Viable System Model

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Study of Viable Systems Model at ITC Ltd.

Submitted by:
Daksh Kumar Anand

This paper is intended as study of the Viable System Model for better understanding. It deals with some of the basic concepts embodied in the model, the modeling process, and its use in practice in ITC Ltd. ITC’s transformation from cigarette to a conglomerate.

Why we need Organizational Models
We all interpret the world through models; these can be explicit, or tacit. For all managers in all organizations, their ability to manage a situation or organization effectively is in direct proportion to the accuracy and relevance of the models they are using to understand it. By far the most common organizational model in use in management today is still the hierarchical model though it has various disadvantages. What it doesn’t model is any of the more fundamental things about the organization: what it is, what it does, how it does it, its processes, formal and informal structures, communications and information transfers, or decision making. The VSM (Viable Systems Model) offers a more sophisticated alternative, one that can be used both for diagnosing existing organizations, and for designing new ones.

The Viable Systems Model:
The viable systems model or VSM is a model of the organizational structure of any viable or autonomous system. A viable system is any system organized in such a way as to meet the demands of surviving in the changing environment. One of the prime features of systems that survive is that they are adaptable. The VSM expresses a model for a viable system, which is an abstracted cybernetic (regulation theory) description that is applicable to any organization that is a viable system and capable of autonomy. A viable system is composed of five interacting subsystems which may be mapped onto aspects of organizational structure. In broad terms Systems 1–3 are concerned with the 'here and now' of the organization's operations, System 4 is concerned with the 'there and then' – strategical responses to the effects of external, environmental and future demands on the organization. System 5 is concerned with balancing the 'here and now' and the 'there and then' to give policy directives which maintain the organization as a viable entity. * System 1 (Operations) in a viable system contains several primary activities. Each System 1 primary activity is itself a viable system due to the recursive nature of systems as described above. These are concerned with performing a function that implements at least part of the key transformation of the organization. * System 2 (Coordination) represents the information channels and bodies that allow the primary activities in System 1 to communicate between each other and which allow System 3 to monitor and co-ordinate the activities within System 1. * System 3 (Operations Planning & Control) represents the structures and controls that are put into place to establish the rules, resources, rights and responsibilities of System 1 and to provide an interface with Systems 4/5. * System 4 (Development Research and marketing) – The bodies that make up System 4 are responsible for looking outwards to the environment to monitor how the organization needs to adapt to remain viable. * System 5 (Decisions to maintain identity) - is responsible for policy decisions within the organization as a whole to balance demands from different parts of the organization and steer the organization as a whole.

According to the above descriptions, these systems can be organized into three groups reflecting the three management perspectives: * Operational Management (Systems 1,2,3)
* Strategic Management (System 4)
* Normative Management (System 5)


ITC was incorporated on August 24, 1910...
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