An Introduction to the Viable Systems Model

Is your system viable? An introduction to the
Viable Systems Model (VSM)
Robert Lamb
rlamb@pmi-aus.com.au
PMI
2017 LAST Conference
Session Leader Handbook
Thursday 29 and Friday 30 June 2017
Swinburne University (Hawthorn Campus)
ATC Building and EN Building
Please read the following info carefully. The timings in thi
supercede those in previous registration confirmation ema
The most important stuff
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Please read the following info carefully. The timings in this handbook
supercede those in previous registration confirmation emails.
Check in on both days is in the foyer of the Advanced Technologies Centre (ATC). Registration on
On Thursday, there will be an Opening Session in ATC101 at 8:50. We have a special, new
experiment that we are trying (not lightning talks), for the morning session. After morning break we will
disperse to various rooms. On Friday, after check in, there will be another group session in ATC101
before dispersal to other sessions.On both days, the end of day drinks will be held at the Hawthorn
Hotel, 481 Burwood Road (TBC)
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Updated on 19 June 2017
1
The Viable* Systems Model (VSM)
3
What is
the VSM?
What are its
origins?
How can it
help me?
How do I
use it?
Systems thinking:
“thinking about the network
of relationships rather than the things
themselves” (Beer 1990)
© Robert Lamb 2017 LAST Melbourne 2017: Is your system viable? v0.2
This is an annotated version of a presentation
given at LAST Melbourne 2017 and as such is
positioned as an introductory overview rather
than an definitive exposition.
Please contact the author regarding any
questions, comments or corrections...
*Viable:
1. able to live or exist, esp. in a particular place
or climate…
2. workable, practicable; feasible, esp.
economically or financially.

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Where does the VSM fit in the toolkit ?
4
Strategy
frameworks
Business
Model
CanvasLean
six sigma
Agile / Scrum
People-y stuff
VSM
There are many tools and techniques to support
strategy development and process execution –
but not so many for organization design.
The VSM can fill that gap!
Insight Strategy
Organization
Execution

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Stafford Beer (1926 – 2002)
5
Organisation man… … and sage
The VSM is the brainchild of one
man – Stafford Beer.
Beer was a polymath, eccentric and
iconoclastic. He started off working
in operations research in the 1940s.
He developed an interest in the new
field of cybernetics, and spent thirty
years developing and refining the
VSM as a way to analyse and design
organisations using cybernetic
principles.
Beer applied the VSM to many
organisations, both commercial and
political. He famously used the VSM
to model the entire economy of
Chile under the leadership of
President Allende in 1970, a venture
that was only brought to an end by
the summary intervention of a CIA
supported military coup.

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VSM Trilogy
Books by Beer
6
Stafford Beer’s books are well written (and often
humorous) but they are dense, discursive, and by no
means easy reading. “Heart” contains the fullest
exposition, and “Diagnosing” is a portable guide.

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Source:
Stafford Beer
“Diagnosing the System for organizations”
Wiley, 1995
Beer’s VSM
© Robert Lamb 2017 LAST Melbourne 2017: Is your system viable? v0.2 7
Here’s Stafford’s canonical model, showing the structure of
the VSM at two levels of recursion (nesting). Refer to “Heart”
or “Diagnosing” for specifics regarding the structure.
The following presentation depicts a simplified version that
shows only one level of recursion and glosses over some of
the inter-connections.
Stafford’s principles of cybernetics include the assertion that
all viable systems contain viable systems and are themselves
contained in viable systems.
Another way of looking at this is to say that viable systems
are fractal – they have a similar structure at whatever level of
detail you drill down to.

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A Viable Diagram (single recursion)
8© Robert Lamb 2017 LAST Melbourne 2017: Is your system viable? v0.2
Here is the simplified representation,
which we will build up system by system.
System in Focus
environment
System 3*
Audit
System 1
System 2
Co-ordination
System 3
Collec,ve
Opera,ons
Element 1
Local
Environment
Element 1

Processes
Element 1
Manage-
ment
Element 3
Local
Environment
Element 2
Local
Environment
Element 2

Processes
Element 3

Processes
Element 2
Manage-
ment
Element 3
Manage-
ment
System 4
Planning &
development
System 4
Environment
System 5
Governance

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System-in-focus (recursion level)
9
By product By customer By function
MLA Business
Systems
Time sharing
bureau
Tour
operating
systems
Membership
records
systems
Personal
computers
Tour operating
systems
Laker
Skytrain
Blue Sky
Greenalls
Laker Skytrain
Design
Programming
Support
The VSM is capable of depicting organisational
function at any level of recursion (nesting).
The level of recursion for any particular model
is called the “system-in-focus”, and can be
specified using various criteria.
The break-out should align with the
organisation’s operating model to give the
cleanest division of responsibilities. This
example, from a company I worked for in the
1980s, shows three different criteria.
Note that the VSM does not imply “one role –
one position” – it describes what has to be
done to assure viability, not who does it.
Product /
Service
Type
Function / Process

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Breaking out the System 1 Elements
The System 1 elements do the
customer-facing work that realises the
purpose of the System-in-focus.
In Lean terms, they encompass the
Customer Value Adding functions.
Laker Skytrain
Design
Programming
Support
System-in-focus
System 1 elements
(of the system in focus)

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System 1 Element – Viable Operations
11
amplify
attenuate (filter)
Suppliers
Customers
Inputs
Outputs
Environment Process
There is always more raw complexity in the
environment than the process can handle.
Therefore we have to attenuate (filter) the
inputs to the process, e.g. via standard
communication channels for accepting change
requests, and amplify the outputs, e.g. by
release notes (or videos) describing the effects
of what has been changed.

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Managing Operational Processes
12
Local Environment
Processes
Mgt
Local
Environment
Processes
Manage-
ment
There is always more complexity in the environment than
the process can handle – and there is also more complexity
in the process than local management can handle.
Management uses communication tools such as training,
SOPs, policies, KPIs, standardised reports, and Agile / Scrum
events to attempt to match management variety to process
complexity.

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System 1 Element Interactions
To simplify the diagram, we replace each pair of
arrows with a single double ended connector,
symbolising the two-way information channels.
In practice, several system 1 elements work in
parallel, each having its own environment,
processes and local management.
Operations (processes) may have overlapping
environments – they use the same technology
and / or serve the same customers. Actions
taken by one operation can impact the effect of
actions taken by another operation. For example
if one operation upsets a common customer,
that may have ripple effects for other
operations.
As well as interaction with common
environments, operations may have direct
interdependencies – for example functionality
developed by one team may be needed as an
input to the process of another team. One team
might make a change to database structure that
impacts the coding of a customer query. That’s
what the wavy lines show.
System 1
Element 1
Local
Environment
Element 1

Processes
Element 1
Manage-
ment
Element 3
Local
Environment
Element 2
Local
Environment
Element 2

Processes
Element 3

Processes
Element 2
Manage-
ment
Element 3
Manage-
ment

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System 3 – Collective Operations
The unity between the system 1 elements is
provided by a system 3 – called here
“collective operations”.
System 3 has some sort of resource
agreements with each system 1 element, in
which system 3 agrees resourcing in terms of
people and budget in exchange for the
commitment to deliver certain outcomes.
These are formal management agreements,
either in writing or agreed in conversations,
and are usually pretty high level – certainly not
at a transactional level.
They may get reviewed periodically – anything
from weekly to annually – but they do not give
the system 3 enough bandwidth (that is to say
variety) to control how the system 1 works
beyond the agreements, and they are not a
license for the system 3 to look over the
shoulder of the system 1 or to take decisions
on its behalf.
System 1
System 3
Collec&ve
Opera&ons
Element 1
Local
Environment
Element 1

Processes
Element 1
Manage-
ment
Element 3
Local
Environment
Element 2
Local
Environment
Element 2

Processes
Element 3

Processes
Element 2
Manage-
ment
Element 3
Manage-
ment

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System 2 - Co-ordination
System 2 co-ordinates between the
system 1 elements to handle the
direct interdependencies, the
environmental overlaps, and fair
use of collective resources.
Part of the agreement between
system 3 and system 1 specifies the
system 2 protocols and processes
that apply. E.g: you will
communicate with Slack, you will
format your reports in standard
format X, you will hire staff using
corporate HR and so on.
System 2 specifies shared services
to the system 1s. Within the system
1 eleements, subsets of the system
2 are used to communicate
between the local management
and its operations. The system 1
elements may add their own
functions to the system 2 –
provided they do not compromise
its effectiveness in co-ordinating
between them.
System 1
System 2
Co-ordination
System 3
Collec&ve
Opera&ons
Element 1
Local
Environment
Element 1

Processes
Element 1
Manage-
ment
Element 3
Local
Environment
Element 2
Local
Environment
Element 2

Processes
Element 3

Processes
Element 2
Manage-
ment
Element 3
Manage-
ment

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System 3* - Reality Check
There needs to be some cross-
check that bypasses the system 1
management and gives system 3 a
direct insight into the workings of
the processes.
This is often referred to as the audit
function. It is circumscribed and
occasional - it is not an axis for the
direct intervention of senior
management into the system 1
operations.
Some audits may be formal – e.g.
checking expenses or occupational
health and safety audits.
Informally, system 3* also includes
“management by walking around”
and “going to Gemba”.
System 3*
Audit
System 1
System 2
Co-ordination
System 3
Collec&ve
Opera&ons
Element 1
Local
Environment
Element 1

Processes
Element 1
Manage-
ment
Element 3
Local
Environment
Element 2
Local
Environment
Element 2

Processes
Element 3

Processes
Element 2
Manage-
ment
Element 3
Manage-
ment

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System 4 – Planning
17
System 3
Collec&ve
Opera&ons
System 4
Planning &
development
System 4
Environment
Systems 1, 2 and 3 are concerned with the
ongoing balancing and response of the system
1 operations to their respective environments,
in other words, “Business as Usual”.
But of course environments change – customer
requirements, available technologies, new
competitors, economic growth or contraction.
The system 1-2-3 arrangement does not have
the capability to deal with these changes.
System 4’s role is to anticipate changes in the
wider environment and position the 1-2-3 to
operate in this new environment.
System 4 thus needs to be able to predict,
plan, and simulate future states and to design
and implement changes to the 1-2-3 based on
its forecasts.
System 4 deals with additional environmental
factors than 1-2-3 – we show it has having its
own environment, which is of course in
addition to its interactions with system 3.

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System 5 – Governance
18
System 3
Collec&ve
Opera&ons
System 4
Planning &
development
System 4
Environment
System 5
Governance
System 5 rounds out this single-
recursion VSM by providing
governance functions.
It is responsible for the purpose and
values of the system, and for
monitoring the balance between
ongoing operations (system 3-2-1) and
planning (system 4) as an imbalance
between these can prove fatal.
The System 5 also monitors the
effectiveness of the whole system in
meeting its objectives.
“Leadership” includes the functions of
system 3, 4 and 5.
Because the VSM is recursive, each
system 1 element should include its
own system 3-4-5 structure, having the
appropriate scope and timeframe for
its own governance and planning.

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The Algedonic Signal
The VSM includes one additional
feature – the facility for problems to
be escalated to the system 5 without
being filtered through the
intermediate systems, like the
emergency cord on a train.
Beer calls this the “Algedonic” signal,
being to do with pain and pleasure.
Perhaps this is the proper use of a
“red” signal on a R-A-G report…
System in Focus
environment
System 3*
Audit
System 1
System 2
Co-ordination
System 3
Collec,ve
Opera,ons
Element 1
Local
Environment
Element 1

Processes
Element 1
Manage-
ment
Element 3
Local
Environment
Element 2
Local
Environment
Element 2

Processes
Element 3

Processes
Element 2
Manage-
ment
Element 3
Manage-
ment
System 4
Planning &
development
System 4
Environment
System 5
Governance

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How can the VSM help? – Some lenses
• Alignment of System 1s to the operating model (overview)
• Agreement of resources, expectations & autonomy for System 1s (S3)
• Co-ordination and support of System 1 elements (S2)
• Adequacy of reality checks – does management know what’s really happening? (S3*)
• Organisation and resourcing of planning and development (S4)
• Management balance of operations and planning (S3 – 4)
• Clarity of mission, values and organisational norms (S5)
• Fulfilment of purpose (S3 – 4 – 5 interaction)
• Effectiveness of emergency escalation (Algedonic signal)

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Resources

PMIRobert Lamb
rlamb@pmi-aus.com.au
0419 368 734
Process Management International
22
Please contact the author with any
questions and comments.

An Introduction to the Viable Systems Model

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An Introduction to the Viable Systems Model