Research and Behavioral Science Syst. Res. 32, 564–578 (2015) Published online 15 May 2014 in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/sres.2286 ■ Research Paper

Model-based Management: A Cybernetic Concept

Markus Schwaninger* University of St Gallen, St Gallen, Switzerland

The purpose of this contribution is to elaborate an integrative framework for model-based management, drawing on the concepts of . This conceptual frame should enhance managers’ understanding of structures that give rise to patterns of behav- ior, helping them to design more effective policies and improve their practice in general. We flesh out the commonalities between technical, biological and social cybernetics. An analysis is undertaken to make the available concepts fertile for the social domain. These are then synthesized into an integrative framework for a model-based, cybernetically grounded management. Copyright © 2014 John Wiley & Sons, Ltd.

Keywords model-based management; cybernetics; organizations; integrative management framework; transdisciplinarity

INTRODUCTION and social domains. A paradoxical situation results, namely, that concepts and methods are Since its beginnings in the 1940s, cybernetics—the often unduly transferred while adequate and fer- science of ‘control and communication in the ani- tile transmissions are not carried out. Generally, mal and in the machine’ (Wiener, 1948)—has at least the domains of technical, biological and turned towards multiple fields of application. A social cybernetics have differentiated and segre- clear distinction differentiates technical, biological gated themselves in a way that communication and social cybernetics. In addition, cybernetic among them is rare. There is a ‘red thread’ that schools have evolved in medicine, psychology, is often neglected—the generic concepts that are pedagogy, anthropology and epistemology. applicable to any one of these domains. We The conceptual differences between the respec- believe that in a time of growing dynamic com- tive contexts of application are often ignored plexity in organizational settings, new ways of (Ackoff and Gharajedaghi, 1984). This leads to management are necessary. As demonstrated improper transfers of concepts, models and elsewhere, the effectiveness of managers and methodologies between the technical, biological leaders will increasingly depend on the use of formal models. Therefore, a model-based man- * Correspondence to: Markus Schwaninger, Institute of Management, agement has been advocated (Schwaninger, University of St Gallen, Dufourstrasse 40a, CH-9000 St Gallen, et al Switzerland. 2010; Grösser ., 2014). This idea is fundamen- E-mail: [email protected] tally linked to the concepts of cybernetics, which

Received 6 June 2013 Copyright © 2014 John Wiley & Sons, Ltd. Accepted 17 April 2014 Syst. Res. RESEARCH PAPER are in principle an invaluable pool of knowledge to context of and change. Or, in brief, the betappedbythecommunityofmanagersand framework provides a transdisciplinary ‘code’,by leaders. which management can be improved. The leverage The purpose of this contribution is to elaborate here is based on the enhancement of managers’ an integrative framework for model-based man- understanding of the system they manage. agement,1 which makes the variety of cybernetic concepts fruitful, helping managers to reflect upon and improve their practice. Frameworks ORIGINS OF CYBERNETICS of this kind are needed and can empower execu- tives, leaders, entrepreneurs, politicians and so To shape the future, we must first understand the on—in short, managers—to be more effective. past. The word ‘cybernetics’ stems from kybernetiké, This has been demonstrated recurrently in the the ancient Greek expression for the art of realm of general management, which is of inter- steersmanship; kybernétes names the steersman. est here (e.g., Ulrich and Krieg, 1972; Bleicher, Already, Plato used cybernetic ideas when he char- 1996; Ulrich, 2001; Rüegg-Stürm, 2005; Martin, acterized the statesman as the steersman of society. 2007). The novelty about our approach is two- Later on, various precursors of modern cyber- fold. First, the framework to be elaborated here netics showed up, particularly in the 19th cen- is based on a survey of the principles of cybernet- tury. André-Marie Ampère (1843) developed the ics from its beginnings to the present. Second, idea of a science, which he titled cybernétique. this framework is directed to the specific needs That science embodied, within an overall system of a model-based management. of connaissances humaines, the general knowledge We will explore the basic concepts available about governance in political space. James Clerk from cybernetics, and how they emerged. The Maxwell (1868) with his centrifugal governor laid understanding of these concepts—the heuristic the cornerstone for . Modern cyber- power of which is undisputed—should enhance netics was founded by several actors: their fertile use whenever applications to • Rosenblueth et al. (1943), with an article about complex issues or problems are at stake. ‘Behavior, Purpose and Teleology’, in which The aim of elaborating a cybernetic framework the concept of was operationalized. for model-based management begs for a solid • The Macy Conferences (1946–1953), which as- theoretical–conceptual foundation. We have sembled the leading members of the cybernetic decided to build the argument starting with the research community, including McCulloch, origins of cybernetics. We then proceed to sketch Wiener and von Foerster, among others. These out the evolution of cybernetics across the gatherings were dedicated to the topic ‘circular different fields of application. On that basis, the causal, and feedback mechanisms in biological conceptual building blocks for model-based and social systems’. management will be introduced, with a view to • , with his opus ‘Cybernetics or their relevance and embodiment in the different Control and Communication in the Animal application fields. Consequently, these compo- and the Machine’ (1948), which is considered nents will be synthesized into an integrative the basic opus of cybernetics. cybernetic framework for model-based manage- ment. Instead of delving into the details of exam- That last title conveys the insight that the pro- ples on how to use the framework, we restrict cesses of control and communication are equally ourselves to highlighting its function as a present in the technical world, nature and the diagnostic device, and its enabling function for social domain, and structurally equivalent in a the transdisciplinary inquiry necessary in a specific sense. Already, in his quoted work of 1948, Wiener includes society as a universe of 1 By ‘model-based management’, we understand a management of or- information processes in his analysis (pp. 155ff.). ganizations, that is, governance, control and leadership sustained by formal models (see also Section on An Integrative Framework for Contemporaries and colleagues of Wiener de- Model-based Management). velop cybernetic concepts and apply them in the

Copyright © 2014 John Wiley & Sons, Ltd. Syst. Res. 32, 564–578 (2015) DOI: 10.1002/sres.2286 Model-based Management 565 RESEARCH PAPER Syst. Res. physiological context (Ashby, 1952, 1956) and es- example, a law of exponential growth can be lo- pecially in neurophysiology (McCulloch, 1965). cated equally in colonies of bacteria and in human In later works by Wiener (1954) and other au- populations, in the latter with behavior patterns thors (e.g. Beer, 1959; Deutsch, 1969; Luhmann, such as conflict and cooperation or the progression 1984), cybernetic concepts are also transferred to in the number of scientific publications. A similar social systems. For that purpose, the application case is the logistic growth curve (‘S-curve’), which of perception and epistemology is made (Powers, maps the process and the limitation of growth. It is 1973; von Foerster, 1984) to man–machine sys- applied in biology, , economy and tems, conversations and learning (Pask, 1975). sociology, for example, to technological substitu- In the offing at that time, a distinction between tion processes and population development. a first-order cybernetics and a second-order cybernet- Cyberneticians were the ones who were able to ics emerges. in that context explain dynamic phenomena of that kind as a draws a distinction between ‘cybernetics of ob- result of feedback processes.2 served systems’ and ‘cybernetics of observing Feedback is used in virtually all scientific fields, systems’ (von Foerster and Rebitzer, 1974). In from physics, chemistry and ecology to the social the first case, concepts such as information, feed- and economic sciences, as a principle for the expla- back, adaptation, and control or nation of system behavior and the design of governance occupy the centre of attention. In systems. This is also the case in applied disciplines the second case, the observer becomes part of such as engineering and management. the observed system; interest falls on phenomena Cybernetics takes insights and concepts from such as self-organization, self-reference and the individual disciplines (e.g. Boltzmann’s entropy construction of realities. formula from statistical mechanics) and brings it The early cybernetic studies broach mainly two into a larger context. In other words, it opens aspects that are crucial for dealing with complex, these insights or concepts by means of generali- dynamic systems: communication (via language zation into new fields of application. For exam- and information) and control or governance ple, in the by Shannon and (with its components of regulation and steering). Weaver (1949: 51), an equation for the computa- In addition, the cybernetic perspective makes tion of entropy that is practically identical with possible the inquiry into invariant structures not the Boltzmann formula can be found. only in a descriptive sense but also in a prescrip- Cybernetics has also made a topic accessible to tive one, and in a way that transcends disciplines. scientific analysis, which, up to that point, had Here, two insights of the early cyberneticians been reserved to metaphysics—teleology, that is, were path breaking: first, that one and the same the study of goal orientation. Feedback is a mech- structure can be ascertained in biological systems anism that provides goal direction, as Rosenblueth (living beings and organisms), in technical systems et al. (1943) showed in conceptual terms. (power plants, energy networks, etc.) and in social systems (organizations and societies); second, that the knowledge of these structures can be used for TECHNICAL, BIOLOGICAL AND SOCIAL the design of technical, biological and social sys- CYBERNETICS tems. The term socio-technical system therefore be- came widely adopted in language use. In this section, we sketch out how the three applica- These new insights were congruent with an tion domains of cybernetics—technical, biological idea stemming from general systems theory: the idea that systems of any kind can be described 2 Feedback is that process in a system by which an outcome variable is and explained with one and the same formal redirected—normally via a control system (regulator and governor)— as an input, such that the object system’s behavior changes. Hence, the apparatus (von Bertalanffy, 1968; Rapoport, system changes itself. The complementary concept of de- 1986). In this way, structural invariances (‘isomor- notes an information process by which a disturbance is registered ex ’ ante, before it impinges on the object system, and the respective infor- phisms ), the same principles that rule different mation is directed to the control system, which thereupon can change kinds of systems, should be uncovered. For the system anticipatively (Figure 3).

Copyright © 2014 John Wiley & Sons, Ltd. Syst. Res. 32, 564–578 (2015) DOI: 10.1002/sres.2286 566 Markus Schwaninger Syst. Res. RESEARCH PAPER and social—have evolved and differentiated them- technology, safety engineering (e.g. antilock brak- selves (Figure 1). The focus will be on the middle ing systems (ABS) and power plant control), energy column, named ‘cybernetic thread’. As cybernetics and transportation technology (e.g. wind turbines, also has ramifications into the other fields of the trains and signal technology), aircraft and space systems approach, the other two columns will be technology, computer and communication technol- put into play, also. ogy and robotics. In the automation of production, control and information processes, a huge increase in model building, simulation and algorithmization Technical Cybernetics has occurred (von Känel et al., 1990). Also inspired by technical cybernetics, several Cybernetics in the first place became very prom- pragmatic (inter)disciplines have emerged, such inent in the technological domain. Its principles as micro-system technique, man–machine sys- became the fertile soil for breeding technical tems and systems engineering. These disciplines applications. An outstanding development in have in common a commitment to the holistic that domain is control theory (Figure 1, left design of complex systems, following an interdis- strand). This discipline is practised today in al- ciplinary approach. The field of man–machine most all areas of technology. It plays a crucial role systems, for example, rests on ergonomy, in most disciplines of engineering. Its domains of cognitive science, software and control theory application encompass not only simple machin- (Johannsen, 1993). Bionics, which is also funda- ery (e.g. thermostats and mechanical governors) mentally influenced by cybernetics, is bound to but also sophisticated systems of propulsion learn from nature for the formation of technical

Figure 1 Overview of the systems approaches. An earlier version of this diagram was published in Schwaninger (2009b)

Copyright © 2014 John Wiley & Sons, Ltd. Syst. Res. 32, 564–578 (2015) DOI: 10.1002/sres.2286 Model-based Management 567 RESEARCH PAPER Syst. Res. systems, and recently also for the organization of effectiveness of collaboration in large groups social systems (Figure 1, middle). Disciplines (‘infosets’). In the wake of Beer’s work, many such as the last mentioned are rooted in technical application-oriented and methodological cybernetics, but beyond the technological con- contributions to organizational cybernetics have text, they also include humans in their design accrued, which often refer to the viable system approaches. model (e.g. Gomez, 1978; Espejo and Harnden, 1989; Clemson, 1991; Espejo et al., 1996; Hoverstadt, 2008; Malik, 2008; Türke, 2008; Biological Cybernetics Schwaninger, 2009a; Espejo and Reyes, 2011; Pérez Ríos, 2012) (Figure 1, middle). After technology, cybernetic thinking has also with his conversation theory spread throughout biology, physiology and ecology. (1976) and his work on learning (1975) made Prominent applications are in neurophysiology important contributions to the cybernetics of (McCulloch, 1965; Figure 1, middle) and medicine human, social and socio-technical systems. (Brown, 1985; Tretter, 2005). The biocybernetician (1973, 1980) in his oeuvre Frédéric Vester, originally a physician, succeeded connected studies that are epistemological in na- in applying cybernetics to physiological processes ture with other inquiries into human and social (Vester, 1976). Later on, he opened new paths to cop- systems (Figure 1, right strand). ing with ecological issues concerned with cybernetic A milestone on the way from first-order cyber- methods, fuelled by his transdisciplinary approach netics to second-order cybernetics is the first opus to systems analysis (Vester, 1999). Finally, Maturana about principles of self-organization (von Foerster (a physician) and Varela (a biologist) have to be and Zopf, 1962). Studies published therein (in par- mentioned, who carried out cybernetic research ticular Ashby, 1962) opened a new perspective: the in the area of biology (e.g. Maturana and Varela, postulate was—similar to the new physics 1973) and accomplished studies in epistemology (Heisenberg, 1959: 93)—to include the observer in (Maturana and Varela, 1987; Varela et al., 1991). the cybernetic system. The protagonist of this The design of social systems, including the socio- conceptual innovation was Heinz von Foerster, technical systems, can learn from the functioning of the director of the Biological Computer Laboratory higher-order ecosystems. Their functioning can at the University of Illinois. Von Foerster inspire planners, politicians and managers in bring- formulated the lead difference already mentioned ing about a livable world. between ‘observed systems’ (cybernetics I) and ‘observing systems’ (cybernetics II; von Foerster and Rebitzer, 1974), which would be seminal for Social Cybernetics the investigation of social systems. Themostcomprehensiveprojectforthe The application of cybernetics to social systems grounding of a system theory or cybernetics also developed after the cybernetics of technolog- of social systems was undertaken by the sociol- ical systems. A foundation was laid by Stafford ogist . In his opus ‘Social Beer with his pioneering work ‘Cybernetics and Systems’ (1995/1984), a detailed blueprint for Management’ (1959). Beer (1979, 1981, 1985) is a theory system was presented, which would the father of . He be conferred to the various functional subsys- expanded his ideas concerning the application tems of a society (e.g. Luhmann, 1990, 1994). of cybernetic principles to the management of or- In line with the programme of cybernetics II, ganizations and framed his viable system model, autopoiesis, self-organization and self-reference which specifies the necessary and sufficient pre- were among the topics recurrently addressed conditions for the viability of any organization. by Luhmann. Luhmann’s pupils have pursued Beyond that, Beer (1994) came up with the Team his argument and have translated it mainly Syntegrity protocol—a model for the organiza- into the organizational context (e.g. Willke, tion of social processes that enhances the 1996; Baecker, 2003).

Copyright © 2014 John Wiley & Sons, Ltd. Syst. Res. 32, 564–578 (2015) DOI: 10.1002/sres.2286 568 Markus Schwaninger Syst. Res. RESEARCH PAPER

Finally, under the term ‘soft systems’, diverse refuted. For both the human and organizational methodologies have come about, which were realms, the non-trivial agent who can react to developed for applications in the realm of organi- impulses in unforeseeable ways is a more appro- zations (Figure 1, right strand). priate concept (after von Foerster, 1984). Russell The three domains of reality just discussed Ackoff and Jamshid Gharajedaghi (1984) have exhibit very different features. Even so, cybernetics argued cogently for a distinction between the is applicable to all of them, owing to its abstract domains mentioned earlier.4 They differentiate nature and focus on the invariances inherent in them as follows: all kinds of systems. We will now try to elicit the • The mechanistic model: It implies that a sys- concepts by which these invariances are captured. tem can be understood completely, if one un- derstands the relationships between its parts. These are considered as sufficient for the ex- CYBERNETIC CONCEPTS—BUILDING BLOCKS planation of the connection between cause FOR A FRAMEWORK OF MODEL-BASED and effect. The system behaves deterministi- MANAGEMENT cally. Applied to organizations, the mechanis- tic model conforms to the image of a If it is so that the science of cybernetics is applied to hierarchically structured system governed cen- all three phenomenal domains, two questions trally by a totally autonomous authority. • spring up: which cybernetic concepts are used The organismic model: It is based on the idea the same way in all three object domains? And of a system that depends on its environment. then, are any concepts specifictosingledomains In order to survive, it must adapt and learn. and therefore cannot be used in transcending the Survival is the highest goal, for the attainment domains? of which growth is essential. Shrinkage is a In science and in practice, differences between synonym for degradation and decay. An or- the three domains are often negated. As an exam- ganismically conceived organization is struc- ple, men and machines are often equated, that is, tured hierarchically, but as thinking and they are understood as interchangeable system sensing are separated from each other, gover- components that react deterministically to exter- nance is not completely centralized. Some nal impulses. Consequently, this position is parts show certain measures of self-control, prominently represented in the dawning modern but they cannot control the functions they era by LaMettrie, the French exponent of a mate- must perform. • rialistic, mechanistic world view and author of The model of social systems: In contrast to an the opus ‘L’Homme Machine’ (1748). This stance organism that can change its structure only to is also present today among certain decision the- a limited extent, but nevertheless survives, a orists, for example in their idea that organisms, social system exercises nearly full control over organizations and adaptive machines are not its structure. The effective management of a so- only similar but also functionally equivalent cial system does not require the control of the (Crowther-Heyck, 2005). In economics, the mech- mutually independent parts, but rather of the anistic metaphor has had a paradigmatic signifi- interactions among these parts and the interac- cance from the era of mercantilism (17th tions between the system and its environment. fi century) until the neoclassical era (Ötsch, 1993). Analysis alone is insuf cient for the study of In our day, the inclination to design and steer or- such a system; it must be complemented by ganizations as if they were trivial machines is less synthetic thinking. As the parts of an a problem of theory than of the practical world.3 However, these forms of reductionism have been 4 Formal analytical methods enable one to describe systems of very different types—nonliving systems, organisms and organizations— by one and the same set of formulas (Rapoport, 1968). Even so, we still 3 The ubiquity of bureaucratic controls and hurdles (Kanter, 1983: 56f.) face the aforementioned differences between the types, independent of and the re-engineering movement (Hammer and Champy, 1993) are our belief, whether or not they can be eliminated in principle and prominent manifestations of mechanistic design. therefore will be outdated sooner or later.

Copyright © 2014 John Wiley & Sons, Ltd. Syst. Res. 32, 564–578 (2015) DOI: 10.1002/sres.2286 Model-based Management 569 RESEARCH PAPER Syst. Res.

organization have their own goals and values, elimination, whereas second-order learning the deterministic model, according to which arises by changing the goals or the mental the causal relationships are exhaustively models. Finally, learning to learn better has been known, is useless in this case. termed ‘meta-learning’ or ‘deutero-learning’. Besides the existence of learning organisms This brief account of the distinction between the and organizations, learning machines have been characteristic models of different domains leads to established since Turing (1950: 454ff.). the conclusion that distinct ideas of governance • Self-organization: A behavior that emanates have to be employed. Neither the mechanistic from the elements and structures of an evolving nor the organismic model is sufficient for dealing system. It gives rise to forms that are neither with social systems. Oft-heard ideas such as ‘the externally devised nor imported. In line with organization must function like a machine’ or the principle of redundancy,self-organizing sys- ‘the company is like an animal’ are inopportune. tems show no separation of organizing, design- This does not imply that all cybernetic con- ing or controlling parts. Self-organization was cepts would be applicable to one single domain identified first in chemistry and biology. In the only. Rather, most of them are relevant to all three technological domain, self-organization occurs of them, albeit with different nuances. We will in multiagent systems. Finally, social systems proceed to a survey of the concepts of cybernetics are self-organizing, as can be shown, for exam- as they emerged in the evolution of the field. We ple, in politics and in socio-technical networks. begin with those concepts that are ubiquitous • Evolution: Evolutionary theory deals with the across the whole range of domains of application: change of the inheritable attributes of a • Feedback and feedforward: These phenom- population from generation to generation. Muta- ena are found in all three domains. One differ- tions increase the variety of types (➔ Variation). ence is that social systems show a probabilistic Whenever the individuals of a population differ causality, whereas mechanical systems are in regard to one or more attributes, a selection mostly deterministic.5 mechanism provokes certain individuals to • Information: The concept of information is procreate successfully with a higher probability highly relevant independent of the domain. The (➔ Selection). Survival then is a consequence of cybernetic definition of information as ‘that which fitness. In this process, variation and selection en- CHANGES us’ (Beer, 1979: 283) implies that hance the adaptation of a population in its envi- information and mere data are different things. ronment. The concept of evolution stems from Informationisthecomponentofamessagethat biology (Darwin, 1859), but it also pertains to so- is new to the addressee. Hence, it always cial (e.g. Nelson and Winter, 1974) and technical emerges in a receptor that notes ‘adifference systems (e.g. Rechenberg, 1973). which makes a difference’ (Bateson, 1973: 286). Certain concepts are connected mainly with • Control, governance: These abstractions refer the organismic–biological domain, without to the backward-oriented process of regulation excluding technical and social systems applica- and its forward-oriented counterpart— tions completely, as follows, for example: steering. Both phenomena inhere in all kinds of dynamic systems. • Adaptation: In organisms, adjusting to exter- • Learning: This refers to the adoption of new nal influences is an ‘automatism’. It manifests behaviors into the repertory of an organism, itself as changes in structure and behavior concretely as the acquisition of knowledge, following external stimuli. In social systems, competencies and skills. First-order learning adaptation gains an eminently creative occurs by regulation in a process of error component—reaching out to co-produce the environment. 5 In causal relationships, determinism refers to the view that cause and • Homeostasis: This refers to the maintenance of a effect—due to preconditions—are unequivocally predetermined and predictable. In the probabilistic case, the incidence of a result can only state of equilibrium in an open dynamic system be indicated with a certain probability. by means of an internal process of regulation.

Copyright © 2014 John Wiley & Sons, Ltd. Syst. Res. 32, 564–578 (2015) DOI: 10.1002/sres.2286 570 Markus Schwaninger Syst. Res. RESEARCH PAPER

This principle also functions in social systems, valid across the whole range of domains of appli- but it does so through the participation of agents cation. Even the concepts that are primarily with their own goals and values. connected to one domain only may lend them- • : This refers to the spontaneous ap- selves to being anchored in other domains as well. pearance of new system properties, owing to For example, emergence or even reflexion, two the interplay of the system components. In concepts that stem from biology, can also be linked principle, foreseeing the new features of the to and implemented in a machine. Think of an whole as a function of the properties of the abstract multiagent system, which can produce parts is impossible. Emergence surfaces also unexpected, ‘emergent’ features, or a computer in organizations; there, unexpected develop- system with an inbuilt higher reasoning function. ments can often be anticipated. Nevertheless, a fatal pitfall occurs in applying • Autopoiesis: The process by which an organ- a concept irrespective of the nature of a domain. ism (re)produces itself and maintains its exis- An ominous example of inappropriate transfer tence was ascertained by biologists. It is also of concepts is the mechanistic approach to the recognized as a phenomenon that arises in or- control of social systems. Although machines ganizations (e.g. by Luhmann), in the sense are typically controlled by goals defined centrally that these reproduce themselves by means of and outside the system, social systems are operational closure.6 governed by values and goals that emanate from both the system as a whole and the components Two concepts inherent in human and social of that system (see the models of Ackoff and systems are as follows: Gharajedaghi introduced earlier). • Reflexion: This is the highest form of self- The question of inappropriate concept transfer reference, that is, of the relationship of a system hinges less on the concepts themselves than on with itself. Basal self-reference and reflexivity their interpretation and application. For our pur- are those forms of self-reference that can be pose, the interest lies in the particular nature of ascertained in organisms (Schwaninger and social systems. Groesser, 2012). Reflexion, that is, the thinking To take an example, the control function in a of a system about itself and its environment, is social system is by nature fundamentally differ- a function to be found in organizations, for ent and more complex than in technological and example, in strategy processes: the organization organismic systems. It is polycentric and and its interaction with the environment are multimedial and embraces multiple autonomous, cogitated. conscious and reflexive agents. In addition, the • Ethos: Stemming from the Greek term for organization as a whole is (self-)conscious. character, custom, morals and manners, ethos Despite all their differences, the applications in denotes the moral sense of a person or a social all domains can learn from one another. For exam- system. For organizations, it is the totality of ple, this was shown by Beer (1979, 1981, 1985), convictions, namely values and norms, that whose viable system model is inspired by human constitutes and stabilizes the unity and iden- neurophysiology. Conversely, technologists also tity of the system. learn from the functioning of natural organisms, as in bionics, the application of biological princi- The conclusion from this survey is that ulti- ples to design in engineering (Blüchel and Malik, mately almost all concepts of cybernetics are in 2006; Nachtigall and Wisser, 2013). some way applicable to systems in all three do- mains. In other words, most of these concepts are AN INTEGRATIVE FRAMEWORK FOR 6 Operational closure is about the circularity of operations producing operations and must not be confounded with closeness, which implies MODEL-BASED MANAGEMENT isolation. An organism keeps all, or a certain part, of the relations be- tween its elements invariant, despite perturbations, which stem from the organism’s internal dynamics as well as from its relationships with By model-based management, we apprehend an or- other systems (Maturana et al., 1987: 180). ganization’s management (governance, control

Copyright © 2014 John Wiley & Sons, Ltd. Syst. Res. 32, 564–578 (2015) DOI: 10.1002/sres.2286 Model-based Management 571 RESEARCH PAPER Syst. Res. and leadership) sustained by formal models. The integration’—the cybernetic notation used in the high and growing importance of such models for following diagrams. the viability of organizations has been As shown in Figure 2, the building blocks of expounded elsewhere (Schwaninger, 2010). As the framework are as follows: (i) the concrete cybernetics deals with governance or control in system to be managed—the organization; (ii) general, it makes sense to support management the environment/milieu of that system; and (iii) with cybernetic models, that is, abstract represen- the model system used by the management. tations of concrete systems. Models are one, if not We now elaborate these components and their in- the, crucial factor for the results that can be terrelationships in a more detailed way (Figure 3). attained with the management process (theorem In an organization (‘the system’), technologi- by Conant and Ashby, 1981). If that is so, then cal, biological and social components are inte- the quality of the models used is extremely impor- grated on a higher level. That system adapts to tant. The truth and quality of the models used its environment, which it can also influence. This hinges primarily on the correct match of the model is in principle a homeostatic way of functioning. with the concrete (‘real’)systeminfocus.These In addition, the system is subject to change pro- thoughts can be summarized as follows: ‘Show cesses, which are essentially self-organizing, and me your model and I will tell you what you can it learns. The changes are part of a comprehen- reach’. This section embodies an effort to make ex- sive evolutionary mode, in which new system plicit the role of models in management, and their properties can emerge. Although the organiza- relationships with the objects of management, tion is open in the sense that it can import people, namely organizations, and the environment. information, energy and matter, it can also be Given the diversity of the real systems and in considered operationally closed in that it obeys view of the many conceptual components, which an internal circular logic by which it produces it- we have tried to make comprehensible, an inte- self (‘autopoiesis’). grative effort is called for at this point. It should The model system is coupled to the real system make this variety productive by synthesizing and its environment through multiple informa- the component concepts in such a way that a tion and communication processes. Information higher meaning emerges. To this end, we have is present almost everywhere in the diagram: developed an integrative framework for model- feedback is an information process, as are based management grounded in cybernetics. feedforward, decision, adaption of the model, re- Frameworks are models with a broad scope, flexion, etc. The concept of control is present in and usually of a qualitative type. They have been the notion of control model. We wish to remind defined as ‘broad schemes which support the ori- the reader that control or governance, as already entation within a wide field. A framework offers dimensions and categories, by which a rough overview and a first location, and possibly also a structuring of an issue or problem, can be un- dertaken’ (Schwaninger, 2010: 1422). The frame presented here visualizes the con- cepts introduced in the last section, in their relative positions and with their interrelationships. The framework embodies a synthesis of these cybernetic concepts, all of which are at the service of the viability and development of an organiza- tion. The integration of these components opens out into a generic meta-model, which should and can be an enabler for effective management. The rationale that guided the design of this Figure 2 Building blocks of the framework for model-based meta-model is expressed in a ‘language of management

Copyright © 2014 John Wiley & Sons, Ltd. Syst. Res. 32, 564–578 (2015) DOI: 10.1002/sres.2286 572 Markus Schwaninger Syst. Res. RESEARCH PAPER

Figure 3 Integrative cybernetic framework for model-based management mentioned, is the umbrella term for steering (via possible effects on future reality of decisions as feedforward) and regulation (via feedback), be- well as disturbances and potential emergent phe- cause often this clear distinction is not made. nomena must already be captured. In this con- We understand control in an encompassing sense nection, simulation is of utmost importance, here: it involves more than a mechanistic correc- namely for exploring action spaces and the impli- tion of deviations leading to first-order learning. cations of alternative options, strategies and It also entails creative processes, by which new structures in particular. paths can be discovered and new options Managers and leaders always take their decisions invented. This often leads to the revision of goals based on their models, the mental model being at and mental models (second-order learning). least as important as the formal model. Models On the basis of the information provided to the are always biased, incomplete and prone to error. control unit via feedback and feedforward, that Physiological and psychological perception filters, unit influences and changes the real system by whose primary task is reducing complexity via means of decisions and actions.7 In a dynamic, selection, entail such undesired side effects. high-complexity context, it is essential that de- Management models serve the purpose of compen- lays in this process be minimized. The postulate sating these counterproductive consequences of the of ‘real-time control’ (Beer, 1979; Hetzler, 2010) filters, in such a way that decision-makers may take is in line with this requirement. It is not enough into consideration even those aspects that would to gather the current system state. Rather, the have been ignored. These models should also foster analysis, synthesis and the recombination of ideas, 7 The control unit’sinfluence on the environment is indirect, as organiza- information and knowledge, which is vital to the tion and environment are structurally coupled. Also, feedback and feedforward from the environment do not impinge directly on the organi- creation of the new. zation, but only indirectly via the model. That is probably what Luhmann Model-based management is aimed at improv- means when he claims that a system cannot be changed from outside, but only ‘irritated’. More exactly, such irritations are internal to the system, em- ing the whole decision and implementation process anating from environmental impacts (Luhmann, 1997:118). by making available high-quality models. The

Copyright © 2014 John Wiley & Sons, Ltd. Syst. Res. 32, 564–578 (2015) DOI: 10.1002/sres.2286 Model-based Management 573 RESEARCH PAPER Syst. Res. connections between decisions and their effects on managed on the basis of a good model. More ex- the real system/environment as well as the conse- actly, the diagnosis can discover whether the quent repercussions on the mental and formal management of the organization is sufficient to models of the manager are critical levers for the ensure its viability and development. upgrading of those models. The framework furnishes the checkpoints by Themostimportantcomponentofamodel-based which the components of the management that management is the meta-level of self-reflexion work can be distinguished from those that do not. and ethos. The former denotes the activity of This step can be made tangible by looking into self-reference, including self-observation and the deficits or failures that can occur. We intention- what we call self-framing/reframing—on the ally choose the failures: these are at the core of or- part of decision-makers: Is the model adequate? ganizational pathologies, because they tend to Does it answer the decisive questions? Can we reveal more insights than the successes do (Malik, learnfromit?Whichperceptualdistortionsneed 1982; Vedder, 1992). The pertinent diagnostic correction? Does the system change, and in what points will relate to the following categories8 : direction?Dotherulesofthegameshift?Does (1) Structural deficits: the model need modifications? These are strate- gic and developmental considerations inhabiting 1.1 Dysfunctionalities of organizational a long-term horizon. Finally, ethos brings in the structure, such as lack of autonomy in ultimate, normative component of values and business units, too small or too large re- norms that should govern the organization as a dundancy/slack, lack of flexibility whole: Are the governing values and rules still 1.2 Lack of or pathological self-organization adequate, in light of new imperatives? Do the (2) Model and control deficits: supreme goals need adjustment? Is a reframing or reconfiguration of the system required? 2.1 Erroneous mental models Formally, the ethos is often cast in vessels such 2.2 Missing or insufficient or wrong formal as organizational identity, vision and mission. models Independent of formal aspects, the ethos can fur- (3) Perceptual deficits: nish the crucial components that complete an ad- equate model (as postulated earlier), in that they 3.1 Insufficient feedback causing uninformed balance and eventually integrate the following: management (i) the internal and external views and (ii) the 3.2 Insufficient feedforward causing lack of short-term and the long-term perspectives. The forward orientation horizon here is very long term if not timeless. (4) Behavioral deficits: The issues addressed here, namely processes of self-reflexion and the formation of an ethos, call for 4.1 Lack of adaptation, misalignment with a holistic, that is, unfragmented approach, despite the environment the division of labour in an organization. Transdis- 4.2 Insufficient change, usually due to bar- ciplinary collaboration is needed. Cybernetics with riers to change and defensive routines the integrative framework for model-based man- (5) Competence and creativity deficits: agement outlined earlier is an enabling basis for such an approach. 5.1 Flaws in or erosion of core competencies 5.2 Inaptness of reframing and recombination of ideas, knowledge and information MAKING USE OF THE FRAMEWORK There is a clear limitation to this use of the framework. It provides paragons for the different The integrative framework for model-based management functions, but it does not interpret management supports diagnosis in the first place. Such a diagnostic function can discover if 8 A more detailed analysis of organizational pathologies in a cyber- an organization or other social system is netic framework has been presented by Pérez Ríos (2012).

Copyright © 2014 John Wiley & Sons, Ltd. Syst. Res. 32, 564–578 (2015) DOI: 10.1002/sres.2286 574 Markus Schwaninger Syst. Res. RESEARCH PAPER them in terms of concrete soft or hard variables. In order to overcome the language problem at the in- principle, the user of the framework must decide terface (Espejo et al., 1996). Such a strategy can work how to evaluate each aspect of the organization well only in a context of low variety, for example if in terms of both soft and hard aspects. To give an two agents cooperate with each other. If several or example, if a manager is unskilled in handling many exponents of different disciplines have to the interrelationships with her employees, this is communicate in a team, the group must agree on a communication deficit in the widest sense. It a common code. The United Nations and many in- could be merely qualitative (e.g. a negative atti- ternational schools have settled on English as their tude towards people), but it would also have a standard of communication. value (high–low) in terms of information flow, that Here, we are referring to the question of is, in the feedback and feedforward dimensions. selecting a language that solves the problem of communication in multidisciplinary settings. The issue here is making the necessary variety THE FRAMEWORK AS A TRANSDISCIPLINARY of perspectives productive, which is necessary ENABLER in dealing with complex systems. When analysing a societal problem, for example, of This study has shown that almost all the concepts public health, it is not enough to conduct eco- of cybernetics have their importance in each one nomic, epidemiological and sociological analyses of the domains considered (technical, biological separately from each other. Rather an integration and social). The proposition formulated at the out- of perspectives is necessary. The interdisciplinary set, that cybernetic concepts are often conferred path as defined earlier then is not functional. It is unduly between domains of application, holds in necessary to pursue a transdisciplinary approach. the following sense: One and the same concept In such a case, all members of the responsible can be applied in different domains, but then it is group use one and the same language.9 Besides often interpreted in mistaken ways. In regard to the ethnic languages, the kind of language we are social systems, this is particularly the case with addressing here is a code that facilitates the cap- the control function, which in social systems is of ture of subject matters of different scientificand another nature and more complex than in the tech- professional fields. nological and organismic domains. In principle, the formal sciences, mathematics in Social systems are scientific objects of a specific particular, make available such a ‘code’.Mathemat- type: if the distinctions made in this text hold, then icsishighlyprecise,butnotespeciallydirectedto aspecific language is needed to talk about organi- dealing with complex dynamic systems. Cybernet- zations and their management and to study them. icsoffersaformalapparatusthatwasdeveloped Management needs knowledge coming from especially for coping with complexity. In the sense many disciplines (Ulrich, 2001). Directing an orga- of General System Theory (von Bertalanffy, 1968), nization is not only an economic problem but also cybernetics is suitable for representing dynamic a sociological, communicative and ecological systems of widely differing contents and whatever issue. Leading in an organization also has psycho- degree of resolution or size. Cybernetics is generally logical, technological and informational aspects. better suited for that purpose than mathematics, Therefore, an interdisciplinary view is fre- evenifthelatterismoreprecise. quently postulated: as the problems at hand Transdisciplinary collaboration is the operation overtask the individual, the cooperation of experts of a multidisciplinary group on the basis of a from different disciplines is called for. Hence, the shared formal apparatus or language. Hence, interdisciplinary approach is supposed to solve the integrative cybernetic framework for model- the complexity problem. How does interdisciplin- based management offered in the preceding arity function? It rests upon the communication section is such a vehicle—an enabler for between exponents of multiple fields. For that pur- pose, one person per set of two must know or learn 9 Professional translators may be necessary to uphold the communica- the language of the other person in that set, in tion system.

Copyright © 2014 John Wiley & Sons, Ltd. Syst. Res. 32, 564–578 (2015) DOI: 10.1002/sres.2286 Model-based Management 575 RESEARCH PAPER Syst. Res. transdisciplinary inquiry, discourse and collabora- large, a way of learning with models. In this sense, tion, by which an organization can cope with com- model-based management has an exceedingly plexity more effectively. Cybernetic theories and high potential for the improvement of manage- concepts are predisposed to support such commu- ment and organization. It will be worthwhile nication and cooperation. Therefore, cybernetics is pursuing this path of research further, in order a strong integrative factor for leadership and man- to actualize that potential. agement. This holds at least for all those cases in which organizations are at stake—systems that have to cope with complexity and change, strive ACKNOWLEDGEMENTS for sustaining viability and evolve over time. The author would like to thank Professor Stefan Groesser and two anonymous reviewers for their OUTLOOK valuable comments that have been of great help in finishing this paper. The cybernetically grounded integrative frame- work for model-based management developed in this paper is highly abstract. That is a strong point: it embodies a synthesis of concepts as they REFERENCES might be of interest to academics. As far as prac- titioners are concerned, this frame can help them Ackoff RL, Gharajedaghi J. 1984. Mechanisms, better ‘understand the world’ or, more down-to- organisms and human systems. Strategic Manage- ment Journal 5: 289–300. earth, make sense of what they are experiencing Ampère AM. 1843. Essai sur la philosophie des sci- and doing in their management and leadership ences ou exposition analytique d’une classification work—an important prerequisite for improving naturelle de toutes les connaissances humaines, managerial skills. Seconde Partie. Bachelier: Paris. The role of cybernetics in the context of model- Ashby WR. 1952 (second edition 1960). Design for a Brain: The Origin of Adaptive Behavior. Chapman based management is in making transparent the and Hall: London. structure and behavior of complex dynamic systems, Ashby WR. 1956. An Introduction to Cybernetics. for a better understanding of the following: (i) what Chapman & Hall: London. is going on in the system and (ii) what is to be done Ashby WR. 1962. Principles of the self-organizing system: to direct the behavior and evolution of the system on transactions of the University of Illinois Symposium. In Principles of Self-organization, Von Foerster H, Zopf a desirable course. It need not be emphasized that GWJ. (eds.). Pergamon Press: London; 255–278. the framework has to be complemented by models Baecker D. 2003. Organisation und Management. and methods to become operational, for example, Suhrkamp: Frankfurt. structural models and methodologies for modelling Bateson G. 1973. Steps to an Ecology of Mind. Paladin and dynamic simulation. Books: London. Bateson G. 1980. Geist und Natur. Eine notwendige In this contribution, a pertinent framework has Einheit. Suhrkamp: Frankfurt a.M. been developed, on the basis of the conceptual Beer S. 1959. Cybernetics and Management. The building blocks bred within the history of cyber- English Universities Press: London. netics. The presented structure is embedded into Beer S. 1979. The Heart of Enterprise. Wiley: Chichester. an evolutionary process and therefore still devel- Beer S. 1981. The Brain of the Firm. Wiley: Chichester. Beer S. 1985. Diagnosing the System for Organizations. opable. But even now, it already has value as a Wiley: Chichester. heuristic device for gaining knowledge and Beer S. 1994. Beyond Dispute. The Invention of Team improving management. Syntegrity. Wiley: Chichester. From the integrative cybernetic framework Bleicher K. 1996. Das Konzept integriertes Manage- presented here, one can gather an overarching ment. Campus: Frankfurt a.M. Blüchel KG, Malik F. 2006. Faszination Bionik. Die cue: ultimately, the interaction of environment, Intelligenz der Schöpfung. Bionik Media: München. control and real systems is the driving force for Brown RF. 1985. Biomedical Systems Analysis. Abacus: progress. Model-based management is, by and Turnbridge Wells.

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Copyright © 2014 John Wiley & Sons, Ltd. Syst. Res. 32, 564–578 (2015) DOI: 10.1002/sres.2286 578 Markus Schwaninger