Organisations and Systems

Thanks to the work of P Beynon-Davies

Figure 2.2: A dynamic system

Source: after Beer (1966).

• Complex systems of human activity

• Made up of a collection of inter-related and inter-dependent sub-systems, which are organisations in their own right

Organisations

Composed of one or more of the following: • operational processes or mechanisms of transformation• sets of inputs and outputs from agents in the environment• control processes

Systems

Figure 2.3: System elements

Sub-systems and hierarchy

• A sub-system is some coherent part of a system

• Hierarchy is an inherent property of most systems

As a food retailer • Physical inputs to the organisation are foodstuffs it receives from

suppliers; physical outputs are foodstuffs sold on to customers• Payments made by customers and to suppliers are data inputs and

data outputs respectively

Tesco PLC: System

Figure 2.5: Tesco as a system

Tesco originally specialised in food retail but has diversified into areas such as discount clothes, electronics and financial services

Tesco PLC: Activity systems

• Key transformation: activity systems involved in supporting the sale of foodstuffs – Activity systems can be considered in a hierarchical fashion– Tesco’s systems of supply, supermarket operation and

financial management all contribute to its overall purpose: making a profit for its shareholders

• Environment: the retail industry / supermarket retail

Modelling activity systems: Rich pictures

• Involve some area of organisational life deemed problematic and so open to change

• Involve organisational analysis• Consider the problem situation as the context for the system• Represent the environment, stakeholders, concerns and

issues in this problem situation • Capture the essence of a complex situation • Include graphically as much as is relevant for representing the

problem situation in question• Are deliberately informal; there is no standard notation

Figure 2.6: A rich picture of a university

Tesco

• Tesco is primarily in the business of selling foodstuffs to customers

• Mission: to ‘create value for customers to earn their lifetime loyalty’

• Strategy is based on – offering a range of different types of stores– understanding its customers– treating its employees well

• Value for this company might include the additional value services available to loyalty card customers such as discounting of goods

Tesco: The equifinality characteristic of activity systemsThe equifinality characteristic of activity systems can be seen by looking

at two alternative models for food retail

1. Tesco supermarkets operate a traditional model– manages the flow of physical goods from suppliers through to customers– involves maintaining a large floor space stocked with products– customers go to supermarkets, pick products from shelves and transport

products home themselves

2. Tesco introduced on-line retail– customers order goods via the website– a picking list is produced for a store operative who walks around a store and

picks products to satisfy the customer order– the customer’s shopping basket is crated and delivered by van to the

customer’s home for a delivery charge

Figure 2.7: Food retail as two

activity systems

Decision tables

• Another way of representing a decision strategy

• Represents a set of business rules – or rules which regulate the behaviour in a business process

Table 2.1: A set of business rules for car rentals

• In this example the rules control the process of awarding discounts to customers renting compact cars

• A compact car rented for a month with loyalty membership and booked at least 3 days in advance will be entitled to a 20% discount.

Control

• A monitoring sub-system that ‘steers’ the behaviour of other operating sub-systems

• Frequently referred to as – a control mechanism– sub-system – process

Forms of organisational structure

• Large organisations historically maintained centralised structures

• More recently large organisations use multi-divisional structures

• Modern organisations have decentralised further, introducing a business unit structure

Figure 2.16: Forms of organisational structure

The application of process modelling to organisational problems

• Modelling is critical as a tool in the design of new ways of working

• The concept of system can be applied hierarchically within the process of modelling or design– we can specify the working of some system at a high level

or at a low level of detail• Process modelling allows us to represent in detail the

current or intended features of critical elements of organisational systems

Figure 2.17: Process modelling constructs