Table Of ContentManagement 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
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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)
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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.
