International Journal of Technology Management and Sustainable Development Volume 4 Number 2 2005 Intellect Ltd Article. English language.

. doi:10.1386/ijtm.4.2.131/1

Organisational viability as a factor in sustainable development of technology

Patrick Hoverstadt Fractal Consultancy, UK Diane Bowling Fractal Consultancy, UK Abstract
This article looks at the impact that the viability of organisations that own and manage technological systems has on the sustainability of that technology. Specifically, it looks at the role that organisational viability through time plays in linking technology to its operating environment and stakeholders to ensure sustainability. Using three case studies, the authors show how a lack of organisational viability led to technological unsustainability in established industries. Organisational viability is assessed using Beers Viable System Model (VSM) and this is also used to address the problems of organisational viability through redesigning the system to ensure sustainability.

Keywords
organisation environment pollution viability sustainability VSM fractal structure operations management metal processing nuclear waste

Introduction
In this article we will use three case studies to look at the relationship between organisational sustainability or viability, and the sustainable development of technology. These case studies involve paid consultancy projects undertaken by the authors. In each case, the work was commissioned to address real problems that the organisations faced to do with their viability as they saw it. And in each case, their organisational viability problems had to do with the interactions between the organisation and its environment and the pressures that the organisations were facing as a result of their environmental impact. These cases were not, therefore, chosen in advance to demonstrate the application of a particular theory or model; and the conclusions we have come to in writing this article have resulted from reflection on practice and the application of systems theory to real-world situations. Sustainable development has become a touchstone of modern thinking, and whilst the concept has often been presented as either a technological issue with an ethical dimension or as a social issue with an ethical dimension, it has rarely been presented as an organisational issue. We argue that what links the technology domain to the social domain is the organisation, and that a prerequisite of sustainable development is viability of organisations. The argument runs at two levels. First, sustainability implies longevity, and organisations that are viable through time are needed to manage such development. Second, viable organisations are
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well connected to their operating environments, and so are able to take decisions about technology and development that are appropriate to their environment, including the social and ecological domains.

Sustainable development and viability Sustainable development

The term sustainable development has several distinct meanings. Historically, it originated in relation to explicitly green issues, but has evolved to reflect a wider concern about long-term consequences that is summed up in the Bruntland definition development that meets the needs of the present without compromising the ability of future generations to meet their own needs (Brundtland 1987: 43 [emphasis added]). In the three cases we discuss in this article, sustainability was an issue, and there was an almost seamless connection between the ecological problems created by technology, social and ethical problems and the capacity of the organisations concerned to recognise and address these issues through time.

Viability and sustainability

The connection between viability and sustainability has some face validity, but does beg a number of questions. Is it always the case that sustainability requires viable organisations? What happens to the sustainability of a development if organisations are not viable? Clearly there are some sectors such as IT, which are characterised by having a population of mainly short-lived organisations. Obviously these are not inevitably responsible for unsustainable development. However, during their short life these companies are likely to be viable, and need to have a long-term perspective that is greater than their own expected life span. Sustainable development often has considerations for organisations beyond the likely span of their survival, often reaching into hundreds, thousands of years and more. The nuclear industry in particular has had to grasp this nettle. The common factor in our case studies is the longevity and the actual or potential severity of the harmful effects of the development in question. We would argue that sustainability requires that the longevity of a harmful effect needs to be matched by the longevity of organisational ownership of the problem and by an adequate and appropriate organisational response to it. As well as longevity, it also follows that another requirement is the ability to predict harmful effects. This argument is clearly more obviously relevant to issues of pollution than those of resource use that are also a major factor within sustainability. Certainly, within the nuclear industry from which two of our cases are drawn, the need for organisational longevity to manage long-term effects was recognised as an issue.

Methodology for assessing viability

The methodology we use to look at organisational viability is Beers Viable Systems Model (VSM). In developing the VSM, Stafford Beer sought to
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develop a science of organisation, by setting down the principles that underpin all organisations, and create viability, which is the capacity to exist and thrive in sometimes unpredictable and turbulent environments. The criteria of viability require that organisations are or become ultrastable, that is, capable of adapting appropriately to their chosen environment, or adapting their environment to suit themselves. This is in contrast to hierarchies, which are inherently unstable structures, designed as they are to allow a small group or a single individual to change the direction of the whole organisation at will. The VSM models the structures of the organisation and the relationships between them. This includes key processes, communications, and information flows. A key concept is that of complexity and how the organisation and its management handle the complexity of both their environment and their own activities. The model deals with this inherent complexity by unfolding in a fractal structure, in which systems are made up of sub-systems, which have the same generic organisational characteristics. In other words, viable systems are made up of viable systems, which are themselves made of viable systems. Significantly for the purposes of this article, the VSM sets down criteria for organisations to become viable, i.e. capable of sustaining themselves in their chosen environment through time. A key to this is that throughout

Figure 1: Beers Viable Systems Model.

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the structure of the organisation, there are, at every level, mechanisms for adaptation that allow that part of the system to adapt to both its external operating environment and the internal environment of the wider system of which it is a part. These mechanisms for adaptation need to be built into the structure of the organisation to operate at appropriate levels; and their existence or absence are the core of our argument. Viability implies the ability of the organisation to go beyond merely doing what it does, and doing it well and efficiently. It implies the ability to change itself, its activities, its form, its identity, and the environment in which it operates. So to be viable, organisations need to be able to adapt, and furthermore, the mechanisms for adaptation need to present in all the sub-systems and sub-sub-systems of the organisation. In the VSM, balancing the interests of cohesion which has to do with managing the current activities - the inside and now of the organisation - is intelligence, which looks outside the organisation and into the future. Typical intelligence activities are forward planning, forecasting, marketing, and technical/product development. Many of the disciplines that manage the cohesion of the organisation (financial control, personnel, operations management) have a counterpart within intelligence: finance planning, training and development, capacity planning, and research and development. All these are activities that look at the organisations place within its operating environment and the future, and seek to prepare the organisation for a new future. Strategic decision-making is a process of matching current reality to future needs or objectives. So a typical decision process would start with an assessment of where we are now, deciding where we want/need to be in the

Figure 2: Intelligence, the organisation looking into the future and its environment.

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future, and then planning how to get from where we are now to where we need to be. Within the VSM, where we are now is within cohesion management, whilst where we want to be in the future is handled by intelligence. Balancing the two is policy. Successful strategic decision-making requires a rich debate between elements of cohesion, between elements of intelligence, and between intelligence and cohesion. This set of conversational processes needs to be overseen by the policy function. Failure to adequately structure these conversations results in a high failure rate for decisions (either not implemented, or fail on implementation). There are a number of archetypal strategy problems in this area, including the following: Strategy dominated by cohesion, resulting in stasis Strategy dominated by intelligence resulting in unachievable and unrealistic plans Strategy dominated by one functional discipline resulting in decisions that ignore key issues, and offer solutions that do not match the problem

Figure 3 shows a typical set of strategy conversations. Different environmental opportunities are matched to the existing state of the organisation such that a practical and realistic conclusion can be arrived at. The choice as to which markets the organisation should develop with which products is balanced against the capacity of the organisation to support this in terms of financial, human, and production resources, and through an assessment of what needs to be done to enable each development to cope with impending challenges.

Figure 3: Example of integrated decision-making in a commercial context.

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Using the VSM as a template allows us to diagnose structural weaknesses in organisations and specifically weaknesses in their capacity to maintain their own viability in their chosen environment. It can, therefore, provide us with a set of objective criteria for assessing organisational viability. We can use this assessment of organisational viability and look at its significance in either creating or undermining sustainability in technological developments. Explicitly within the VSM framework is the concept that viable systems are themselves necessarily composed of viable subsystems. Applying this to the context of a wider socio-environmental system within which an organisation is embedded clearly implies that the viability (and therefore the sustainability) of the socio-environmental system is compromised if its component systems (including industry) are not themselves viable. This view, explicitly set out within the VSM is also consistent with Maturana and Varelas work (1979, 1992) on structural coupling between a system and its environment.

Moving to a fractal structure for sustainability

The first case study concerns a large metal processing plant and illustrates the impact that systemic failures within operations had on the viability of the company and on environmental sustainability. The company had several thousand staff producing metal using electrolytic and casting processes. They also produced electrodes. The company had been organised on hierarchical/functional lines. During this era of the organisation, pollution was such that local health was affected, trees no longer grew in the neighbourhood of the factories and local people could not hang out washing for fear of damage. The earlier structure can be characterised as functional chimneys (see Figure 4). The shop-floor workforce producing electrodes and metal, which they cast into ingots, are shown in the foundation layer, which supports a number of chimneys. These chimneys contain staff who develop new processes and equipment; maintain the equipment; provide staff development and maintain company discipline and records; understand the technologies of the processes and how the external physical environment is affected by them; look after the health and safety of the workforce; interact with current and potential customers; and ensure that all the processes meet current performance standards and that the company is running profitably. In this scenario, all decisions and problem solving takes place away from the daily routine of making metal. The shop-floor staff followed process instructions and referred to others whenever there was a deviation in the process. The inevitable result was a decision structure that was slow and ineffective and actually became an indecision structure, as operational staff would not bother to seek decisions on their problems because they knew that decisions would be ineffective or inappropriate. However, the polluting gases and effluents were produced within the electrolytic cells on the shop floor. Reducing these depended, in the first instance, on controlling the operation of each cell better. Each cell already
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Figure 4: Functional chimneys. had an operational team to look after it. Electrolytic processes take considerable time to run up and run down; they cannot be started and stopped at will. Therefore, each cell had five shift teams responsible for it to cover 24 hours a day, each day of the year. The casting and electrode production processes also involved shift work. The company recognised that to control the cells better would require better knowledge at the shop-floor level, together with the responsibility and authority to act. To achieve this, the organisation was changed away from functional chimneys and these functions moved to the shop-floor teams. Achieving this required time and resources to train staff and overcome opposition. The teams already consisted of about six people; so the company, together with the support of the unions, worked to enhance the knowledge, responsibility and authority of the members. One member of the team became the team trainer. This was the member who was recognised by the team and management as already having good relationship skills. Training was provided to enhance skills and ensure that this member understood the technical and other processes well, so that they could help others. Similarly, the team member with the best technical and scientific skills was selected for training as the teams technical problem-solver. Each team already had a team leader, whose training was enhanced, so that the leader could ensure that the team was adequately staffed and lead the team in collective problem solving, bringing in improvements to the cells management. Each shift team also improved liaison with other shifts for the same cell and between cells. Knowledge, responsibility and authority were transferred from the functional chimneys to the cell teams and also to the management of the
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product lines - that is the electrolysis, casting and electrode production units. These cell teams gained a fresh organisational perspective regarding the financial, marketing, maintenance, and product and process development aspects of the business. These changes moved the company away from the hierarchical/functional structure to a fractal structure that reflected the fact that the company was a metal producer. The Viable System Model helps people to enhance the viability of their organisations by providing a model of the complexity and the systems needed to manage that complexity. A first step in modelling this is the unfolding of this complexity into fractal levels with each level having similar organisational systems. Each level has a corresponding environment. Figure 5 shows the company with its new structure unfolded and the environment corresponding to each level. The environment of a company includes customers, suppliers, competitors, etc. With better knowledge of processes and the needs and importance of the environment, responsibility and authority, the cell teams were able to reduce the amount of potential pollutants leaving the cell, ensuring that they were collected as well as possible by the ducting systems. Cell teams

Figure 5: Unfolding complexity of a metal processing company.

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Figure 6: Structure and communications within electrolysis unit. and shift teams could coordinate between themselves to improve the overall waste-product management at the cell level. But cell teams were not responsible for the movement of the metal to the casting plant or for the equipment to do this. They were also not responsible for the air extraction system around the plant. This is because the ducting system was wider than any one cell and needed to take into account broader needs than each individual cell. Because of this, and the capital cost of an extraction system, this remained the responsibility of a more aggregated level that of the electrolysis unit as a whole. The electrolysis unit had aspects of financial and maintenance devolved to it, aspects that had originally been parts of centralised chimneys. This improved their ability to manage the collection of pollutants within the plant and their movement to a treatment unit. This unit remained centralised as it treated pollutants from the whole plant. Figure 6 shows the structure of and communications within the electrolysis unit. Responsibility and authority together constitute greater autonomy. The greater autonomy of the shift, cell and the unit levels had a further effect beyond their individual ability to better manage issues locally like, for
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example, pollution. It also improved the ability to negotiate between the levels. Thus, the unit in general was responsible for the overall management of pollutants discharged through and by it. Directly, the unit managed the ducting system, but in conversation with the teams running the cells, they could improve the overall effectiveness of the integration of pollution management between cells by standardising best practice and instituting continuous improvements. These improvements in pollution management all resulted from organisational changes. The financial costs were small and the savings large. The major costs were largely emotional as people have had to change practices and attitudes of a lifetime. However, all staff lived in the local area and benefited directly from the gains in the local environment. Also, working in the factory, they gained from improvements in the physical environment within the factory.

Figure 7: Structure and communications of the company.

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Following the improvements to pollution management made by the organisational changes, further improvements could only be achieved through a large financial investment in a new treatment plant. To do this, a multi-disciplinary team was created. Leadership belonged to the projects department at the centre, but it also involved other parts of the company. As we argue elsewhere in this article, to solve a complex problem, the problem team must be organised to reflect all parts of the problem. Figure 7 brings together the organisation of the metal company in one Viable System Model. It shows how all parts of the company are interconnected and therefore give insight into the way in which the pollution management problem, and thus the sustainable development of metal production, is company-wide and interconnected.

Policy-making for sustainable development

Our first case concerned decision-making about operations. Our other cases involve decision-making to inform national policy about the management of nuclear waste in two countries in Europe. These cases illustrate the impact that systemic failure of policy-making has on the viability of an industry and thereby on environmental sustainability. The central problem facing the non-military nuclear industry is that of nuclear waste arising from the production of electricity from nuclear reactors. Currently, there is no accepted answer to the question of what to do with high-level and long-lived nuclear waste. In the absence of an answer to this problem, plans for the expansion of the industry, which could be desirable at a governmental level in reducing carbon dioxide emissions as well as at a company level for commercial reasons, are effectively on hold.

Figure 8: Problem complexity in nuclear waste management.

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The problem of what to do about nuclear waste is a classical example of a complex problem in that it has several interdependent elements to it, and involves a range of stakeholders with divergent views about the nature of the problem and about the nature of any possible solution. Amongst the elements of the problem, there are environmental, economic, social and political issues as well as a set of technical and technological issues. Each one of these elements would in reality be sufficiently complex to constitute a complex problem set in their own right and each is dependent on the other elements (Figure 8). For example, it is simply unrealistic to evaluate possible technical solutions to the waste problem without taking into account their economic consequences, especially when considering the long-term status of the industry, since abandoning further nuclear development would have major economic consequences. Similarly, the inherent conflict of interest between economic development and environmental concerns was clearly recognised. Within the VSM, the resolution of complex problems, such as this, is achieved through the integration of different stakeholders - both internal and external - into the decision process in such a way that interdependent problem elements are handled in parallel and are tackled as interdependent rather than separate problems. Two obvious prerequisites to this are, first, the recognition by the problem owners of the nature of the problem and its different constituent elements and, second, the engagement of relevant stakeholders in the decision process. To be effective in solving complex problems, there has to be a congruence between the structure of the problem and the structure of the decision process such that the decision structure can be mapped onto the problem; interdependencies between elements of the problem need to be replicated in the decision process if key elements or aspects of the problem are not going to be missed. A VSM analysis of the decision process in the nuclear industry in country A reveals several issues. Foremost of these is the failure to recognise and address the complexity of the operational environment, in general, and the context of the problem, in particular. Specifically, there was a failure and reluctance to engage fully with those aspects of the problem beyond the technological. Even at a purely organisational level, this would have been no easy task since there were a considerable number of organisations involved within the nuclear industry. These included generators, waste managers (or would-be waste managers awaiting permissions), research bodies, environmental monitors, health and safety inspectors, and a plethora of regulatory authorities of various sorts. Outside the industry itself, there were, of course, many different interest groups with a legitimate stake in the decision, both domestic and international (as cross-border disputes over the transport of waste showed) and, of course, the problem crossed the boundaries of interest between many government departments. It may be that the very scale of the problem or its complexity overwhelmed those charged with designing the decision process; but whatever
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Figure 9: Fragmentation of decision-making in nuclear waste management. the reason, the problem of what to do about nuclear waste was treated as if it was simply a technological problem. It was widely recognised and stated by those involved in the decision process that this was more than just technological. And yet political, social, economic and wider environmental (beyond immediate site-pollution) considerations were effectively excluded from the decision process. The assumption was repeatedly made that the politicians would take all that into account - this, despite the fact that it was widely known within the industry that hardly any politicians understood the issues or their implications well enough to do much beyond rubber stamping the conclusions arrived at from the technological debate. Figure 9 shows the fragmentation of the decision process, with the industry heavily engaged in research into possible technical solutions working under the explicit assumption that their role was limited to this, and that consideration of other factors, and their importance was purely the concern of politicians and government. At least one official, a senior civil servant, stated that it was not possible to build a decision structure capable of dealing with multiple interdependent factors and that it was therefore necessary to design the structure as if it were purely technical and hope that other factors could be accommodated later. However, even the technological problem of waste disposal was, in itself, a multi-factored problem with several interdependent issues and requiring the integration of different scientific and engineering disciplines. The integration of these disciplines and organisations in a decision structure to solve the technological problem had been achieved (Figure 10). So there was clear evidence that this sort of organisation and decision-making was practicable, if difficult. Using the VSM as a normative model for assessing the viability of the industry, we can see that there were major weaknesses in the adaptation mechanism at the industry level, with the exclusion of non-technological
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Figure 10: Integrated teams to solve complex technological problems. factors from the decision process. The consequence was that the process of searching for a technical solution was under constant attack from those sections of the public and the government that felt their interests had not been taken into account. This effectively undermined the whole of the decision process and proved hardly the way forward since technical solutions were seen as politically and socially unacceptable. In contrast, the nuclear industry in country B took a very different approach. Engaging different stakeholder groups within the decision process allowed them to explore the full complexity of the nuclear waste problem and in particular to take into account the interdependencies between different parts of the problem set. The technical solution that was arrived at and put into effect in country B was deep disposal. This was similar to the solution proposed without success in other countries. The difference in country B was that the integrated nature of the decision process led to political consensus and alignment behind the solution, but only once it was de-coupled from the issue of the continuing development of the industry. In other countries (including country A), both industry and the public saw solving the nuclear waste problem as giving a green light to further development of the nuclear industry. In country B, agreement for a plan to deal with existing nuclear waste was conditional on the freezing of development, which meant that the scale of the problem was fixed in both scale and duration.

Adaptation and prediction

So far in the three cases mentioned, we have concentrated on that element within viable systems that has to do with adaptation and, specifically, the organisational capacity to take decisions at appropriate levels, and in ways that are appropriate to the organisations operating environments. Part of this capacity is the ability to predict or forecast future conditions and sce144
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narios. In each of our cases, there was a historical failure to predict the consequences of technological development. It is important to recognise that this is a symptom of failure at an organisational level, not a personal one. If we take the nuclear examples, the problems of nuclear waste have long been well known to nuclear scientists and individuals within the industry. However, without the creation of any adequate organisational capacity to deal with the problem, any unease about this unsolved problem was kept at the individual level, and the issue was effectively ignored for years until it threatened the future of the industry.

Conclusion
From a VSM perspective, our case studies show a metal processing company and an industry that looked inwards and focused on their own current concerns rather than looking at those issues in both the broader environment and the future. In both cases, this was an organisational or systemic failure, not a failure of individuals. The systemic organisational failures at both the operational and the strategic levels had direct and observable impacts on both the viability of the organisations concerned and critically on the sustainability of the environments in which those organisations were embedded. In both cases, the viability of the organisations and the sustainability of the environment were directly linked, and the failure of the organisation had direct consequences for the environment. This finding is in line with the both the theoretical basis of the VSM that viable systems are composed of viable sub-systems. The finding is also consistent with Maturana and Varelas work on the structural coupling between systems and their environments. The case studies also show the value of the VSM as a tool that is able to quickly and precisely diagnose any lack of organisational viability and therefore its value in creating and promoting sustainability. References
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Andersson, K. Espejo, R. and Wene, C. (1998), Building Channels for Transparent Risk Assessment, SKI Report 98: 6, RISCOM pilot study, Stockholm. Wene C. and Espejo R. (1999), A Meaning for Transparency in Decision Processes, in proceedings of conference on Values in Decisions on Risk (ed. Kjell Andersson), sponsored by European Commission/DGXI, Swedish Nuclear Power Inspectorate and Swedish Radiation Protection Institute, Stockholm, 13-17 June. Maturana H. and Varela F. (1979), Autopoiesis and Cognition: The Realization of the Living, Boston Studies in the Philosophy of Science, Boston: Kluwer Academic Publishers. (1992), The Tree of Knowledge: Biological Roots of Human Understanding, Boston: Shambhala Publications

Suggested citation
Bowling, J. and Hoverstadt, P. (2005), Organisational viability as a factor in sustainable development of technology, International Journal of Technology Management and Sustainable Development 4: 2, pp. 131146, doi: 10.1386/ijtm.4.2.131/1

Contributors details
Patrick Hoverstadt and Diane Bowling are from Fractal, a UK-based consultancy firm engaged in leading-edge research addressing organisational problems (www.fractal-consulting.com). Patrick Hoverstadt is responsible for Fractal activities in the north west of England. Contact: 23 Birchbrook Road, Lymm, Cheshire, WA13 9SA, UK. Diane Bowling is responsible for activities of the Fractal Consultancy in the West Midlands. Contact: 1 Radnor Road, Dudley, West Midlands, DY3 3TW, UK. E-mail: patrick@fractal-consulting.com E-mail: diane@fractal-consulting.com

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