systems theory

Your ultimate guide to Agile lingo

Circle rep


The theory of organizational systems comes mostly from the work of the German sociologist Niklas Luhmann. It is a radically new way of designing organizations.

Traditionally, these theories are studied from a particularly simplified perspective. Classical management tends to think of the organization as a kind of machine dedicated to productivity and efficiency. It is up to the manager to determine the best - unique - way to achieve these objectives; what Frederick Taylor calls "the one best way".

Systems theories, on the other hand, focus more on understanding the cohabitation of all the distinct parts parts of a system that form a complex whole. These systems are seen as the whole which will emerge from the aggregation of distinct entities, among which exists infinite degrees of interaction. The purpose of these theories is no longer to understand in order to control, but to optimize.

First, system theory conceives organizations as entities open to an environment they are interacting with. For the manager, these exchanges are the first reality to be identified, in order to control it and put it at the service of his company.

Then, this theory distinguishes three components in the organization's value chain: inputs (material and human resources, etc.), throughputs (value creation which is the core of the company's activity) and outputs (the product or service delivered). This decomposition makes it possible to identify each component, define its contours, contents, combinations...

Systems theory, in short, aims to provide managers with a tool to understand the organization structure in their organizations. This tool reveals them the complexity of the systems they are entrusted with.

Finally, systems theory is based on two other extremely powerful and closely related concepts. The first, very scientific, is that of entropy. It is a physical principle that any given system (physical or social) tends to deteriorate over time. The second concept, a kind of response to the first, is that of feedback. Feedbacks are developed from the company’s activities results - output. They redefine the company's resources and way of doing business - input. Finally, they precisely help maintaining the balance of the organization, and prevent its deterioration.

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