AN ORGANISATIONAL APPROACH TO INDUSTRIAL ECOLOGY USING THE SOFT SYSTEMS
METHODOLOGY
Ph. D. student Lars Brede Johansen, Norwegian University of Science and Technology (NTNU)
Professor Annik Magerholm Fet, Norwegian University of Science and Technology (NTNU)
ABSTRACT
This paper represents a search for a framework for research on organisation and management for industrial
ecology (IE). A three-step structure is followed. First, soft systems methodology (SSM) is presented. Leading up
to the concluding methodology, a brief theoretical argument is given. An explicit account is made on where and
on what form input from the chosen perspectives IE and extended enterprise (EE), is needed. In the second part,
theoretical descriptions of IE and EE are presented. Important issues for research and action following this
perspective are abstracted based on the information need of SSM. Finally, the features from IE and EE are related
to the frame of SSM.
1. INTRODUCTION
Industrial ecology (IE) takes into consideration the environmental performance through the entire life cycle of
products, services and processes. Inspired by substance circulation in mature ecosystems, IE focus on cooperation between enterprise in order for by-products from one actor (a large fraction of which was previously
known as waste) to serve resources for the others. Evolution of such industrial value-chains can evolve to
resemble the metabolistic pathways described in scientific ecology. Such broader scope of preventive strategies
replaces the site-specific focus of the end-of-pipe thinking that dominated industrial environmental work until the
1980s. Environmental management is a sub-system to the general management. The extended scope of IE
therefore calls for a corresponding change in the general thinking about organisation and general management. A
suitable answer to this need seems to be the broad concept of extended enterprise (EE). Similar to IE, the
literature on EE calls for life cycle management, co-operation in business networks, and frequently uses
ecological metaphors. With the obvious similarities in metaphors and typology, ideas of connecting them easily
comes to mind.
But an elaboration on the resemblance between IE and EE is a job half-done. Since environmental
management is typical "social science for social change", these theories should be placed in a scheme developed
to support organisational change through interventions. The scheme should be based on systems thinking that fit
complex, ill-defined and multi-purpose systems like enterprise networks. Orthodox systems theory based on
scientific reductionism modelling with one predefined goal, should be replaced by a multi-stakeholder framework
that recognises the co-existence of different perspectives and even different world views within the boundaries of
an enterprise networks. Action research as introduced by Greenwood and Levin (1998), has completed this
transformation from decomposition to the diversity of multi-stakeholder systems. Soft systems methodology
(SSM) (Checkland 1981; Checkland and Scholes 1990), a well-tested adaptation of action research, is chosen in
this paper.
This paper aims to develop a framework that proves useful in the pursuit of sustainable management practices.
An attempt to approach this overarching purpose will be carried out in three steps. First, SSM is presented. It
gives guidelines that support the process of organisational change, from the initial modelling to taking action.
Factors like Weltanschauung (world outlook) and consciously chosen perspectives and theories influence the
direction of change. In the second part, IE supported by EE will be developed to focus alteration efforts toward
sub-system ('holons') that affect the environmental performance. Directions for practical use of the theoretical
perspectives in the SSM conclude this part. In the third part, an attempt will be made to produce a concrete
research design for case studies.
In SSM, which is presented in detail later in the paper, change is proposed through 'relevant systems', and these
are modelled as human activity systems. It is self-evident that 'relevant systems' will vary with the analyst's
interests. For example, a change in perspective from human resources to EE, will heavily influence the 'relevant
systems' described. IE and EE emphasis interactions between enterprises, and other perspectives are less visible.
This bias is present in this paper where inter-organisational relations are in focus. A more complete model should
include more comprehensive theories of the individual organisation, e.g. from human resources and the political
perspective. This would describe the individual enterprises as multi-stakeholder systems. In addition, the
horizontal relations between similar enterprises dominate in this paper. A more comprehensive model would
include the vertical dimension with external conditions from political decisions, laws and regulations, as well as
consumer demands, NGOs etc.
2. THEORETICAL FRAMEWORKS
In this chapter, SSM, IE and EE are presented. But first, a motivation to fuse organisational theory and
environmental management is presented. It is based on the paradigm shift from "command-and-control" to
"shaping conditions of adaptation".
2.1 MERGING PARADIGMS IN ORGANISATIONAL AND ENVIRONMENTAL THEORIES
The emergence of IE, which encompasses life cycle assessment, marks a shift in perspective for work on
environmental issues. Catchwords like "life cycle perspective" and "systems approach" highlight expansion of the
dimensions time and space. At the same time general management theory adopts a description of the individual
company as embedded in an enterprise network. Such networks consist of similar entities interacting and
constituting mutual contingencies, both as possibilities and constraints, for each other. Some network approaches
put emphasis on consumer preferences, changes in laws, regulations and other factors as well. Being embedded in
a complex network of factors influencing the enterprise, management must change their strategy from commandand-control toward predefined goals, to adaptation and relations management.
The common attributes of IE and EE make it natural to include both in a unified approach. But using analogies
from one type of system to describe and understand other systems is not unproblematic. It demands a procedure
of initial abstraction of system characteristics followed by re-specification on the other (Luhmann 1995). Using
the guidelines from Luhmann on different disciplines within design, organisation and management research, we
see a merging paradigm prevail (Rasmussen 1998). The paradigm shift is manifested in the transition from
normative models towards models of actual decision making behaviour. This implies that systems are no longer
designed to remove human biases and errors through deviation control. Managers must accept their dependence
on interacting enterprises to improve their own performance. Deduced from this view, information systems must
provide decision-support for managing relations on the inter-organisational level. This is control by proper
shaping of the conditions controlling the enterprise's adaptation (Rasmussen 1998).
2.2 SOFT SYSTEMS METHODOLOGY
2.2.1 METHODOLOGY DEFINED
In Encyclopædia Britannica, methodology is defined as "a body of methods, rules, and postulates employed by
a discipline : a particular procedure or set of procedures" and "the analysis of the principles or procedures of
inquiry in a particular field". Combining these show that methodology include a synthesis of the operating core of
procedures, methods and rules, and the "philosophical" core of reflection on the choices implicit in the operation.
Two other definitions and demarcations illuminate what methodology is about. "It is usually based on some
philosophical view, otherwise it is merely a method, like a recipe" (Avison & Fitzgerald 1997). "I take a
methodology to be intermediate in status between a philosophy, using that word in a general rather than a
professional sense, and a technique or method. [..] A methodology will lack the precision of a technique but will
be a firmer guide to action than a philosophy" (Checkland 1981 p 162)
The equation Philosophy + Method = Methodology agrees with the definitions above. Such an understanding
of methodology stresses the need for co-operation between previously isolated scientific cultures (Snow 1959).
The "philosophical" part of a methodology provides a common conceptual framework that can facilitate
interdisciplinary co-operation within and between academic cultures (Øfsti 1997). This is interesting because the
complexity of organisations and socio-technical problems in general, calls for interdisciplinary co-operation.
The philosophy
of SSM
The method(s)
of SSM
SSM as
a whole
SSM in
action
Figure 1. SSM - a synthesis of philosophy and method(s) (from lecture notes by Wallis, J.P. at the
University of Wolverhampton, School of Computing & IT)
2.2.2 FROM "HARD" TO "SOFT"
Checkland (1981) gives a comprehensive presentation of the history of the systems movement. Modern science
started with the scientific revolution of the 17th century. Ideas, theories and general laws were induced from
experimental studies. Complex phenomena were explained in terms of simple ones applying the concept of
scientific reductionism. Following this line of thought resulted in seemingly never ending acceleration of the
scientific discoveries known as progress. The successful round trip to the moon mark a milestone in this history.
But some systems did not fit into this scientific paradigm. Many systems were characterised by emergent order
on different levels of organisation. Systems like the physical human being is best understood by a simultaneous
description of the emergent properties on the levels of atoms, molecules, organelles, cells, organs, and the entire
organism. Stephen J. Gould's (1996) theory on evolution is related to this view. His hierarchical theory of natural
selection describes fitness as a combination of properties from the level of the genetic code to the ecosystem
level. Emergence as a concept brakes with reductionism, because bypassing a level of organisation removed the
logic constitution of the system. This line of systems theory is leading the way for holism so that opposing
decomposition no longer means embracing vitalism.
Another problem facing the science is related to communication and control. Gregory Bateson (1972) argues
that the brain, plus body, plus environment constitute the self-corrective, information-processing unit. This
systems view surpasses the old mind-body problem that materialists and dualists have discussed for hundreds of
years. It also diverges from the Jurans's model for the control of anything (1951) in two important ways. First, the
information given to the controller (a person) will not be transformed to action immediately. A cognitive filter
that attributes meaning to the information precedes this step. The second difference arises from an open systems
view with influencing environmental factors. Ashby's law of requisite variety demands a controller with a variety
of responses that can match the variety of the environmental information (Ashby 1956). Given that the
environment is dynamic and not completely understood, the controller must learn and adapt.
Attribution of meaning leads to a common denominator, self-consciousness, found in most arguments related
to the uniqueness of man. It has been showed that the consequence of self-consciousness is that the human being
is irreducibly free. One implication is that we can chose to see any set of activities as a system, and act on it as
such. In contrast, the scientist is seen as an outside observer when studying natural phenomena. Although
phenomenology challenges this assumption on a general basis, common sense philosophy accepts the existence of
objective truths and natural law in this domain of science.
The absence of "natural laws", laboratories and reproducibility for human activity systems has led branches of
the social scientific community along the slippery slope from cultural relativism to "anything goes". Gadamer and
Checkland have elaborated more constructive alternatives. They provide frameworks where research is seen as
part of a learning circle, and truth and laws are regarded as unproductive concepts.
Francis Bacon, representing the concept of 'positive science', saw new knowledge as finding constants, doing
reproducible experiments and thereby eliminating all historical elements (Bleicher 1980 pp 108-116). The
Popperian framework with falsification is somewhat "softer" than the Baconian scheme. But the subjective factor
is still hardly emphasised, and science is still understood as a process in which theories about an objective reality
is continuously improved. A pre-requisite of such improvement is an conception of the object of study as
independent of historical, social and scientific paradigmatic context. In hermeneutic philosophy the desire to
know everything is replaced by being open to new experiences. All knowledge is 'prejudicial' says Gadamer, and
the prejudices constitute a given 'horizon of understanding'. We see that the positive word knowledge is closely
related to negative words like prejudice, tradition and authority. Fundamental to hermeneutic philosophy are "the
historic factors on the Geisteswissenschaften (arts and humanities): their object does not remain the same but is
constituted ever anew by different questions directed towards it". This view forms the philosophical basis for
Peter Checkland's development of SSM.
2.2.3 SSM DESCRIBED
The methodology in summary is presented below (Checkland and Scholes 1990 fig. 2-5). But a few central
concepts to SSM must be described first. Checkland found that small or big enterprises, private or public, "had
one characteristic in common. They all featured human beings in social roles trying to take purposeful action"
(Checkland & Scholes 1990 p 82). A set of connected activities making a purposeful whole was on this
background taken to be a particular kind of holon. The word holon was a response to the need for "a new word
for the entities which are wholes at one level of a hierarchy while simultaneously being parts of higher level
entities" (Checkland 1981 p 82). The last concept presented in this paper is Weltanschauung (world outlook). It
is the (unquestioned) image or model of the world which makes this particular human activity system (with its
particular transformation process) a meaningful one to consider. SSM emphasise the importance of explicitly
formulating the Weltanschauung, and possibly changing it if the results are not satisfactory. In practical use it
bears resemblance to the four frames; structural, human resources, political and symbolic, deduced from the
retrospective view on schools in organisational theory by Bolman and Deal (1997).
The SSM in summary is shown on the next page, and followed by a short step by step explanation.
Figure 2. The conventional seven-stage model of SSM, modified after Checkland & Scholes (1990 fig. 2-5).
"We see that stages 1, 2, 5, 6 and 7 are 'real world' activities necessarily involving people in the problem
situation; stages 3, 4, 4a and 4b (sub-systems to 4) are 'systems thinking' activities which may or may not involve
those in the problem situation, depending upon the individual circumstances of the study." (Checkland 1981 p
163).
"The function of stages 1 and 2 is to display the situation so that a range of possible and, hopefully relevant
choices can be revealed". A particular system being part of a hierarchy of systems, must be chosen and described
using 'structure', 'process' and 'the relation between structure and process'. Attempts should be made to build up
the richest possible picture, not of the 'problem' but of the 'situation' in which there is perceived to be a problem.
Stage 3, the root definition, is intended to encapsulate the fundamental nature of the systems chosen by naming
notional systems that from the analysis phase seem relevant to the problem. Root definitions have status of
hypotheses concerning possible improvement to the system. It is important to view root definitions as 'relevant
system' which can lead to illumination of problems and hence their solution or alleviation. From this view follows
that a root definition is a description of an human activity system which captures a particular view of it; the
analyst's Weltanschauung. The Weltanschauung is flexible, and can be varied consciously e.g. through
implementation of different perspectives on organisation and environmental management. The Weltanschauung
will also change in the process of learning. Checklists are developed to help practitioners formulate the root
definition.
In stage 4 conceptual models are made of the human activity systems named and defined in the root
definitions. The model is a structured set of verbs that describe the minimum necessary activities required for a
human activity system to cohere with that described in the root definition. Recommended supporting stages are
4a, a general human activity system which can be used to check the model for fundamental deficiencies; and 4b,
where modifying or transforming the model using other systems concepts is considered.
The complete conceptual models are in stage 5 'brought into the real world' and set against the perceptions of
1
what exists there. The purpose of this 'comparison' is to generate a debate with concerned people in the problem
situation. In stage 6, they will define possible changes which simultaneously meet two criteria: that they are
arguably desirable and at the same time feasible given prevailing attitudes and power structures, and having
regard to the history of the situation under examination. Stage 7 then involves taking action based on stage 6 to
improve the problem situation. This in fact defines 'a new problem' that may now be tackled with the help of the
methodology.
SSM is a structured way to describe, analyse and change human activity systems. But although being less
normative than standard systems engineering, and adapted to handle fuzzy and ill-defined problems, the
Weltanschauung of the analyst influences the whole study. "For Gadamer, understanding is bound and embedded
in history because understanding deploys the knower's effective-history, personal experience and cultural
traditions, to assimilate new experiences. Thus, the initial structure of an effective-history constrains the range of
possible interpretations, excluding some possibilities and calling forth others" (Mallery et al. 1987). Conscious
and explicit treatment of one's intellectual position, and the will to use several perspectives in construction of root
definitions and conceptual models, make the best of the premises for academic enquiry.
2.3 IE AND EE PRESENTED
The motivation for combining theories on EE and IE to provide a new framework for environmental
management, was accounted for in chapter 1 and 2.1. Below is given a short additional argument for the synthesis
based on overlapping use of analogies and parameters central to describe and change enterprises.
The most cited definition of IE is that formulated by Graedel & Allenby (1995):
“Industrial ecology is the means by which humanity can deliberately and rationally approach and maintain a
desirable carrying capacity, given continued economic, cultural and technological evolution. The concept
requires that an industrial system be viewed not in isolation from its surrounding systems, but in concert with
them. It is a systems view in which one seeks to optimize the total materials cycle from virgin material, to
finished material, to component, to product, to obsolete product, and to ultimate disposal. Factors to be optimized
include resources, energy, and capital.”
This definition reflects that the individual enterprise is viewed as embedded in a network of co-operating
and/or competing actors, as well as dynamic political, juridical and marked conditions. It specifically emphasises
the life cycle perspective in relation to describing, analysing and improving the environmental performance. This
view contrasts the previous end-of-pipe era where focus was primarily site specific.
Specialised branches of IE emphasise particular issues. Many have written extensively on closing material
cycles (see Ehrenfeld 1994). Others have written about the importance of thermodynamics and exergy (the
fraction of the total energy content that may be utilised to perform work on the surroundings) analysis in IE, but
these are outdone by analysis that combine material flows and exergy analysis (Connelly and Koshland 1997).
Yet another typical direction within IE is the study of eco-industrial parks. Such a park in Kalundborg, Denmark,
is the most mentioned example in all IE literature (see Ehrenfeld and Gertler 1997). Finally, “industrial
metabolism” is the whole of materials and energy flows going through the industrial system. It is aimed at
understanding the whole system of circulation of the materials and energy flows linked to human activity (see
Erkman 1997 for short overview and Ayres and Simonis (red) 1992 for a thorough presentation).
The concept of extended enterprise (EE) has similar scope as that described in the definition of IE.
Collaboration, decentralisation and inter-organisational integration are typical properties, and an important reason
for their emergence is the development in interaction with electronic information systems (O'Neill and Sackett
1994). Challenges related to inter-organisational co-operation, is expected to play an important role in further
development of computers (Friedman with Cornford 1989 p 337). One analytical framework and one concept,
both examples of EE, are given a short presentation below.
First, Håkansson has formulated an analytical framework for relations and business networks based on what he
calls substantial and functional factors. The substantial factors are shared activities, resources and personal
connections. The functional levels that enterprises should analyse are the single enterprise (as always), dyads (cooperative relationships with suppliers and customers) and the network as a whole (Håkansson and Snehota 1995).
In his studies, special focus has been put on relationships motivated by common needs for technology
(Håkansson 1989).
Second, the concept of virtual enterprise (VE) takes the idea of adaptation one step further. VE is defined in
GlobaMan21, a project in the IMF (Intelligent Manufacturing Systems) program (Globeman 1999). VE are cooperative efforts where resources from several actors are utilised to meet a marked demand. E.g. in a network of
20 enterprises, four come together and use some of their competencies to carry out a project. They form a VE,
and this unit exists only during the life cycle of the project. This concept clearly shows that managers must adopt
an inter-organisational focus. VE has an interesting feature in being proactive, in terms of doing things that the
individual enterprise can not manage, not only adaptive. It also shows that actions are not pre-planned in terms of
long-term goals, but triggered by the stimuli of new interaction (e.g. a marked demand).
Network models such as in IE and EE, stimulate the use of ecological analogies on human activity systems.
This is an interesting observation; a search on EE on the internet gives the impression that the presentations put
more emphasise on both spatial and temporal responsibility than conventional organisation theory seems to do.
Some even describe EE as a response to the environmental challenge (Browne 1996 p 10). This is related to the
manufacturing systems' growing focus on inter-enterprise networking across the value chain.
The next chapter contains a fundamental discussion on how the theoretical fragments presented above can be
unified in a methodological approach, and utilised to promote environmental improvements in enterprises. In the
following chapter with final results, detailed examples are given on how elements from IE and EE are used
consciously to illuminate the problem situation and construct conceptual models. Whether the resulting
methodology will contribute to approaching the aim, can not be discussed before case studies have been
performed.
3. METHODOLOGICAL APPROACH
Stage 3 in Figure 2, 'Root definition of relevant purposeful activity systems', is the connection point between
SSM on one hand and IE and EE on the other. The word 'relevant' highlights that Weltanschauung, perspective or
paradigm behind the applied theories and subjective attribution of meaning, influences this stage. Some examples
of connections will be made, and these are elaborated further in the next chapter.
An example of combining IE and EE to improve a situation is "closing the material cycle" of a substance
which is expressed as a problem situation (stage 2, Figure 2) because of volume waste and/or toxicity. A relevant
human activity systems that is associated with industrial metabolism and exergy analyses may be:
a) collect the products after use --> agree with enterprise to reuse, recycle or utilise the exergy in the material -> sell material as resource on the market.
b) collect the products after use --> agree with a company that can utilise your by-product (waste) as a resource.
c) co-operate with the enterprise network (EN) that surrounds you --> form a virtual enterprise (VE) --> plan for
design, construction, operation and dismantling of unit for material recycling --> treat the previous waste flow,
and send it back into the material cycle (done by the VE).
In another example related to environmental technology, several aspects from EE, and 'critical technologies'
(Ehrenfeld 1994) from IE are used.
Presume that a life cycle assessment for an EN uncovers one rather grave environmental issue. Too high levels of
heavy metals are discharged through the purification plant. Two proposed human activity systems follow:
a) investigate the shared information in the network, and see weather the necessary resources are available
if yes --> form a VE --> develop the appropriate technological solution --> implement, operate and dismantle.
if no --> form a VE given permission to use a given amount of money to solve the problem --> VE: contact
external enterprises that have the competence required to solve the problem --> the enlarged VE (including
external partner(s)) develop an appropriate technological solution --> implement, operate and dismantle.
These examples illustrate the essence of the methodological approach using IE and EE as perspective and
"idea generator" in a SSM. It should be noted that SSM is thorough, and that these examples are superficial.
Stage 4, conceptual models, includes a support model (4a) and an encouragement to test other systems concepts
(4b). This builds on the root definitions, and produce detailed models that are compared with the real world in
stage 5. It should also be stressed that the conceptual model from stage 4 is no dictate, just a starting point for
discussion. The final decision is made after all the involved stakeholders have been heard.
4. APPROACHING A DETAILED RESEARCH DESIGN
The aim of this paper is to develop a framework that proves useful in the pursuit of sustainable management
practices. This has been attempted using IE and EE to focus the 'relevant systems' suggested in an SSM. A
detailed research design stands out from the descriptions above in the level of precision. Details about
formulating root definitions and constructing conceptual frameworks can be read elsewhere (e.g. Checkland and
Scholes 1990).
Some organisational approaches are presented below. Elements of the models that capture a potentially useful
view of general problem situations, are gathered in a checklist.
The general concept of EE is best pursued when the EN shares information in an information system. Such
sharing blurs the boundaries between enterprises, and empowers the EN as a whole. Problem situations that used
to look unsolvable for the individual enterprise may now, because of the richness of aggregated resources, be
possible to address.
Developing relationships in business networks opens for large improvements. Two examples are:
1) Critical technologies may be developed through co-operation (e.g. energy effective processes, production
processes that takes efforts from two or more enterprises, purification processes for exhaust gas or waste water)
2) One enterprise can use the other's "waste" as a resource. Such co-operation is likely to take the form of mutual
adaptation. Good communication may result in the "waste-stream" from one enterprise meeting the quality
demands from another. As such relations evolve, the fraction of the "waste" transforming into a resource may
increase considerably. Building on the energy and material pinch technologies known from chemical engineering,
may be appropriate onset.
A formalised EN that actively uses VE, can improve its environmental performance in at least to independent
ways:
3) The VE may collaborate with partners that cover the whole life cycle of the process, product, service or
exchange. In this way the VE can i) design for environment, ii) demand for suppliers to comply with
environmental standards, iii) control the operation and maintenance, and finally iv) see to that environmental
concerns are taken into account during the end treatment.
4) Certain waste flows may constitute an important environmental issue to an enterprise network. Establishing the
infrastructure needed to collect and process the waste flows, together with getting customers for the recycled
products, may exceed the resources of one single enterprise. But by forming a VE, and sharing investment costs,
risks and workload, the project may be realisable.
It seems natural that the potential for improvements increases the greater and more flexible the networks are.
5. CONCLUSIONS
The search for a framework for research to promote sustainable management practices was done in three steps.
First, SSM was presented as guidelines that support the process of organisational change. In the second part, a
methodological framework of IE and EE was adapted to the structure of SSM. The third part was an attempt to
produce a concrete research design for case studies.
Other perspectives and theories that those represented in IE and EE can be used. The four classes of notional
systems named in chapter 4 do not by any means provide the complete picture. When experience has been gained
from studies that emphasise horizontal co-operation, additional factors must be included. These are factors
internal to the individual enterprise, and factors treating its vertical relation; from the political and juridical level
to the individual consumers and NGOs.
An important intention with SSM is to manage complex, ill-defined system with many stakeholders. Such
systems are poorly described using "hard" systems thinking. But to get good results using SSM, a lesson should
be drawn from Ashby's law on requisite variety (that the variety of a regulator must equal that of the disturbances
whose effects it is to negate) (Ashby 1956). This criterion for good control is incompatible with narrow
perspective and paradigmatic blindness. This is why SSM related to organisational change should include a
comprehensive and diverse set of perspectives and theories.
When experience is gained using SSM, the information gathered must be structured in some way. Since
knowledge is structured by differences, these must be mapped. It is likely that the environmental themes will vary
considerably between business sectors. Software producers are different from the metallurgic industry, and an
enterprise in the countryside should respond differently than placed ones. Keeping experience in classes
delimited by for example recommended views and other tips related to a particular business sector, geographical
locations, size of enterprise and more etc., can be a good approach. Working between the quite abstract
methodology on one hand and concrete, specified classes of enterprises on the other may be fruitful. It bridges
the gap between the systems theory too general to have useful content related to the specific problem, and
applications too specific to be generally interesting beyond the trivial.
ENDNOTES
1. Using the concept of comparison is really not accurate because the conceptual model (phase 4) and the
problem situation expressed (phase 2) can be fundamentally different and thereby incommensurable. It is more
accurate to see the use of conceptual models as a base for ordered questioning (Checkland 1981 p 178)
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