Developing Business Competence: A model based on Viable Systems

Seminar on “Organisational Restructuring of SEBs” D.V. Ramana
The System-1 of an organisation consists of the various parts of it directly concerned with
implementation of the major objective/or the one responsible for undertaking the main activity of
the organisation. These are defined as departments, or divisions, or subsidiaries, or units etc. It is
important to note that each part is autonomous in its own right. This means the parts themselves
must be viable systems and must exhibit the features of all five functions.
Systems-2 to 5 are the channels for controlling (Holmberg 1991) the separate system-1s and they
emerge from the need to facilitate the operations of system-1, and to ensure the suitable
adaptation of the whole organisation.
System-2 comprises the information system necessary to decentralised decision making within
system-I and to solving problems, which develop between the separate, system–1s. This is
carried out through formal reporting and through people building their own networks or contacts.
System-3: This is the control function that maintains internal stability and ensures effective
implementation of policies.
System-4: An intelligence gathering function. It is the point in the organisation where internal and
external information can be brought together
System-5: It is responsible for policies. It balances today’s operations against tomorrow’s needs,
and investments.
Besides the above five systems, the <strong>model</strong> stresses the importance of appropriate information
flows and communication links. This information is about how the different parts of the
organisation, and the organisation as a whole, are performing in relation to their respective goals.
Beer (1985) suggests following three levels of achievements:
� Actuality: Refers to the current achievement with existing resources within existing
constraints;
� Capability: Refers to the possible achievement using existing resources with existing
constraints; and
� Potentiality: Refers to what could be achieved by developing resources and removing
constraints.
Application of VSM in Power Sector:
Power sector is experiencing unprecedented changes because of the fast changes in the field of
technology, feasibility of un-bundling, change in ownership and control, dynamic goals of the
different activities. In such a situation, the need for a scientific <strong>model</strong>, such as VSM, that is <strong>based</strong>
on cybernetic principles encompassing many ideas from management science cannot be overemphasised.
Several authors have proved the general applicability of the <strong>model</strong> 13 and it has been
argued that the VSM can provide the premises to underpin efficient and effective managerial
actions. VSM can help in diagnosing the problems facing the power sector and provide a
mechanism to develop business competency.
In this section an effort will be made to use VSM as tool for developing business competence of
one of the distribution companies viz. Cesco by undertaking the following steps:
a) Identify the System;
b) Establish and study five systems of the <strong>model</strong> at the corporate and division level; and
c) Use VSM for addressing some of the problems facing Cesco.
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