To get organisational insight and a better understanding of how a competence centred organisation works. To understand the minimum requirements for having a viable organisation in place in a changing environment. To understand how we as managers can work with the systems to create the best value.

1. Johnny Mikkelsen
January 2018
Organizational review creating insight highlighting areas
for improvements – requisite variety, a cybernetic concept
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2. 2
Overall purpose
 To get organisational insight and a better
understanding of how a competence
centred organisation works
 To understand the minimum requirements
for having a viable organisation in place in
a changing environment
 To understand how we as managers can
work with the systems to create the best
value

3. 3
The Viable System Model (VSM) system by Stafford Beer
VSM is to understand an enterprise as a system. If an
enterprise is not understand as a system, managers
cannot change it with any kind of predictability. The
model, consists of environment and a system:
• System 1 – Operations – Where products are
manufactured, where services are provided
• System 2 – Coordination – As defined, it is balancing
act between multiple operations in order to reach
equilibrium. It is the rules, the procedures, the
guidelines that “prevent” operations from deviation.
It’s function is to control or damp the oscillation
• System 3 – Integration – Managing and control
operations, provide resources in order to operate
(money, humans, equipment, systems)
• System 4 – Intelligence – Measure results perceived
by the market (environment) absorbs the internal
performance, balances mismatch, sense the future
and provides guidance for adaptation. This exists
strategically, as also operationally
• System 5 – Policy – The system provides strategy
and business direction

4. 4
Analysis the procurement organisation highlighting areas for
improvements
System 1
 Operations
System 2
 Governance structure
 Standards and procedures
 Common culture and values
 Common processes and language
 Leadership
System 3
 IT systems, data bases and tools
 Resources
System 3*
 Review and audits
 Control functions
 Knowledge sharing
System 4
 Market insight and prediction
 R&D, continuous development
 Knowledge management
System 5
 Policies
 Guiding principles
 Value proposition
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! : Suggested focus areas