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5 Thinking about organisations and their management: science and systems thinking

5 Thinking about organisations and their management: science and systems thinking

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60  Part 1  Systemic ways of thinking about strategy and organisational dynamics



There is, however, an important difference between the scientist concerned with

nature and the analogous manager concerned with an organisation, which is not

acknowledged in scientific management. The scientist discovers the laws of nature

while the manager, in the theory of management science, chooses the rules driving

the behaviour of the organisation’s members. In this way, something like Kant’s

autonomous individual and the accompanying rationalist causality is imported into

theories of scientific management, but with some important differences. First, it is

only the manager to whom rationalist causality applies. It is he or she who exercises

the freedom of autonomous choice in the act of choosing the goals and designing the

rules that the members of the organisation are to follow in order to achieve the goals.

Those members are not understood as human beings with autonomous choices of

their own but as rule-following parts making up the whole organisation. Closely

linked to this point about freedom is that of acting into the unknown. Kant argued

that individuals make choices in the form of hypotheses about an unknowable reality and they discover the efficacy of these choices in acting. In its use in scientific

management, rationalist causality is stripped of the quality of the unknown, and

also of the ethical limits within which action should take place, to provide a reduced

rationalist causality. In fact, scientific management does what Kant argued against. It

applies the scientific method in its most mechanistic form to human action. S­ econd,

Kant’s coupling of autonomous human action with universal ethical principles is

absent in the rationalist causality of management science, which regards human

action as a reflex-like response to stimuli in accordance with the behaviourist psychology of its time.

The ethical aspect appears to some extent in the reaction of the human relations

school to scientific management. By the 1930s the view that Taylor and Fayol took of

human behaviour was being actively contested by, for example, Elton Mayo (1945),

a social psychologist. He conducted experiments to identify what it was that motivated workers and what effect motivational factors had on their work. He pointed

to how they always formed themselves into groups that soon developed customs,

duties, routines and rituals and argued that managers would only succeed if these

groups accepted their authority and leadership. He concluded that it was a major

role of the manager to organise teamwork and so sustain co-operation. Mayo did

not abandon a scientific approach but, rather, sought to apply the scientific method

to the study of motivation in groups.

From the 1940s to the 1960s behavioural scientists (for example, Likert, 1961)

continued this work and concluded that effective groups were those in which the

values and goals of the group coincided with those of the individual members and

where those individuals were loyal to the group and its leader. Efficiency was seen

to depend upon individuals abiding by group values and goals, having high levels of

trust and confidence in each other in a supportive and harmonious atmosphere. In

extending freedom to all members of an organisation and paying attention to motivational factors, the human relations school took up a fuller notion of rationalist

causality.

Taking scientific management and human relations together, we have a theory in

which stability is preserved by rules, including motivational rules, which govern the

behaviour of members of an organisation. Change is brought about by managers

when they choose to change the rules, which they should do in a way that respects

and motivates others so that the designed set of rules will produce optimal outcomes.







Chapter 3  The origins of systems thinking in the Age of Reason   61



Organisations are thought to function like machines, achieving given purposes deliberately chosen by their managers. Within the terms of this framework, change of a

fundamental, radical kind cannot be explained. Such change is simply the result of

rational choices made by managers, and just how such choices emerge is not part

of what this theory seeks to explain. The result is a powerful way of thinking and

managing when the goals and the tasks are clear, there is not much uncertainty and

people are reasonably docile, but inadequate in other conditions. Truly novel change

and coping with conditions of great uncertainty were simply not part of what scientific management and human relations theories set out to explain or accomplish.

The principles discussed above were developed a long time ago, and they have

been subjected to heavy criticism over the years, but they still quite clearly form the

basis of much management thinking.



The shift to systems thinking

The wider paradigm shift from mechanistic to systemic thinking described in the

previous section is also evident in theories of organisations and their management.

For example, general systems theory was combined with psychoanalysis to develop

a systemic understanding of organisation (see Chapter 6) which emphasises clarity

of roles and task definition and equates management with a controlling role at the

boundary (Miller and Rice, 1967). The influence of the cybernetic strand of systems thinking is even more in evidence (see Chapter 4). All planning and budgeting

systems in organisations are cybernetic, in that quantified targets are set for performance at some point in the future, the time path towards the target is forecast, and

then actual outcomes are measured and compared with forecasts, with the variance

fed back to determine what adjustments are required to bring performance back

to target. All quality management systems take the same form as do all incentive

schemes, performance appraisal and reward systems, management and culture

change programmes, total quality management and business process re-engineering

projects. The thinking and talking both of managers and organisational researchers,

therefore, tend to be dominated by cybernetic notions. The third strand of systems

thinking, namely systems dynamics, originally had little impact on management

thinking but more recently it has attracted much interest as a central concept in the

notion of the learning organisation (see Chapter 5). Here, instead of thinking of a

system moving towards an equilibrium state, it is thought of as following a small

number of typical patterns or archetypes. Effective management requires the recognition of these archetypes and the identification of leverage points at which action

can be taken to change them and so enable management to stay in control of an

organisation, in effect controlling its dynamics.

The shift from reductionist management science to holistic, systemic perspectives

on organisations does not, however, entail any substantial challenge to the scientific method. The manager continues to be equated with the natural scientist, the

objective observer, and just as the scientist is concerned with a natural phenomenon,

so the manager is concerned with an organisation. Now, however, the organisation is understood not as parts adding to a whole, but as a system in which the

interactions between its parts are of primary importance in producing a whole that

is more than the sum of its parts. The manager understands the organisation to

be a self-­regulating or a self-influencing system and it is the formative process of



62  Part 1  Systemic ways of thinking about strategy and organisational dynamics



self-­regulation or self-influence (formative cause) that is organising the pattern of

behaviour that can be observed. In the case of general systems and cybernetics, that

pattern is movement towards a chosen goal, an optimally efficient state, and the pattern of behaviour is held close to this goal/state when the system is operating effectively. In the case of systems dynamics, the form towards which the system moves

is a typical pattern or archetype enfolded in the system, which the manager can

alter by operating at leverage points. In all of these systems theories, therefore, the

final form of the system’s behaviour, that towards which it tends, is a state already

enfolded, as it were, in the rules governing the way the parts interact. The manager

is the objective observer standing outside the system and through reason designs it,

changes it, and sets objectives for it. The manager is also assumed to have no interests or values except in the efficient development of the organisation for which they

have responsibility.

In the decades after 1950 the first wave of modern systems thinking about organisation, described above, paid as little attention as management science did to ethics,

ordinary human freedom, politics and the unknown nature of the final state towards

which human action tends. As soon as one thinks of a human organisation as a system that can be identified or designed, one immediately encounters the problem that

the identifier or the designer is also part of the system. This problem was recognised

by the systems thinkers of the mid-twentieth century and later led to the development of second-order systems thinking (see Chapter 9). Also, some more recent

developments of systems thinking (soft systems and critical systems) in the 1980s

and 1990s actively took up the issues of participation and ethics, but they did so in

a way that did nothing to alter the underlying theory of causality (see Chapter 9).

The systems movement continues to build on a theory of rationalist causality applied

to the understanding and design of organisations as systems that are governed by

formative causality.



Back to the public-sector consultancy

We started this chapter by referring to a consultancy we recently undertook where

we were invited to support a group of managers who had just experienced a major

strategic reorganisation. The way they, and the politicians who had instigated the

reorganisation, were thinking about change in their organisation clearly reflects the

history of systems thinking outlined in this chapter. They were taking it for granted

that they, as autonomous individuals, could objectively observe their organisation,

understood as a system, and change the values that drive its operation. In other

words, they were assuming that they could enfold into the organisational system

the purposes that it would then unfold. In doing this, they had lost sight of Kant’s

notion of a regulative idea. Instead of thinking that they could understand the system ‘as if’ it were unfolding a purpose they were hypothesising, they were thinking

that their organisation was a system that really could/would unfold the purpose they

determined for it. More than that, however, they were doing what Kant strongly

advised against. They were applying the notion of system to the human actions that

are the organisation, thereby thinking of the organisation’s members, including

themselves, as parts of the system. In this way of thinking ordinary human freedom

to make a choice is lost sight of. However, all individuals in an organisation have

some choice regarding the part they play in together forming the values that guide







Chapter 3  The origins of systems thinking in the Age of Reason   63



their behaviour. Attempts to determine these values for them are then bound to fail,

if indeed individuals have at least some degree of choice. Furthermore, the systemic

way of thinking cannot explain in its own terms the very matter that these managers

were concerned with: namely the transformation of their organisation. This is simply because systems thinking cannot explain, in its own terms, novelty or creativity.

What may seem, in this chapter, to be a rather abstract philosophical discussion is

in fact a highly practical matter.



3.6  How systems thinking deals with the four questions

Systems thinking essentially seeks to understand phenomena as a whole formed by

the interaction of parts. Whole systems are separated from others by boundaries

and they interact with each other to form a supra-whole. There are thus different

levels at which phenomena either exist or need to be thought about. These notions

of wholes, boundaries and levels are central distinguishing features of systems thinking. How does this kind of thinking deal with the four questions posed near the end

of Chapter 2 (page 40)?

The first question has to do with the nature of human knowing and behaving. In

systems thinking the answer to this question is a dualism. On the one hand, humans

are thought of as rational, autonomous individuals who objectively observe systems

and ascribe purposive behaviour to them. Causality here is rationalist and rational

humans are free to choose. On the other, humans are also thought of as parts or

members of the system being observed and so subject to formative causality. As such

they cannot be free to choose but are subject to the purpose and formative process

of the system. This problem has not gone unnoticed by systems thinkers but in

­Chapter 9 we will argue that the problem has not been resolved.

The second question has to do with how action and interaction is understood, and

what this means for stability and change. In systems thinking, interaction between

parts produces the whole and the parts are relevant as parts only because they produce and sustain the whole. The form of causality is the formative process of interaction between parts. Process here means the process of producing a whole and

participation means participating in the production of a whole.

Taken together, the systems thinkers’ answers to these two questions imply a particular way of thinking about human experience: that is, the patterning of interaction between people. The implication is that the cause of experience, the cause of

the patterning of interaction between people, lies in some system, created by people,

that lies above or below that experience. So, in the consultancy we referred to, the

particular patterning of the interactions between people in the organisation was

assumed to be caused by a system of vision, mission and values existing somehow

outside the direct experience of the people interacting.

Turning to the third question to do with the method used to understand human

action, it is clear that the method of the systems thinking so far discussed is that of

objective observation. Generally, when applied to organisations, this is done in a

realist way. People then think that systems actually exist in reality and organisations really are systems that have their own purposes. Organisations and systems are

thereby reified – that is, understood to have an existence as things. Kant’s idealist



64  Part 1  Systemic ways of thinking about strategy and organisational dynamics



position on systems is thereby lost. However, in later critical systems thinking (see

Chapter 9) Kant’s ‘as if’ position has been recovered. Critical systems thinkers argue

against the notion that systems actually exist and regard them as mental structures.

Second-order systems thinking also moves away from simple objective observation

and seeks to understand humans as participants in systems.

The fourth question has to do with contradiction. Systems thinking originated

as a dualistic way of thinking that eliminated paradox, for example by postulating one causality for nature and another for human action. Since Kant, systems

thinkers have retained, often implicitly, a dual theory of causality, formative and

rationalist, and applied them both to human action. They eliminate the paradox, not

by different spatial locations, but in different temporal sequencing. First, managers

are thought of as autonomous individuals subject to rationalist causality when they

are determining the organisational system’s purpose and then as subject to formative causality in their role as members of the system. In this way they preserve the

‘both ... and’ structure of Kantian thinking.



3.7  Summary

This chapter has described some key aspects in the development of Western thought

over the last four centuries. Its particular concern has been with the origins of systems thinking in Kantian philosophy and his articulation of the autonomous individual, as well as later developments in systems thinking and its application to human

action around the middle of the twentieth century. The purpose has been to highlight the key aspects of systems thinking and the particular problems it poses when

applied to human action. The main problem has to do with how, in system terms, we

are to understand human participation, freedom and transformation.



Further reading

The origins and philosophical nature of systems thinking are reviewed in more depth in

­Stacey et al. (2000) and in Griffin (2002). Also refer to Checkland (1999), Jackson (2000)

and ­Scruton (2001).



Questions to aid further reflection

1. What are the key elements of a system and what are the consequences of thinking

about organisations in this way?

2. What are the distinctions between efficient, formative and rationalist causality?

3. How does the development of management thinking reflect changes in ways of

­thinking in the natural sciences?







Chapter 3  The origins of systems thinking in the Age of Reason   65



4. In what way does systems thinking about organisations reflect a dualist, ‘both ... and’

way of thinking and what are the consequences?

5. How does one explain learning, creativity, spontaneity and choice from a systems

perspective?

6. Where in your own experience do you see organisational manifestations of the ­thinking

described in this chapter?



Chapter 4



Thinking in terms of

strategic choice

Cybernetic systems,

cognitivist and humanistic

psychology

This chapter invites you to draw on your own experience to reflect on and consider the

implications of:

• The origins and nature of thinking that

organisations are cybernetic systems.

• The origins and nature of thinking about

the human individual in terms of cognitive

and humanistic psychology.



• The requirement for predictability on

which the theory of strategic choice

depends.

• What it means to be practical in terms of

strategic choice theory.



• The origins and nature of thinking about

human communication in terms of a

sender–receiver model.



• The manner in which control, leadership

and group behaviour are thought about in

the theory of strategic choice.



• The role of the objective autonomous

individual observer who can control.



• The technically rational process that is

assumed in the theory of strategic choice.



• The dualistic theory of causality implied

by strategic choice theory.



• How the theory focuses attention and

what this entails for what managers do.



It is important to understand the theories of cybernetic systems and cognitivist/

humanistic psychology because they provide the key assumptions that tend to be

taken for granted in the theory of strategic choice. Without this understanding it is

not possible to reflect rigorously on the entailments of thinking in terms of strategic

choice and so evaluate the prescriptions of the theory.



Chapter 4  Thinking in terms of strategic choice   67







4.1 Introduction

The major part of most textbooks on strategic management is devoted to the

prescriptions and analytical techniques of formulating and implementing strategic

plans of one kind or another. In other words, they express the theory of strategic

choice. What these textbooks devote very little attention to is the way of thinking

that strategic choice theory reflects. The underlying assumptions of the theory are

taken for granted rather than explored and so the entailments of making those

assumptions are not examined. While this chapter gives a very brief description of

the key elements of the theory of strategic choice, its main purpose is not to provide

a comprehensive review but to explore the way of thinking reflected in that theory.

This theory has strong critics and there has been a shift in thinking over the past

two decades to notions of the learning organisation (see Chapter 5), but strategic

choice is probably still the dominant theory of strategy and organisational change.

You can hear it in the way that most management practitioners talk about strategy

and change in their organisations, and you can read it in a great many of the books

and articles written about strategy and organisational design and development.

According to the theory of strategic choice, the strategy of an organisation is

the general direction in which it changes over time. The general direction encompasses the range of activities it will undertake, the broad markets it will serve, how

its resource base and competences will change and how it will secure competitive

advantage. The purpose of the strategy is to secure sustainable competitive advantage that will optimise the organisation’s performance. This strategy is chosen by the

most powerful individual in the organisation or by a small group of managers at the

top of the management hierarchy – that is, the dominant coalition. The prescribed

way of making the choice is first to formulate a strategy by following an analytical

procedure to prepare a plan: that is, a set of goals, the intended actions required to

achieve the goals, and forecasts of the consequences of those actions over a long

period of time. Having chosen the general direction, or strategy, the managers at the

top of the hierarchy are then required to design an organisational structure to implement it. The structure they design should be a largely self-regulating system in which

people are assigned roles and objectives that will realise the chosen strategy. Implementation is the procedure of designing systems to ensure that the plans are carried

out in the intended manner and periodically adjusted to keep the organisation on

track to achieve its goals. A brief description of the formulation and implementation

procedures is provided later in this chapter.

From this brief description, it can be seen that strategic choice theory makes particular assumptions about how people interact with each other. They are thought to

interact within a particular kind of system, which has been designed by the dominant

coalition of managers in the organisation. This is a cybernetic system, the nature of

which will be described in the next section of this chapter. The ability to predict is

crucial to the ability to control an organisation understood as a cybernetic system.

Strategic choice theory assumes that it is possible for powerful individuals to

stand outside their organisations and model them in the interest of controlling them.

The theory assumes that organisations change successfully when top executives form

the right intentions for the overall future shape of the whole organisation and specify

in enough detail how this is to be achieved. It prescribes the prior design of change



68  Part 1  Systemic ways of thinking about strategy and organisational dynamics



and then the installation of that change. The manner in which the public-sector

organisation had been reorganised prior to our consultancy assignment discussed in

Chapter 3 is a good example of this way of thinking. The theory of strategic choice

therefore places the individual, and the rational choices made by the individual, at

the very centre of its explanation of how organisations become what they become.

The cause of an organisation’s ‘shape’ and performance is the strategy rationally

chosen by its most powerful members. It, therefore, immediately implies a particular

theory of human psychology: that is, a theory of how humans know and act. The

theory implied is that of cognitivism, which will be described later in the chapter.

Furthermore, the need to motivate people to achieve objectives also implies a psychological theory of motivation and this is usually based on humanistic psychology.

This will also be described later in this chapter.

The foundations of strategic choice theory therefore reflect a particular way of

thinking about what organisations are and how they become what they become.

This way of thinking derives essentially from Kant (see Chapter 3) and combines

cybernetic systems theory with the cognitivist and humanistic psychological theories

that the rest of this chapter will explore.



4.2 Cybernetic systems: importing the engineer’s idea of self-regulation

and control into understanding human activity

Cybernetics is an application of the engineer’s idea of control to human activity.

During the Second World War the superiority of the German air force led British

scientists to consider how they might improve the accuracy of anti-aircraft defences.

One of these scientists, Norbert Wiener, saw a way of treating the evasive action

of enemy aircraft as a time series that could be manipulated mathematically using

negative feedback to improve the gunner’s predictions of the enemy plane’s future

position (Wiener, 1948).



Negative feedback and equilibrium

Negative feedback simply means that the outcome of a previous action is compared

with some desired outcome and the difference between the two is fed back as information that guides the next action in such a way that the difference is reduced until

it disappears. The effect is to sustain a system in a state of stable equilibrium. When

anything disturbs a cybernetic system from its state of stable equilibrium, it will

return to that equilibrium in a self-regulating manner if it is governed by negative

feedback control. A commonly quoted example of a cybernetic system is the domestic central heating system.

A domestic heating system consists of an appliance and a regulator. The regulator

contains a device that senses room temperature connected to a device that turns the

heating appliance on and off. A desired temperature – that is, an external reference

point – is set in the regulator by an observer outside the system. When the room

temperature falls below this desired level, the control sensor detects the discrepancy

between actual and desired states. The regulator responds to a negative discrepancy

with a positive action – it turns the heat on. When the temperature rises above the







Chapter 4  Thinking in terms of strategic choice   69



desired level, the opposite happens. By responding to the deviation of actual from

desired levels in an opposite or negative way, a cybernetic system dampens any

movement away from desired levels. The system keeps the room temperature close

to a stable level over time, utilising negative feedback.



Negative feedback and human action

Wiener and his colleagues held that negative feedback loops were important in most

human actions – a loop in which the gap between desired and actual performance of

an act just past is fed back as a determinant of the next action. If you are trying to

hit an object by throwing a ball at it and you miss because you aimed too far to the

right, you then use the information from this miss to alter the point at which you

aim the next shot, so offsetting the previous error. In this sense the feedback is negative – it prompts you to move in the opposite direction. You keep doing this until

you hit the object. Wiener and his colleagues thought that this negative feedback

was essential to all forms of controlled behaviour and that breaking the feedback

link led to pathological behaviour.

Another example is provided by the operation of markets. In classical economic

theory, markets are assumed to tend to a state of equilibrium. If there is an increase

in demand, then prices rise to encourage a reduction in demand and an increase in

supply to match the demand. If demand then stays constant, so will price and supply. Any chance movement of the price away from its equilibrium level will set in

train changes in demand and supply that will rapidly pull the price back to its equilibrium level. In other words, a cybernetic system does not have an internal capacity

to change. Instead, any significant change is simply a self-regulating adaptation to

some external, environmental change. Dynamic equilibrium is a movement over

time in which a system continuously adapts to alterations in a continually changing

environment.

However, the self-regulating operation of cybernetic systems is not as simple as it

sounds. Cyberneticists realised that when negative feedback becomes too fast, or too

sensitive, the result could be uncontrolled cycles of over- and under-achievement of

the desired state. So, for example, you may be taking a shower and find the water

too hot. This leads you to raise the flow of cold water. If you do not take sufficient

account of the lag between your action and the subsequent drop in temperature you

may increase the cold water flow again. This may make the water too cold, so you

raise the flow of hot water, which then makes it too hot again. Unless you get the

time lag between your action and its consequence right, the system will not stabilise.

So, if a negative feedback control system is operating too rapidly, behaviour will

fluctuate in an unstable manner instead of settling down to a desired level.

Those studying such systems therefore sought to establish the conditions for stability and instability in negative feedback control systems. As a result of this kind of

work, governments came to accept that their attempts to remove cycles in the level

of activity in the economy were usually counterproductive. Just as the economy was

recovering from a slump, impatient governments tended to cut taxes and increase

expenditure, so fuelling an excessive boom accompanied by rapid inflation. Just as

that boom was collapsing on its own, fearful governments increased taxes and cut

expenditure, so pushing the economy into a deeper slump than it would otherwise

have experienced. Exactly this kind of debate has been waged between economists



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