1. Chapter 4: SYSTEMS THEORY
Provides a general analytical framework (perspective) for viewing an organization.

2. Systems Theory Synergy Interdependence Interconnections
within the organization
between the organization and the environment
Organization as ORGANISM
“A set of elements standing in inter-relations”

3. Overview General Theoretical Distinctions Misunderstandings
Strengths of Systems Theory
Systems Framework
General Systems Theory Principles
System Characteristics
Contingency Theory
The Learning Organization

4. General Theoretical Distinctions
Classical and humanistic theories prescribe organizational behavior, organizational structure or managerial practice (prediction and control). MACHINE
Systems theory provides an analytical framework for viewing an organization in general (description and explanation). ORGANISM

5. Misunderstandings Doesn’t focus on specific task functions
Doesn’t directly explore the impact of interpersonal relationships and loyalty on productivity
Doesn’t provide for detailed focus
Changes in environment directly affect the structure and function of the organization.

6. Strengths
Recognizes
interdependence of personnel
impact of environment on organizational structure and function
affect of outside stakeholders on the organization
Focuses on environment and how changes can impact the organization
Seeks to explain “synergy” & “interdependence”
Broadens the theoretical lens for viewing organizational behavior.

7. Systems Framework Ludwig von Bertalanffy (1968)
Offered a more comprehensive view of organizations
NOT a theory of management - new way of conceptualizing and studying organizations
Four Strengths (“promises”) M. Scott Poole
Designed to deal with complexity
Attempts to do so with precision
Takes a holistic view
It is a theory of emergents - actions and outcomes at the collective level emerge from the actions and interactions of the individuals that make up the collective

8. Principles of General Systems Theory
Laws that govern biological open systems can be applied to systems of any form.
Open-Systems Theory Principles
Parts that make up the system are interrelated.
Health of overall system is contingent on subsystem functioning.
Open systems import and export material from and to the environment.
Permeable boundaries (materials can pass through)
Relative openness (system can regulate permeability)
Second Principle of Thermodynamics (ENTROPY)
Entropy must increase to a maximum
Negentropy increases growth and a state of survival
Synergy (extra energy causes nonsummativity--whole is greater than sum of parts)
Equifinality vs. “one best way.”

9. Characteristics of Organizations as Systems
Input-Throughput-Output
Inputs
Maintenance Inputs (energic imports that sustain system)
Production Inputs (energic imports which are processed to yield a productive outcome)
Throughput (System parts transform the material or energy)
Output (System returns product to the environment)
TRANSFORMATION MODEL (input is transformed by system)
Feedback and Dynamic Homeostasis
Positive Feedback - move from status quo
Negative Feedback - return to status quo
Dynamic Homeostasis - balance of energy exchange
Equivocality and Requisite Variety (Karl Weick)
Equivocality (uncertainty and ambiguity)
Requisite Variety (complex inputs must be addressed with complex processes)

10. Characteristics of Organizations as Systems
Role of Communication
Communication mechanisms must be in place for the organizational system to exchange relevant information with its environment
Boundary Spanners perform this function!
Media Outlets are communication link between system & environment
Communication provides for the flow of information among the subsystems
Systems, Subsystems, and Supersystems
Systems are a set of interrelated parts that turn inputs into outputs through processing
Subsystems do the processing
Supersystems are other systems in environment of which the survival of the focal system is dependent
Five Main Types of Subsystems
Production (technical) Subsystems - concerned with throughputs-assembly line
Supportive Subsystems - ensure production inputs are available-import raw material
Maintenance Subsystems - social relations in the system-HR, training
Adaptive Subsystems - monitor the environment and generate responses (PR)
Managerial Subsystems - coordinate, adjust, control, and direct subsystems

11. Characteristics of Organizations as Systems
Boundaries
The part of the system that separates it from its environment
Four Types of Boundaries (Becker, 1997)
Physical Boundary - prevents access (security system)
Linguistic Boundary - specialized language (jargon)
Systemic Boundary - rules that regulate interaction (titles)
Psychological Boundary - restricts communication (stereotypes, prejudices)
The ‘Closed’ System
Healthy organization is OPEN
Do not recognize they are embedded in a relevant environment
Overly focused on internal functions and behaviors
Do not recognize or implement equifinality
Inability to use feedback appropriately
CO-DEPENDENT

12. Characteristics of Organizations as Systems
McMillan & Northern (1995) on Enabling Co-dependency
Asymmetrical communication status of the hierarchy
Levels of authority
Fear of Punishment
The socially acceptable addiction
Workaholics
Addiction leads to more co-dependency
The organization’s selective attention
Money and power as distractions
Focus on ends instead of means
Skilled communication incompetence
Deprived of useful feedback
Emotion is masked
First extension of Systems Theory into Management Practice - CONTINGENCY THEORY

13. Contingency Theory
There is no one best way to structure and manage organizations.
Structure and management are contingent on the nature of the environment in which the organization is situated.
Argues for “finding the best communication structure under a given set of environmental circumstances.”
Management of Innovation - Burns and Stalker (1968)

14. Two Contingency Theories
Burns and Stalker (1968) Management of Innovation
Organizational systems should vary based on the level of stability in the environment
Two different types of management systems
Mechanistic systems - appropriate for stable environment
Organic systems - required in changing environments (unstable conditions)
Management is the Dependent Variable
Variations in environmental factors lead to management
Lawrence and Lorsch (1969)
Key Issue is environmental uncertainty and information flow
Focus on exploring and improving the organization’s relationship with the environment
Environment is characterized along a certainty-uncertainty continuum

15. Pragmatic Application of Systems Theory
The Learning Organization
Peter Senge’s The Fifth Discipline: The Art and Practice of the Learning Organization (1990)
An organization that is continually expanding its capacity to create its future
Organizational Learning Occurs under Two Conditions
1) When design of organizational action matches the intended outcome
2) When initial mismatch between intentions and outcomes is corrected, resulting in a match
Key attribute of learning organization is increased adaptability
Adaptability is increased by advancing from adaptive to generative learning

16. The Learning Organization
Adaptive (single-loop) Learning
Involves coping with a situation
Limited by the scope of current organizational assumptions
Occurs when a mismatch between action and outcome is corrected without changing the underlying values of the system that enabled the mismatch.
Generative (double-loop) Learning
Moves from COPING to CREATING an improved organizational reality
Necessary for eventual survival of the organization
Both are Central Features of the Model of the Communicative Organization (Chapter 6)
Synergy and Nonsummativity are Important

17. The Learning Organization
Through communication, teams are able to learn more than individuals operating alone.
Critics argue that teams inhibit learning
Thoughts?
Leadership is a key element in creating and sustaining a learning organization.
Leaders are responsible for promoting an atmosphere conducive to learning
CREATIVE TENSION
Represents difference between the “vision” of where the organization could be and the reality of the current organizational situation.

18. Impediments to Learning Organization
Complexity of the Environment
Difficult to determine cause and effect
Multiple contributing elements in complex environments
Internal Conflicts
Individuals, teams, departments, and subcultures are often at odds
Energy is drained by conflect
Organization members must be trained in communication and conflict-negotiation skills

19. Summary Systems Theory is NOT a prescriptive management theory
Attempts to widen lens through which we examine and understand organizational behavior
The Learning Organization
Synergy
Nonsummativity
Interdependence
Equifinality
Requisite Variety
Emphasizes COMMUNICATION in the Learning Process
Organizations cannot separate from their environment
Organizational teams or subsystems cannot operate in isolation

20. Bottom Line
The same misunderstandings and problems that continue to occur will eventually cause fatal damage to the system.