Organizations as Systems
The notion of organization as system refers to an approach to conceptualizing organizations as systems based on systems thinking and theory in order to study the organization's design and management. Organization as system is an adaptive whole with emergent properties making it more than the sum of its parts. The organization has members - organization units - that can be viewed as adaptive whole sub-systems, each with its own emergent properties. An organization is designed to accomplish predefined goals and objectives through its parts - organization units comprised of people - with a common purpose and the other organization resources they employ.
A system is defined by its boundaries - the limits that identify its components, processes, and interrelationships when it interfaces with another system. To ascertain certain subsystems requirements properly and to design appropriate systems such as organization functional structure, strategy execution system, etc., it is of primary importance to understand the system as a whole. All the systems of an organization and its environment are inter-related and interdependent. This has important implications both for organizations and for those analysts who seek to help them better achieve their goals. When an element of the system is changed or eliminated the rest of the system's elements and subsystems are also significantly affected. The measure of effectiveness of an organization is its capacity to fulfill the system's goals, and the goals of its components.
Using systems overlay to understand organizations allows for the acknowledgement of the idea of systems composed of subsystems, their inter-relatedness and interdependence, the existence of boundaries that allow or prevent the interaction between various organization units and elements of other subsystems and environments, and the existence of internal environments characterized by degree of openness and closeness, which might differ across departments, units, or even systems projects.
The notion of organization as system refers to an approach to conceptualizing organizations as systems based on systems thinking and theory in order to study the organization's design and management. Organization as system is an adaptive whole with emergent properties making it more than the sum of its parts. The organization has members - organization units - that can be viewed as adaptive whole sub-systems, each with its own emergent properties. An organization is designed to accomplish predefined goals and objectives through its parts - organization units comprised of people - with a common purpose and the other organization resources they employ.
A system is defined by its boundaries - the limits that identify its components, processes, and interrelationships when it interfaces with another system. To ascertain certain subsystems requirements properly and to design appropriate systems such as organization functional structure, strategy execution system, etc., it is of primary importance to understand the system as a whole. All the systems of an organization and its environment are inter-related and interdependent. This has important implications both for organizations and for those analysts who seek to help them better achieve their goals. When an element of the system is changed or eliminated the rest of the system's elements and subsystems are also significantly affected. The measure of effectiveness of an organization is its capacity to fulfill the system's goals, and the goals of its components.
Using systems overlay to understand organizations allows for the acknowledgement of the idea of systems composed of subsystems, their inter-relatedness and interdependence, the existence of boundaries that allow or prevent the interaction between various organization units and elements of other subsystems and environments, and the existence of internal environments characterized by degree of openness and closeness, which might differ across departments, units, or even systems projects.
Organization Operating Model
The operating model is an abstract representation of how an organization operates across process, organization structure, partner network, technology domains in order to deliver value defined by the organization in scope. The Operating Model serves as a blueprint for how resources are organized and operated to get critical work done. It encompasses decisions around the shape and size of the business organization, where to draw the boundaries for each line of business, how people work together within and across these boundaries, how the corporate center will add value to the business units, and what norms and behaviors should be encouraged.
The Operating Model Component Elements:
The Operating Model is the result of the Operations Strategy, and is focused on how to best enable and implement the organization's strategy. Operations strategy defines through the Operating Model, an organization structure design on how an entire business will allocate its resources to support operations and its strategic goals.
Organization Capability
Organization capability defines “what” a business does at its core, and can be denoted by the level-1 functions of the organization. Organizational capability refers to a company's ability/capacity to manage resources, such as employees, effectively to gain an advantage over competitors. Organizational Capability profile describes the skills, knowledge and resources that enable a company to provide quality products and services to customers. Organization capabilities such as collective skills, abilities, and expertise of the organization are the outcome of investments in staffing, training, compensation, communication and other human resource areas. The capability focus should be on the business's ability to meet customer demand; it must be unique to the organization to prevent replication by competitors. Organization capability is a company's ability to manage resources such as employees, effectively to gain competitive advantage over competitors. It expresses the capacity to deploy resources or efficiently and effectively assign organization activities in creating and delivering value to customers. Organization capability is defined as an organization’s ability to, for example, innovate, or to respond to changing customer needs.
Organizational capabilities are key intangible assets; you can’t see or touch them, yet they can make all the difference in the world when it comes to market value. These capabilities - the collective skills, abilities, and expertise of an organization - are the outcome of investments in staffing, training, compensation, communication, and other human resource areas. They represent the ways that people and resources are brought together to accomplish work. They form the identity and personality of the organization by defining what it is good at doing and, in the end, what it is. They are stable over time and more difficult for competitors to copy than capital market access, product strategy, or technology.
Capabilities, Competencies and Abilities
Competency is an overloaded term and may refer to a person’s functional, social or technical competency.
Core competencies refer to a company’s core technical competencies; for example, a financial services firm must know how to manage risk. Core competencies are distinctive, rare, valuable firm-level resources that competitors are unable to imitate, substitute or reproduce.
Emergent Property
Organizational capabilities emerge when a company delivers on the combined competencies and abilities of its individual members. Individual abilities may include ‘Leadership’ ability, which is an individual social skill that gives the individual the ability to, for example, set direction, communicate a vision, or motivate people. Organization capabilities enable an organization to turn its technical know-how into results. There is no magic list of capabilities appropriate to every organization; however, there are some identified list that well-managed companies tend to have, such as:
Organization capability is defined operationally, in terms of the dynamic relationships between organizational culture, the outcomes of operational processes, institutional arrangements, structure, and the organization’s resources. It expresses the potential capacity to deploy resources, or efficiently and effectively assign organization activities to the right “actors” (socio-technical systems) in creating and delivering value to customers.
The operating model is an abstract representation of how an organization operates across process, organization structure, partner network, technology domains in order to deliver value defined by the organization in scope. The Operating Model serves as a blueprint for how resources are organized and operated to get critical work done. It encompasses decisions around the shape and size of the business organization, where to draw the boundaries for each line of business, how people work together within and across these boundaries, how the corporate center will add value to the business units, and what norms and behaviors should be encouraged.
The Operating Model Component Elements:
- Structure - This defines the appropriate boundaries for lines of business and shared services, centers of expertise, and other coordinating mechanisms that allow a company to leverage scale and expertise. The structure also specifies the size and shape of the organization with indicative resource levels and locations. Organizations are composed of interrelated (sub) organization units serving as specialized function, departments, divisions, geographic locations, etc. The organization unit is conceptualized as a social system - complexes of people and/or groups that according to commonly agreed rules and procedures strive to realize one or more preset objectives. Typical functions in a business organization may include Finance, Marketing and Sales, Human Resources, Operations, etc. A Business organization is a dynamic social system in that it has a purpose and is greater than the sum of its parts. Essentially, you can think of this high level organizational chart as the "hardware" of the operating model with the next four dimensions (Accountability, Governance, Culture, and Capabilities) serving as the "software" that makes the "hardware" run. The organization structure design focuses on enabling effective management of complexity, coordination and control of organizational behavior. This is critical as the decision rights cascade grows, because the structure and operating principles as well as governance of the organization becomes more complex and critical to manage.
- Accountability - This describes the roles and responsibilities of the main organization entities including ownership of P&Ls and a clear, value adding role for the corporate center. There should be clear guidelines for the roles each organizational unit will play in critical decisions. A reward framework linked to accountability reinforces strong execution.
- Governance - Governance and behavior refers to executive forums and management processes that yield high-quality decisions on strategies, priorities, resource allocation and business performance management. A management dashboard with the key metrics keeps the focus on the company's top priorities.
- Culture and Values (Ways of working) - This describes the expected cultural norms for how people collaborate within and across functions or teams. Organizational culture is the collective behavior of humans who are part of an organization, and the meanings they attach to their actions. Culture includes the organizational values, visions, norms, working language, systems, symbols, beliefs and habits. Culture manifests itself in the particular way things are done in an organization. It affects who gets hired, how they get trained (formally or informally), what behaviors get rewarded, who gets promoted, and virtually all organizational procedures and administrative protocols. Organizational culture can be supportive of the following: Learning and Development (Growth), Participatory Decision-Making, Power Sharing, Support and Collaboration,
- Capabilities - This refers to how the organization combines people, processes, and technology in a repeatable way to deliver desired outcomes.
The Operating Model is the result of the Operations Strategy, and is focused on how to best enable and implement the organization's strategy. Operations strategy defines through the Operating Model, an organization structure design on how an entire business will allocate its resources to support operations and its strategic goals.
Organization Capability
Organization capability defines “what” a business does at its core, and can be denoted by the level-1 functions of the organization. Organizational capability refers to a company's ability/capacity to manage resources, such as employees, effectively to gain an advantage over competitors. Organizational Capability profile describes the skills, knowledge and resources that enable a company to provide quality products and services to customers. Organization capabilities such as collective skills, abilities, and expertise of the organization are the outcome of investments in staffing, training, compensation, communication and other human resource areas. The capability focus should be on the business's ability to meet customer demand; it must be unique to the organization to prevent replication by competitors. Organization capability is a company's ability to manage resources such as employees, effectively to gain competitive advantage over competitors. It expresses the capacity to deploy resources or efficiently and effectively assign organization activities in creating and delivering value to customers. Organization capability is defined as an organization’s ability to, for example, innovate, or to respond to changing customer needs.
Organizational capabilities are key intangible assets; you can’t see or touch them, yet they can make all the difference in the world when it comes to market value. These capabilities - the collective skills, abilities, and expertise of an organization - are the outcome of investments in staffing, training, compensation, communication, and other human resource areas. They represent the ways that people and resources are brought together to accomplish work. They form the identity and personality of the organization by defining what it is good at doing and, in the end, what it is. They are stable over time and more difficult for competitors to copy than capital market access, product strategy, or technology.
Capabilities, Competencies and Abilities
Competency is an overloaded term and may refer to a person’s functional, social or technical competency.
- Functional competency is a specific knowledge or skill area, such as in marketing, finance, manufacturing, etc., that relates to the successful performance of the job. Functional competencies are specific to a specific department or type of job. They are basic skills and behavior that are needed to do a job successfully.
- Social competency or ability is any skill facilitating interaction and communication with others where social rules and relations are created, communicated , and changed in verbal and non-verbal ways.
- Technical competencies are specific to fluency in operating specific equipment, software application, design calculations, coding, theoretical and practical expertise in a specific domain such as barbering, dentistry, etc.
Core competencies refer to a company’s core technical competencies; for example, a financial services firm must know how to manage risk. Core competencies are distinctive, rare, valuable firm-level resources that competitors are unable to imitate, substitute or reproduce.
Emergent Property
Organizational capabilities emerge when a company delivers on the combined competencies and abilities of its individual members. Individual abilities may include ‘Leadership’ ability, which is an individual social skill that gives the individual the ability to, for example, set direction, communicate a vision, or motivate people. Organization capabilities enable an organization to turn its technical know-how into results. There is no magic list of capabilities appropriate to every organization; however, there are some identified list that well-managed companies tend to have, such as:
- Talent - We are good at attracting, motivating, and retaining competent and committed people.
- Speed - We are good at making important changes rapidly.
- Shared Mind-Set and Coherent Brand Identity - We are good at ensuring that employees and customers have positive and consistent images of and experiences with our organization.
- Accountability - We are good at obtaining high performance from employees.
- Collaboration - We are good at working across boundaries to ensure both efficiency and leverage.
- Learning - We are good at generating and generalizing ideas with impact.
- Leadership - We are good at embedding leaders throughout the organization.
- Customer Connectivity - We are good at building enduring relationships of trust with targeted customers.
- Strategic Unity - We are good at articulating and sharing a strategic point of view.
- Innovation - We are good at doing something new in both content and process.
- Efficiency - We are good at managing costs.
Organization capability is defined operationally, in terms of the dynamic relationships between organizational culture, the outcomes of operational processes, institutional arrangements, structure, and the organization’s resources. It expresses the potential capacity to deploy resources, or efficiently and effectively assign organization activities to the right “actors” (socio-technical systems) in creating and delivering value to customers.
Organization Open Systems
Organizations can be viewed as systems - social systems - that are alive, organic, dynamic and complex; and as as Open systems are essentially, goal-seeking, information feedback systems. Open system theory (Ludwig von Bertanlanffy,, 1956), defines the concept of a system, where "all systems are characterized by an assemblage or combination of parts whose relations make them interdependent" (Scott p. 77). Open systems have open, or porous, boundaries that allow feedback exchanges from inside and outside the business. Open systems tend to devise more than one way to accomplish goals or reach similar results with different conditions and operations--what von Bertanlanffy called “equifinality.” This is in direct contrast to closed systems that function under the assumption that there is only one way to achieve a result: a direct relationship between cause and effect. The key elements of Open Systems include:
Openness refers to the free flow of information within the system.
Open Systems Components/Elements
Organization Open Systems continuously interact with their environments through acquisition of input, production of output, and exchange of information; they survive and grow by continuously adapting to their environment through learning. When a business regularly interacts with its environment, and exchanges and processes feedback, it is an open system organization.
Outputs and Inputs
The outputs of a system define the value produced by the system from its inputs for the benefit of the system's users. Determining the output is a critical step in specifying the nature, amount, and regularity of the inputs needed to operate the system.
Processors
Processors are elements of a system that actually transforms inputs into outputs. Transformation involve processors which are the elements of a system that actually transforms inputs into outputs. Processors may include resources such as people/human resources, equipment, etc., which can be organized according to how work gets done, i.e., processes for creating and delivering value, and how they are managed i.e., organization functions, divisions, etc.
Control Systems
Systems Controls - Feedback is a form of systems control. As systems, organizations use planning and control to manage their resources effectively. System's outputs are used as feedback that compares performance with goals. This comparison in turn helps managers formulate more specific goals as inputs. Feedback is received from within the organization and from the outside environments around it.
Feedback Mechanism
Feedback is a return of information about a result or the return portion of a process. Feedback measures output against a standard in some form of cybernetic procedure that includes communication and control. Feedback can be positive or negative; routine or informational. Negative feedback generally provides the controller with information for action. Positive feedback reinforces the performance of the system, and is routine in nature.
Environments
The enabling environment is comprised of the external and internal factors.
Organization Boundaries
All systems are contained by boundaries separating them from the environment. Organizational boundaries exist on a continuum ranging from extremely permeable - open - to almost impermeable - closed. For an organization to continue to adapt, survive and grow it must be able to import resources - people, raw materials, and information - through its boundaries (inputs), and then exchange the outputs - finished products, services, and information - with its environment (the outside world). Openness and closedness exist on a continuum.
Openness and closedness of organizations is related to the concept of external boundary permeability.
Organizations can be viewed as systems - social systems - that are alive, organic, dynamic and complex; and as as Open systems are essentially, goal-seeking, information feedback systems. Open system theory (Ludwig von Bertanlanffy,, 1956), defines the concept of a system, where "all systems are characterized by an assemblage or combination of parts whose relations make them interdependent" (Scott p. 77). Open systems have open, or porous, boundaries that allow feedback exchanges from inside and outside the business. Open systems tend to devise more than one way to accomplish goals or reach similar results with different conditions and operations--what von Bertanlanffy called “equifinality.” This is in direct contrast to closed systems that function under the assumption that there is only one way to achieve a result: a direct relationship between cause and effect. The key elements of Open Systems include:
- Output and Inputs
- Processors
- Control System
- Feedback Mechanism
- Environment
- Boundaries and Interfaces
Openness refers to the free flow of information within the system.
Open Systems Components/Elements
Organization Open Systems continuously interact with their environments through acquisition of input, production of output, and exchange of information; they survive and grow by continuously adapting to their environment through learning. When a business regularly interacts with its environment, and exchanges and processes feedback, it is an open system organization.
Outputs and Inputs
The outputs of a system define the value produced by the system from its inputs for the benefit of the system's users. Determining the output is a critical step in specifying the nature, amount, and regularity of the inputs needed to operate the system.
- Inputs - An organization as a living entity must take in energy to survive and grow. An organization must obtain information from the external environment such as industry trends, the needs of market segments, as well as financial, human, and material resources from the external environment in order to survive and achieve sustainable growth. When an organization lacks suffucuent resources from the external environment, it begins to weaken and ultimately die.
- Outputs - The outputs of a system define the value produced by the system from its inputs for the benefit of the system's users. The determining the output is a critical step in is specifying the nature, amount, and regularity of the inputs needed to operate the system. The products and services produced from the inputs through the transformation processes are exported top the external environment by the organization to meet the tangible needs of customers, thus fulfilling the organization's purpose and making good on its commitments that managers and key personnel made in their implicit contract with the external environment.
Processors
Processors are elements of a system that actually transforms inputs into outputs. Transformation involve processors which are the elements of a system that actually transforms inputs into outputs. Processors may include resources such as people/human resources, equipment, etc., which can be organized according to how work gets done, i.e., processes for creating and delivering value, and how they are managed i.e., organization functions, divisions, etc.
- Process - A process is an orderly grouping of interdependent activities/tasks linked together according to a plan (flow chart) to achieve a specific objective (produce an output of a specified type). An activity is associated with assignment policies that defines the rules and criteria for match between role definition and the specification of the required skills and qualifications to perform the activity/task. The policy can be resolved at run-time to any available resource with the requisite skills and qualifications. These resources may be tangible assets/resources such as human resources (people), capital assets (i.e., property, plant and equipment).
Control Systems
Systems Controls - Feedback is a form of systems control. As systems, organizations use planning and control to manage their resources effectively. System's outputs are used as feedback that compares performance with goals. This comparison in turn helps managers formulate more specific goals as inputs. Feedback is received from within the organization and from the outside environments around it.
Feedback Mechanism
Feedback is a return of information about a result or the return portion of a process. Feedback measures output against a standard in some form of cybernetic procedure that includes communication and control. Feedback can be positive or negative; routine or informational. Negative feedback generally provides the controller with information for action. Positive feedback reinforces the performance of the system, and is routine in nature.
- Tactical Feedback - This relates to business results - measures of the product and operational tactical performance of a business. Business results demonstrate the quality and value of products and services that lead to customer satisfaction and engagement.
- Strategic Feedback - This relates to the strategic context and helps explain, at a high level, the reason for the entity's existence, what it exists to achieve, and the powers and functions it may exercise to help achieve its goals. Strategy organizes the internal and external context of an organization, using concepts like SWOTs and Porter’s Five Forces, to help us make sense or meaning of the environment we operate in. Strategy helps us make meaning of our context, and therefore helps us create a path forward. It provides others in the organization with a mental model to understand the organization, its’ environment and the path that it has chosen.
- Feedback Loop - The feedback loop is a process in which a system receives internal/external environmental responses to its behavior and in turn, reacts to those received responses by accommodating and assimilating the energy/information received, by altering the system's structure, and then engaging in altered exchanges of energy/information.
Environments
The enabling environment is comprised of the external and internal factors.
- The external environment is defined by external factors such as characterized by PESTEL factors e.g., tight lending conditions, government regulations and competition. These factors are uncontrollable, and can be modeled as "Influencer" concept abstraction borrowed from Business Motivational Model by the OMG. The category of external factors (influencer) is large and inclusive. Every business has hundreds of potential influencer. There will always be too many influencer to model. The decision as to what influencer to model is determined by the influencer's impact the organization's mission or mandate and if its of strategic relevance.
- The internal environment is defined by the set of internal factors resulting from either the way the business is run, or decisions made, or both. The factors resulting from how the business is run include the business reputation and image, credit worthiness, etc. The factors resulting from business decisions include management structure and staffing, physical decor of facilities/offices, etc. Internal factors can be conceptualized as "strengths"/"weaknesses" that can be controlled directly or indirectly; but changing these factors usually involves indirect costs such as lost productivity for example, while new employees are being trained, some direct costs such as a penalty for terminating a lease before it expires.
Organization Boundaries
All systems are contained by boundaries separating them from the environment. Organizational boundaries exist on a continuum ranging from extremely permeable - open - to almost impermeable - closed. For an organization to continue to adapt, survive and grow it must be able to import resources - people, raw materials, and information - through its boundaries (inputs), and then exchange the outputs - finished products, services, and information - with its environment (the outside world). Openness and closedness exist on a continuum.
- Openness - refers to the free flow of information within the organization. Creative departments are often characterized as open, with free flow of ideas among participants and very few restrictions on who gets what information, and at what time when a creative project is in its infancy.
- Closedness - refers to obstacles to the free flow of information within the organization. This is at the opposite end of the continuum; examples might be the defense department unit assigned to work on top secret defense planning affecting national security.
Openness and closedness of organizations is related to the concept of external boundary permeability.
Organizations as Social Systems
Organizations can be viewed as systems - social systems - that are alive, organic, dynamic and complex; and as as Open systems are essentially, goal-seeking, information feedback systems. The significance of conceptualizing organizations as social systems - complex systems - is that systems theory and principles allow insight into how organizations work, and how they can be effectively evolved and changed to work better. A social system is a whole that is defined by its function(s) in one or more containing systems; each system containing at least two essential parts which can affect its behavior and properties. How it performs cannot be calculated by adding up all the work arrangements - like departments - with the resources and processes that connect it all together.
Organizations as social systems are comprised of a collection of people, organized into structured grouping and managed to meet a need or pursue collective goals. Organizations are social systems in that each organization is made up of people, and has a defined purpose that is subscribed by the individuals that comprise the organization. Each organization depends on norms and rules as enforcement mechanisms to restrain the individual behavior of the people (actors). Any organization of people in a purposeful endeavor (i.e., business, community, society, militia, army, etc.) is also by deduction a system. So enterprises and business organizations are social systems that have purpose and are capable of independent thought, decisions, and actions as a result of the behavior of the members (human actors).
Social Systems Components/Elements
Organizations as social systems are comprised of complexes of norms and policies that guide behaviors of the members of the organization. Social Systems are defined as system of systems in that, larger more complex systems are composed of systems of the same type (i.e., people or Social System). A basic construct of conceptualizing social systems is human actors that are deemed to be systems in that they have purpose and have intentions. These systems are modeled as a network of social actors which are viewed as being intentional, i.e., they have goals, beliefs, abilities, and commitments. The elements of a social system includes:
A social system may be defined as a plurality of social actors (people) who are engaged in more or less stable interaction "according to shared cultural norms and meanings". This model enables analysis of real world systems that focuses on how well the goals of various actors are achieved given some configuration of relationships among a set of actors that comprise a system, and what re-configurations of those relationships can help actors advance their strategic interests.
Organization as Social System
Organizations are composed of interrelated (sub) organization units serving as specialized function, departments, divisions, geographic locations, etc. The organization unit is conceptualized as a social system - complexes of people and/or groups that according to commonly agreed rules and procedures strive to realize one or more preset objectives. Typical functions in a business organization may include Finance, Marketing and Sales, Human Resources, Operations, etc. A Business organization is a dynamic social system in that it has a purpose and is greater than the sum of its parts.
The dynamics of social systems are expressed in terms of the intentional properties of the actors that comprise the system, and the interaction relationships between these actors. Interactions between actors can occur to satisfy goals that are either common to actors or global goals which pertain to the society (organization) as a whole and lay outside the scope of any one individual actor. Considering sub-organizations as a kind of structured logical actor, interactions among the sub-organization units can be viewed as a way of realizing society goals.
Organizations have “purpose” (as in purposeful endeavor) which may be expressed as a goal to be achieved. Goals, although specific and measurable, can be a simple statement of a company's culture or attitude, i.e., to be number one in customer satisfaction in a particular industry. Members in that organization (social system actors) have to subscribe to that goal; which gives coherence to their motivations, decisions, actions, and behavior. Obviously, their beliefs, motivations, etc., can also be influenced by culture (organizational, and environmental), as well as “self-awareness” (as it shapes learning and impacts decisions). In this formulation, “self-awareness” is an “internal” critical factor that can be expressed as a "health" metric.
Organizations can be viewed as systems - social systems - that are alive, organic, dynamic and complex; and as as Open systems are essentially, goal-seeking, information feedback systems. The significance of conceptualizing organizations as social systems - complex systems - is that systems theory and principles allow insight into how organizations work, and how they can be effectively evolved and changed to work better. A social system is a whole that is defined by its function(s) in one or more containing systems; each system containing at least two essential parts which can affect its behavior and properties. How it performs cannot be calculated by adding up all the work arrangements - like departments - with the resources and processes that connect it all together.
Organizations as social systems are comprised of a collection of people, organized into structured grouping and managed to meet a need or pursue collective goals. Organizations are social systems in that each organization is made up of people, and has a defined purpose that is subscribed by the individuals that comprise the organization. Each organization depends on norms and rules as enforcement mechanisms to restrain the individual behavior of the people (actors). Any organization of people in a purposeful endeavor (i.e., business, community, society, militia, army, etc.) is also by deduction a system. So enterprises and business organizations are social systems that have purpose and are capable of independent thought, decisions, and actions as a result of the behavior of the members (human actors).
Social Systems Components/Elements
Organizations as social systems are comprised of complexes of norms and policies that guide behaviors of the members of the organization. Social Systems are defined as system of systems in that, larger more complex systems are composed of systems of the same type (i.e., people or Social System). A basic construct of conceptualizing social systems is human actors that are deemed to be systems in that they have purpose and have intentions. These systems are modeled as a network of social actors which are viewed as being intentional, i.e., they have goals, beliefs, abilities, and commitments. The elements of a social system includes:
- Actors - People or individuals that comprise the interacting units/elements in an organization/society.
- Interactions - Individuals (people) constitute the basic interaction units; but the interacting units may be groups or organization of individuals within the system; each interacting individual has function or role to perform in terms of the status he occupies in the system.
- Purpose - The purpose of a social system or organization defines the end goal or the object or reason for its existence. This purpose can be expressed as a goal to be achieved. Members in that organization/society (social system) have to subscribe to that goal; which gives coherence to their motivations, decisions, actions, and behavior. The nature of a social system is determined by its needs, satisfactions, and purpose.
- Ideals and Norms - These are established by the society and intended for keeping the social system intact and for determining the various functions of different units. Norms prescribe the rules and relationships on the basis of which individuals or persons may acquire their cultural goals and aims. Ideals and norms are responsible for an ideal structure or system of the society. These norms and ideals may include folkways, customs, traditions, fashions, morality, religion, etc.
- Knowledge and Faith - Faith is the result of the prevalent customs and beliefs. They ensure the force of individuals are guided towards a particular direction. Faiths and knowledge act as controlling agency of different types of human societies.
- Sentiment - Sentiment is directly linked with the culture of people, it plays an immense role in investing society with continuity.
- Status - Every individual in society is functional; status may be conferred on an individual by virtue of his birth, sex, caste, age, etc. One may achieve it on the basis of service rendered.
- Role - Role is the external expression of the status. Adhering to roles lead to social integration, organization and unity in social systems.
- Power - This derives from the ability of some agents within society to set the agenda for future action. A power structure is an overall system of influence between any individual and every other individual within any selected group of people.
- Sanction - Society could not exist without social norms and the social sanctions that enforce them.
A social system may be defined as a plurality of social actors (people) who are engaged in more or less stable interaction "according to shared cultural norms and meanings". This model enables analysis of real world systems that focuses on how well the goals of various actors are achieved given some configuration of relationships among a set of actors that comprise a system, and what re-configurations of those relationships can help actors advance their strategic interests.
Organization as Social System
Organizations are composed of interrelated (sub) organization units serving as specialized function, departments, divisions, geographic locations, etc. The organization unit is conceptualized as a social system - complexes of people and/or groups that according to commonly agreed rules and procedures strive to realize one or more preset objectives. Typical functions in a business organization may include Finance, Marketing and Sales, Human Resources, Operations, etc. A Business organization is a dynamic social system in that it has a purpose and is greater than the sum of its parts.
The dynamics of social systems are expressed in terms of the intentional properties of the actors that comprise the system, and the interaction relationships between these actors. Interactions between actors can occur to satisfy goals that are either common to actors or global goals which pertain to the society (organization) as a whole and lay outside the scope of any one individual actor. Considering sub-organizations as a kind of structured logical actor, interactions among the sub-organization units can be viewed as a way of realizing society goals.
Organizations have “purpose” (as in purposeful endeavor) which may be expressed as a goal to be achieved. Goals, although specific and measurable, can be a simple statement of a company's culture or attitude, i.e., to be number one in customer satisfaction in a particular industry. Members in that organization (social system actors) have to subscribe to that goal; which gives coherence to their motivations, decisions, actions, and behavior. Obviously, their beliefs, motivations, etc., can also be influenced by culture (organizational, and environmental), as well as “self-awareness” (as it shapes learning and impacts decisions). In this formulation, “self-awareness” is an “internal” critical factor that can be expressed as a "health" metric.
Operations Systems
The Operations System for an organization is the joint configuration of resources and processes such that its resulting competencies are aligned with the organization's desired competitive position. The existence of trade-offs and constraints in the operations system imply that no single operation can be universally appropriate for all organizations; rather, each organization strategy requires a tailored operating system configured such that its competencies best fit the customer value proposition specified by the organization's competitive strategy.
The Operating System integrates three (3) different but complementary views of operations including:
The Operations System is utilized by Operations Management in its tasks to provide the best match of supply with demand.
Resource-Based View
According to the resource-based view of the firm (Barney 1991), organizational resources (e.g., financial, human, physical, informational, relational) help organizations enhance their marketing strategies, achieve sustainable competitive advantage, and gain better performance. These resources can be either tangible or intangible, and can be transformed into higher-order resources (i.e., competencies and capabilities), enabling the delivery of superior value to targeted buyers.
Business Strategy
Organization Capability
Competencies
Resource
Work Systems - Process Based View
A typical business organization accomplishes its work load by creating a series of tasks that are performed and carried out as required. These tasks can include purchasing materials, selling services, hiring employees or responding to customers. Placing those tasks into series of organized and interconnected systems may benefit the company by introducing efficiency and order to the workday and ultimately increasing the bottom line.
Work systems allow everyday tasks to operate in a coordinated manner and provide a basic framework to produce services and products. Work systems are designed to accomplish a variety of tasks such as:
Elements or Components of Work Systems
The elements or components that define a work system include:
The Operations System for an organization is the joint configuration of resources and processes such that its resulting competencies are aligned with the organization's desired competitive position. The existence of trade-offs and constraints in the operations system imply that no single operation can be universally appropriate for all organizations; rather, each organization strategy requires a tailored operating system configured such that its competencies best fit the customer value proposition specified by the organization's competitive strategy.
The Operating System integrates three (3) different but complementary views of operations including:
- Resource View – This view focuses on the assets used in operations to create and deliver value. The resource view of an organization or any of its parts as a bundle of resources (real assets). Viewing operations as a bundle of real assets is most useful when decision on amounts and types of resources the operation needs. This investment or capital budgeting decision, along with the allocation of resources to activities, is one of the major tasks of management. The resources/assets can be categorized into tangible resources (i.e., people/human resources, capital assets – property, plant and equipment), and intangible resources (i.e., relationship with suppliers and customers, intellectual property, reputation and brands, knowledge and experience in processing, technologies and markets). Often tangible real assets do the work, while intangible assets embody the know-how to do the work. Tangible real assets are human resources (people) and capital assets (property, plants, and equipment as shown on the balance sheet). Intangible assets include relationships with suppliers and customers, intellectual property, reputation and brands, and knowledge and experience in processing, technology, and markets.
- Process View – This view focuses on how the resource portfolio is utilized and allocated to activities with the intent of adding value. Adopting a process view means we deal with instances of work called flow units (e.g., consulting engagements, patients, hotel guests, barbershop/salon patrons, or customer orders) flowing through a network of activities and buffers. Buffers store flow units that have finished one activity, but are waiting for the next activity to start. The primary workflow is typically accompanied by an information flow (to coordinate activities) and cash flow (to support and reward them). A process may refer to workflow such as billing a customer, implementing an engineering change order, new product development, manufacturing process, etc.
- Competency View – This view focuses on the resulting abilities of the ensemble of an organization’s resources, processes and values which determine the set of outputs, products/services that the operating system will be particularly good at providing. A competency is a set of defined behaviors that provide a structured guide enabling the identification, evaluation, and development of behaviors in individual employees. A competency is the ability of an individual to do a job properly.
The Operations System is utilized by Operations Management in its tasks to provide the best match of supply with demand.
Resource-Based View
According to the resource-based view of the firm (Barney 1991), organizational resources (e.g., financial, human, physical, informational, relational) help organizations enhance their marketing strategies, achieve sustainable competitive advantage, and gain better performance. These resources can be either tangible or intangible, and can be transformed into higher-order resources (i.e., competencies and capabilities), enabling the delivery of superior value to targeted buyers.
Business Strategy
Organization Capability
Competencies
Resource
Work Systems - Process Based View
A typical business organization accomplishes its work load by creating a series of tasks that are performed and carried out as required. These tasks can include purchasing materials, selling services, hiring employees or responding to customers. Placing those tasks into series of organized and interconnected systems may benefit the company by introducing efficiency and order to the workday and ultimately increasing the bottom line.
Work systems allow everyday tasks to operate in a coordinated manner and provide a basic framework to produce services and products. Work systems are designed to accomplish a variety of tasks such as:
- Work systems that accomplish a task and then end, Special Projects .e., Conference, data collection, etc.
- Work systems that are designed to manufacture a product for a specific time and then discontinued.
- Work systems that link together to form a larger work system, for example Production Lines. Production Work Systems link the Supply Chain Work System (material purchases), the Design Work System (Engineering), and the Packaging Work System (produced a purchase ready product).
Elements or Components of Work Systems
The elements or components that define a work system include:
- Workers (Participants) - employees or contract workers.
- Task - Task at hand that needs to be done, and how the task should be accomplished.
- Organization - The Organization element is defined in terms of Organization Structure, Organization's Policies, and Leadership Practices. The Organization Structure includes the individuals, the roles in the company and how the roles relate regarding the work to be done. The Organization's Policies include agreements, rules and statements that dictate the way the work needs to be completed. Leadership practices within the organization directs and controls the accomplishment of the work system and help maintain focus and motivation.
Organization System
Organization as a system is comprised of organization units, each comprising a set of positions organized in a reporting hierarchy.
Organization Purpose
Organizations have “purpose” - its reason for being - which may be expressed as a goal to be achieved. Goals, although specific and measurable, can be a simple statement of a company's culture or attitude, i.e., to be number one in customer satisfaction in a particular industry. Members in that organization (social system actors) have to subscribe to that goal; which gives coherence to their motivations, decisions, actions, and behavior. Obviously, their beliefs, motivations, etc., can also be influenced by culture (organizational, and environmental), as well as “self-awareness” (as it shapes learning and impacts decisions). In this formulation, “self-awareness” is an “internal” critical factor that can be expressed as a "health" metric.
Organization Unit
The Organization Unit is an abstraction of the logical structured actors that represent business entities such as business units, business functions, departments, bureaus, teams, groups, divisions, etc. An organization unit's policies define the criteria for a group of people that are members of the organization. The criteria for the grouping may be based on function (people with similar skills), product develop, division, etc. An organization unit is an ordered grouping of interdependent positions linked together according to a plan (reporting relationships) to achieve specific objectives.
Organizational Units can be categorized according to certain characteristics such as responsibilities and obligations of a set of employees. They group organizational controls, people, processes, culture, assets such as applications, and knowledge, and information to reflect the realization of the organization's effective strategy. When the Organizational Unit reaches its lowest level of decomposition it is represented by a Position.
Positions - Skills, Knowledge, and Competencies
Positions as Logical Actors are social concepts employed by organizations for abstracting from specific human actors in the organization. Positions represent the part of the organizational design which specifies the competencies and services necessary to achieve the society (business enterprise) objectives. Positions define how the organization aims at implementing its design through the specification of the behavior of particular individuals or group of individuals.
Institutional Arrangements
Institutional arrangements refer to the policies, procedures and processes that allow systems to function and interact effectively and efficiently in an organized setting. Such arrangements/relationships can be rules which may be binding, e.g., legislation or contractual arrangements, or non-binding, e.g., codes of conduct, norms, and values that are unwritten but are widely accepted. Interaction refers to the manner in which each component functions with other components of the system. Interactions between actors can occur to satisfy goal intentions common to the actors, or global goals which pertain to the organization (or society) as a whole and lay outside the scope of any one individual actor.
Within the enabling environment, institutional arrangements are policy and legal frameworks; at the organizational level, they include strategy, processes, and technology that enable operations, as well as internal accountability mechanisms. Organizations depend on norms and rules as well as policies to guide behavior. Policies are recognized descriptions which act as enforcement mechanisms to restrain individual behavior and regulate all sorts of organizational interactions such as delegation, dependency relationships with internal/external organizational entities as well as defining concepts within the organizational setting. Policies and procedures enable how organizations operate to help them cope with their environments. The purpose of these rules is to allow the organization to make decisions using "standard operating procedures" as a guideline and hence make decisions more consistent.
Organization System Behavior
The behavior of an organization as a whole is defined by the patterns of interactions among the people, individuals and groups of individuals that are members of the organization. The behavior of actors (people) in the organization is impacted by their beliefs, values, and "mental model", and influenced/guided by organization's purpose, policies, and cultures (institutional arrangements). To be good standing members of an organization, actors have to subscribe to the purpose and values of the that organization and policies which give coherence to the actor's behavior. The behavior of actors is manifested in each actor's decisions, actions, and priorities. The behavior is influenced by the design of the organization structure and its institutional arrangements. A well designed organization ensures appropriate levels of energy is generated and maintained in the system. System organization secures, expends, and conserves energy to maintain the system and further the achievement of its mission/purpose.
Organization Culture
Organizational culture is the collective behavior of humans who are part of an organization, and the meanings they attach to their actions. Culture and values describe the expected cultural norms for how people collaborate within and across organization units (i.e., functions, divisions, departments, etc.) or teams. Culture includes the organizational values, visions, norms, working language, systems, symbols, beliefs and habits. Culture manifests itself in the particular way things are done in an organization. It affects who gets hired, how they get trained (formally or informally), what behaviors get rewarded, who gets promoted, and virtually all organizational procedures and administrative protocols. Organizational culture can be supportive of the following: Learning and Development (Growth), Participatory Decision-Making, Power Sharing, Support and Collaboration. Organizational culture can be supportive of the following: Learning and Development (Growth), Participatory Decision-Making, Power Sharing, Support and Collaboration, Tolerance for risk and conflicts. Culture establishes an organization climate that affects the day-to-day experience that people have when working in an organization. Like an atmosphere that permeates the work place. Organizational Climate is characterized by factors such as level and type of employee morale; confidence in management; openness to change; conflict and pressure; a spirit of creativity and innovation; fair process; and a no-blame philosophy.
It is important to note that culture is not overt behavior or visible artifacts that one might observe if one were to visit a company. It is not even the philosophy or value system which the organization articulates or has written down in various "charters". It is the assumptions which lie behind the values and which determine the behavior patterns and viable artifacts such as dress code, office layout, etc. Culture reflects and affects the ownership that individuals feel for execution related goals. The culture within the organization is a very important factor in attaining business success. The attitudes of staff and volunteers, and their ability to "go the extra mile" makes a very significant difference. Negative attitudes can have severe impact on the organization's ability to implement strategies for development despite however thorough the planning processes are. Positive attitudes of staff and volunteers will not only make the management tasks easier, but also will be noticed and appreciated by customers as well as members of the organization.
Systems Controls
Feedback is a form of systems control. As systems, organizations use planning and control to manage their resources effectively. System's outputs are used as feedback that compares performance with goals. This comparison in turn helps managers formulate more specific goals as inputs. Feedback is received from within the organization and from the outside environments around it.
External Environment
Anything external to an organization's boundaries is considered to be an environment external to the organization. The environment may consist of a milieu of different environments including: community with factors such as demographics, physical location, etc., economic environment with factors such as competition, markets, etc., political environment, legal environment, etc. Changes in environmental status can be planned for but cannot be controlled.
Organization as a system is comprised of organization units, each comprising a set of positions organized in a reporting hierarchy.
Organization Purpose
Organizations have “purpose” - its reason for being - which may be expressed as a goal to be achieved. Goals, although specific and measurable, can be a simple statement of a company's culture or attitude, i.e., to be number one in customer satisfaction in a particular industry. Members in that organization (social system actors) have to subscribe to that goal; which gives coherence to their motivations, decisions, actions, and behavior. Obviously, their beliefs, motivations, etc., can also be influenced by culture (organizational, and environmental), as well as “self-awareness” (as it shapes learning and impacts decisions). In this formulation, “self-awareness” is an “internal” critical factor that can be expressed as a "health" metric.
Organization Unit
The Organization Unit is an abstraction of the logical structured actors that represent business entities such as business units, business functions, departments, bureaus, teams, groups, divisions, etc. An organization unit's policies define the criteria for a group of people that are members of the organization. The criteria for the grouping may be based on function (people with similar skills), product develop, division, etc. An organization unit is an ordered grouping of interdependent positions linked together according to a plan (reporting relationships) to achieve specific objectives.
Organizational Units can be categorized according to certain characteristics such as responsibilities and obligations of a set of employees. They group organizational controls, people, processes, culture, assets such as applications, and knowledge, and information to reflect the realization of the organization's effective strategy. When the Organizational Unit reaches its lowest level of decomposition it is represented by a Position.
Positions - Skills, Knowledge, and Competencies
Positions as Logical Actors are social concepts employed by organizations for abstracting from specific human actors in the organization. Positions represent the part of the organizational design which specifies the competencies and services necessary to achieve the society (business enterprise) objectives. Positions define how the organization aims at implementing its design through the specification of the behavior of particular individuals or group of individuals.
Institutional Arrangements
Institutional arrangements refer to the policies, procedures and processes that allow systems to function and interact effectively and efficiently in an organized setting. Such arrangements/relationships can be rules which may be binding, e.g., legislation or contractual arrangements, or non-binding, e.g., codes of conduct, norms, and values that are unwritten but are widely accepted. Interaction refers to the manner in which each component functions with other components of the system. Interactions between actors can occur to satisfy goal intentions common to the actors, or global goals which pertain to the organization (or society) as a whole and lay outside the scope of any one individual actor.
Within the enabling environment, institutional arrangements are policy and legal frameworks; at the organizational level, they include strategy, processes, and technology that enable operations, as well as internal accountability mechanisms. Organizations depend on norms and rules as well as policies to guide behavior. Policies are recognized descriptions which act as enforcement mechanisms to restrain individual behavior and regulate all sorts of organizational interactions such as delegation, dependency relationships with internal/external organizational entities as well as defining concepts within the organizational setting. Policies and procedures enable how organizations operate to help them cope with their environments. The purpose of these rules is to allow the organization to make decisions using "standard operating procedures" as a guideline and hence make decisions more consistent.
Organization System Behavior
The behavior of an organization as a whole is defined by the patterns of interactions among the people, individuals and groups of individuals that are members of the organization. The behavior of actors (people) in the organization is impacted by their beliefs, values, and "mental model", and influenced/guided by organization's purpose, policies, and cultures (institutional arrangements). To be good standing members of an organization, actors have to subscribe to the purpose and values of the that organization and policies which give coherence to the actor's behavior. The behavior of actors is manifested in each actor's decisions, actions, and priorities. The behavior is influenced by the design of the organization structure and its institutional arrangements. A well designed organization ensures appropriate levels of energy is generated and maintained in the system. System organization secures, expends, and conserves energy to maintain the system and further the achievement of its mission/purpose.
Organization Culture
Organizational culture is the collective behavior of humans who are part of an organization, and the meanings they attach to their actions. Culture and values describe the expected cultural norms for how people collaborate within and across organization units (i.e., functions, divisions, departments, etc.) or teams. Culture includes the organizational values, visions, norms, working language, systems, symbols, beliefs and habits. Culture manifests itself in the particular way things are done in an organization. It affects who gets hired, how they get trained (formally or informally), what behaviors get rewarded, who gets promoted, and virtually all organizational procedures and administrative protocols. Organizational culture can be supportive of the following: Learning and Development (Growth), Participatory Decision-Making, Power Sharing, Support and Collaboration. Organizational culture can be supportive of the following: Learning and Development (Growth), Participatory Decision-Making, Power Sharing, Support and Collaboration, Tolerance for risk and conflicts. Culture establishes an organization climate that affects the day-to-day experience that people have when working in an organization. Like an atmosphere that permeates the work place. Organizational Climate is characterized by factors such as level and type of employee morale; confidence in management; openness to change; conflict and pressure; a spirit of creativity and innovation; fair process; and a no-blame philosophy.
It is important to note that culture is not overt behavior or visible artifacts that one might observe if one were to visit a company. It is not even the philosophy or value system which the organization articulates or has written down in various "charters". It is the assumptions which lie behind the values and which determine the behavior patterns and viable artifacts such as dress code, office layout, etc. Culture reflects and affects the ownership that individuals feel for execution related goals. The culture within the organization is a very important factor in attaining business success. The attitudes of staff and volunteers, and their ability to "go the extra mile" makes a very significant difference. Negative attitudes can have severe impact on the organization's ability to implement strategies for development despite however thorough the planning processes are. Positive attitudes of staff and volunteers will not only make the management tasks easier, but also will be noticed and appreciated by customers as well as members of the organization.
Systems Controls
Feedback is a form of systems control. As systems, organizations use planning and control to manage their resources effectively. System's outputs are used as feedback that compares performance with goals. This comparison in turn helps managers formulate more specific goals as inputs. Feedback is received from within the organization and from the outside environments around it.
External Environment
Anything external to an organization's boundaries is considered to be an environment external to the organization. The environment may consist of a milieu of different environments including: community with factors such as demographics, physical location, etc., economic environment with factors such as competition, markets, etc., political environment, legal environment, etc. Changes in environmental status can be planned for but cannot be controlled.