Management

Stafford Beer - W Edwards Demin - Fredmund Malik

Enterprises are a worldwide ground of modern society and life. Whether at one of the merchant stalls in Constantinople’s Spice Bazaar, a Lidl supermarket in Germany, a Kroger supermarket or mall in the United States, or others online or across time and geographies, there are common patterns of ‘marketing’: i.e. produce assembled for sale with supply lines and production sources that span the globe.

— Jenkinson, Identity 

Through the interventions of various well known management thinkers such as Peter Drucker, Chris Argyris (whose double loop learning is a recursive structure integral to much of cybernetics), Peter Senge, Fredmund Malik HonFCybS, and Stafford Beer, cybernetics has rippled through management thinking.  In discussion with one group of very senior professors at Wharton, I was advised that it was simply “baked in” to modern management.  Indeed, Deming’s TQM, Chris Argyris and double loop learning, Agile, Drucker’s management by objectives and general theory — these and other mainstream methods drew heavily on a cybernetic approach.  Unfortunately, in the process the home principles have sometimes got lost, burnt, forgotten, or used by those who do not understand them well, a kind of technical kiss of death.   However, anyone familiar with management practice and business situations — the working of enterprises, whether it is the White House or the local café, Amazon global or Greenpeace — will know that management fits cybernetics perfectly and vice versa. Cybernetics is an art of management founded on a science of organization.

Double loop learning is a recursive structure integral to much of cybernetics.

The fundamental challenge

The fundamental challenge for the manager — or leader — is to cultivate a balance between reliable and compliant order and creative flexibility, regularity and dynamic responsiveness.  Balanced regulation and maintenance of these throughout the enterprise requires enabling flows of information, decision-making, action and interaction. These take place inside the organisation, with suppliers, and with customers and are precisely what cybernetics was developed to understand, design for, and maintain.  

Taking advantage of it means navigating the standard problem: practitioners want theory simple; theorists want completion and may lack competences in the field to demonstrate what they know. 

How does a living organism live?

For an organism to live it needs just the same kind of characteristics as a company.  Reliability, control, flexibility, adaptation, responsiveness to opportunity, management of risk.

In general, cybernetics sees companies as having a functional self-organizing identity, a method of navigating into the future as well as controlling or regulating present activities. The autopoietic tradition within cybernetics offers considerable insight into  self-governance.   Self-organizing includes the purposefully autonomous behaviours of people and incorporates the world of the enterprise (its milieu or ecosystem and its internal culture, resources, discourse, and behaviours). In the Viable System Model (VSM), a cybernetic organization structure developed by Beer, system 5 (S5) is the identity level of organization.

Cybernetics is an art of management founded on a science of organization.

All living organisms are directive: they maintain their own life, innumerable regulative values (from ethos to temperature and immune response). They act autonomously, i.e. in such a way as to cancel external interference, an insight critical for the designs of marketing and of change. The theoretical base establishes beyond all reasonable doubt the autonomy and purposefulness of people, acting in a continuous stream of observing behaviour towards complexes of self-generated goals, cancelling interference and navigating according to emotional and values-based criteria along with ‘rational choice’.  Such ‘self-generated goals’ are the same as customer demand or employee motivations, and are stimulated in contextual experiences,  brand and others. Hence, people cannot be made to want things. How and why they may be attracted to them leads for the first time to a comprehensive fit between theory and commonsense practice. The science therefore incorporates aesthetic and moral dimensions on rational scientific grounds.

Euston Station concept, HS2
HS2 rail concept design for Euston station

This is fundamental for understanding how enterprises work.  All life also lives enmeshed, closely-coupled in co-learning or evolving relationships with each other and their world (their market, niche habitat, milieu, ecosystem).  This includes communities, networks, and market spaces. In turn it leads to how companies design and produce what customers want: i.e. design and design production. Cybernetics engaged and formed the root of the new design movements that developed from Whole Earth Catalog to MIT Media Lab and Palo Alto, influencing fields from ecology to internet. Smart technologies were also enabled. 

Deming’s total quality management

 

 Deming was part of the Teleological Society with Wiener, Turning, von Neumann, and others during and after the Second World War — one of the groups that was the precursor to the Macy Conferences and worldwide cybernetics movement that also led to the development of the Cybernetics Society. He was an academic statistician who had studied under Shewhart, both of them giving consideration to the management of organisations.  During the Second World War, he was called on to take responsibility for improving logistics and supply to the military with remarkable success.  As a result, after the war he was called by General MacArthur to help with the rebuilding of Japan and there — generally giving a seminar 200 times a year — he taught thousands of Japanese managers and worked with hundreds of companies on improving their quality management systems.  The results were so devastatingly successful that the Japanese economy despite adversarial attitudes in the West grew rapidly and in a number of industries swept away Western competitors.  Attempts by Western companies and academics to understand tended to fail because they couldn’t understand the underlying mindset.  Some of this no doubt depended on the Japanese capability to work as a team, with an attitude of compliance to direction, but it also depended on the fact that the direction included giving far more responsibility to workers and to a recognition of the necessity to design production systems that eliminated errors.  The elimination of errors is a fundamental cybernetic principle.  Feedback is primarily involved in the double-headed task of keeping the organisation on track and avoiding errors.

In due course he wrote Out Of the Crisis to try to bring his ideas to the West, and some companies understood.  His 14 points for management turn deep management principles into fundamental and simple instructions — almost management mantras.  The fundamental cycle is one of continuous improvement, essentially a cybernetic process of experiment, learning, and instituting improvement in an ever ongoing process of incremental transformation.  “Improve constantly and forever every process for planning, production, and service.  It is management’s job to work continually on the system (design, incoming materials, maintenance, improvement of machines, training, supervision, retraining.)

His design for a production system is a masterpiece of cybernetic organization — without ever using the word he reproduces the principles in language that Japanese and then many Westerners could understand.  It has two flows of information and activity.  A continuous stream of production transformations directed towards customer satisfaction and the balancing stream of information collected and flowing backwards is feedback.  The designing of systems of signals and production analysis is central to this.  So was his incredibly controversial idea to eliminate inspection.  Inspection meant that something had already gone wrong and needed to be discovered.  His goal was to eliminate things going wrong.  And in order to do that he needed to empower workers as well as train managers in the development of better systems.  This is not the place to spell out all of his theory but merely to highlight that through TQM and then later on its development as lean, cybernetics has had a hugely influential determination in the production systems of the world that have revolutionised expectations.  People no longer expect cars to break down. Reliability is now a given, a sine qua non of business.

Malik’s “Right and Good Management”

Fredmund Malik HonFCybS connected to Drucker’s cybernetic model more than 40 years ago and continued to develop the framework.  His six volume series, Management: Mastering Complexity, first published in German and then translated into English is one of the more comprehensive cybernetic texts on management.  In it he tries to provide a thorough outline of cybernetic management, or wholistic management systems for functioning, where he describes functional as right and good as opposed to wrong and bad management.   He describes cybernetics as the art of navigation, or in more general terms the art of control, regulation, and steering.  Like Deming he is interested in translating the science into management practice but points out the importance of understanding that science when problems come forward everyday understanding may not suffice.   He considers cybernetics is probably the most significant signs of the 20th century, the science that has driven the transformation from the 20th into the 21st century and whose impact will continue to be noticeable throughout this century.

“Without cybernetics there would be no computers or robots, no electronics, no information sciences.  There would be no breakthroughs in biological disciplines, nor in genetic engineering.  The progress enabled by cybernetics creates risks but even greater opportunities.  Whoever wishes to avoid the first and capture the latter will have to deal with cybernetics.”  It does this because it “enables us to understand, explain, and systematically use the third basic element of nature: information.” (Management, 46-7)

  He goes on to point out that if a given object consists of some 15 kg of carbon, 4 kg of nitrogen, 1 kg of calcium, half a kilo of phosphor and sulphur and about 200 g of salt, 150 g of potash and chlorine, and around 15 other materials, as well as plenty of water, it doesn’t amount to much.  It is the organization of the materials in a pattern or order through the information that constitutes that order that the life of a human consists.  And this is what makes cybernetics so important to managers, for similarly it is the organization of resources that makes companies successful.

The 6 volumes cover general management, corporate policy and governance, strategy, structure, culture, and the task of executives.  He begins his introduction to the German edition of 2007 with the same analogy of the relationship with life: “If the genome is the code to human life, good management is the code to the human ability to master life.  It determines both the ability of the individual to survive in society, and the ability of society and its institutions to function and perform.  Few things could be more important.  Few raise so many questions.  Few are as complex.”  His fundamental propositions include:

1. “Management is society’s most important function.  The functioning of society depends on management.  Only management turns resources into results.  This is of course a concept closely tied to cybernetics — the attainment of outcomes using resources.

3. “Right and good management is universal, invariant, and independent of culture.  It is equally valid for all kinds of organisations and all countries.  There is no need for international, multicultural, or global management.  All effective institutions function in the same way.  They employ the same functional principles.”  He can say this because he’s talking about the transdisciplinary universals of cybernetics.  But these essentially deal with varying contexts and varying goals.  They are the methods by which goals can be determined and then achieved adapting to a changing world.

7. “In my view, most of the management ideas prevailing over the past 15 years or so (written 20007) are false, misleading, and harmful.  This is true in particular for anything related to the doctrine of shareholder value and its consequences — such as value-increasing strategies and a way of thinking that focuses predominantly on financial aspects.  The stakeholder approach is equally wrong.”  Shareholder value constructs a false goal, subject to the whims of the market, and not solidly related to the cocreation of value with customers.  Its attainment distorts the organisation’s performance.  He demonstrates, as do many others, that companies focused on shareholder value perform less well (in profit and sustained success) than those focused on the fundamentals.  These fundamentals are related to an understanding of governance and the organisational purpose of value creation.  He goes on to demonstrate that shareholder value and stakeholder value were fads that oscillated in an attempt to find the right solution, both leading to sub- optimisation.  Whereas shareholder value proposed that the organisation should be focused exclusively on creating wealth for shareholders, stakeholder value thought that it should be shared out amongst multiple groups.  He sees a problem here: that it puts organisations at the mercy of the changing balance of power between stakeholder groups.  Malik does not consider customers to be “stakeholders” — they are central to the purpose of good corporate management: serving the customers better than the alternatives can.

Malik’s comprehensive wholistic system is inevitably a work in progress — he evolved it in his own years of leading his consulting company and the widespread experience of many users.  Other consultants and leaders have developed other tools and methods or developed aspects of his work in other ways.  But it does provide a perspective that is thoroughly thought about the question — one currently positioned as governance, a term that itself derives from the same root as cybernetics, i.e. kybernetes — and the processes of orchestrating any enterprise focused on delivering value to one or more groups of customers on the best cybernetic way of doing this. Because it is so effective it also provides the necessary conditions for good employment, investor returns, and societal returns without needing to confuse the issue.  This is entirely consistent with what Dr Deming discovered and demonstrated.

 Beer’s Viable System Model

The viable system model is a highly regarded systems tool developed by Stafford Beer for the design, diagnostics, and maintenance of information systems flow in a company (or economy). It is modelled on his cybernetic understanding of the brain and sensory organization.   VSM’s basic structure consists of five recursive levels of organization: 

  1. The top-level identity function that permeates the organisation;
  2. The forward-looking focus on scanning upcoming changes in the market and technology leading to innovations in strategy, technology, vision and operational methods;
  3. The regulation between units through middle and operationally senior management, allocating resources, making choices, mediating between new ideas and existing ones, present needs and future aims;
  4. The institution of the smoothing systems, culture, and tools that enables people to know what they’re doing, how, and equip them for ongoing work, including the necessary information;
  5. And then the operational unit that actually delivers value two other units, the productive and service functions, which as a unit contain the whole of the structure again.  A company might therefore have six or 60 business units, each of which has its own identity, strategic planning, regulation, internal organisation, and operational delivery of value or offerings. 

  It supported by some deep theory about the management of information, how information needs to be regulated in order to function effectively and how the systems for regulating information and using it work best.  It leads to the notion of an intelligent company.Or indeed an intelligent nation.

Management aspects

Someone competent in cybernetics can scan all of the following and immediately see the relevance of cybernetics.

Administration and unit/team organization

AI software for management

Assistive tech, eg for surgery

Autonomous vehicles, autopilots…

Brand and identity management

Business Models  and their use for replication

Business systems

Change design

Conflict resolution

Culture and culture management

Cybernetic tools, including VSM

Designing machine systems, e.g. AI, IoT, software, and other smart technologies

Ethical and functional consequences

Extended corporate machine intelligences

Financial and business models

Financial systems

Future search — developing strategy

Governance and audit systems, compliance

Homeostatic devices and signal systems

Innovation, problem solving, design and execution of change

Internet as managerial context

Language of commitment (Flores)

Lean, Quality and Deming’s TQM

Logistics

Management  and organization theory

Management skills

Marketing, Sales, Brand, Pricing, value propositions and offerings

Organization theory, structure and design

Policy formation and control, Governance, steering tools

Production systems and their design and maintenance

Propriopoiesis

Semantic web and advanced coding

Smart software systems (feedback and controls)

Software systems and coding practices

Strategy, research, planning, decision making, adaptation

Team building

Value streams, processes, circular economy, ecosystem

—Angus Jenkinson FCybS, June 2021