The Viable System Model (VSM) is a model of organizational structure that is based on the structure of the human nervous system. It was described by British cybernetician Stafford Beer in his books Brain of the Firm (1972), The Heart of Enterprise (1979), and Diagnosing the System for Organizations (1985). It has been used as a conceptual tool for understanding organisations, redesign them (where appropriate) and support their management of change.
The VSM is a useful guide for knowledge management. The model explains what structures and procedures are needed at each level of an organization and hence what information and what decisions are needed in each part of the organization.
The Viable System Model identifies five management functions within an adaptive system. - System one consists of the units that do the basic work of the organization, for example manufacturing products or delivering services.
- System two consists of units that handle coordination and scheduling among the system ones. System two activities include allocating space and equipment and enforcing rules and procedures.
- System three is the middle management function, except that its primary activity is to make a “resource bargain” with the system ones. That is, system three makes resources available in exchange for a commitment by the system ones to meet certain objectives that are agreed upon.
- System four is responsible for long-range planning and the design of new products and services. Whereas system three is responsible for activities “inside and now,” system four is responsible for activities “outside and then.”
- System five manages the interaction between systems three and four and embodies the corporate ethos.
- System five decides the identity of the firm and its governing principles and norms. This
includes decisions about the kinds of businesses to be developed by system four and to be put into operation by systems three, two and one.
There are five essential functions for Viability:
1) Implementation: Those responsible for producing the products or services implied by the organization's identity. Are at the core of the recursive model.
2) Coordination: Coordinating the interfaces of the system's value adding functions at the operations of its primary sub-units.
3) Control: Two-way communication between sub-unit and meta-level remains a prerequisite for variability
4) Intelligence: Is the two way link between the primary activity and the external environment.
5) Policy: It needs to be very selective in the information it receives.
