Chapter 4: SYSTEMS THEORY
Provides a general analytical
framework (perspective) for viewing
an organization.
Systems Theory
Synergy
 Interdependence
 Interconnections
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within the organization
between the organization and the environment
Organization as ORGANISM
 “A set of elements standing in inter-relations”
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Overview
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General Theoretical Distinctions
Misunderstandings
Strengths of Systems Theory
Systems Framework
General Systems Theory Principles
System Characteristics
Contingency Theory
The Learning Organization
General Theoretical Distinctions
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Classical and humanistic theories prescribe
organizational behavior, organizational
structure or managerial practice (prediction
and control). MACHINE
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Systems theory provides an analytical
framework for viewing an organization in
general (description and explanation).
ORGANISM
Misunderstandings
Doesn’t focus on specific task functions
 Doesn’t directly explore the impact of
interpersonal relationships and loyalty on
productivity
 Doesn’t provide for detailed focus
 Changes in environment directly affect the
structure and function of the organization.
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Strengths
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Recognizes . . .
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interdependence of personnel
impact of environment on organizational structure and
function
affect of outside stakeholders on the organization
Focuses on environment and how changes can
impact the organization
Seeks to explain “synergy” & “interdependence”
Broadens the theoretical lens for viewing
organizational behavior.
Systems Framework
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Ludwig von Bertalanffy (1968)
Offered a more comprehensive view of organizations
NOT a theory of management - new way of
conceptualizing and studying organizations
Four Strengths (“promises”) M. Scott Poole
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Designed to deal with complexity
Attempts to do so with precision
Takes a holistic view
It is a theory of emergents - actions and outcomes at the collective
level emerge from the actions and interactions of the individuals
that make up the collective
Principles of General Systems Theory
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Laws that govern biological open systems can be applied to systems of
any form.
Open-Systems Theory Principles
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Parts that make up the system are interrelated.
Health of overall system is contingent on subsystem functioning.
Open systems import and export material from and to the environment.
Permeable boundaries (materials can pass through)
Relative openness (system can regulate permeability)
Second Principle of Thermodynamics (ENTROPY)
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Entropy must increase to a maximum
Negentropy increases growth and a state of survival
Synergy (extra energy causes nonsummativity--whole is greater than sum
of parts)
Equifinality vs. “one best way.”
Characteristics of Organizations as Systems
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Input-Throughput-Output
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Inputs
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Throughput (System parts transform the material or energy)
Output (System returns product to the environment)
TRANSFORMATION MODEL (input is transformed by system)
Feedback and Dynamic Homeostasis
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Maintenance Inputs (energic imports that sustain system)
Production Inputs (energic imports which are processed to yield a productive outcome)
Positive Feedback - move from status quo
Negative Feedback - return to status quo
Dynamic Homeostasis - balance of energy exchange
Equivocality and Requisite Variety (Karl Weick)
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Equivocality (uncertainty and ambiguity)
Requisite Variety (complex inputs must be addressed with complex processes)
Characteristics of Organizations as Systems
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Role of Communication
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Communication mechanisms must be in place for the organizational
system to exchange relevant information with its environment
Boundary Spanners perform this function!
 Media Outlets are communication link between system & environment
Communication provides for the flow of information among the subsystems
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Systems, Subsystems, and Supersystems
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Systems are a set of interrelated parts that turn inputs into outputs through
processing
Subsystems do the processing
Supersystems are other systems in environment of which the survival of the focal
system is dependent
Five Main Types of Subsystems
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Production (technical) Subsystems - concerned with throughputs-assembly line
Supportive Subsystems - ensure production inputs are available-import raw material
Maintenance Subsystems - social relations in the system-HR, training
Adaptive Subsystems - monitor the environment and generate responses (PR)
Managerial Subsystems - coordinate, adjust, control, and direct subsystems
Characteristics of Organizations as Systems
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Boundaries
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The part of the system that separates it from its environment
Four Types of Boundaries (Becker, 1997)
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Physical Boundary - prevents access (security system)
Linguistic Boundary - specialized language (jargon)
Systemic Boundary - rules that regulate interaction (titles)
Psychological Boundary - restricts communication (stereotypes, prejudices)
The ‘Closed’ System
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Healthy organization is OPEN
Do not recognize they are embedded in a relevant environment
Overly focused on internal functions and behaviors
Do not recognize or implement equifinality
Inability to use feedback appropriately
CO-DEPENDENT
Characteristics of Organizations as Systems
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McMillan & Northern (1995) on Enabling Co-dependency
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Asymmetrical communication status of the hierarchy
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The socially acceptable addiction
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Money and power as distractions
Focus on ends instead of means
Skilled communication incompetence
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Workaholics
Addiction leads to more co-dependency
The organization’s selective attention
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Levels of authority
Fear of Punishment
Deprived of useful feedback
Emotion is masked
First extension of Systems Theory into Management Practice CONTINGENCY THEORY
Contingency Theory
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There is no one best way to structure and manage
organizations.
Structure and management are contingent on the
nature of the environment in which the
organization is situated.
Argues for “finding the best communication
structure under a given set of environmental
circumstances.”
Management of Innovation - Burns and Stalker
(1968)
Two Contingency Theories
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Burns and Stalker (1968) Management of Innovation
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Organizational systems should vary based on the level of stability
in the environment
Two different types of management systems
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Mechanistic systems - appropriate for stable environment
 Organic systems - required in changing environments (unstable
conditions)
Management is the Dependent Variable
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Variations in environmental factors lead to management
Lawrence and Lorsch (1969)
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Key Issue is environmental uncertainty and information flow
Focus on exploring and improving the organization’s relationship
with the environment
Environment is characterized along a certainty-uncertainty
continuum
Pragmatic Application of Systems Theory
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The Learning Organization
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Peter Senge’s The Fifth Discipline: The Art and Practice of the
Learning Organization (1990)
An organization that is continually expanding its capacity to create
its future
Organizational Learning Occurs under Two Conditions
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1) When design of organizational action matches the intended
outcome
2) When initial mismatch between intentions and outcomes is
corrected, resulting in a match
Key attribute of learning organization is increased adaptability
Adaptability is increased by advancing from adaptive to generative
learning
The Learning Organization
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Adaptive (single-loop) Learning
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Generative (double-loop) Learning
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Involves coping with a situation
Limited by the scope of current organizational assumptions
Occurs when a mismatch between action and outcome is corrected
without changing the underlying values of the system that enabled
the mismatch.
Moves from COPING to CREATING an improved organizational
reality
Necessary for eventual survival of the organization
Both are Central Features of the Model of the
Communicative Organization (Chapter 6)
Synergy and Nonsummativity are Important
The Learning Organization
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Through communication, teams are able to learn more than
individuals operating alone.
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Critics argue that teams inhibit learning
Thoughts?
Leadership is a key element in creating and sustaining a
learning organization.
Leaders are responsible for promoting an atmosphere
conducive to learning
CREATIVE TENSION
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Represents difference between the “vision” of where the
organization could be and the reality of the current organizational
situation.
Impediments to Learning Organization
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Complexity of the Environment
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Internal Conflicts
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Difficult to determine cause and effect
Multiple contributing elements in complex environments
Individuals, teams, departments, and subcultures are often at odds
Energy is drained by conflect
Organization members must be trained in communication
and conflict-negotiation skills
Summary
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Systems Theory is NOT a prescriptive management theory
Attempts to widen lens through which we examine and
understand organizational behavior
The Learning Organization
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Synergy
Nonsummativity
Interdependence
Equifinality
Requisite Variety
Emphasizes COMMUNICATION in the Learning Process
Organizations cannot separate from their environment
Organizational teams or subsystems cannot operate in
isolation
Bottom Line
The same misunderstandings and
problems that continue to occur
will eventually cause fatal damage
to the system.