Developing Business Competence: A model based on Viable Systems

Seminar on “Organisational Restructuring of SEBs” D.V. Ramana
• Evaluating the impact of reducing
Summary and Suggestions for Action plan
The power sector has experimented with all forms of reforms ranging from un-bundling to change
in ownership. However, an experience of Orissa <strong>model</strong> has demonstrated that theses experiments
have not changed the scenario. The sector is still affected by most of the problems and is now
facing newer problems arising from the failure of the privatisation process. This paper presented
an alternative <strong>model</strong> for strengthening the organisation by developing the business competence
using VSM. VSM offers a paradigm for problem solving. While no attempt has been made to
find solutions to specific problems, an effort has been made to diagnose the limitations of the
existing solutions and suggested that it necessary to see the organisation i.e. Cesco as Viable
System consisting of several viable systems. It has been observed that though some form of all
five systems can be found at the corporate level, such systems are conspicuous by absence at the
division level. If each sub-division and division becomes viable then the entire organisation can
become viable.
1 The Power and Energy Division of the Planning Commission in their Annual Report on the working of
SEBs and Electricity Department (April 2000) reported the T&D losses as 23.5 % (1992-93), 23.4% (93-
94), 23.8% (94-95), 46.9% (95-96) and 20.4% (96-97).
2 S. Hunt and G.Shuttleworth, Competition and Choice in Electricity. John Wiley &Sons
3 The generating plants were large with respect to the size of the market. The optimal size of the
generating unit rose through 1970 to 1980, as it had for previous 50 years. Then things began to turn around
. Technology imported from material science and space programme made turbines much more efficient. At
the same time the price of gas declined. The way was then clear for smaller and cheaper generating units.
4 Surrey, J (ed), The British Experiment; Privatisation: the Record, The Issues and The Lessons. Earthscan
Publications London.
5 Farnham, D. and Horton, S. (1993), The Public Service Managerialism”, in D. Farnham and S. Horton
(eds.), Managing the New Public Services (London, Macmillan).
6 Flynn, N.(1993), Public Sector Management (Hemel Hempstead, Harvester).
7 Stoker, G. (1989), New Management Trends (Luton, Local Government Training Board
8 Terry, L.D. (1998), Administrative Leadership, Neo Managerialism, and the Public Management
Movement. “ Public Administration Review, 58(3):194-200.
9 Osbrone, D., and Gaebler, T (1992), Reinventing Government, New York: Addison Wesley.
10 For details on various <strong>model</strong>s reference can be made to Creative Problem Solving: Total Systems
Intervention by M.C. Jackson and R.L. flood (1991); John Wiley & Sons.
11 Stafford Beer unfolded his <strong>model</strong> (VSM) of the organisational structure of viable systems in two of his
books viz. Brain of the Firm and The Heart of Enterprise published during the 1970s. He published
Diagnosing the System for Organisations in 1985, which was intended as a practical guide to enable any
manger to organise and manage tasks effectively.
12 Holmberg, B.A., <strong>Developing</strong> Organisational <strong>Competence</strong> in a business, in The Viable System Model:
Interpretation and Applications of Stafford Beer’s VSM , edited by R.Espejo and R.Harnden (1990); John
Wiley & Sons
13 Espejo, R. (1979), ‘Information and management: the cybernetics of a small company’, working paper
125, University of Aston Management Centre. Jackson, M.C. and Alabi, B.O. (1986), ‘Viable systems all:
a diagnosis for XY Entertainments’, working paper 9. Dept. of Management systems and Sciences,
University of hull; Beer, S. (1974), The Integration of Government Planning, Study for the Government of
Alberta.
14 Jackson M.C., Evaluating the Managerial Significance of the VSM, in The Viable System Model:
Interpretation and Applications of Stafford Beer’s VSM , edited by R.Espejo and R.Harnden (1990); John
Wiley & Sons
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