The Neurology of Business: Implementing the Viable System Model PDF
Preview The Neurology of Business: Implementing the Viable System Model
Management for Professionals Martin Pfiffner The Neurology of Business Implementing the Viable System Model Management for Professionals The Springer series Management for Professionals comprises high-level business and management books for executives. The authors are experienced business professionals and renowned professors who combine scientific background, best practice,andentrepreneurialvisiontoprovidepowerfulinsightsintohowtoachieve businessexcellence. Martin Pfiffner The Neurology of Business Implementing the Viable System Model MartinPfiffner FondationOroborus Altendorf,Switzerland Translatedby MarkKyburz EnglishProjects Zürich,Switzerland ISSN2192-8096 ISSN2192-810X (electronic) ManagementforProfessionals ISBN978-3-031-14259-8 ISBN978-3-031-14260-4 (eBook) https://doi.org/10.1007/978-3-031-14260-4 #TheEditor(s)(ifapplicable)andTheAuthor(s),underexclusivelicensetoSpringerNatureSwitzerland AG2022 Thisworkissubjecttocopyright.AllrightsaresolelyandexclusivelylicensedbythePublisher,whether thewholeorpartofthematerialisconcerned,specificallytherightsofreprinting,reuseofillustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilarmethodologynowknownorhereafterdeveloped. Theuseofgeneraldescriptivenames,registerednames,trademarks,servicemarks,etc.inthispublication doesnotimply,evenintheabsenceofaspecificstatement,thatsuchnamesareexemptfromtherelevant protectivelawsandregulationsandthereforefreeforgeneraluse. The publisher, the authors, and the editorsare safeto assume that the adviceand informationin this bookarebelievedtobetrueandaccurateatthedateofpublication.Neitherthepublishernortheauthorsor theeditorsgiveawarranty,expressedorimplied,withrespecttothematerialcontainedhereinorforany errorsoromissionsthatmayhavebeenmade.Thepublisherremainsneutralwithregardtojurisdictional claimsinpublishedmapsandinstitutionalaffiliations. ThisSpringerimprintispublishedbytheregisteredcompanySpringerNatureSwitzerlandAG Theregisteredcompanyaddressis:Gewerbestrasse11,6330Cham,Switzerland Preface Asarule,ittakes50–60yearsforgroundbreaking,seminalinnovationstospreadto the point where they create real benefits in the economy and society. This book concerns such a basic innovation, first because we urgently need it, and second because it is available, waiting to be used, after 50 years of practical testing and technologicaldevelopment. Almost 50 years ago to this day, the British scholar and top manager Stafford Beerpresentedhissolutiontoaproblemthat,atleastinmostpeople’sminds,didnot yetexist.Whilethetechnologyalreadyexistedinrudimentaryform,itwasfarfrom mature. Beer was way ahead of his time because the question at hand was how to makecomplexenterpriseswork. Afewyearsearlier,duringWorldWarII,agroupofscientistsinMexicoCityhad discovered a new science that would change the world as no discipline ever had: cybernetics, the science of control and communication in complex systems—or, simply put, the science of functioning. It enabled the unprecedented technological revolution of the postwar era, which led to today’s Industry 4.0 and digitalization. Beerwasthefirsttosystematicallyapplythescienceoffunctioningtothemanage- ment of enterprises—which he was directly involved in as a top manager. He revealed the structures that need to be in place for an enterprise—regardless of sizeandcomplexity—tofulfillitspurposeandachieveitsgoals. Ifcyberneticsisnowappliednotonlytotechnicalsystemsbutincreasinglyalsoto socialsystems,thatis,ourorganizations,thiscouldrevolutionizetheworldasecond time. Because as this book shows, the functioning of organizations is the core problem as well as the solution to the challenges of our time. Poorly functioning organizations cause the crises facing our world. Today, most organizations are overwhelmed by the complexity and dynamics of their environment, and unneces- sarily waste a lot of energy and time in their paralyzing and incomplete internal mechanisms. Ifwe want to regain our freedomof action,we need better solutions. Butcanwereallyfindtheseinevenbetteranatomiesororganizationalchartsofthe enterprise—even though we have been optimizing them for over a hundred years and have already tried out all conceivable forms? Or will we really find better solutions in an even better physiology of the enterprise or in process design— althoughwehavealsobeenusingandoptimizingthistechnologyfor30years? Or should we instead focus on a third dimension of organizing, that is, what an v vi Preface organization does to manage its internal and external complexity: its neurology? Withoutneurology,therecanbenocomplexitymanagement,noagility,norintelli- genceandcreativity.Sowhatotherlessoncanwelearnfromneurologyforcontrol and communication in the enterprise? As we will see, a neurological perspective resolves many perennial questions of organizing, such as autonomy versus hierar- chy,agilityversuscohesion,andflexibilityversuscontinuity. Stafford Beer has given us a model that for the first time enables measuring, comparing, and assessing the quality and performance of various organizational structures. The yardstick for this is the question of how well these structures deal withcomplexityanddynamics.Ontheotherhand,aslongasweremaintrappedin the first two dimensions of organizing, we will be taken in by fads, solving one problem and creating another. Dealing with complexity and dynamics is the main challengeofourtime,anddesigningthethirddimensionoforganizing istherefore themanagementissueofthefuturethataffectseverymanagerpersonally. Beer’s “Viable System Model” is the only model to date that comprehensively addressesthethirddimension.Aftermorethantwodecadesofpracticalexperience,I have decided to share that experience, and thus to contribute to the growing international community of practitioners and scholars. This book is for those managers who want to put Beer’s model into practice. A book like this, therefore, needstobeunderstandableanduseful.Butifitisnotwell-foundedorboring,readers willputitdown.Sothechallengewastomanageathreefoldbalancingact:between practicalusefulness,scientificthoroughness,andfascinatingreading. I am grateful to many people. First and foremost, I thank my wife Sibylle, who has encouraged and supported me for 25 years. She has contributed much to this book.IthankMarkKyburzforhistranslationandforallhissupportthroughoutthe project.IalsothankClaudiaZürcherandFranziskaHubmannforcreatingthehand- drawnillustrations.BarbaraBethkeatSpringer,whosupportedtheprojectfromthe outset,wasapleasuretoworkwith.Thankyou. I am grateful to the many colleagues in the field of cybernetics I have been privilegedtoworkwith,andwhobecamefriendsinmanycasesandrolemodelsin many ways: Allenna Leonard, Vanilla Beer, Roger Harnden, Joe Truss, Chris Cullen, David Komlos, David Benjamin, Angela Espinosa, Joe Walker, Stephen Davies,DavidBeatty,JoséPerezRios,MarkusSchwaninger,JanKuiper,Swanette van der Vegt, Mike von de Wijnckel, everyone at Liverpool John Moores Univer- sity,andmanyothers. IammostgratefultotheentrepreneurBernadetteLangenick-Pfisterandherlate husband Willy Pfister who created the Fondation Oroborus, which promotes the disseminationofmanagementcyberneticsinthebusinessworld,andwhichhasalso supportedthisbook. I thank the thousands of executives in business and nonbusiness organizations around the world for the opportunity to discuss application issues, to try out new ways of doing things, and to learn from them. They, along with my former colleagues at the Management Zentrum St. Gallen, are the foundation on which thisbookstands. Preface vii Finally,Ithankmytwoteachersandmentors.WorkingwithFredmundMalikfor nearly 30 years has shaped my thinking. He introduced me to the practice of systems-oriented management theory and management cybernetics as a student in the1980sandlaterintroducedmetoStaffordBeer.FromFredmundMalikIlearned what right and good management is and how to use it to create real benefits in practice,aconcernalwaysparticularlyclosetohisheart.Finally,mygreatestthanks belongtoStaffordBeerhimself,whointroducedmebothtohisthinkingandtothe applicationofhismodelsandmethodswithsuchpatienceandaffectionduringmany longconversationsinthelast3yearsofhislife.HedidsoontheconditionthatIpass ontheknowledgeIhadgainedtoothers,whichgavemethebestpossibleimpetusto writethisbook. I bow to the pioneers of cybernetics, most notably Norbert Wiener, Warren McCulloch,HeinzvonFoerster,RossW.Ashby,WalterPitts,JohnvonNeumann, Claude Shannon, Margaret Mead, and Gregory Bateson, on whose shoulders we stand.Soletusseewhatwecanmakeoutfromthevantagepointtheyhavegivenus. Altendorf,Switzerland MartinPfiffner May30,2022 Prologue: Why This Book Matters Abstract During WorldWarII,agroupofscientistsinMexicodiscoveredanewdiscipline: the science of functioning. In it, they found the recipe for success, which was first applied in technology and led to the third industrial revolution (automation), and subsequentlytothealreadyproclaimed,fourthindustrialrevolutionofdigitalization, whichtodayencompassestheeconomyandsocietyasawhole.Theproblemisthat technical systems have left social systems behind. Our ponderous and expensive organizationscannolongerkeepupwithtechnology-drivencomplexityanddynam- ics. Only when the recipe for success is applied to our organizations will we experienceanewwayoffunctioning.Thisrecipeliesneitherinorganizationalcharts (anatomy) nor in organizational processes (physiology), but rather in the third dimension of organizing: the neurology of the enterprise, that is, in its control and communication. Evertried.Everfailed.Nomatter. Tryagain.Failagain.Failbetter. (SamuelBeckett,WorstwardHo!) A World-Changing Discovery: The Formula for Success One evening, somewhere in 1940s America, when the first computers were being built,WarrenMcCullochstepsintoacommonroomataconventioncenter.Hespots Norbert Wiener sitting in an armchair, deeply immersed in a book. “Norbert,” he says,“WalterPittsandIareworkingonamachinethatwillenableblindpeopleto read with their ears.” The ensuing events led to one of the most far-reaching and crucialdiscoveriesofthetwentiethcentury.Inourpresent,twenty-firstcentury,this discoverywillplayanevenmoreimportantrolethanever. Wiener looks up from his book with interest. “The advantage,” McCulloch continues, “is that books will not need to be printed in braille. But there is one ix x Prologue:WhyThisBookMatters matter that I’d like to discuss with you. Our machine scans the text. The problem, though,isthatitdoesn’trecognizeindividuallettersbecauseoftheirdifferentsizes andfonts.Wecouldofcourseprintstandardizedletters,butbraillealreadydoesthat. Ourmachinemustthusbeabletorecognizetheshapeofaletter‘n’inanysizeand shape. I have an inkling of how we could teach the machine.” McCulloch draws a technical diagram on a piece of paper and explains the design of scanners, photo- electric cells, and oscillators to Wiener. The two scientists discuss and argue for a while. Later McCulloch pours another whiskey and goes to bed. He leaves the diagram on the table. Shortly afterward, Gerhardt von Bonin enters the common room. A leading expert in neuroanatomy, he knows everything about the nervous system,itsstructureandprocesses.VonBoninseesthedrawingonthetable,studies itbriefly,andasksWiener:“Whowastryingtodrawadiagramofthevisualcenterof thebrain?”1 Wienerisoverwhelmed.Couldtheblueprintforhowthebrainrecognizesshapes look like McCulloch’s drawing? Did the brain and the machine really work the sameway?Thenextevening,Wienertoldtheotherconferenceparticipantswhathad happened. About twenty people were present. What was special about the confer- encewasthatparticipantscamefromdifferentsubjectareasandwereworldleaders intheirfield.Wienerwasoneofthesixbestmathematiciansofhistimeandwasalso knownas“theAmericanLeibniz.”McCulloch,theconferenceleader,wasaworld- famous neurophysiologist and a neighbor of Albert Einstein’s, with whom he was goodfriends. Wiener’s excitement quickly spread to the other participants. Did an engineer eager to build such a machine need the same blueprint as nature had already developed in four billion years of evolution? Can we learn from organisms how trulydifficultthings,suchasrecognizingshape,work?Thescientistsgatheredinthat 1940scommonroomdiscussedthetechnicaldiagramandtriedtoquantifyit:What speedmustthemachineoperateatinordertofunction?Theresultwastheirnextbig surprise:Theycalculatedarateoftenvibrationspersecond—whichcorrespondsto analphabrainwavewhenwedaydreaminarelaxedposture.Ourbrain,then,scans theworldatthesamespeedasascannercapableofrecognizingletters. Evidently, recognition in the brain involves the same ingredients as in the machine. The scientists around Wiener instinctively sensed that they were on the trailofapotentiallyworld-changingdiscovery.Ifthesameprinciplesappliedintwo worldsasdifferentasthemachineandtheorganism,mighttheyalsoapplyinother disciplines?Hasfocusingonourspecificareasofexpertiseblindedustodiscovering universalprinciples?AndwhosaysthatGodknowsthedifferencebetweenbiology andengineering,orbetweenphysicsandchemistry? Dating the birth year of a new science mostly proves elusive. Nobody knows when exactly physics or philosophy emerged. In our case, however, matters are different. From 1943, at the height of World War II, McCulloch, Wiener, and the 1NorbertWiener,Cybernetics:OrControlandCommunicationintheAnimalandtheMachine, 2nded.(Cambridge,MA:MITPress,1948),pp.22ff.,133ff.
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