Using the Viable System Model for Methodical Assessment of Variety in Organizations: The Story of Designing a Method

Using the Viable System Model for Methodical Assessment of Variety in Organizations: The Story of Designing a Method

Christoph Rosenkranz (Goethe-University Frankfurt am Main, Frankfurt, Germany) and Roland Holten (Goethe-University Frankfurt am Main, Frankfurt, Germany)
Copyright: © 2013 |Pages: 22
DOI: 10.4018/jdm.2013070102
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Abstract

The complexity in value chains that arises from the cooperation of multiple stakeholders is of utmost importance for managers and organizational designers. In this context, theories of organizational design seek to address the practical problem of intentionally changing organizational structures and processes to enhance organizational performance. Successful cooperation largely depends on effective and efficient information flows. This paper reports on a research project using the design science research framework to develop a method for the analysis and design of information flows. Linking information flows to the concept of variety, the Viable System Model is applied as a theoretical foundation of the so-called Variety Engineering method. The design of method is reported, the procedure for its application is demonstrated, and it is accounted for how the method was evaluated in a set of field studies.
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1. Introduction

Value chains are struggling with increasing complexity of business processes (Schäfermeyer, Rosenkranz, & Holten, 2012), as business processes become ever more complex and cut across inter-organizational boundaries and functions (Kock & McQueen, 1996). Approaches that try to improve the performance of business processes generally rely on two strategies, either to increase the efficiency of business processes or to coordinate business processes more effectively (Anupindi, Chopra, Deshmukh, Van Mieghem, & Zemel, 2006, pp. 211-222). The first strategy requires measurement and control of business processes to reach desired states, focusing on resources and the flow of materials and goods in order to reduce inventory levels. The second strategy shifts the focus from the flow of materials and goods to the information and information flows that are increasingly needed for coordination activities. Well-informed actions are more likely to achieve desired goals, as information helps individuals form true beliefs which lead to effective, goal achieving actions (March & Smith, 1995, p. 251). Therefore organizations try hard to achieve efficient information flows in order to be more effective (Jin & Levitt, 1996). This is even truer in networked value chains, where actors from totally different organizations communicate with each other for coordinating actions. As information is potentially one of the most important drivers of performance in value chains because it directly affects other drivers such as the efficient flow of materials (Chopra & Meindl, 2007, p. 45), attempts to model managerial work need to study and describe the information flows and the communication (Mintzberg, 1971, pp. B-108).

The question that guided the research project which is presented in this paper is how an organization can be successfully analyzed and designed with regard to its information flows. The objective is to construct useful artifacts for organizational analysis and design. The design process of developing constructs for describing information flows, models for explaining the relation between those constructs, and a procedural method for analyzing and designing information flows is presented. In this, the research follows the design science research methodology (Hevner, March, Park, & Ram, 2004; Vaishnavi & Kuechler, 2008).

The remainder of this paper is structured as follows. Section 2 briefly discusses the motivation for the research and related work. Afterwards, the cybernetic concepts of variety and the Viable System Model are suggested as the theoretical underpinnings for the analysis and design of information flows in Section 3. The design and the search process that led to a novel method for analyzing and designing information flows are presented in Section 4. Section 5 gives a brief overview of evaluations of the approach during the design process. The contributions, limitations, and future research directions are presented in Section 6.

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