In this Section you will be looking at the internal environment of
your organisation - the entire complex of interacting Operational
units and Systems 2 and 3 which are there to stabilise and optimise.
If it is out of balance, then there will be instabilities (lots of conflict, people competing for the same resources, confusions about who should be doing what), a lack of optimisation (clear ways that overall efficiency could be improved, but no way of either planning it or of getting it implemented), and the Operational units may be working in isolation from the rest of the organisation.
The solution to these kinds of problem is to ensure that there is a balance between the complexity of the problems affecting the Operational units, and the capabilities of Systems 2 and 3 who have to deal with them.
The approach is as follows:
In the next few pages we will be looking at the design of all of this.
But first: review all the elements of the Inside and Now by considering your VSM diagram of Systems 1, 2 and 3. It will look something like this.
Three Operational elements are shown with the interactions between
their Metasystems, Operations and Environments.
System 3 is shown with its two subsystems: System 3* responsible for audits and surveys, and System 2 responsible for stability.
The diagram also illustrates 6 vertical channels which interconnect the various aspects of the Operational elements:
C1: Environmental intersects.
C2: Audits and surveys (System 3*).
C3: Operational interactions.
C4: Mandatory System 3 information.
C5: Negotiated System 3 information.
C6: System 2 (stability) information.
The Question now is:
How can we ensure that all of these aspects of the Inside and Now are properly designed?
At this stage you will be looking at two aspects of this diagram:
Having made the Operational units as autonomous as possible the next step is to look at these two channels and to see if any issues can be dealt with in this way.
The steps involved in this procedure are given below.
The question now is:
"Do Systems 2 and 3 have the capabilities to deal with their jobs of stabilising and optimising the internal environment???"
You have already identified the parts of your organisation which do these jobs at the moment.
As the rate of change of markets continues to escalate it becomes more and more essential to monitor and deal with problems on a continuous basis - and so monthly committees are becoming progressively more useless.
How thorough is the information you have from your Operational units? How good is the model of System 1? How up-to-date? If this is inadequate, then any decisions made by Systems 2 and 3 will be made in some degree of ignorance.
After thinking about issues like this you may decide to increase the capabilities of Systems 2 and 3 in order to ensure they can do their job. This may involve more time, more people, more thorough monitoring or whatever.
Whatever you decide, it is essential not to interfere with the autonomy of the Operational units, unless it is absolutely necessary.
The steps involved in completing the internal balance are given on the next page.
The combination of local autonomy, improved information systems, and the new System 2 and 3 jobs restored the balance.
This led to incorrect assumptions as to the products which needed to be produced and huge inefficiencies at the factories. On several occasions late information would result in a change of plan, involving resetting a production facility which had taken eight hours to set up.
A study of the internal environment revealed that establishing accurate information systems was all that was needed to restore the internal balance.
Once these systems have been established, the need for any sort of authoritarian system should become completely unnecessary, and Systems 2 and 3 may be designed with relative ease.
He established communications links between most of the nations factories and a central gathering point in Santiago which implemented Systems 2 and 3.
Each factory measured its performance daily and sent a set of indicators through communications systems based on microwaves and telexes and in some cases messages on horse back.
A suite of computer programs analysed the indicators, and sent any alerting messages straight back to the relevant factory. (This was 1972 and computers were still very expensive. Most of this would be done by Micros today, thus enhancing local autonomy).
The integration of most of the nation's industry into a single system had some dramatic consequences.
During 1972 the CIA initiated a strike of 70% of Chile's transportation. They had embarked upon a policy of "destabilisation" and had bribed the owners of the trucks to refuse to work.
Immediately, the alerting signals began to flood into Santiago. No raw materials here, no food there.
This began a period of intense activity as the signals were processed and plans were produced to provide as much of the nations transportation needs with the 30% which was under the control of the Government.
Because the information systems were so thorough, the people in Santiago knew exactly what was needed, by whom, what trucks were available and so on.
During the next 36 hours all the emergencies were dealt with, everything which was needed was delivered and some factories said that they had never had better service.
For this situation, Systems 2 and 3 were clearly able to deal with the demands of the Operational units, despite the fact that 70% of the distribution system was unavailable to them.
Most of the success is due to the conception of an integrated economy, and to the information systems which enabled the people dealing with the crisis to know just what was involved: their models were thorough and current.
The US Congress reports of that era show a great deal of surprise at the stability of Chile under Allende, and that in order to attain their goal of bringing Pinochet to power they had to make far greater efforts than they had expected.
HTML version constructed by John Waters at the Llanidloes Resource Centre. Last modified 30th October 2005.