This is the third post in this blog on the Viable System Model (VSM). It follows on a general introduction to VSM and overviews of the more operational subsystem 3 and the more strategic subsystem 4. Subsystem 5 is about policy, governance, and identity. It is responsible for the survival of the system as a whole. As such it must maintain a proper balance between operational efficiency (subsystem 3 and lower) and pro-active innovation (subsystem 4). Aspects of intelligence that are especially relevant to the policy level are engagement in industry bodies or trade associations and benchmarking. Informal contacts on the golf course are equally useful.
The policy level is also responsible for maintaining the organization’s identity. System identity can be determined in two ways. One of the ways to define the identity of a system is by determining its purpose. According to Stafford Beer (1986) the “purpose of a system is what it does” (POSIWID). Checkland´s root definition – one of the key elements of soft systems methodology – can be used as a description of the purpose and thereby identity of the organization. Another approach is that of structural coupling, i.e. describing the relationship with the environment, for instance by carrying out a boundary analysis (see the earlier post on critical system heuristics).
Weak or ill-balanced governance is often associated with a strong focus on compliance and internal control. This may lead to the so-called death spiral, where intelligence and strategy failure in due course lead to structural operational failure. With the organization in disarray and pressures mounting, both time and capacity to redress the situation of intelligence and strategy failure will be lacking.