Peirce and Beer

This paper considers the philosophical background of Stafford Beer's Viable Systems Diagnosis (VSD) as profoundly influenced by Charles Peirce. In a general sense, our work discusses the VSD theory base in the development of a model for actionable theory in organizations. This paper examines VSD theory in the Beer trilogy ‘Brain of the Firm,’ ‘The Heart of the Enterprise’ and ‘Diagnosing the System’ and we propose that a sound set of VSD action principles can be derived from this trilogy. We contend that the philosophical background underpinning these principles is important. Using Beer’s ‘Decision and Control,’ we consider that philosophical background and link Operational Research and the interdisciplinary learning within Cybernetics to modern general systems theory. We explore Beer’s viewpoint on the Peirce depiction of four main methods of fixing belief; tenacity, authority, a priori and finally the scientific to assist in that expansion. We consider how knowledge of Beer’s perspective on making sense of the world is important in the linkage of VSD theory to the managerial problem arena. We relate the Peirce methods to previously reported problem solving exercises involving the VSD ideology, which we will develop individually at a later date. This paper reflects our desire to express the interpretation of VSD theory in a language that the well-informed manager may readily translate into the third step of testing theory in practice.     

What is the Systems Approach Good for?

This paper examines and evaluates social systems with the help of a set of classical systems concepts and identifies a number of organisational failures that can be better understood from a systemic point of view. It then extends Kaplan’s “balanced scoreboard” to include these concepts.     

Money, Time and Variety Engineering: The Application of Cybernetics to the Diagnosis and Design of Financial Performance Management Systems

Variety engineering was the term coined by Stafford Beer to describe the management of the system of constraints placed on an organisation. Successful variety engineering involves working with the demands of Ashby’s Law of Requisite Variety; matching regulatory variety with that of the situation being regulated. Money is an important mechanism for variety engineering: the allocation of financial resources helps amplify variety; its withdrawal attenuates. This paper argues that budgeting, the conventional approach to the management of financial resources, demonstrably does not have requisite variety. This fact could be manifest in a range of undesirable patterns of behaviour. The practice of budgeting has not, however, been seriously challenged by systems theorists nor alternative mechanisms proposed. This paper sets to remedy this by describing how the cybernetic regulation of the flow of financial resources can be incorporated into the framework provided by Beer’s Viable Systems Model.     

Collaborative Implementation Network Structures: Cultural Tourism Implementation in an English Seaside Context

Strategic policy has to be implemented within complex operating environments where organisations have to perform within an inter-dependent production process in a dynamic mix of competition and cooperation. This suggests that network structures need to be in place that allow for both collaboration and competition whilst mitigating against structural fragmentation. The aim of this research was to further the understanding of control and communication mechanisms and collaboration in policy implementation networks and focus upon problems of structural fragmentation in these complex policy environments. This research used a systems approach to develop a methodological framework based on Beer’s Viable System Model, work by Espejo and Social Network Analysis. The research was set in a tourism ‘cluster’ in an English seaside context, which is that part of the Yorkshire coast covered by the Scarborough Borough Council local authority, where a more culturally focussed tourism product was being introduced.     

Elicitation Methods of Organisational Knowledge: From the Individual to the Collective Through an Integrative Approach

The importance of the cyclic transformation of tacit knowledge into explicit knowledge for the knowledge-creation organisations is strategic. Yet in many instances this transformation is supported by informal settings with low process controllability. It is critical though that this be followed by a more systematic approach. A number of models of organisational learning have been developed by extrapolating individual learning styles, as is the case of the holonomic framework. However, there is a need to relate more closely models of learning and of knowledge creation to the knowledge elicitation methods, in order to further support knowledge management practice. This paper examines the holonomic framework with the view of informing the systematic elicitation of strategic knowledge in professional practice. It draws upon the experience and practical application of elicitation methods–in particular causal mapping and scenario building methods–to elicit middle-senior managers’ strategic knowledge by candidates to a Masters in Business Administration. The two methods are benchmarked against the holonomic cycle of knowledge development with regards to its learning phases, thus providing a more integrative approach to strategic knowledge elicitation methods.     

The Actions of Mahabharat (an Indian Epic): An Analysis from Action Science Perspective

This paper analyses the actions of Mahabharat from the point of view of action science. From the point of view of action science, the source of the problem of Mahabharat is the undiscussable issue of who should be the king of Hastinapur. The paper then analyses the actions of different actors of this epic. It concludes that Yudhishthir displays the Model I governing value of ‘minimize generating or expressing negative feelings’. Duryodhan displays the Model I governing value of ‘maximize winning and minimize losing’. Vidur, Bhishm and Dronacharya display the Model I governing value of ‘be rational’. Together these actors create the ‘limited learning system’ of Model O-I. The primary inhibitory loops created by this limited learning system finally lead to secondary inhibitory loop of polarisation of different actors into two groups and the emergence of win-lose group dynamics in the form of war as the only action which can settle the original undiscussable issue of who should be the king of Hastinapur.     

A Systems Theoretical Approach to Interoperability of Information

A rapid process of hybridisation of man and technology, organisation and technology and society and technology is currently sweeping the world. This process requires a way of (scientific) thinking that takes hybrid systems as the starting point. Such an approach makes it increasingly important for hybrid systems to be interlinked, enabling them to exchange and share information through these links. This linking of (hybrid) systems to enable them to exchange and share information can also be denoted as the realisation of interoperability between (hybrid) systems. Five principles from Luhmann’s systems theory can help us understand interoperability. Interoperability enables (hybrid) systems to join random coalitions and networks. The network centric warfare concept is currently the basis for international efforts aimed at the development and application of interoperability that would enable armed forces to act effectively and efficiently. This paper demonstrates what we can learn from Luhmann’s system’s theory.     

Towards a theory of game-based non-equilibrium control systems

This paper considers optimization problems for a new kind of control systems based on non-equilibrium dynamic games.To be precise,the authors consider the infinitely repeated games between a human and a machine based on the generic 2×2 game with fixed machine strategy of finite k-step memory.By introducing and analyzing the state transfer graphes(STG),it will be shown that the system state will become periodic after finite steps under the optimal strategy that maximizes the human’s averaged payoff,which helps us to ease the task of finding the optimal strategy considerably. Moreover,the question whether the optimizer will win or lose is investigated and some interesting phenomena are found,e.g.,for the standard Prisoner’s Dilemma game,the human will not lose to the machine while optimizing her own averaged payoff when k = 1;however,when k≥2,she may indeed lose if she focuses on optimizing her own payoff only The robustness of the optimal strategy and identification problem are also considered.It appears that both the framework and the results are beyond those in the classical control theory and the traditional game theory.     

Measuring the Performance of a Research Strategic Plan System Using the Soft Systems Methodology’s Three ‘Es’ and the Viable System Model’s Indices of Achievement

We explore problems involving the measurement of the performance of a system. We outline two systemic approaches that have come from different epistemological positions: one from the interpretivist paradigm (soft systems methodology) and the other from the cybernetic paradigm (viable systems model). These two systemic methodologies that have tackled problems involving performance measurement are considered and discussed: (a) Checkland’s systems ideas of ‘managing and controlling’ a system throughout a set of three measures of performance: efficacy, efficiency and effectiveness; and (b) Beer’s concepts of Actuality, Capability, Potentiality of the firm and his claims that the performance of a system needs to be quantifiable and resumed on ‘pure’ numbers which should reflect the survivability of the firm. A parallel is drawn between the two approaches concluding that although the paradigms underpinning them are in some way different, the practicalities of these approaches to control, measure and improve the performance of a system are very similar. A case involving the measurement of a proposed research strategic plan for a Manchester Metropolitan University Business School’s department is used to illustrate the systemic approaches.     

Action Research: Its Foundations in Open Systems Thinking and Relationship to the Scientific Method

This paper considers those interpretations of action research that can be traced to Kurt Lewin at the Research Center for Group Dynamics at the University of Michigan, and the work in social ecology by Emery and Trist at the Tavistock Institute. It locates the logical basis of these interpretations in the philosophy of pragmatism, particularly as it relates to Peirce’s inferential logic and inquiry system. Drawing on this argument, and on the significant developments in approaches to systemic thinking over the past 40–50 years, a normative set of criteria is established for action research. The paper concludes that both positivist science (which relates to closed systems thinking) and action research (which relates to open systems thinking) are essential to any complete scientific approach.     

Problem Conceptualisation Using Idea Networks

The social act of conceptualising a situation as problematic is thought to determine what will later be seen as a satisfactory solution. Pierce argues that conceptualising something (or an event) is a process of thinking about it through a set of conceptual frames. This paper presents a method for emerging those conceptual frames from preliminary discussions with participants. It draws on the work of Christopher Alexander and the Small Worlds phenomenon. Alexander suggests that participants’ statements can be thought of as being networked. The Small Worlds phenomenon then suggests that this network will not be uniform but rather be made up of a number of clusters (small worlds). These can be used to identify the conceptual frames in the participants’ statements. Therefore, the argument of this paper is that this method can be used to conceptualise problems. Having an explicit method is thought preferable to calling for unspecified creativity. The creativity comes from the method taking Dewey’s advice to switch between analysis and synthesis. The paper’s argument will be supported by explaining how the method can be practiced, while explaining why (theorising) the steps advised might be creative.

Pricing of LIBOR futures by martingale method in Cox-Ingersoll-Ross model

<正> This paper considers the pricing of LIBOR futures in the Cox-Ingersoll-Ross(CIR)modelunder Pozdnyakov and Steele(2004)'s martingale framework for futures prices.Under the CIR modelfor short term interest rate,we prove that there exists a unique futures price process associated withthe terminal value and the standard financial market,and that this unique futures price process has amartingale representation.Moreover,a general closed-form pricing formula for LIBOR futures contractsis obtained in the CIR model.     

The Viable System Model and Its Application to Complex Organizations

Stafford Beer’s Viable System Model is the best known of the many cybernetic models he constructed over a career spanning more than 50 years. He explored the necessary conditions for viability in any complex system whether an organism, an organization or a country. Although the model was first applied in his work in the steel industry, many further applications were made during his later work as a consultant. The best known of these was when he was invited by President Salvadore Allende of Chile in 1970 to model the social economy of that country. That experiment was brutally cut short in 1973 by the CIA assisted coup during which Allende was killed and Pinochet’s dictatorship installed. The model itself draws on mathematics, psychology, biology, neurophysiology, communication theory, anthropology and philosophy. It was first expressed in mathematical terms in ‘The Cybernetic Factory’; next it was described in neurophysiological terms in Brain of the firm; and finally according to logic and graphic presentation in Heart of Enterprise and Diagnosing the System for Organizations. This last version is the one that is most accessible. It enables people to address organizational issues in a way that skirts the usual categories and organization charts and gets down to the actual necessary functions, no matter who is performing them. With this model people can get a boost as they diagnose or design an organizations. One aspect is to discover what the organization’s critical variables are and to find or install the homeostats that will show that they are maintaining equilibrium. Within that context, the model will help you ascertain that the principle functions and communications channels are in place and can function effectively. A crucial aspect of the VSM is that it is recursive; that is that the same relationships can be traced from the shop floor to the corporation or from the village to the country. Two examples will be discussed: a small business and the Chilean work from the 1970s. It is hoped that this will encourage people to imagine a world that works much better than it does now and where management is not defeated by complexity. A version of this paper was delivered as the first Stafford Beer Memorial Lecture on July 8, 2007 at the World Multiconference on Systems, Cybernetics and Informatics in Orlando Florida.     

Disposing the leftovers under the consignment contract with revenue sharing: Retailer vs supplier

This paper studies the consignment contract with revenue sharing where the retailer offers two revenue share schemes between himself and his supplier from the viewpoint of inventory ownership: One is that the retailer takes charge of the unsold items,the other one is that the retailer returns the unsold items to the supplier at the end of the selling period,and the supplier disposes those overstockings.In each contract,the retailer deducts a percentage from the selling price for each sold item and transfers the balance to the supplier.The supplier solves a two-stage problem:She first chooses contract,then decides retail price and delivery quantity according to the terms of the contract chosen.With an iso-price-elastic demand model,the authors derive the retailer and suppliers’ optimal decisions for both schemes.In addition,the authors characterize how they are affected by disposing cost.The authors compare the decisions between the two schemes for disposing cost turn out to be holding cost or salvage value,respectively.The authors use numerical examples to show the supplier’s first-stage optimal decision depends critically on demand price elasticity,the disposing cost and the retailer’s share for channel cost.     

Leadership and Learning: A Critical Reexamination of Senge’s Learning Organization

From its inception the concept of the learning organization has been identified with a particular type of organization or new forms of organizational learning. But it is often forgotten that Senge’s ‘system thinking’ formulation of the learning organization was inseparable from an attempt to reformulate a new way of thinking about change agency and leadership in organizations. Here it is argued that Senge’s learning organization can be re-conceptualised as a partial fusion of ‘systems thinking’ and learning theories that leads to a concept of organizational learning as a form of ‘distributed leadership’. However, the concept is critically flawed because it cannot theorise the organizing practices by which learning to lead and leading to learn are shared or distributed in organizations. It is concluded that Senge’s under-theorized focus on distributed leadership consistently neglects issues of practice and issues of power. As such his work does not provide an exploration of the possibilities for increasing the dispersal of human agency, power, knowledge and autonomy within the workplace.     

Evaluating Climate Change Discourse in New Zealand

Issues of social responsibility, ethics and interdependence, as well as the pragmatic imperative to better understand complexity, require that diverse viewpoints be invited and given credence by policy makers seeking imaginative ‘solutions’ to climate change. This paper explores the statutory introduction of biofuels into New Zealand by way of the discourses that preceded this decision. This inquiry used Critically Systemic Thinking and ‘Mode 2’ Soft Systems Methodology (SSM) to engage with multiple stakeholders to the Biofuels policy to discover how the discourse was conducted. It concludes that the process of policymaking was framed in technical rationalist terms thereby favouring certain ‘worldviews’ over others. Accordingly, a model of ‘ideal’ discourse and decision making for governing the conduct of future public discourse is presented. This inquiry assists in re-establishing SSM as a rigorous and reflexive approach to analysing a complex issue and for enhancing collective learning into its content and process.     

A game theoretical study of cooperative advertising with multiple retailers in a distribution channel

Extant studies of cooperative advertising mainly consider a single-manufacturer-single-retailer channel structure.This can provide limited insights,because a manufacturer,in real practices,usually deals with multiple retailers simultaneously.In order to examine the impact of the retailer’s multiplicity on channel members’ decisions and on total channel efficiencies,this paper develops a multiple-retailer model.In this model,the manufacturer and the retailers play a Stackelberg game to make the optimal advertising decisions.Based on the quantitative results,it is observed that:1) When there are multiple symmetric retailers,as the number of retailers scales up,the manufacturer’s national advertising investment contributes increasingly to add to channel members’ profits in equilibrium,but the total channel efficiency deteriorates quickly and converges down to a certain value;2) When there are multiple asymmetric retailers,the distribution channel suffers from the manufacturer’s uniform participation strategy due to the retailer’s free-riding,and benefits with the manufacturer’s retailer-specific participation strategy.This study derives equilibrium solutions in closed form for all games considered and measures explicitly the gains/losses of channel efficiencies under different game settings.     

Action Research for Sustainable Water Futures in Western Sydney: Reaching Beyond Traditional Stakeholder Engagement to Understand Community Stakeholder Language and Its Implications for Action

Action on issues of ecological significance often requires changes in personal behaviour and political consensus on technologies to support these changes. Unfortunately, many consultation processes only engage a narrow range of stakeholders, usually those professionally engaged or already active on a range of community issues. This paper illustrates how people who are ‘hard to reach’ or seen as ‘apathetic’ might be engaged using ‘action-conversations’ that explore the social climate for action and how scientific/technical messages can be framed in the language of the community.     

Exploring an Explicit Use of the Concept of Sustainability in Transport Planning

The aim of this paper is to explore an explicit use of the concept of sustainability within transport planning. This paper analyses the concept of sustainability based on a practical approach for a sustainable development of Nordhavn, an area of Copenhagen, exemplifying a complex planning problem. An exploration of the application of the concept of sustainability is carried out using elements of Soft Systems Methodology (SSM). This approach indicates a need to separate the use of sustainability considerations regarding the transport planning ‘process’ from the transport planning ‘results’. The two approaches are related to the planning levels presented by Ulrich (Syst Prac 1(4):415–428, 1988). It was chosen to focus on the understanding of a sustainable transport planning process. This focus is addressed by four stakeholder groups interviewed based on the ‘ought to’ mode of Critical Systems Heuristics (CSH). Finally an outline of some of the factors of a sustainable transport planning process is proposed.