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- The Fractal Organization - The Fractal Organization - Wiley Online Library
System 5 creates the identity, the ethos, and the ground rules under which everyone operates. For example, Widget Co. Organisational entities, such as a Board of Directors, or the President are usually responsible for System 5 processes. System 5 has to manage the interaction between Systems 3 and 4 and to decide on the right balance for the organisation white dashed lines in Figure 1.
This balance determines the course and strategy of the whole organisation. Finally, Operations may face emergency situations that could threaten the viability of the whole company, such as a fire incident in the widget storage department that destroys a significant part of production. In these situations, a fast intervention from System 5 is usually needed, which would have to bypass the slower intermediate processes between of Systems 1 and 5 described above. An emergency direct connection between Systems 1 and System 5 is therefore needed dashed red line of central axis in Figure 1 , which Beer called the algedonic channel.
The standard provides guidance to organisations of all types on the underlying principles of SR, and on ways to integrate socially responsible behaviour into the organisation. Moreover, ISO uses its framework of core subjects and integration practices in order to classify 40 cross-sectoral and 35 sectoral voluntary SR initiatives and tools. Certain clauses were omitted from the analysis, since they are of an introductory, or informative nature and hence not useful, such as clause 1 on the scope of the standard. For example, System 4 is responsible for the activities in clause 5-Recognising SR and engaging stakeholders.
For example, System 2 is contributing to the activities described in clause 7. It must be noted, that the VSM Relationship Table and VSM Mapping Diagram are indicative, and should only be understood in the context of the detailed description and implementation examples. The reason is that the majority of ISO clauses relate to more than one dynamically interacting VSM systems, and this cannot be properly conveyed by the Appendix and Figure 2 alone, which suggest a one-on-one static mapping. For example, clause 7. Yellow elements represent the SR Core Subjects.
Contributing elements are not shown for simplicity. Therefore, System 5 should first make a commitment to adopt ISO, understand the basic concepts, and examine how they affect its purpose.
The President expands this statement by including the goal of producing widgets in a socially responsible manner that benefits society and the environment. Likewise, the vision of the company is updated to include the aspiration to become recognized as a leading company for its excellent and sustainable widgets. Thus System 5 must adopt the ISO Seven Principles of SR 4 and also the more specific SR principles 6 that are identified as relevant to its particular activities see next section.
The Organisational Governance core subject 6. Finally, System 5 is responsible for promoting and integrating SR within the organisation, by means of raising awareness on related issues 7. A high degree of commitment at the top of the organisation, through serious adoption and implementation of SR principles and policies, sets an example for the whole organisation. All of the above activities of System 5 should ideally build up a culture that encourages SR practices throughout the organisation.
Apart from her managerial decisions, this is reflected in her conversations with people inside and outside the organisation, as she frequently promotes SR as the way forward. She has also encouraged the creation of a group of like-minded people from within the organisation and from key stakeholders to push the SR agenda forward. Recognizing SR and Engaging Stakeholders 5. In the case of SR, System 4 needs to recognize how the organisation relates to its external environment, and what are the SR impacts, interests and expectations 6, 7.
In other words, System 4 needs to build a model of the external environment in relation to SR Panagiotakopoulos, A fundamental aspect of model building is the definition of its boundaries Decleris, The practice of recognizing SR is essentially a process of widening the traditional model boundaries of System 4, across all of the above concepts, to consider SR elements, issues and impacts.
In addition, an international NGO is conducting a campaign to raise awareness on the life-cycle impacts of widgets and influence consumer behaviour. System 4 realizes that it needs to widen its scope and know more about the life-cycle of widgets, from the upstream stages of Raw Material Extraction to the downstream stages of Use and End-Of-Life grey elements in Figure 1. This information can be compiled and provided by System 3. This interaction between Systems 3 and 4 white arrows in Figure 2 is crucial in developing feasible and realistic SR strategies based on factual data see next section.
In order for these strategies to be effective, this model should correctly express the specific challenges and opportunities facing the organisation relating to every SR issue 6 , or in other word it should possess requisite variety Conant and Ashby, This is shown in Figure 3. This process should involve Systems 3 and 5 and be based on pre-determined criteria e. However, the final decisions on criteria and prioritization 7. Specific SR strategies and programmes are then developed by System 4 with the aid of System 3 7.
These strategies have to abide by the SR policies of System 5 7. According to the Pollution Prevention policy theses impacts should be minimized.
System 4 investigates alternative mitigation actions and consults with the General Manager and the Finance Director System 3 to assess their implementation feasibility and costs. She feels that priority should be given to Widget Co. Finally, System 4 with the aid of the General Manager develops in more detail the implementation plans of the first two strategies. System 4 needs to identify stakeholders, enter into a continuous dialogue and build a relationship, at least with the most significant ones 7.
This relationship will provide the organisation with valuable information and alternative viewpoints and thus increase the variety of its SR model. In order for this relationship to be meaningful, it will also have to be reciprocal, i. A common practice towards this end is the issue of a sustainability or SR report 7. A similar practice is to participate in certification schemes, such as ecolabels 7.
System 4 has to guarantee the credibility of such practices, by following established tools and guidance 7. Finally, in case disagreements or conflicts emerge between the organisation and its stakeholders, System 4 should have in place mechanisms to resolve them, and ensure these are known and made available to stakeholders 7. Moreover, System 4 gets approval from the President to issue a Sustainability Report on an annual basis, according to the recent GRI guidelines, which will be communicated to all stakeholders.
System 4 regards this as a competitive advantage strategy, since it has detected an increasing demand for verified EPDs from the market. This involves making these general policies more specific to the operational context of each System 1, by providing specialized SR procedures, rules and directions.
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A particular form of resource is the provision of training that will build the capacity of Operations to manage demanding SR issues 7. The newly agreed procedures are circulated to all affected parties. Following a demand by the Assembly Manager, the HR department arranges that more staff is allocated to Assembly and that special training is provided to relevant employees on the new procedures.
This involves analysing the more general SR plans and strategies of System 4 into more specific objectives and targets that should be allocated to each operation department System 1 7. Ideally, their feasibility will have to be discussed and negotiated with Systems 1, taking into consideration the required resources that should be provided by System 3 for their realization.
Therefore, the General Manager decides to create a working group consisting of the Assembly, Finance, Procurement and Production Planning Managers to develop the cost, schedule and technical plans of the strategy and continue with its implementation upon reaching an agreement. This monitoring requires the development of sustainability indicators quantitative or qualitative appropriate for each SR issue that will encourage performance and self-regulation of Operations.
These indicators may develop along three different channels: i Central Channel: on a regular basis via performance reviews and reports by Systems 1 7. This information allows System 3 to continuously negotiate with Systems 1, and intervene to modify their SR implementation plans only if it is affecting the viability of the whole organisation.
Beer suggests that monitoring of performance on the Central, as well as on the System 2 channel, should be as close to real-time as possible Beer, Additionally, in order to make sure these indicators are measured accurately and honestly, he arranges for an annual audit to check that measuring procedures and protocols are followed correctly.
These aggregated indicators are presented by the General Manager to System 4 and the President in their quarterly strategy meetings. In the case of SR, Operational units might attempt to implement SR actions and practices that affect other units, e. This includes negotiation processes among Systems 1 that make sure no operational unit will be in a disadvantaged position. Moreover, their installation may last for a month, during which the operation of the Warehouse will be seriously disrupted.
The Warehouse manager is very concerned about this development and meets with the Assembly manager, in order to find ways to minimise impacts to his department. They identify an alternative less obstructive location and they co-ordinate the installation and Warehouse schedules to minimise disruptions. This may involve the adoption of specific data collection and measurement protocols, operating procedures, as well as other forms of standardization2. After 2 Similarly, so-called policies e. Several SR programmes focus on creating these kinds of environments to raise awareness and drive engagement on specific SR issues.
Again, IT can be very useful in creating an SR culture, for example through relevant employee forums, social media Reilly and Weirup, , or even gamification Stevens, Additionally, the HR manager with the help of the SR Team print awareness raising posters about the new Pollution Prevention strategy, along with tips on how to minimize pollution and what should be done in case of a pollution incident.
The lower-level Systems 1 to 5 will have a similar function to those of the parent organisation, but with a different lower-level focus. In terms of SR, the Recursive System Theorem implies that each Operational unit, and in particular its local management, should develop similar SR functions to those detailed in the paragraphs above 7. The focus of these functions should be adapted to the particular lower-level context and purpose of the Operational unit. He holds a meeting with the sub- department supervisors to explain the new policy and what is generally expected of them System 5.
Moreover, he encourages them to discuss among themselves any implementation issues, before asking for his help System 2. The Assembly Manager also decides to attend a short conference on environmental management in order to better understand the environmental issues of the assembly process System 4.
The remaining three core subjects, namely Fair Operating Practices 6. ISO provides general principles and considerations for each core subject, and specific actions and expectations for the related SR issues 36 issues in total. Similar to the analysis of the previous paragraphs, the clauses of each issue could be interpreted with the same method by the VSM. An example of such an interpretation is shown in Figure 5 for the Pollution Prevention issue 6. Yellow arrows indicate the different aspects of this issue that may relate to any part of Operations and extend to respective local environments.
The Fractal Organization - The Fractal Organization - Wiley Online Library
Previously it was concerned with markets, technical innovations and financial matters, now it has widened its remit to involve the environment, community, consumer issues and so on. Essentially the variety of its environmental niche has suddenly exploded and in order to restore Requisite Variety RV , there is an urgent need to ramp up the variety of its operation. One way to visualise this is presented in Figure 6, building on the analysis of sections 3. An organisation wishing to integrate SR into its structure will have to integrate the following management layers: 1.
Figure 6 Integration of management layers The repercussion of Figure 6 is that the more SR issues an organisation considers relevant, the more variety it will need to possess in order to manage them effectively. A possible response would be to indeed create a new structure for each SR issue. In contrast, the authors believe that this integration should not be based on creating distinct roles for each management layer, but rather incorporating these values and ways of making choices and decisions, in the day-to-day Business Management, resulting in a more systemic Sustainability Management.
In a recent work Panagiotakopoulos et al. This paper goes further regarding sustainability management practice in the context of ISO standard.