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Organization Change: Theory and Practice, Sixth Edition Chapter 4: Theoretical Foundations of Organizations and Organization Change

Open-system Theory (1 of 2)

Understanding human organizations.

An organization’s utilization of energy.

Money: a critical input for a business.

The input–throughput–output loop.

4.1. Define open-system theory.

Open-system Theory

Understanding human organizations:

Any living organization is open as it is dependent on and continually interacts with its environment.

Only nonliving matter forms closed systems.

An organization’s utilization of energy:

An organization takes in energy from its environment in order to survive.

The energy includes money, raw materials, or the work of people.

This energy is then transformed into a product or service and is returned to the environment.

Money: a critical input for a business:

Money provides additional input after transformation into a product that is sold in the marketplace.

Sales income becomes the primary input if a profit-making organization is to survive in the long term, which then reactivates the system.

The input–throughput–output loop:

A feedback loop that connects output to input.

Example: A bank loan (input) provides money to purchase raw materials (more input) so that a product can be made (transformation) and then sold (output) to consumers, and their payments provide money for further input, reactivating the cycle.

Open-system Theory (2 of 2)

Identifying boundaries of an organization.

Internal elements of an organization.

Importance of a total system perspective.

4.1. Define open-system theory.

Open-system Theory

Identifying boundaries of an organization:

It is necessary to follow the energic and informational transactions of a system as they relate to the cycle of activities of input, throughput, and output.

Open systems maintain themselves through a continuous inflow and outflow of energy through permeable boundaries.

Internal elements of an organization:

Physical and technological parts, such as buildings, machines, desks, and paper;

Task- or work-related elements, such as specific jobs, roles or functions; and

Suborganizations or subsystems, such as departments, divisions, or business units.

Importance of a total system perspective: The change of one part of a system will affect other parts and perhaps all parts eventually.

Characteristics of Open Systems (1 of 4)

Importation of energy.

Throughput: the process.

Output: completion of services.

Systems are cycles of events.

4.2. Identify the characteristics of open systems.

Characteristics of Open Systems

Importation of energy:

For human organization to ensure survival, it must be self-contained or self-sufficient, and thus it must draw energy from outside.

The various energy sources: a line of credit from a nearby bank; the purchase of raw materials to produce the firm’s product and services, revenues from previous client work; some temporary workers to help meet peak demands.

Throughput: The sources from the environment are used to develop a survey questionnaire, the survey is administered in the client organization, and the data are collected and analyzed, and a report is prepared for the client.

Output: The report is delivered, appropriate action according to the survey data is taken, and a fee for the services rendered is collected.

Systems are cycles of events:

The term events explain the nature of an organization’s structure and boundaries.

Events provide identity; the identifying and boundary-setting events were:

Contracting;

Purchasing;

Hiring a workforce;

Providing the service;

Paying the employees; and, eventually,

Contracting again with the client for additional work or moving on to a new client.

Characteristics of Open Systems (2 of 4)

Negative entropy:

All organizations move toward disorganization.

Importing more energy than expended.

Active and deliberate effort necessary.

Information input, negative feedback, and the coding process.

4.2. Identify the characteristics of open systems.

Characteristics of Open Systems

Negative entropy:

The entropic process is a universal law of nature in which all forms of organization move toward disorganization or death.

The open system can store energy and acquire negative entropy by importing more energy from its environment than it expends.

Organizations are not self-sufficient; they are unstable and will not survive or grow unless active and deliberate effort is expended.

Constant effort must be expended not only for the maintenance of an organization but for its very survival.

Information input, negative feedback, and the coding process:

Receiving feedback on how well an output is being received can ensure effective respond to clients in the future.

Negative feedback enables corrective action to be planned and taken.

Consulting firms would pay more attention to negative feedback from clients than from professional peers.

Characteristics of Open Systems (3 of 4)

Steady-state and dynamic homeostasis:

Not a motionless or true equilibrium.

Apparent equilibrium.

Growth needed to counteract entropy.

Differentiation.

4.2. Identify the characteristics of open systems.

Characteristics of Open Systems

Steady-state and dynamic homeostasis:

In a steady state, there is a continuous flow of energy from the external environment and a continuous export of the products of the system, but the character of the system, the ratio of the energy exchanges, and the relations between parts remain the same.

Apparent equilibrium: has constant ups and downs; the overall averaging of these ups and downs gives the appearance of a stationary or steady-state situation.

The process of counteracting entropy implies change: the average of an organization’s ups and downs does not always remain at the same level, although the basic character of an organization tends to remain the same.

Differentiation: Specialization and division of labor evolve as an organization continues to offset the entropic process and grow.

Characteristics of Open Systems (4 of 4)

Integration and coordination.

Equifinality: the same goal, different starting points.

Openness and selectivity.

4.2. Identify the characteristics of open systems.

Characteristics of Open Systems

Integration and coordination:

Integration is accomplished through shared norms and values.

The social-system vehicles used by are organization structure, roles, and authority.

The “silo effect”: an outcome of too much differentiation and inadequate integration and coordination.

Equifinality: An organization can attain the same goal from different starting points and by a variety of paths.

Openness and selectivity:

An organization’s success and effectiveness in a systems sense are contingent on openness and selectivity.

The organization’s managers must be open to options but should be selective in their inputs and outputs.

Organization Change Is Systemic (1 of 2)

The objective for change is systemic.

Change in one aspect affects other aspects.

Target for change is the system:

Sensitivity training.

Systemic target is the organization’s culture.

4.3. Describe how organization change is systemic.

Organization Change Is Systemic

The objective for change is systemic: Some aspect of the system is selected for change, usually as a result of a previous diagnosis and in collaboration with the relevant people within the organization.

Change in one aspect affects other aspects: When some aspect of the system is changed, other aspects eventually will be affected.

Target for change is the system:

Sensitivity training: educational and individually focused on the objective for change, improvement, and learning.

Systemic target is the organization’s culture: The individual goes by the group standards, so if the group standard shows change, the resistance to individual change is eliminated.

The changing of certain of norms and their accompanying values that are integral to culture needs to be a major focus of an organization change effort.

Organization Change Is Systemic (2 of 2)

Utilization of human energy in the organization:

Importing more energy from its environment.

Establishing negative entropy.

4.3. Describe how organization change is systemic.

Organization Change Is Systemic

Utilization of human energy in the organization:

For an organization to survive, energy must be taken into the organization in a variety of forms and transformed into products or services that add value to the consumer, and the entropic process must be reversed.

The use of human energy can help the organization’s leaders change so that it can be focused on accomplishment of the organization’s goals, thus effectively establishing negative entropy.

Toward a Deeper Understanding of Organization Change (1 of 2)

The new paradigm “deep ecology.”

Transition from physics to the life sciences.

Systems theory to systemic models.

4.4. Explain the evolution of organization change.

Toward a Deeper Understanding of Organization Change

The new paradigm “deep ecology”:

A holistic worldview, seeing the world as an integrated whole rather than a dissociated collection of parts.

It recognizes the fundamental interdependence of all phenomena and the fact that we are all embedded in the cyclical processes of nature.

Transition from physics to the life sciences: The exploration of living systems had led scientists to the same new way of thinking in terms of connectedness, relationships, and context.

Systems theory to systemic models: The formal systems theory gave way to a development of a series of successful systemic models that describe various aspects of the phenomenon of life.

Toward a Deeper Understanding of Organization Change (2 of 2)

Primary criteria for systems thinking:

Living systems are integrated wholes.

Living systems nest within other systems.

A pattern in a web of relationships.

None of the properties is fundamental.

4.4. Explain the evolution of organization change.

Toward a Deeper Understanding of Organization Change

Primary criteria for systems thinking:

Living systems are integrated wholes with properties that none of their parts have.

Living systems nest within other systems.

A part of a system is actually “a pattern in an inseparable web of relationships.”

None of the properties is fundamental: the overall consistency of the interrelations of the properties determines the structure of the entire web.

Capra’s Three Criteria for Understanding Life (1 of 5)

Pattern

Determines the system’s essential characteristics.

Autopoiesis: key characteristic of a living system.

The system is a closed organization.

4.5. Identify Capra’s three criteria for understanding life.

Pattern

Determines the system’s essential characteristics: The pattern of organization for a living system is the configuration of relationships that determine the system’s essential characteristics that further determines how a living system will be recognized.

Autopoiesis: The key characteristic of a living system, or living “network,” is that it continually produces itself.

The system is a closed organization:

Any larger living system is self-organizing; its pattern is not determined by the external environment but is established by the system itself.

Thus, living systems are autonomous.

Capra’s Three Criteria for Understanding Life (2 of 5)

Structure

A system’s physical components.

Open structurally, closed organizationally.

Dissipative structures.

The stimulus for structure change.

4.5. Identify Capra’s three criteria for understanding life.

Structure

A system’s physical components: The structure of a living network is the embodiment of the system’s physical components: their shapes, chemical compositions, size, etc.

Open structurally, closed organizationally: Open structurally means autopoiesis, and closed organizationally means that the system’s overall pattern remains the same.

Dissipative structures:

The seeming paradox of simultaneous existence of change and stability.

While the structure of a living system is open to considerable change, the form or pattern of its components remains the same.

The stimulus for structure change: It comes from its external environment and triggers reactions and new events within the system, creating consequent reactions followed by feedback loops.

Capra’s Three Criteria for Understanding Life (3 of 5)

Structure

How the system deals with the stimulus.

Form and function of a new structure.

Culture lock-in.

4.5. Identify Capra’s three criteria for understanding life.

Structure

How the system deals with the stimulus: the system’s pattern of components, its process of input–output, and its feedback loops, remains the same despite the change occurring dissipatively.

Form and function of a new structure: If a new structure forms, its form will be a function of the network, or web characteristics, of the system.

Culture lock-in: The inability to change the culture even in the face of threats to survival from the marketplace.

Capra’s Three Criteria for Understanding Life (4 of 5)

Process

Activity involved in the organization.

Cognition: the process of life.

Relationship between mind and brain.

The process of knowing.

4.5. Identify Capra’s three criteria for understanding life.

Process

Process:

The activity involved in the continual embodiment of the system’s pattern of organization.

The connection between pattern and the reinforcer of our support for the independent structure.

Cognition: the activity is cognitive, a way of knowing.

Relationship between mind and brain:

Our brain is a physical thing, but our mind is a process.

The relationship between mind and brain is one between process and structure.

The brain is not necessary for mind or cognition or mental activity to exist.

The process of knowing: This process of knowing is broader than thinking that involves emotion, action, and perception, and involves thinking, language, and other aspects of consciousness.

Capra’s Three Criteria for Understanding Life (5 of 5)

Process

Emotional intelligence.

Structural coupling.

The nonlinear environmental interaction.

Applying Capra’s ideas to organizations.

4.5. Identify Capra’s three criteria for understanding life.

Process

Emotional intelligence:

The concept of mind is more comprehensive than thinking, incorporating emotion, and context.

Emotional intelligence is an integral part of overall intelligence as feelings are not separate from thought.

Structural coupling:

The system goes through continuous structural changes yet maintains its pattern of organization.

These recurrent interactions stimulate structural changes in the living system, but the system is autonomous.

The nonlinear environmental interaction:

Each living system has its own mode of environmental interaction which is not a linear cause and effect.

The system “responds with structural changes in its nonlinear, organizationally closed, autopoietic network that enables the organism to continue its autopoietic organization and thus to continue living in its environment.”

Applying Capra’s ideas to organizations:

Effective organizations constantly monitor their external environments.

As these environments are so complex and rapidly changing, organizational leaders have to be selective about what they monitor.

These leaders then attempt to adapt their organizations to the changes in the environment.

Successful adaptation is a function of how congruent the selection made is with the internal organization change.

Implications for Organizations and Organization Change (1 of 4)

Questioning if larger systems are autopoietic.

Differentiating human societies from other ecosystems.

Organization’s response to perturbation.

4.6. Describe the implications for organization and organization change.

Implications for Organizations and Organization Change

Questioning if larger systems are autopoietic:

Are larger systems, organizations and human societies, autopoietic (self-making) networks?

Our current knowledge is not sufficient to give a definitive answer.

Differentiating human societies from other ecosystems:

Human societies are distinct from “lower levels” of organisms and ecosystems due to language and abstract thinking.

As ants communicate with one another with chemical exchange, humans communicate with language.

The laws of nature are not the same as the laws of a society; the latter can be broken, but the former cannot.

Organization’s response to perturbation: Each organization may respond in its own unique manner, but the organization’s pattern of operations among its components may remain essentially the same.

Implications for Organizations and Organization Change (2 of 4)

Parallels to explain organizations and organization change:

Influencing and being influenced.

Cells take in energy and dispose of waste.

Cells are autopoietic but not self-sufficient.

Cells selectively respond to perturbations.

4.6. Describe the implications for organization and organization change.

Implications for Organizations and Organization Change

Parallels to explain organizations and organization change:

Influencing and being influenced: Systems maintain themselves through a continuous inflow and outflow of energy through permeable boundaries.

Cells take in energy and dispose of waste: Cells take in energy, matter, and the like and dispose of waste; organizations take in energy and “dispose” of products and services and excess human resources at times.

Cells are autopoietic but not self-sufficient: Cells depend on the external environment for survival.

Cells selectively respond to perturbations.

Implications for Organizations and Organization Change (3 of 4)

Cells continuously reproduce themselves.

A cell’s pattern is not determined by the external environment.

Cells have differentiated yet integrated components.

4.6. Describe the implications for organization and organization change.

Implications for Organizations and Organization Change

Parallels to explain organizations and organization change:

Cells continuously reproduce themselves; organizations continually deal with entropy and in the process produce themselves.

A cell’s pattern is not determined by the external environment but by the system itself.

Cells have differentiated components, yet these components exist to support one another in the interest of the whole.

Implications for Organizations and Organization Change (4 of 4)

The occurrence of information processing.

Understanding organizational actions.

4.6. Describe the implications for organization and organization change.

Implications for Organizations and Organization Change

The occurrence of information processing:

Process is the living system’s mind, cognition, or mental activity.

Living systems perceive, sort through, and select for internal use certain but not all elements from the external environment.

Organizational learning is a growing area of interest for scholars and practitioners.

Understanding organizational actions: An organization’s unique culture, its autopoietic process, and its selective response to perturbations may be inadequate for its long-term survival.