Systems Theory of Organizations

Summary

The video script delves into the concept of viewing organizations as systems through General Systems Theory, introduced by von Bertalanffy and Miller. It contrasts this holistic approach with the classical management view, emphasizing efficiency and control. The script explains the system's components: inputs, processes, and outputs, and highlights open systems' interaction with their environment. It discusses the importance of feedback, goals, equifinality, and entropy, illustrating how systems naturally tend toward disorganization without maintenance. The summary concludes by noting systems theory's influence on other organizational theories.

Takeaways

• 🌟 General Systems Theory was established by Ludwig von Bertalanffy and J.G. Miller in the 1960s and 1970s, offering an alternative perspective to the classical management view of organizations as machines.
• 📚 The Social Psychology of Organizations by Daniel Katz and Robert Kahn applied systems theory to understand organizational life, emphasizing a holistic approach over the classical efficiency and control focus.
• 🛠️ Classical management sought the 'one best way' to perform tasks, in contrast to systems theory which encourages multiple ways to achieve organizational goals.
• 🔄 Organizations are seen as open systems with inputs (resources and information), throughputs (activities within the system), and outputs (outcomes and services).
• 🍕 An example of a system is a pizza place, which uses inputs like ingredients and labor, processes like making dough and taking orders, and produces outputs like pizzas and profits.
• 🔁 Systems are open to their environment, exchanging resources and information, which is crucial for their health and adaptation to unpredictable external factors.
• 👀 Boundary spanners, or leaders, scan the environment to monitor external factors affecting the organization, such as competition and economic trends.
• 🧩 Holism is central to systems theory, viewing systems as a whole rather than a collection of separate parts, highlighting the interdependence and synergy within the system.
• 🔄 Interdependence is key in systems theory, recognizing that changes in one part of the system can influence other parts, both directly and indirectly.
• 🎯 Systems have goals, but these are contingent and negotiated, adapting as situations develop rather than following a predetermined single path.
• 🛤️ Equifinality in systems theory suggests that while there may not be one best way to organize, some ways are more effective than others, and the best approach can vary with context.
• 🔁 Feedback is essential in systems, with negative feedback correcting deviations and positive feedback amplifying current processes, though it must be managed carefully to avoid unintended consequences.
• ⚙️ Entropy is a fundamental concept in systems theory, indicating a natural tendency for systems to deteriorate without ongoing maintenance and balance.
• 🌱 Systems theory has paved the way for other theories such as complex adaptive systems, chaos theory, and learning organizations, providing a rich vocabulary and perspective on organizational dynamics.

Q & A

What is the General Systems Theory and who established its foundations?

General Systems Theory is a framework for analyzing and understanding complex systems. It was established by Ludwig von Bertalanffy and J.G. Miller in the 1960s and 1970s.

How did the systems metaphor from biological organisms influence the study of organizations?

The systems metaphor of living biological organisms was imported into Organizational Studies to provide a richer understanding of how organizations function as interconnected and interdependent systems rather than as individual components.

What was the main perspective of the classical management era in organizational studies?

The classical management era viewed organizations as machines, focusing on efficiency, productivity, and control, and seeking the one best way to perform tasks within the organization.

How does the systems approach differ from the classical management perspective in terms of goals?

The systems approach does not seek a single control mindset or the one right way to accomplish tasks. Instead, it aims to describe and explain how organizations work as a whole, pursuing multiple ways to achieve various goals.

What are the three main parts of an organization as described by the systems approach?

The three main parts of an organization according to the systems approach are inputs (resources and information), processes or throughputs (activities within the system), and outputs (outcomes, products, and services).

Can you provide an example of how a pizza place operates as a system?

A pizza place operates as a system with inputs like workers, food, and equipment; processes that include making dough, taking orders, and preparing pizzas; and outputs such as delivered pizzas, profit, and waste materials.

What does it mean for a system to be 'open' in systems theory?

An 'open' system in systems theory refers to a system that interacts with its environment, allowing for the exchange of information and resources, which is essential for the system's health and proper functioning.

What is the role of leaders in scanning the environment of an organization?

Leaders, acting as boundary spanners, scan the environment to monitor external factors such as vendors, customers, competition, and economic trends, which helps in making informed decisions for the organization.

How is the concept of holism important in the systems approach to organizations?

Holism in the systems approach emphasizes viewing organizations as a whole rather than as separate pieces, recognizing that the system is greater than the sum of its parts due to the interdependent and interactive nature of its components.

What is the concept of equifinality in systems theory, and how does it relate to organizational goals?

Equifinality in systems theory suggests that there is no single best way to organize, but also acknowledges that not all ways of organizing are equally effective. It implies that organizations should adapt and negotiate goals based on the specific situation at hand.

How do feedback mechanisms function in systems theory?

Feedback mechanisms in systems theory involve negative feedback, which corrects deviations to reestablish the system's goals, and positive feedback, which can amplify and enhance the system's processes, though it must be managed to avoid unintended consequences.

What is entropy in the context of systems theory, and why is it significant?

Entropy in systems theory refers to the natural tendency of systems to deteriorate and move toward disorganization over time. It signifies the need for continuous effort to maintain balance and prevent the system from running down.

How has systems theory contributed to the development of other organizational theories?

Systems theory has served as a foundation for other theories such as complex adaptive systems, chaos theory, learning organizations, and loosely coupled systems, providing a comprehensive set of concepts and vocabulary for understanding organizations.

Outlines

00:00

📚 Introduction to Systems Theory in Organizations

This paragraph introduces the concept of viewing organizations as systems, a perspective rooted in General Systems Theory established by Ludwig von Bertalanffy and J.G. Miller. It contrasts this with the classical management view of organizations as machines, which was focused on efficiency, productivity, and control. The systems approach emphasizes the whole organism, not just individual components, and seeks to understand how organizations work as a whole rather than imposing a control mindset. The paragraph also outlines the three main parts of an organization according to systems theory: inputs, processes (or throughputs), and outputs, using a pizza place as an example to illustrate these concepts.

05:01

🌐 Systems Theory Concepts: Openness, Holism, and Interdependence

This paragraph delves deeper into the principles of systems theory, highlighting the open nature of systems and their permeable boundaries with the environment. It discusses the importance of environmental scanning by leaders to make informed decisions. The concept of holism is introduced, emphasizing that systems should be viewed as a whole rather than a mere collection of parts, with the idea that the system is greater than the sum of its parts. Interdependence is another key concept, illustrating how changes in one part of the system can affect others, both directly and indirectly. The paragraph also touches on the idea of systems having contingent and negotiated goals, and introduces the concept of equifinality, which suggests that there is no single best way to organize but acknowledges that some ways may be more effective than others.

10:04

🔁 Feedback, Entropy, and the Evolution of Systems Theory

The final paragraph explores the role of feedback within systems, distinguishing between negative feedback, which corrects deviations to maintain stability, and positive feedback, which can amplify processes but also needs to be managed to avoid negative consequences. It introduces the concept of entropy, which refers to the natural tendency of systems to deteriorate over time, and the importance of maintaining balance through homeostasis or equilibrium. The paragraph concludes by discussing how systems theory has served as a foundation for more specific theories such as complex adaptive systems and chaos theory, and has influenced other organizational concepts like learning organizations and loosely coupled systems.

Keywords

💡General Systems Theory

General Systems Theory, established by Ludwig von Bertalanffy and J.G. Miller, is a framework for understanding complex systems. It is foundational to the video's theme as it provides an alternative perspective to classical management views, emphasizing the interconnectedness and wholeness of organizations rather than viewing them as machines. The theory is used to explore how organizations function as a whole, with an emphasis on the relationships between parts rather than isolated elements.

💡Organizational Studies

Organizational Studies is an academic field that examines the structure and function of organizations. In the context of the video, it is where the systems metaphor is applied to gain a richer understanding of organizational dynamics. The field has imported systems theory concepts to analyze how organizations operate as living organisms, moving away from the mechanical perspective of classical management.

💡Systems Metaphor

The Systems Metaphor refers to the conceptualization of organizations as living organisms rather than machines. It is central to the video's narrative, illustrating a shift in perspective from the traditional view of organizations to a more dynamic and integrated approach. The metaphor is used to highlight the importance of considering the whole system and its interdependent parts.

💡Classical Management

Classical Management represents an era and school of thought that views organizations as machines, seeking efficiency, productivity, and control. It is contrasted with the systems approach in the video, which offers a counterpoint by focusing on the whole organism and multiple ways to achieve organizational goals, rather than the 'one best way' as advocated by classical theorists like Frederick Taylor.

💡Inputs

In the context of systems theory as applied to organizations, Inputs refer to the resources and information needed to supply the organizational system. The video uses the example of a pizza place, where inputs include workers, food, ovens, and other materials, to illustrate how these elements are essential for the system to function and produce outputs.

💡Processes or Throughputs

Processes or Throughputs are the activities within the system that lead to the accomplishment of work. The video describes these as the actions taken in a pizza place, such as making dough, cutting vegetables, and answering phones, which are necessary for the creation of the final product and the service provided.

💡Outputs

Outputs are the outcomes, products, or services created or delivered by an organization. The video uses the example of a pizza place delivering pizzas to customers, generating profit, and providing paychecks to employees, to demonstrate the tangible and intangible results of the organizational system's processes.

💡Open Systems

Open Systems are those that interact with their environment, allowing for the exchange of information and resources. The video emphasizes this concept by explaining that organizations are not isolated but have permeable boundaries, which is crucial for their health and proper functioning. The idea is used to discuss the dynamic relationship between an organization and its environment.

💡Holism

Holism is the principle of viewing systems as a whole, rather than as a collection of separate pieces. The video explains that a system is greater than the sum of its parts, using the human body as an analogy to illustrate the interconnectedness and interdependence of system components. This concept is central to the systems approach, which values the organization as an integrated entity.

💡Feedback

Feedback in systems theory refers to the dynamic process where the output of a system is used to influence its future behavior. The video distinguishes between negative feedback, which corrects deviations to maintain stability, and positive feedback, which can amplify processes but requires careful management to avoid undesirable outcomes. Feedback is essential for the system's adaptation and growth.

💡Equifinality

Equifinality is the concept that there is no single best way to achieve a goal, but all ways are not equally effective. The video uses this term to challenge the classical management's 'one best way' approach, suggesting that while there may be multiple paths to a goal, some are more effective than others. This concept supports the idea of contingency and negotiation in setting organizational goals.

💡Entropy

Entropy, in the context of systems theory, refers to the natural tendency of systems to deteriorate and move toward disorganization if left unchecked. The video uses the concept to highlight the importance of maintaining balance and order in a system through continuous effort and input of energy, resources, and information.

Highlights

General Systems Theory was established by Ludwig von Bertalanffy and J.G. Miller in the 1960s and 1970s.

Organizational Studies researchers applied the systems metaphor of living biological organisms to understand how organizations work.

Daniel Katz and Robert Kahn's 1966 publication, 'The Social Psychology of Organizations,' applied systems theory concepts to organizational life.

The systems approach provides an alternative perspective to the classical management view, focusing on the whole organism rather than individual parts.

Classical management aimed for efficiency, productivity, and control, searching for the 'one best way' to perform tasks.

Systems theory describes and explains how organizations work without a control mindset, pursuing multiple ways to achieve goals.

Organizations are viewed as open systems with permeable boundaries, constantly exchanging information and resources with their environment.

Key components of organizational systems include inputs (resources and information), processes (activities within the system), and outputs (outcomes and products).

Holism is central to systems theory, viewing systems as greater than the sum of their parts, with interconnected and interdependent elements.

Feedback processes in systems theory include negative feedback (correcting deviations) and positive feedback (amplifying desired processes).

Entropy in systems refers to the natural tendency of systems to deteriorate and move toward disorganization, requiring constant maintenance to achieve balance.

Equifinality in systems theory suggests there is no single best way to organize, though some ways are more effective than others depending on the context.

Systems theory laid the groundwork for more specific theories like complex adaptive systems, chaos theory, and learning organizations.

Karl Weick's research on loosely coupled systems is a direct extension of the systems view on organizations.

Systems theory provides a counterpoint to classical management, offering a comprehensive vocabulary and conceptual framework for understanding organizations.

Transcripts

- [Narrator] Today we're gonna look

at how we can see organizations as systems.

Ludwig von Bertalanffy and J.G. Miller

established the foundations

of General Systems Theory

in the 1960s and 1970s.

And researchers in the Organizational Studies area

imported the systems metaphor

of the living biological organism

and the key terms that go along with it

to pursue a richer understanding

of how organizations worked.

In 1966, for example, Daniel Katz

and Robert Kahn published

The Social Psychology of Organizations

that applied systems theory's concepts

to organizational life.

I think it's most helpful to see systems

as an alternative perspective at the time.

Classical management era of organizational studies

was really the dominant view

and it saw organizations as machines

and that was the main way to view

life in organizations for many decades.

The goal of that classical management

school of thought was they wanted efficiency,

productivity and control.

They were looking for the one right way

or, as Frederick Taylor said,

the one best way to do every single task

in the organization.

And so when systems theory came along

it was really a whole another way

to view life at work.

A systems approach looks at the whole organism,

not the little pieces of the machine,

but how it all fits together as a whole.

So, the goal of the systems approach

is to describe and explain

how organizations work.

They don't have a control mindset.

And they wanted to pursue multiple ways

to accomplish the various goals of the organization.

They're not looking for the one right way.

So I think it's best to understand

this systems approach as a counterpoint,

or an alternative, or even a reaction

against the classical management era

and school of thought.

So, in an organization we have

three main parts.

We have a set of inputs

where we have resources, information

that is needed to supply

the organizational system.

We also have the processes or throughputs.

That's all the activity within the system

that we need to do to accomplish work.

And then we have the outputs.

Those are the outcomes, the products,

the services created or delivered

by the organization.

Typical pizza place, for example,

has inputs that you might expect.

The people that are doing the work,

the food, the ovens, refrigerator, pizza boxes,

and all the other materials.

And then you have your processes,

or throughputs, where you make the dough,

you cut the vegetables, mix the sauce,

answer the phones, take the orders,

make the pizza, delegate the tasks.

Lots of work in a pizza place!

And then you have outputs

which are hopefully pizza

delivered to happy customers.

You have a profit for the shop.

Hopefully, your employees

are getting good paychecks.

You put the trash in the dumpster,

and all the other kinds of waste material.

Those are also considered outputs of a system.

And those are the three main parts.

So systems here are clearly open.

That's one of the main concepts

in systems theory.

They're open to their environment.

When we say environment,

we don't just mean things like the weather.

Of course we're not excluding that weather

but the environment more broadly.

So you have permeable boundaries

where information comes in and out,

resources flow both in and out

of those boundaries and around the organization.

And you have an exchange with the environment

that's not just happening but it's essential

for the health of the system.

So, constantly things are coming in

and moving out of the system

to keep it healthy,

to keep it functioning properly.

And your environments that you're in

are very unpredictable.

You can't say for certain

exactly what's gonna happen with competitors,

and exactly what's gonna happen in the future.

So you have the leaders

that are scanning the environment,

they're called boundary spanners.

And they're looking at the environment

to see what the vendors are up to,

what the customers are looking to do,

what the competition is up to,

where the general economy is headed.

And they're keeping an eye

through an environmental scanning

on all of the things that are happening

in and around the organization

to make better decisions.

Holism is an important part

of the systems approach

where systems are viewed as a whole,

not simply as a collection of separate pieces.

So, you wouldn't view yourself,

your whole body as just a collection of cells,

you're much more than that.

Another way to say it is a system

is greater than the sum of its parts.

Some people use the term synergy here,

which has a bad rep in some circles.

Those parts of the system are interdependent

and they interact through mutual feedback processes.

So, feedback is a dynamic process

where the pieces of the system,

of that whole are all interconnected.

Interdependence is another leading concept

in the systems approach

where organizations are in a dynamic

and interconnected relationship

with their environment.

For example, there're sub-parts within the system

that are also interrelated,

they're not isolated.

The organization is not simply isolated

and plopped down in the community,

it's connected to that community

and the pieces, the parts

within that organization

are also interconnected.

They're made up of interconnected sub-systems.

So, you have a whole organization

and then you have, let's say,

some major departments within that organization,

and then within those departments you have

work teams that are also interrelated

and overlapping.

So, changes to one part of the system

directly or indirectly influence other parts.

For example, if you had some people

call in sick on one team,

then other people in the organization

would be at least indirectly affected

and have to maybe pick up some of that work.

Maybe you hire a whole bunch of people

in one part of the organization

and everybody is gonna have to get on board

and train them and adapt when you add people.

So, everything is interconnected.

All the parts either directly or indirectly

influence the other parts.

Systems also have goals but the goals, again,

are not like classical management goals

of finding the one best way.

Goals are contingent and negotiated.

That means it depends on what exactly

the organization is facing

and where it's going.

It'll have to adapt along the way

as the situation develops.

Equifinality is a powerful concept to describe

how systems people approach goals.

the first part of equifinality

is it is no one best way to organize,

and this, again, flies directly in the face

of people like Frederick Taylor

who are looking for the one best way.

The second part of equifinality, however,

makes the concept that much more powerful,

that all ways of organizing

are not equally effective.

So, what they're not saying is look,

there's no one best way

so let's throw it all out.

What they're saying is there may be

not one single way to do everything.

However, there are some ways

that are better than others.

You just can't always know ahead of time

as you pursue your goals

what those several good ways are.

However, for example, if you want to travel

from New York City on a road trip to Los Angeles,

you cannot find one route at all times

that's the one best way

depending on weather, time of year,

traffic patterns, road conditions.

You will have to look for a variety of ways

to get there in that specific case.

However, they're not all the same.

For example, if your travel companion,

your co-pilot says,

"Let's go from New York City

"to Los Angeles on a road trip,

"but let's go all the way up

"through Canada first,"

you're probably gonna say

"That's not one of the better ways

"to do things."

Feedback is also an important part

of the systems approach.

We have negative feedback that seeks

to correct or reduce deviations

in the system's processes to reestablish

a steady course back in the direction

of the system's goals.

That's negative feedback that corrects.

Then you have positive feedback

that changes or grows the system

in desired ways that amplify

and enhance the system's current processes.

So you have positive feedback

that gets you going in the direction

you want to go faster.

However, if you think about it,

just like with kids, you can't reward

the wrong kinds of behavior accidentally.

So, positive feedback in this sense

is not necessarily always good for a system.

You might have a boss that's screaming

and yelling at everybody.

And if that boss get a promotion,

that might be seen as positive feedback

that would then amplify that boss's approach

and maybe the people around that boss

would start to scream and yell

at everybody too 'cause they're seeing

that that's what's being rewarded.

And then eventually, people would have

to give some negative feedback,

say "Hey, let's tone that down.

"We don't want to be like that,"

to get the system back on track.

Entropy is a term that is central

to the way systems work.

It's one that, I think, adds a lot of depth

to this approach, and that is systems tend

to run down, they tend to deteriorate,

and move toward disorganization.

So left on their own,

systems will run down.

For example, if you just left your apartment

and didn't clean it,

and you're still living in it

but you left it on its own

and didn't do the dishes and pickup,

it would only take a day or two

before it looked like a completely

rundown deteriorated system.

And that's why we seek more balance.

There's energy, resources, information

coming into the system to help it reach

homeostasis, or equilibrium.

Those are both ways to say balance.

So you have a whole lot of effort and work

and time put into maintaining

a balance in the system

so it doesn't on its own run down.

And the same way if you stopped

showering your body as a system,

you stopped bathing, brushing your teeth,

you would start to be noticed by your friends.

They would say, "Wow, you're not maintaining.

"You have to do that, otherwise you're gonna

"continue to deteriorate and fall apart."

Systems theory has not necessarily been used

in a lot of very specific ways as it is.

It was more like an opening.

An open door to lead up to a whole other set

of precise theories to look at organizations.

So, for example, complex adaptive systems,

or chaos theory as it's something called,

was built upon the foundation

of systems theory.

Learning organizations is another school of thought

that came out of systems thinking.

And of course Karl Weick's research

on loosely couple systems

is a directly outshoot

of the systems point of view on organizations.

So systems theory has provided

a powerful set of concepts

and a vocabulary and a whole way

of thinking about organizations

that is a direct counterpoint

to the classical management era

school of thought.