GST: A SIMPLIFIED PARADIGM FOR BUSINESS Vincent O’Rourke Park University 75 MSS/DPE, 7290 8th Street Hill AFB, UT 84056 ABSTRACT Business is defined using General Systems Theory (GST) as a paradigm. As GST theory has been used and abused for over sixty years, the article first reviews GST to establish a basic substrate upon which the author’s views are based. Much of the literature in the field, in an attempt to develop GST into a polished, all-encompassing theory, includes every aspect and nuance that could be encountered. While the quest for this goal sheds new light on the theoretical side of GST, to the average business practitioner, or especially to the average student, applying GST to the study or evaluation of a business as a practical matter becomes more of a daunting challenge as the theory becomes more complicated. This article presents the business paradigm in the simplicity of the original concept of general systems theory, as offered by Ludwig von Bertalanffy, using the trusted, established concepts of business organization and management that have been studied, researched, applied, and taught for many years. The marriage of these business concepts to the explanatory power of general systems theory provides a model that is easy to understand, teach, and apply. The resulting business definition reflects von Bertalanffy’s concept of the applicability of GST to organizations. Keywords: GST, business, paradigm, Systems Theory, business systems INTRODUCTION In most business schools, students learn the many, but important, concepts from several disciplines, in classes that are independently taught without relating the various concepts into a single, interdependent entity. Generally, an Introduction to Business course will show students that a business is part of a superordinate economy and that management must use concepts of accounting, marketing, finance, human resource management, production and operations, and legal requirements; however this course only demonstrates a superficial integration of those concepts. The real integration is usually left until the final, ‘capstone’ course, when students are left to determine the integration through case analysis, using critical thinking and logic. The reason given for this is that students must learn the concepts before they can learn how to integrate them. This author believes that the method of learning the various concepts of several disciplines in detail before learning how to best integrate them is extremely inefficient. This paradigm is reflective of the Scientific Revolution of the sixteenth-seventeenth centuries, reflecting Descartes’ reductionistic concept of breaking down every problem into as many single separate elements as possible. It was this concept of reductionism, which left unanswered the questions of Aristotelian notions of holism and teleology, which led von Bertalanffy to develop a more inclusive concept: Systems Theory. The 1 GST Paradigm for Business author’s view of methodological inefficiency was recognized by seeing the difficulty many students had in applying the disciplinary concepts in case analysis, due to an inability to understand the interrelationships and interdependency of business elements. The paradigm outlined in this paper is intended to reflect a simplified version of the General Systems Theory, actually returning to the basic concept promulgated by von Bertalanffy of a simple model applicable to all fields of scientific endeavour. If students can superimpose business concepts onto a very simple model that is easily learned and understood, and can apply to all elements of a business, they can understand the interrelatedness and interdependency of the elements through the generalized model. The origins of systems theory will be examined to establish the substrate for the paradigm, demonstrating the intent of the concept. SYSTEMS THEORY HISTORY Although evidence of the early beginnings of the notion of system can be recognized as early as the sixth century BC, the concept of system dates from Aristotle’s writings in which he expresses his notions of holism and teleology. Many had investigated the causes of objects, but no one had consolidated them into a single explanatory concept until Aristotle related the four causes (material cause – the raw material from which the object is made; formal cause – the shape or form of an object; the efficient cause – the primary source or process of change; and final cause – the reason for the object) as an inseparable combination. (Aristotle, n.d.) In fact, his four causes roughly approximate the basic elements of a system: material cause – components, formal clause – structure, efficient clause – process, and final clause – purpose. Of course, this beginning was far from the complete theory of systems as we know it today, but it established the notion that the elements have a definite relationship among them in order to produce a result that satisfies a predetermined purpose. Aristotle is considered to be the inventor of teleology; from his interest in ends (final clause) and process (efficient clause), or the end and the means to get to the end. (Johnson, 2010) Aristotle’s interest in teleology and his holistic concept that the whole is more than the sum of its parts led to his treatises on the causes. From approximately 350 BCE until the 18th century, no significant contributions to systems theory were made. Smith (2004) cites research that attributes the concepts of feedback and self-regulation to David Hume in 1752, which were reinforced by Thomas Malthus in 1798. His paper credits Lotka, in 1925, Cannon, in 1927, and, finally, von Bertalanffy, in 1932, with developing the earlier work into the basis of systems theory as we know it today. Koehler (1938) introduced the concept of living systems as dynamic, open systems which interact with, change, and are changed by, their environment; as opposed to the static, closed systems having a definable boundary with their environment that are commonly used in the physical sciences. In his seminal article “The History and Status of General Systems Theory”, Ludwig von Bertalanffy (1972; p. 407) recognized that the notion of system is as old as European 2 GST Paradigm for Business philosophy. He quoted: “Aristotle’s statement, ‘The whole is more than the sum of its parts,’ is a definition of the basic system problem which is still valid.” He further quoted from one of his earlier publications: “Since the fundamental character of the living thing is its organization, the customary investigation of the single parts and processes cannot provide a complete explanation of the vital phenomena. This investigation gives us no information about the coordination about the parts and processes. Thus the chief task of biology must be to discover the laws of biological systems (at all levels of organization). We believe that the attempts to find a foundation for theoretical biology point at a fundamental change in the world picture. This view, considered as a method of investigation, we shall call “onganismic biology” and, as an attempt at an explanation, “the system theory of the organism”. (p. 410) Further in that article, Bertalanffy described the evolution of his “dynamical” system theory, which became his “open system,” published earlier by the American Association for the Advancement of Science (Bertalanffy, 1950a). The open system became the general systems model (Bertalanffy, 1950b), which initiated a rapidly spreading interest among researchers and led to the foundation of the Society for the Advancement of General System Theory, which was later renamed to Society for General System Research, and later still, to reflect the broadening scope of inquiry, to International Society for the Systems Sciences. Bertalanffy, in the paper for the British Society for the Philosophy of Science (1950a), discussed the types of system finality, and stated: “Finally, there is true finality or purposiveness, meaning that the actual behavior is determined by the foresight of the goal. This is the original Aristotelian concept. It presupposes that the future goal is already present in thought, and directs the present action. True purposiveness is characteristic of human behavior, and it is connected with the evolution of the symbolism of language and concepts.” This statement from Bertalanffy leads us into one of basic concepts of open systems: a system exists to convert inputs into outputs through a transformation process. The output (the future goal) is already present in thought, and the requirement for the output directs the present action to produce it (obtain the materials necessary to create the output and accomplish the processes needed to transform the materials into the output). Without a conversion process, a system does not exist! Many so-called systems are actually networks that are part of the structure of a system (for example, a highway ‘system’). In Bertalanffy’s “The History and Status of General Systems Theory” article (1972; p. 416), he explained: “It is generally agreed that “system” is a model of general nature, that is, a conceptual analog of certain rather universal traits of observed entities. The use of models or analog constructs is the general procedure of science (or even of everyday cognition), as it is also the principle of analog simulation by computer. The difference from conventional disciplines is not essential but lies rather in the degree of generality (or abstraction): “system” refers to the very general characteristics partaken by a large class of entities conventionally treated in different disciplines. Hence the interdisciplinary nature of general systems theory; at the same time, its statements pertain to formal or 3 GST Paradigm for Business structural commonalities abstracting from the “nature of elements and forces in the system” with which the special sciences (and explanations in these) are concerned. In other words, system-theoretical arguments pertain to, and have predictive value, inasmuch as such general structures are concerned.” His caution was to ensure that general systems theory is used as intended, a model, rather than a description of the situation, itself, in general nature.