will backtowardsthe goal. In this way, systems bringbehaviour can be regardedas self-regulating. Having describedthe VSM and exploredits cyberneticunderpinnings,a review may now be made of the measuresof advancedby Beer: performance * actuality is what the system does now, with existing resources,underexisting constraints; * capabilityis what the system could be doing with existing resources,underexisting constraints; * potentialityis what the system mightbe doing by developing its resourcesand removingconstraints,althoughstill operatingwithin the bounds of what is alreadyknown to be feasible. It is importantto recognize that Beer's VSM is essentially Hence, 'who has the knowledgeto estimatecaparticipatory. pability and potentiality?'is recognized to be a value-laden questionthatcan only be decidedby involvingsystemparticipants.

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Outside World

be kept on overall performanceas future profits may be endangered. The lean systems approach In the book Freedomfrom Commandand Control,Seddon (2003) argues stronglyagainst the use of target setting and functional measures of performance.Rather,he claims to adopta systems view that appearsto be largelybased on appreciationof Ohno's (1988) work and his own consultancy experience. Ohno's maxim, capacity= work plus waste, is to fundamental Seddon's'lean' systemsapproach. advises He managerson how to redesign their systems to rid them of failure demand, 'caused by a failureto do somethingor do somethingright for the customer' (p. 26), and uses various examplesfrom his own consultancypracticeof how this can be broughtabout.The most memorable example,perhapsbecause most people have experienceof it, is the tale relatingto failuredemandin call centres.Who has not been exasperated by a conversationwith a call centre operatorwho is determinedto stick to theirscriptwhetherit answersthe questions that you have or not? Failure demand is high in call centres becausethey providea service thatis based on operators who are trainedto delivera standard responsethat is not tailored to customers'specificrequirements. call Further, centre focus on functionalmeasuresof the numberand managers of duration calls takenby individualoperators such meaand sures fail to captureinformation aboutfailuredemand:'In a call centre,variationwill be causedby the natureof the call, customers,products,procedures,availabilityof information, knowledgeof the service agent and so on... It is as Deming in andotherstaught:95%or moreof variation performance is in the system. By workingon the agents,servicecentremanwaste of agers are workingon the 5%. It is an extraordinary resource.'(2003, p. 35). Seddon (2003, p. 51) management of counsels that to improve the performance such systems, need to focus on eradicatingfailure demand and managers improvingthe abilityof the system as a whole to enhancethe customerexperience: 'Totackle variety a command control the with and is philosophy It to stifletheorganization's to ability handle variety. is to make customers the serviceyou havedesigned, take makingagents and It stickto procedures targets. is not the sameas focusing customers. it showsto customers, And agentson serving many 'if of ourserviceorganizations effectively to customers you say wantthis, this is whatYOUhaveto do to get it', not exactly customer-friendly.' Seddon'scall centreexamplereflectsbehaviourthat, according to Espejo, leads managers to experience the 'control dilemma' (Espejo et al, 1996). Managers,being of a lower perceive that they need more variety than the organization, Uninformation exerciseeffective controlover operations. to their need for more and more information make fortunately, less operationsless flexible and the organization able to deal

Local
Environments
A
IA

IB

IC

Key

1 2 3 3* 4 5 A-C 44-10

Operations Co-ordination Control Audit Channel Intelligence Policy Divisions of a system Informationflows

Figure 1 Beer'sVSM.

The three levels of achievementcan be combinedto give threeindices: * productivity: ratio of actualityand capability; the * latency:the ratio of capabilityand potentiality; * performance: ratioof actualityandpotentiality also the and the productof latency and productivity. Beer held these measuresin preferenceto the bottom line of profit as a measureof system performance because they are able to identify short-term measuresthat endangerlongterm viability.For example,if profitis the only performance measureemployed,then when managersare put underpressure to deliver they may be tempted to reduce the budget for researchand development.Such a reductionmay cause a reportedincrease in this year's profits but the latency index will deteriorate. This should signal that a carefulwatch

and AJGregory-Target leansystems viable systems 1509 setting,

with customers'demands.The more variety is perceivedin customers'demands,the morefreedomand flexibilityshould be grantedto workersto enable them to deal with that dewho aretied to a controlmindmand:butthisplacesmanagers set in a dilemma.Seeking to re-establishcontrolby reducing the freedomof workersmerely serves to exacerbatethe situation;it is with some ironythatthe managercomes to realize that only in grantingworkersgreaterfreedomcan controlbe achieved.The effect of the controlfreakmanagerwho effecwill tively binds the organizationup in a straight-jacket be revealedwith Seddon'sapproachsince 'Capabilitymeasureabouthow well the system mentis essentialin understanding absorbsvariety.'(2003, p. 51). to variThe abilityto respondappropriately environmental is clearly important both for the short-and long-termviety between ability of the system.As such, Seddondifferentiates andpermanent measures.Temporary measuresare temporary when thereis a problemin the systemand are useimportant its ful in ascertaining natureand size so that it may be dealt with appropriately. Such measuresmightincludethe type and frequencyof 'dirt' in input for example why forms are not being completedfully. Such a problemmay requirea change to the contents of a form or its layout. Once the problem has been dealt with the measurecan be discarded.Permanent measuresare more enduringand are relatedto purpose. A good exampleof a permanent measureis end-to-endtime, in other words 'how long does it take from the customers' point of view to do the work?' Indeed, Seddon is clear about the importanceof the customer and advises that 'the customershould be taken as the The systemboundary'. artof makingjudgementsaboutwhere the system-environment boundarylies is an importantpart of the systems approach(see eg, Churchman,1979; Ulrich, 1983, 1996; Midgley, 2000) and Luckett(2003) refers to it dilemmafacing systems thinkers'(p. as 'the most important 49). Seddonrecognizedthat his way of deciding boundaries is controversial: 'Othermoreinclusiveapproaches systems to but thinkingmightbe interesting not, in my experience,profitable.' (2003, p. 184). Taking the customer as a focus is furtherjustified on the groundsthat it facilitatesgreaterunof derstanding the customerdemandwhich helps bringabout clarity of focus aboutpurposeof what the system should be and learningaboutvariation varietyof customerdemand. and This knowledgecan be used to help managers,and workers togethermake 'the work work' by improvingthe flow endto-end and the capabilityof the system to be responsiveto customerneeds. As Seddon states, 'the people who do the workmustbe able to decide the 'best' way to handleany particularcustomerdemandto maximizeefficiency.'(Seddon,p. 78). This type of approachis based on an in-depth understandingof 'how the work works' and the capabilityof the system, in other words it is 'a knowledge based approach'. this liberatesmanagers Further, type of participative approach from tryingto controlwhat individualworkersin the system are doing and encouragesthem,rather, focus on designing to

the system for improvedperformance: frommanaging focus people-ensuring 'Management's changes the that people do as they 'should'-to managing systemand how understanding improving well the workflows,endto is demands...It a stepthatmanagers end,to fulfilthecustomers' are only prepared take when they have first learnedthat to theirorganization's is by performance governed the systemand makethisconceptual not thepeople.Oncemanagers leap,they timedoingpeoplemanagement ('one-to-ones')...' stopwasting (2003,p. 37). In Seddon's approach, thereis a complementary relationship between managersand workers:managersare no longerjust thereto controlworkersratherthey are thereto lead the creation of organizations provideworkerswith work that is that meaningfuland fulfilling. In summary,the three steps in Seddon's 'lean' systems to are approach performance improvement shownin Figure2. are Seddon'sclaims for his approach impressive:'because the measuresare in the hands of people who do the work and are relatedto purpose(serve customersand improvethe work), the culture changes to one that is engaged, innovative and cooperative.'(2003, p. 135). The ideas that Seddon advances are appealingand, in parts, clearly reflect established systems ideas; however,one must questionhis claim to advancean approachto systems thinkingthat is different to others in that it is 'linear and reductionist-it is logical.' (Seddon,p. 182). Comparing systems approaches In the above section, two approaches that use systems printo bring abouteffective controland performance meaciples surement weredescribed. The firstapproach, Beer'sVSM was initially derivedfrom analogy,then groundedin theory and has since been appliedboth at the level of the organization, for example in the wholefood co-operativeSuma (Walker, 2005, http://www.greybox.uklinux.net/vsmg_2.2/index2.html, 11 November2001, last accessed 19 June 2006), and on a nationalscale, for examplein the 1970s Beer acted as an advisor to President Allende in his attempt modelthe Chilean to discussionof the economy on the VSM (for a contemporary significance of this work see Beckett, 2003). The second Seddon's 'lean' systems, as has been said, is a relapproach, atively recent developmentthat has primarilyemergedfrom his well-established consulting practice. Having described both approaches,the earlier derived set of general systems principles for measurementmay now be employed as a frameworkfor facilitating their comparison(see Table 2). The evidence presentedin Table2 is based on an interpretation of the originators'descriptionsof their approach(Beer, 1972, 1979, 1985; Seddon,2003). It can be seen from Table2 thatwhile the two approaches clearly embracea common system orientation,as they both embody the general systems principles,they each do so in

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Journal the Operational of Research Vol. Society 58, No.11

CHECK
understand organisation a as your
system o Whatis the purposeof this

system?
o Demand- what is the natureof

customer demand? o Capability whatis thesystem


capableof achieving? o Flow - how does the work work? o System conditions- why does the

behave way? this system

DO takedirect action thesystem on the action and o Take planned monitor consequences the versus purpose

PLAN leversforchange identify to needsto change improve o What purpose? performance against and action couldbe taken o What whatwouldbe thepredicted consequences? whatmeasures should o Against action taken ensure be (to learning)?

Figure 2 Three steps in a lean systems approach(adaptedfrom Seddon, 2003).

their own particular way. Hence, an evaluationbased on the general systems principleshas not served to enable a judgementto be maderegarding usefulnessof one overthe other. the On a personal note, the VSM appearsto be more theoretically well developedand demanding; though in terms of popularappealthis may well be a disadvantage. Experience of teaching the VSM and feedback from Masters students has led me to believe that its appeal is not immediateand it is only with time that one comes to appreciatehow well the thought-out model actuallyis. The slowly developingappreciationof the VSM contrastsstarklywith the lean systems which has a more immediateappeal.Seddonarticapproach ulates well the problemswith controland performance measurement basedon targetsettingandhis approach, focusingon failuredemandandmakingthe 'workwork',clearlyresonates with managers. Beer's VSM is clearlygrounded cybernetic in but, perhaps,appearstoo theoreticaland lacks the principles common sense appealthatpragmatic managersvalue. To force a choice between the lean systems approachand the VSM would be difficult without seeking to first apply them in practicein orderto evaluatewhat insightsthey offer. In the next section, both approacheswill be applied to the case of a business school. Case-study In this section, a thoughtexperimentusing Beer's VSM and Seddon's lean systems approachwill be reported.It should

be recognizedthateach application was 'quickanddirty'and not of the type that an expert in either approachmight produce. Further,as the applicationwas a thought experiment conductedon a fictional case, the methodologieswere not way and this is clearly recogemployed in a participatory nized as a limitation.Nevertheless,it has been possible to draw some conclusions about each methodology'sstrengths Takand weaknessesfrom this non-participative application. ing a UK businessschoolthatis wantingto improveits perforand manceas the subject,the questionof whataspects,matters measureseach approachdirects attentiontowardswere addressed.The choice of subjectwas significantfor the purpose of the exercise was to see what new insights each methodology would generateabouta familiarsubjectsince learning about the methodology and not the subject was the prime purpose. The business school is partof an establisheduniversityin the northof England.Like many business schools, the dean has ambitionsfor the school to be 'full service' and engage in a portfolioof activitiesthatincludesteaching,researchand short-courseprovision for externalbusinesses. Each of the three functionalareas of the school is headed by a director. The school pays careful attentionto the guidanceprovided by the UK Quality Assurance Agency (QAA) particularly throughthe effortsof the directorof qualitywho ensuresthat appropriate quality monitoringdata are collected, analysed and reviewedwith an eye to improved practice.Globalization and the dependenceof the UK higher education sector on

AJ and Gregory-Target leansystems viable setting, systems 1511

Table 2 A comparisonof lean systems and viable systems approaches Principlefor Measurement Focusses on the performanceof the whole system Comparison ViableSystems:What is meantby the whole system is made problematicas systems are understood to occur in hierarchies(the meta-system,the system-in-focus,and sub-system(s)).This distinctionis useful in terms of making systems analysis manageableand directs us to think aboutthe embedded natureof systems and the flows of informationthat are necessary to ensure harmonybetween the differentrecursionlevels. Lean systems: Customersare taken as the extent of the system. This simple approachto defining systems boundaries is clearly expedient in consultancy practice since it obviates any need to make problematicboundaries and to adopt different perspective in terms of what constitutes an improvementin system performance. Viable systems: What the system exists to do is determinedin a way that respects the views of The tasks allocated to System 1 parts clearly relate to what the systems exists system participants. to do and the model is clear that supportfunctions should not be present at this level since they are not what the system exists to do. Lean systems:A reactiveperspectiveis promoted:the systems exists to 'fulfil customers'demands'. The role of workersis to know how the 'work works' and to carry it out in that best way; the role of managersis to work the system-understanding and improvinghow well the work flows, end to end. Viablesystems:The functionsand informationflows are only those which are necessaryfor effective performanceand viability: any more and the system would be unnecessary and encumber the system, any less and it would not be viable. Lean Systems:To improvethe performance systems, managersneed to focus on eradicating of failure demand and improvingthe ability of the system as a whole to enhance the customer experience. Viable systems: A viable system is one which is able to respond to changes that could not have been envisaged when the system was first created. Through System 4 of the VSM, an ability to identify changes in the environmentand respond to such changes is promoted.The performance measures embraced by this model focus on enhancing the capacity of the system for improved performancein the long term. Lean systems:Focusing on customerneeds clearly enables the system to be responsiveto changes in demand. The focus on capability ratherthan functional measures is clearly orientatedtowards enhancingthe capacity of the system for improvedperformancein the long term. Viable systems: While the performance measures that Beer advances are generalist in nature, stakeholdersin the system are supposed to participatein deciding purposes and the VSM offers a means of pursuingthe purposesefficiently and effectively with only those constraintson individual autonomynecessary for successful operation. Lean systems: The definition of functional measures generated through a participativeprocess is rejectedon the groundsthatthey arerenderedsubjectiveand meaninglessfrom a controlperspective. in However,the approachis essentially participatory that it recognizes that the challenge in many organizationsis to move the decisions aboutthe design of work to where the work is actuallydone.

Relates to what the system actually exists to do

Serves to improve performance

Considers the long term viability of the system

Is designed in a participatory way

recruitment forced the school to look critiinternational has at how teachingcontentand practicemight betterserve cally the changingneeds of its students.The importanceof internalizationand the need to strategically align itself with other businessschools outsideof the UK has led to the top-ranking of appointment a directorwith responsibilityfor this aspect of the school's operations.In the ever-increasingly competitive marketfor students,the school has sought to become sophisticatedin its communicationswith potential students and its marketingof its programmes.The directorof marworks to coordinatethe marketketing and communications ing effort and also to evaluatethe effectiveness of different The school systems of externaland internalcommunication. is accountableto the universityfor resourcesand a finance

the manager prepares school's budget,managesthe allocation of resourceswithinthe school and monitorstheiruse. Given the diversification the school's activitiesand the appointof ment of several directors,a policy and resourcescommittee has been formed, involving the dean, the directorsand the financemanagerto coordinatethe school's activities. Turningattentiontowardsthe applicationof the VSM, the firsttaskis to identifythe system-in-focus.It is usualto think in termsof three recursionlevels, one above and one below the system-in-focus.As Jackson,2003 recognizes'Therewill always be a choice of 'dimensions'along which an organization can unfold its complexity.'(p. 90); hence, the dominant view taken as to the primaryactivities may be regardedas being decided on the basis of judgementand environmental

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of Journal the Operational Research Vol. Society 58, No.11

RECURSIONLEVEL0 Universities in England UniversityX UniversityY UniversityZ RECURSIONLEVEL 1 UniversityZ Arts Social Sciences Physical Sciences Medicine Business RECURSIONLEVEL2 Business School Learningand Teaching

Research ExternalBusiness

Figure 3

Systems identification:triple recursionlevels (adaptedfrom Jackson, 2003).

exigencies (hence, what may seem an 'obvious' division of activities should be subjectto question).See Figure 3 for an adaptedversion of Jackson'ssystems identification diagram of a business school. It is importantto point out that this form of identification (focussingon the meta-system,systemin-focus and sub-systems)is far removedfrom a hierarchical chart.For Beer (1985), such chartsoffer little organizational methodfor blaming purposeaside from being 'a procedural somebodyfor whateverhas gone wrong' (p. i). The next step in the diagnosisprocess is to check whether all of the functionsandcommunication flows arepresent.This (see checking process can be summarizeddiagrammatically Figure4). It can be seen fromFigure4 thatthebusinessschoolin order to operateeffectively and efficientlyin VSM terms should: * regardits System 1 parts as comprisingof its main areas of activity (learning and teaching, researchand external business); * allow each of its System 1 partsto be relativelyautonomous so that it can absorblocal variety; * have a co-ordination function (System 2) involvingmeetof the directorsof each of the System 1 partsto enings sure that they do not act selfishly but in the interestof the school as a whole (policy and resourcescommittee); * have a control function (System 3) that acts to balance demands for resources and allocate them appropriately through a budgeting process and the auditing (System 3*) of how those resourcesare being used (finance manager/policyand resourcescommittee);

* respect the need for intelligence (System 4) by gatheraboutlong-termtrendsand projectingthe ing information system's image out to the environment(here it is important to recognize the increasingemphasis on quality assurance/enhancement proceduresand internationalization making necessarythe roles of directorof quality and directorof international relations,and increasingprofessionalism as regardsmarketing communications); and * have a functionthatdetermines policy (System 5) and also representsthe interestsof the business school within the wider university(the dean and the school board); * implementthose communication channelsthat are necesflows to where it is needed and sary to ensureinformation can be dealt with effectively. Havingredesignedthe businessschool accordingto the VSM, the next stage of the diagnosiswould involve makingjudgements about the actuality,capability and potentially of the system. As has alreadybeen mentioned,while actualitymay be based on availabledata aboutthe system's currentoperations, it may be arguedthat in consideringquestions of capabilityand potentialitythe diagnosistakes a subjectiveturn This concernmay be addressed involvingsystemparticipants. through,for example,the use of Soft Systems Methodology (Checkland,1981) or, as will be discussedlaterin this paper, Critical Systems Heuristics(Ulrich, 1983, 1996) to surface any concernsthat there might be, for example aboutthe reland Beer's ative contribution power of participants. Further, between actualityand capabilitysuggests that differentiation thereis slackin the system:clearlythis is not alwaysthe case.

AJGregory-Target leansystems viable and systems 1513 setting,

World
Outside SRelations,

Dean
School
Board
Director of Quality , Director of International

and Director Marketing of 1 Recruitment Team, Widening Participation Group.


Communications, plus various others, incl.

PRC&
Finance

Channel Audit Local Environments


L&T

Manager

PRC

L&T
Director.

Director-

EB

EB

Director.

Key

L&T R EB PRC

& Learning Teaching Research External Business Committee Policy& Resources


Informationflows

to school. Figure4 TheVSMapplied a business The notion of potentialityis an interestingone that may be aligned with Ackoff's process of Idealized Design (Ackoff, 1994) but it does not tell us how to developresourcesand remove constraints. Hence, the indices of productivity, latency and performance are associatedwith Beer's measuresof that performance appearto be too theoreticalto have relevanceto operational practice. Attentionwill now be turnedto the application Seddon's of In approach. Table3, threeprimaryactivitysub-systemsof a full-servicebusinessschool and measuresthat are commonly used for reportingquality, such as module and programme evaluationquestionnaires considered.Lookingat the sysare tem in this way brings clarityto its purpose(it is also highly to complementary the definitionof Systems 1 functionsin the VSM diagnosis). In this discussion, we shall furtherfocus on the teaching and learningsub-system.The customersfor this system are focus shall here potentiallynumerousbut an uncontroversial be adoptedwith the acceptance studentsas the sub-system's of customers.

The firstissue to be addressed how resourcesareplanned is with regardsto learningand teaching.As more universities workloadmodels there is a shift towards adopt standardized demandas units of productionwith standard times viewing and standardprocedures(it may be argued that the UK's QualityAssurance Agency is a key figurein this drivetowards Hence, the focus in resourceplanningis on standardization). the numberof modules/programmes with estimating required the resources(lecturerhours) needed to prepareand deliver them with little considerationof studentdemand.However, as Seddonstates 'managers know nothingaboutthe natureof this demand.'(p. 26). It is next necessaryto considervalue demandand failure demand.Value demandis essentially the delivery of a modand ule/programme the various activitiesthat are associated with this. Failuredemand,on the otherhand,is somethingthat causesthe customer(in this case the student) makea further to demandon the system. Failuredemandon the largescale (inof volving,for example,the re-teaching a module/programme) is rare but on the small scale, for example seeing students on an individualbasis to answer their specific questions, is Seddon relativelycommon and to a large extent unrecorded. advises that if failuredemandis predictable then actions can be takento eradicateit but if not thenjust got to accept that thingswill always go wrong.In the case of studentsthis is an interestingquestion-how often do studentsbadgerthe lecturerwith questionsbecause it is an easier way of learning than doing the suggested reading and seeking to find their own answers? There is a note-worthyinteraction here between measures thatfocus on resourceplanningandoperational management; failuredemandclearlynegativelyimpactson resourcesbut, if addressedto the customer'ssatisfaction,it can actuallyserve to improveoperational measuresof performance. How happy the studentis with the lecturerthattakes an houror so to tell them all thatthey need to know to completetheirassignment ratherthan have to read some boring old textbook!From an operational perspective, commonlyacceptedmeasuresof system performance pass rates and module evaluationquesare tionnaire(MEQ)results.Playing Devil's Advocate,focusing on such measuresmay cause module leaders to be creative in seeking to improveresults:pass rates can be 'improved' by makingthe assessmentseasier and/ormarkingto a lower and standard, MEQ resultscan be 'enhanced'by focusing on studentsratherthaneducatingthem. We can see entertaining that the measuresthat are being employed are inappropriate in that they can actually serve to detractfrom the system's and performance may in the long-termendangerits viability. So what measuresmight be more appropriate the purpose to of teaching and learning?The purposeof the sub-systemis to deliver teaching in order to bring about learning. It has to be remembered though that if this purposeis to be realized both the lecturerand the studenthave to deliver their module descriptor specified inputs (for example, a standard shouldspecify both teachingand learninghours).This means

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Journal the Operational of Research Vol. Society 58, No.11

Table 3 The three sub-systems of a business school Teachingand Learning School Level Title Focus Measures Directorof Teaching& Learning Creationof value for students Recruitment,variationin pass rates across programmes, variationin programmeevaluation questionnaire(PEQ) results across programmes Directs learning and teaching activity ProgrammeLeader Creation of value for students registeredon programme Number of studentsregistered on programme,programmepass rates, PEQ result, variationin pass rates across modules, variationin Module EvaluationQuestionnaire (MEQ) results across modules Co-ordinatesand guides module leaders,acts on causes of variationwithin the programme team's control, acts on causes of variationbeyond the team's control Research Directorof Research Creationof knowledge Numberand qualityof papers published,numberand size of researchgrants awarded Directs researchactivity External business Directorof ExternalBusiness Creation of value for corporate clients Number and size of corporate contracts secured, income from corporateclients Directs externalbusiness activity Course Manager Creationof value for corporateclients throughthe satisfactionof their training needs Income from trainingcourses, numberof courses delivered

Role Group Title Focus

Head of ResearchCentre Creationof knowledge by members of researchcentre Number and quality of paperspublishedby members of researchcentre, number and size of researchgrants awardedto members of researchcentre Co-ordinatesand guides researchcentre members, acts on causes of variation within the researchcentre's control, acts on causes of variationbeyond the research centre's control Researcher Creationof knowledge Successful grantapplications and publishedjournal papers Writingjournal papers; writing projectproposals and conductingresearch

Measures

Role

Co-ordinatestrainingactivity

Individual Title Focus Measures Role

Module Leader Creationof value for studentson module Module pass rate, variationin MEQ results for differentintakes Delivery of module

Course Leader Creationof value for corporateclient commissioning course Course pass rates, course evaluationquestionnaires Delivery of course

thatthe system needs some way of checkingthatboth parties have deliveredwhat they are committedto before any operationalmeasureof system success/failurecan be determined (andhence the onus for ensuringthatlearningcomes aboutis not merely on the module leader).The use of on-line learning may well be useful in this regardas it provides a way of checking the amountof time that a studentdedicates to learningactivities. is Seddon'sapproach also concernedwith the flow of work With regardto teaching,most lectures and its predictability. schedule and seminarsoperate to a strict and standardized hence demand is predicable.Uncertaintyenters the system thoughat the startof each academicyearbecauserecruitment varies from year to year, particularlywith regardsto first and year undergraduates taughtmasters students.A way of

wouldbe to set 'appropriate' the stabilizing in-flowof students (in entryrequirements termsof the business school's ranking of in league tables) and to maintainthem. The predictability to be made conversionratesfromapplication registration may morepredictable througheffective datacaptureand this may the of be further through introduction effortsto 'tieimproved in' applicantsat an earlier stage (for example, application fees, pre-sessionalprogrammesand relationshipmarketing strategies).The emphasis here on 'making the work work' of clearlydrivesa questioning acceptedworkingpracticesand creative thinkingabout what changes it may be acceptable and feasible to introduce. Having employed the VSM and lean systems approaches to addressthe case of a business school, it can be seen that both serve to bring about clarity as regards the system's

AJ and Gregory-Target leansystems viable setting, systems 1515

purposebut afterthat they providedifferentbut complementhat Beer provides a tary insights. It should be remembered modelandnot a methodology(Jackson,2003) butthe process of systemidentification/diagnosis on to redesignif taken (and to its conclusion) has been well established.Beer provides the functionsto enable a system to be viable and the necesflows between functions to bring coorsary communication dinationand controlabout.However,the measuresof system performancelack operationalveracity due to their subjective nature.On the otherhand, Seddon'sapproachoffers far of measures, greaterinsightinto the identification appropriate failuredemandand the flow of workbut the idea thatthe customershouldbe takenas the systemboundary problematic. is Also, his approachemphasizesindividualprocesses without due considerationfor their coordinationand other activities necessaryfor the well-being of the whole. In the light of the case-study and the relative strengths and weaknessesof the two differentapproaches has served it to reveal, it is appropriate ask at this point how to go to forwards? Can the two approachesbe brought together? And do the strengthsof one completely compensatefor the weaknesses of the other or does somethingelse need to be In introduced? the following section, a model for controland that is based on systems principerformancemeasurement on both Seddon's lean systems and Beer's ples and draws VSM will be advanced. A systems-based model for control and performance measurement An appropriate startingpoint for creating a systems-based model for control and performancemeasurementis to address whathas alreadybeen recognizedto represent signifia cant problemfrom this perspective: how to definethe system boundary.In the case of a business school, it is easy to see ' that merely takingthe student(the customer la Seddon) as the system boundaryand seeking to only satisfy theirneeds, so by lowering academicstandards that all studentsachieve a pass, could threatenthe viabilityof the system. A business school is actuallyrequired servemultiplestakeholders to (stuexternalexaminers,accreditation dents, bodies, the university the administration, government, ratherthanconventional etc) and it is only by achievinga compromise,which customers, to a greateror lesser extent satisfies all their needs based on their common normativeinterest in the credibilityof qualifications, that the institutionwill be successful and remain viable in the longer term. Hence, in the case of a business Furschool, a simplisticdefinitionof customeris inadequate. ther, it is difficultto think of a system where such a simple definitionof customerwould be appropriate all business as organizationsneeds to pay attentionto the regulatoryenvironmentin which they operateand the growing importance of pressuregroup campaignswhich if negativecan severely impacton a businesses' viability (see McIntoshet al, 1998). In terms of the two approachesconsideredhere, the VSM

makes a move in the right directionin emphasizingviability in the environment ratherthan customersbut to take the art of makingjudgementsabout where the system-environment boundarylies seriously,it is importantto consider the contributionsof Churchman, Ulrich and Midgley. Accordingto it Midgley (2000), prior to the work of Churchman was assumedthatthe boundary a system was 'given by the strucof tureof reality'(p. 137). Churchman's was (1979) contribution to realize that boundariesare constructsthat can be defined either narrowlyor more broadly and that how they are defined affects what insights are broughtto bear on the performanceof the systemandits improvement. Churchman's ideas were takenup by his student,Ulrich (1983, 1996) who made a significantcontribution creatingan approach revealfor by the normative contentof systems designs andjudgements ing aboutwherethe boundary a system lies. Midgley's (2000) of contribution been to stronglyadvocatethe need for prefhas acing any interventionwith a process of boundarycritique, criticallyreflect on what happenswhen there is conflict between those involved in making boundaryjudgements,and In examiningprocesses of marginalization. summary, Midgcalls for the modellingof overlapping concernsof stakeley holder groups and the identificationof areas of overlapthat may providea focus for conflictor consensus.Wherethereis conflict, there is a need to be awareof how some stakeholders and issues may be stigmatizedleadingto marginalization; wherethereis consensus,it is still important ask how other to stakeholderthat might not presently be consider would be affected. In makingpracticable processof boundary the critique(folUlrich, 1983, 1996, and Midgley et al., 1998), the folowing cus shouldbe on decidingthose social roles (not individuals) that are involvedin definingthe system, theirrole issues and addressingany key problems(this is expressedin summary as a three-stage processin Table4). The questionsarticulated in Table4 reflectUlrich's 12 boundary questionsand,having posed these questionsin 'is' mode one may then progresson to askingthe same questionsin the ethical 'ought'mode (Ulrich, 1983, 1996). It is not difficultto see that the purposes of differentgroupsof clients may well be in conflict and this would be highlightedwhen key problemssuch as the use of resourcesare considered: example,to what extentcan the for purposesof one groupof clients be sacrificedin the interests of another?It can be seen that the additionof this process of boundarycritiqueis a necessary move as most organizations are requiredto serve multiple stakeholders ratherthan conventionalcustomers,and its only by addressingall their intereststhatthe system will be successfuland remainviable in the longer term. Hence, the first stage of the process is to conducta boundarycritiquethat enables the extent of the system to be 'set'. It is then possible to move on to understanding organithe zationas a system and it is at this stage thatthe VSM may be but put to use. Takingthis stage from Seddon'sapproach basing it on the VSM would serve to ensurethatthe check stage

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Vol. Journal the Operational of Research Society 58, No.11

Table4 A threestageprocessof boundary (basedon Ulrich,1983, 1996). critique


Stage 1 Identifyroles Stage 2 Role specific concerns Stage 3 Keyproblems

fromthe system? TheClient: Whobenefits TheDecision-Maker: has a say? Who TheProfessional: Whohas knowledge? TheWitness: Whobearsthe costs?

Whatis the system's purpose? Whatresources does the decision-maker control? Whatcountsas relevant knowledge? Whatsecuresthe rightsof those affected not involved? but

Whatis themeasure improveof ment? What beyond control the is of the decision-maker? What regarded theguarantor is as of success? Whatdifferent are world-views considered?

involved a rigorousprocess of systems analysis groundedin cyberneticprinciples. Flood and Jackson (1991) provide a procedurefor using the VSM as a tool for diagnosis and clearlythe discussionat the previousstage aboutwhat is and whatoughtto be the system'spurposewill help in this regard. The secondstage of the processis to 'check' the systemusing the VSM as the basis for the comparison. In the light of information gleanedfromthe previousstage, the process may then progresson to planningfor action by identifyinglevers for change. This may involve a discussion for about recommendations change based on the comparison with the ideal model of the VSM that is temperedby a knowledgegleaned at the boundarycritiquestage abouthow will improvement be measured,whatis beyondcontrol,what counts as success and the likely predicated consequencesfor others. Hence, the third stage of the process is to 'plan' for action. The next stage is the implementationof action and the of monitoring actualconsequencesagainstthoseplanned.The fourth stage of the process is the 'doing' of action and althoughthis may be seen as the finalstage, it may lead back to the first stage and anothercycle of control and performance In measurement. Figure5, the activitiesare show in a cyclical fashion. It should be noted that the model itself constitutesa system and as such requirescontroland performance measures. look at each of the activitiesat a lower level Hence, one may of recursionand all of the activities (set, check, plan, do) folshould be evident in each of the activityboxes. Further, modes of operationare embedded lowing Flood (1996), three within the model: * Criticalreview mode-What are the anticipated effects of this stage likely to be? * Problem solving mode-What is the response to issues consideredproblematicat this stage? * Criticalreflectionmode-What was the effect of this stage and what learningcan be gleanedfrom this? On the basis of learning generatedthroughthe additionof processes of criticalreview and criticalreflection,the model itself may be said to representa viable system in that it will change and adaptin responseto its use in practice.

SET

DO

the Identify

Take direct

action on the system I boundariesby system and means of critique ............................................................. monitor the consequences

CHECK Diagnose your organisationas a

system

4............................................................. PLAN Identify levers I

for change

Key

Ky M

Clockwise cycleof problem solving activity


Clockwise cycle of criticalreview Anti-clockwise cycle of criticalreflection

..........................

modelfor controland performance Figure 5 A systems-based measurement. Conclusions The focus of this paperwas to critiquethe reductionistapmeasurement to proand proachto controland performance pose how it can actuallybe improvedby adoptinga systems perspective.The argumentwas establishedthat such a perspective offers managersa shift in focus from the performance of the parts of the system to the interactions.This shift is importantbecause the behaviourof the system is a productof the interactionsof the partsnot the behaviourof the parts in isolation. Following a review of the system approach,a set of generalprincipleswere derivedwhich were to used as a basis for comparingsystems approaches control and performancemeasurement.Consequently,two systems

AJ and Gregory-Target leansystems viable setting, systems 1517

approaches were compared and applied. The first approach, Stafford Beer's VSM, is a well-established model that was derived from theoretical first principles, whereas the second approach, John Seddon's 'lean' systems approach, is a relatively recent development that has primarily emerged from practice. Critique of Seddon's lean systems and Beer's VSM provided the basis for a model for control and performance measurement that integrates learning from both approaches and compensates for their weaknesses by recognizing up-front the need for boundary critique. The addition of a process of boundary critique to a model for control and performance measurement is important because 'It is people on whom the meaning of improvement depends first of all, for they posses the sense of purposefulness, the power, knowledge and sense of responsibility that together determine what ought to count as 'improvement' (Ulrich, 1996, p. 20).

Systems Thinking: Current Research and Practice. Plenum Press:

London.
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