An Introduction to Cybernetic Synergy An Introduction to Cybernetic Synergy Improving Decision-Making and Cost Efficiency in Business and Commercial Environments Mark Rowbotham First published 2021 by Routledge 600 Broken Sound Parkway #300, Boca Raton FL, 33487 and by Routledge 2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN Routledge is an imprint of the Taylor & Francis Group, an informa business © 2021 Mark Rowbotham The right of Mark Rowbotham to be identified as author of this work has been asserted by him in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. 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ISBN: 9780367761356 ( hbk) ISBN: 9780367761387 (pbk) ISBN: 9781003165682 ( ebk) Typeset in Minion Pro by codeMantra Contents Preface ...................................................................................................vii Abstract ..................................................................................................xi Author ................................................................................................. xiii Chapter 1 Introduction to Cybernetics ..............................................1 Chapter 2 A Brief History of Cybernetics ........................................ 15 Chapter 3 The Viable Systems Model ............................................... 31 Chapter 4 Input, Output and Decision Support .............................. 65 Chapter 5 Management Cybernetics and Feedback ........................ 83 Chapter 6 Economic Cybernetics ................................................... 107 Chapter 7 Neural Networks, Connectivity, Varieties and the Rationale behind the VSM............................................. 133 Chapter 8 Cybernetics and the Supply Chain ................................ 183 Chapter 9 Cybernetics and Quality Control .................................. 219 Chapter 10 The Relationship between Cybernetics and AEO Status .....................................................................243 Chapter 11 Conclusions .................................................................... 269 Glossary of Terms ............................................................................... 285 Literary References ............................................................................. 287 Index .................................................................................................... 289 v Preface The subject of cybernetic synergy, although emanating from a socio- economic experiment of economic control by cybernetic means in Chile in the early 1970s, has never been approached as an applied subject in its own right. Indeed, the subject of applied business cybernetics has never been addressed as a separate issue, although it has been shown that the overall subject of cybernetics applies to a wide range of disciplines, from biology to business via mathematics and engineering, and indeed a variety of articles have been published from time to time on the generic subject. There are already several books available on the subject of cybernetics, but they are mostly concerned with mathematical approaches along with very heavy technical and formulaic texts, most of which are completely alien to the layman or the simple practitioner. Furthermore, other than references to business or economic practice in some books, particularly those written by the eminent cybernetician Stafford Beer, former Professor of Business Management at Manchester University and author of several books, there has never, according to the view of the author, been a book published purely about the subject of applied cybernetics relating to busi- ness practices. Business cybernetics is a discipline per se. It deals with business prac- tice, efficiency, and quality control in business. It encompasses much of today’s business practice in terms of lean management, continu- ous improvement, Six Sigma, ISO, and much much more. Contrary to the views of many, it has nothing to do with Artificial Intelligence ( AI), cyberspace, cybersecurity, and other subjects which have deviated wildly from the original concepts. Cybernetics as a discipline concerns the art ( or science) of finding one’s way through a morass of information and concepts, by employing the services of some form of helmsman, or, as in the Greek, Kubernetes, from which the word “ cybernetics” is derived. Helmsmen use simple forms of navigation to steer a ship. I should know this, as I come from a nautical family, where working with the sea as part of the merchant navy was a tradition handed down from one generation to another, apart from one relation, a cousin of my mother, who joined the Royal Navy ( having been born in as much the UK interior as possible, vii viii • Preface namely the West Riding of Yorkshire!). Indeed, I was expected to go to sea in accordance with my N orth-Eastern forbears, but I rebelled, instead becoming an Officer of HM Customs & Excise ( HMC&E), and latterly, a Customs & Excise Consultant. However, that did not sever my connec- tions with the sea. I was assigned to port Customs controls, and boarded and examined several ships as part of my job in HMC&E as an Import and Export Controls Officer, ultimately becoming a specialist in maritime cargo controls. Cybernetics was originally an external interest, fuelled by a cousin of my mother who practised cybernetics as part of his job with a major US management consultancy firm, until it became part of my job as a Customs Consultant by pure chance, auditing companies to determine their compliance with established Customs regulations and practices as well as international supply chain analysis. I soon discovered that there was some isolated literature on the subject of cybernetics for business purposes but that it was extremely fragmented and had little or no cohesion and was either located in specific articles on the internet or incorporated in books written by specialists such as Oskar Lange and Stafford Beer, both of whom addressed economic cybernet- ics from a more socialist viewpoint. It was Stafford Beer who established the original concept of cybernetic synergy when he devised the project to introduce cybernetic planning into the Chilean economy at the invita- tion of the Chilean Economic Minister, supported by the then Chilean President, Salvador Allende. Admittedly, the principle of the project was to adhere to the socialist policy of a planned economy but controlled by cybernetic means. This would appear to fly in the face of free market eco- nomics, but in a world of increasing competitiveness and cost efficiency, cybernetics can enjoy a renaissance, in its application to the corporate entity in terms of monitoring and control of corporate activities for effi- ciency and cost-effectiveness purposes. In this respect, it applies not so much at a national or supranational level, but principally at a corporate level. Planned economies have a propensity to failure, whereas corporate policy tends towards competitiveness based on efficiency and profitability. This was the time, therefore, to redress the balance and write a book on commercial cybernetics and its applications, around the concept of cyber- netic synergy within and between predominantly commercial organisa- tions, be they productive or service-based. This is not so much for my own purposes, although my idea has been to use my own commercial experi- ences, but also for the benefit of those control freaks or savvy business Preface • ix managers out there who want to be able to control business practices either for self-gratification or to genuinely strive for commercial and corporate efficiency in an uncertain economic and commercial world. As time pro- gresses, there is an increasing need for competitiveness based on efficiency and cost-effectiveness, and in my view, cybernetics is the definitive way to achieve this. I have tried to steer ( kybernetika) clear of mathematical wizardry and complex formulae as found in several textbooks, as well as a mountain of technical jargon to be found in most books of the subject of cybernetics. Instead, I have concentrated on simple language and prac- ticalities that ( hopefully) can be easily understood by most people. I have used certain diagrams and the occasional formula, but I have aimed to keep it as simple as possible to facilitate an easy understanding and appli- cation of the subject, and to cybernetically steer through the swamp that is the discipline of the subject. The primary cybernetic concepts analysed include the following: • The Viable Systems Model • Feedback • Requisite Variety • Dynamic Systems • The Neural Network These concepts are then applied to a series of business concepts and prac- tices, and finally, conclusions are drawn. It is all too easy to become emotional and passionate about the subject, particularly in its application to present global crises, but in the cold light of day, when it comes to objective thinking, the principle of cybernetics can easily be applied to present circumstances as a means of providing answers to complex and controversial