Enterprise Design Process:
Function View
Johan Strümpfer
Enterprise Design
Workshop 3
Functions
ENTERPRISE
• PARTS INTERACTING AROUND AN
OVERARCHING BUSINESS PURPOSE
• NOT A CONGLOMERATE
• NOT NECESSARILY A GROUP WITH PARTS
MORE OR LESS IN THE SAME BUSINESS
• NOT A FINANCIAL HOLDING
• A SYSTEM
ENTERPRISE DESIGN
• THE DELIBERATE ARRANGEMENT OF
FACTORS INTO A SYSTEM
• THE INTEGRATION OF INTERACTIONS INTO
A REGULATED WHOLE
Meaning of Organise
– Way the enterprise works
– Pattern of interaction between parts
– How enterprise is set up to deliver what is
required
– How the parts fit together, statically and
dynamically
?
SYSTEM
•
•
•
•
A regulated set of relationships
Interacting and interrelated parts
Parts organised for a purpose
A whole with novel features
SYSTEM VIEWPOINTS
STRUCTURE
PROCESS
REGULATION
FUNCTION
DEFINITION OF FUNCTION
ROLE OF ENTITY IN WIDER
CONTEXT
 RELATIVE TO CONTEXT
 RELATIONSHIP: ENTITY/CONTEXT
 EMERGENCE & HIERARCHY

F1
FUNCTION
S
F2
Fn





Single structure--multiple function
Multiple structure--single function
Multiple function ---> Purpose
“WHY?”
Purpose & Meaning & Worldviews
M&W
C
P
?
S1
S2
Sn
P={F,F,...,F}
1 2
n
F
MED Process Framework
Intro & Overview
Org. struct.
Deconstruct
Immersion
Stakeholder Analysis
VSM
BPD
MED
Analysis of MED
Intervention Design
ENTERPRISE FUNCTION
 ALIGNMENT
WITH ENVIRONMENT
 Shifting
values & expectations
 Viability: Serve its environment

Stakeholder view
 INTERNAL ALIGNMENT
 Organise
dynamically
 Viability: Variety management

Viable Systems Model
STAKEHOLDER VIEW
What is required to align with the
environment?
 What does the enterprise need to
deliver to be viable?

STAKEHOLDER
Stakeholder’s view of the enterprise
 Stakeholder’s logic, rationale and
value systems
 Stakeholder’s choice to be
stakeholder

Measuring enterprise success
S2
S1
Enterprise
S3
Sn
S4
STAKEHOLDERS
• Who should be (are) the
stakeholders?
• Who should be served?
• Who are the clients/
beneficiaries?
EXPECTATIONS
• What should the purpose be, from the
client’s (beneficiary’s) perspective?
• What should (are) the client’s measures of
performance?
• What are the underlying worldview
assumptions that makes this meaningful
to the client?
M&W
C
P
STAKEHOLDER RATING

CRITERIA
 Power
 Satisfaction
 Certainty
 Impact
 Influence

PRIORITISING
 Analytical
Hierarchical Process
Stakeholder Rating
WHAT ARE THE OUTPUT GOALS
FOR SELECTED
STAKEHOLDERS?
• What should be produced to satisfy the
expectations of the particular
client/stakeholder?
• What are the tangible and intangible
deliverables?
• What are time related requirements to
satisfy the expectations?
STATEMENT OF
ENTERPRISE PURPOSE

PURPOSE
 How
the enterprise intends serving its
P={F,F,...,F}
stakeholders
 Vision
 Mission statement
1

IT’S A PROCESS!
 What

needs to be delivered?
BUSINESS PROCESS DESIGN
 What
needs to be done to deliver?
2
n
VIABLE SYSTEMS MODEL
History and popularity
 Background
 Essence
 Use

VIABILITY AND SUSTAINABILITY:
Viable Systems Model (VSM) is a
model for questioning functions
required for the whole enterprise to
act as a viable and sustainable
system.
SOURCES OF MANAGERIAL
COMPLEXITY
EXTERNAL ENVIRONMENT
ORGANISATION
INTERNAL ENVIRONMENT
MANAGEMENT
MANAGEMENT & COMPLEXITY
EXTERNAL
ENVIRONMENT
MANAGEMENT
INTERNAL ENVIRONMENT
ORGANISING FOR MANAGERIAL COMPLEXITY
POLICY
EXTERNAL
ENVIRONMENT
INTELLEGENCE
MANAGEMENT
CONTROL
INTERNAL ENVIRONMENT
MANAGERIAL FUNCTIONS: INTELLIGENCE
POLICY
EXTERNAL
ENVIRONMENT
INTELLEGENCE
MANAGEMENT
CONTROL
INTERNAL ENVIRONMENT
MANAGERIAL FUNCTIONS: CONTROL
POLICY
EXTERNAL
ENVIRONMENT
INTELLEGENCE
MANAGEMENT
CONTROL
INTERNAL ENVIRONMENT
MANAGERIAL FUNCTIONS: POLICY
Developing policy (decision rules)
 Responding to signals from other
functions
 Arbitration between external and
internal demands
 Represents the whole in the
environment

MANAGERIAL FUNCTIONS: OPERATIONS-1
DIVISION A
MANAGEMENT A
ENVIRONMENT A
DIVISION B
MANAGEMENT B
ENVIRONMENT B
DIVISION C
ENVIRONMENT C
MANAGEMENT C
MANAGERIAL FUNCTIONS: OPERATIONS-2
CONTROL
DIRECTIVES
DIVISION A
RES OURCE BARGAINING
MANAGEMENT A
ENVIRONMENT A
DIVISION B
MANAGEMENT B
ENVIRONMENT B
DIVISION C
ENVIRONMENT C
MANAGEMENT C
MANAGERIAL FUNCTIONS: COORDINATION
CONTROL
CO-ORDINATION
COMMA NDS
DIVISION A
MANAGEMENT A
ENVIRONMENT A
DIVISION B
MANAGEMENT B
ENVIRONMENT B
DIVISION C
ENVIRONMENT C
MANAGEMENT C
MANAGERIAL FUNCTIONS: AUDITING
MO NITO RING/
AUDITING
CONTRO L
DIE CTIVES
DIVISION A
RE SO URCE BARGAINING
MANAGEMENT A
E NV I RONMENT A
DIVISION B
MANAGEMENT B
E NV I RONMENT B
DIVISION C
E NV I RONMENT C
MANAGEMENT C
CO -O RDINATIO N
VIABLE SYSTEMS MODEL
POLICY
INTELLEGENCE
EXT ERNAL
ENVIRONMENT
MONITORING/
AUDITING
CONTROL
DIECTIVES
DIVISION A
RESOURCE BARGAINING
MANAGEMENT A
ENVIRO NM ENT A
DIVISION B
MANAGEMENT B
ENVIRO NM ENT B
DIVISION C
ENVIRO NM ENT C
MANAGEMENT C
CO-ORDINATION
VIABLE SYSTEMS MODEL
System 1: Implementation system
System 2: Co-ordination of System 1 parts
System 3: Control of System level 1 parts
System 4: Development or intelligence function
System 5: Policy setting system
ADVANTAGES OF VSM







Directs questioning to essentials of organising
for handling complexity
Directs internal organisation to promote learning
and adaptation
Directs internal organisation to fulfilling set goals
Puts focus on management ROLES and clarifies
actual roles
Emphasises viability as a function of environment
and internal functioning being aligned
Directs attention to interaction of parts not lines
of authority
Good systemic conceptual basis
LIMITATIONS OF VSM







Organismic origins of VSM silent on essence of
social systems (human dimension)
VSM silent on purposefulness, notions of power,
culture, values, management style
Over-emphasis on System 1 at expense of higher
system levels weaken ability to adapt.
VSM can entrench mechanistic/organismic
autocratic management style
VSM designed enterprise is not solution to
change management
VSM approach traditionally diagnostic and not
design orientated
Seductive in its simplicity
Case Studies
Case 1: Description given in the
handout pp 15-17.
 Case 2: Helping a group see itself in
the whole.

VSM SYSTEM DIAGNOSIS
[SYSTEM IDENTIFICATION]
 SYSTEM DIAGNOSIS

STAKEHOLDER ANALYSIS -->
OUTPUTS
 VSM DIAGNOSIS OF ENTERPRISE

DIAGNOSIS: SYSTEM 1






How do enterprise parts map to the
required outputs?
What parts of the enterprise are System 1
components?
What measures of performance are
applied?
How is accountability, responsibility and
authority acquired, devolved and
implemented?
What is the scope for decision making?
[process modelling]
DIAGNOSIS: SYSTEM 2





Identify sources of turbulence for System
1 parts, including conflicting demands
Identify System 1 co-ordination
requirements
Identify System 2 components
Examine facilitation role of System 2
components, as opposed to control role.
Query perceptions of System 2 role in rest
of enterprise
DIAGNOSIS: SYSTEM 3






Identify System 3 parts
Determine shared System 1 resources and
allocation rules
Examine scope of authority, responsibility
& accountability
Determine measures of performance
System 3 applies to System 1
Clarify audit/information gathering into
System 1.
Examine perceptions about System 3 in
System 1 & System 3 management style
DIAGNOSIS: SYSTEM 4






Is System 4 functions discernible?
What activities constitute System 4, and
who does it involve?
Assess degree on inward/outward focus,
and openness of System 4 to environment
Assess scope and time frame of interest
to System 4
Assess preoccupation of System 4 with
maintaining stability vs renewal
Examine degree to which System 4
support learning in Systems 3 and 5.
DIAGNOSIS: SYSTEM 5




Who represents the enterprise when
viewed from stakeholders’ perspectives?
Assess degree of identity and positioning
of enterprise determined by System 5
Does System 5 manage the enterprise
vision, mission and alignment with this?
Assess degree of preoccupation of
System 5 with System 3 (operational) vs.
System 5 (strategic)
DIAGNOSIS: INTERACTIONS
List the vehicles for interaction
between different systems
 Check that appropriate information is
channelled through these vehicles
 Check for parallel communication
lines (informal) that
bypasses/replace Systems 2-5
 Assess speed of communication Vs
perceived turbulence

FREQUENTLY DIAGNOSED FAULTS






Systems 1 are often not handled as viable
systems in their own right.
Systems 2-5 seek viability in own right
Additional structures not explainable in terms of
VSM are found
Systems 2 and 4 are often weak and immaturely
developed.
System 5 collapses into System 3 and fails in
truly performing System 5 role
Inappropriate information is channelled between
systems, or not rapidly enough communicated
Application
Go through an application of the
stakeholder design of enterprise
functions
 Do a VSM diagnostic and design of
your enterprise

ORDERING OF ACTIVITIES
ACROSS ALL PROCESSES

CATEGORIES OF ACTIVITIES:
 Monitoring
and Auditing
 Co-ordinating activities
 Control activities
 Primary production activities.
 Support process activities
 Common, shared activities