Knowledge Management
Department of Computer Systems and Communications
Academic Year: 2016-2017
Francesco Caputo
fcaputo@mail.muni.cz
The role of Service Logic and Systems Thinking in managing social
and economic complexity
Traditional managerial models are not able to understand and to explain
recent economic and social changes
Conceptual logic
Shift from Linear perspective A B C D E
Cause ▶ Effect
to a ‘complex’perspective A B C D E
More contextual causes
produce different contextual effects
Conceptual logic: what is the complexity?
Conceptual logic: what is the complexity?
Adaptable
Elements
Embedded
Systems
Co-Evolution
Non-Linearity
Simple
Rules
Not Predicable
in Detail
Order w/o
Central
Control
Natural
Emergence &
Creativity
Conceptual logic: what is the complexity?
Conceptual logic: what is the complexity?
Traditional managerial and interpretative models consider the complexity an
objective feature of problem/situation.
By building on this reflection they affirm that the only way to solve a complex
problem is based on its split up into elementary parts.
By adopting this pathway researchers lost many of the specific features of
investigated problems.
How to overcome the limitations of
useless traditional predictive models?
Conceptual logic
Every organizations, individuals, groups can be considered systems
“A system is any group of interacting, interrelated, or
interdependent parts that form a complex and unified whole that
has a specific purpose” (Koskinen, 2013: 15).
Systems thinking
According to Odum and Barrett (1971), it is need to shift the attention from
the reductionist approach to the holistic one
ü Systems have a purpose that defines it as a discrete entity that holds it together
ü All parts must be present for a system to carry out its purpose optimally
ü The order in which parts are arranged affects the performance of a system
ü Feedback provides information to the system that lets it know how it is doing
relative to some desired state
Characteristics of Systems
Every Systems can be analyzed from two different perspective:
Structural and Dynamic
ü How a system is composed?
ü How each elements interact
with each other?
ü What are the effects of
feedback processes?
ü How a system emerges?
ü How can be explained aims
and pathways of a systems?
ü Why different systems
interact?
Viable System Model
(VSM)
(Beer, 1981; Espejo, 1990)
Viable Systems Approach
(VSA)
(Barile, 2000, 2009; Golinelli,
2000, 2010)
Characteristics of Systems
The Viable Systems Model is based
on the five functions of the human nervous system
The five functions recur at each level of organization:
• System one – the producing units
• System two – coordinates the producing units
• System three – middle management, defines a “resource bargain” with the
system ones
• System four – does long-range planning, designs the next product or service
• System five – controls the rate of innovation, defines the organization’s
values
… is a diagnostic tool that support understanding of organizational structure
… defines all the elements that it is needs to control and the way to control it
… shows how to support innovation and to regulate it
The VSM …
Source: Beer, 1981
Viable Systems Model (VSM)
Source: Beer, 1981
Viable Systems Model (VSM)
Source: Beer, 1981
Viable Systems Model (VSM)
Decrease in variety
Expansion of variety
Decision
making area
Area of action
(operative)
Source: Beer, 1981
Viable Systems Model (VSM)
Source: Beer, 1981
Viable Systems Model (VSM)
The Viable Systems Approach (VSA) is built upon the Stafford Beer’s Viable
System Model
The VSA support decision makers in studying and governing business as well as
social organizations.
It has been developed within the disciplinary field of business management from
the early works of Barile (2000) and Golinelli (2000) following a rich research
stream of systems theories (Ashby, 1958; von Bertalanffy, 1968; Beer 1972; Parsons
1971; Maturana & Varela 1975 ; Forrester, 1994).
… supports decision makers in understanding of contextual dynamics
… offers an holistic view of system functioning
… helps desion makers in planning and evaluating system’s strategies
and actions
The vSa …
Source: Saviano, 2013
Viable Systems Approach (VSA)
Information units
Interpretation schemes
Categorical values
Source: Barile, 2013, www.asvsa.org
Viable Systems Approach (VSA)
Source: Barile, 2009, www.asvsa.org
Viable Systems Approach (VSA)
Viable Systems Approach (VSA)
Ability to use existing
schemes of synthesis
Ability to identify/develop
new schemes of synthesis
Decision
Making
Need to identify or develop
theories, models, techniques,
and tools that are unknown
or new to us.
Adoption of known existing
theories, models, techniques,
and tools that is at most
complicated.
Problem
Solving
Viable Systems Approach (VSA)
Holistic view
(whole)
Systems view
(interaction)
Structure view
(relation)
Reductionist view
(parts)
StaticviewDynamicview
Perspectivechange
Viable Systems Approach (VSA)
The system emerges
from the structure
Different contexts can be extracted
from the same environment
A system can emerge
from different structures
Different systems can emerge
from the same structure
Different environments can be viewed
from the complexity of reality
In which ways is possible to wider the perspective of observation?
How it is possible to explain relationships among different systems?
Conceptual logic
According to Lusch and Vargo (2006),
to understand what are the reasons for a
relationship it is need to understand
what are the needs of involved actors
and how they think that the relationships
can help them in achieve their aims.
Service thinking
The SDL is based on 10 fundamentals principles (Vargo & Lusch, 2008):
ü FP1: Service is the fundamental basis of exchange
ü FP2 : Indirect exchange masks the fundamental basis of exchange
ü FP3: Goods are a distribution mechanism for service provision
ü FP4: Operant resources are the fundamental source of competitive advantage
ü FP5: All economies are service economies
ü FP6: The customer is always a cocreator of value
ü FP7: The enterprise cannot deliver value, but only offer value propositions
ü FP8: A service-centered view is inherently customer oriented and relational
ü FP9: All social and economic actors are resource integrators
ü FP10: Value is always uniquely and phenomenologically determined by the
beneficiary
The Service Dominant Logic (SDL) is a conceptual framework direct to
change the perspective in managerial and governance approaches
… identifies core competences, knowledge and skills that represent a potential
competitive advantages.
… supports decision makers in cultating relationships with stakeholders.
The SDL …
Source: Vargo & Lusch, 2005
Service Dominant Logic (SDL)
Source: Vargo, 2015, http://sdlogic.net/index.html
Service Dominant Logic (SDL)
Source: Vargo, 2015, http://sdlogic.net/index.html
Service Dominant Logic (SDL)
Towards a new logic in market relationships
Towards a new logic in market relationships
Source: Vargo and Lusch, 2004
The evolution of focuses in market relationships
A new logic for the management of complexity: user centred
A new logic for the management of complexity: co-creative
A new logic for the management of complexity: sequencing
A new logic for the management of complexity: evidencing
A new logic for the management of complexity: holistic
Ashby, W. R. (1958). Requisite variety and its implications for the control of complex systems. Cybernetica, 1, 83-99.
Barile, S. (2000), Contributi sul pensiero sistemico in economia d'impresa. Arnia, Salerno.
Barile, S. (2009). Management sistemico vitale. Giappichelli, Torino.
Beer, S. (1972). Brain of the firm: A Development in Management Cybernetics. Herder and Herder, New York.
Beer, S. (1981). Brain of the firm: the managerial cybernetics of organization. New York: J. Wiley.
Espejo, R. (1990). The viable system model. Systemic Practice and Action Research, 3(3), 219-221.
Forrester, J. W. (1994). System dynamics, systems thinking, and soft OR. System Dynamics Review, 10(2-3), 245-256.
Golinelli, G. M. (2000). L'approccio sistemico al governo dell'impresa: Valorizzazione delle capacità, rapporti intersistemici e
rischio nell'azione di governo. Cedam, Padova.
Golinelli, G. M. (2010). Viable systems approach (vSa): Governing business dynamics. Cedam, Padova.
http://sdlogic.net/index.html
Koskinen, K. U. (2013). Systemic View and Systems Thinking. In Koskinen K.U., Knowledge Production in Organizations (pp.
13-30). Springer International Publishing.
Lusch, R. F., & Vargo, S. L. (2006). Service-dominant logic: reactions, reflections and refinements. Marketing theory, 6(3), 281-
288.
Maturana, H. R., Varela, F. J., & Beer, S. (1975). Autopoietic systems: A characterization of the living organization. Biological
Computer Laboratory, Univ. of Illinois.
Odum, E. P., & Barrett, G. W. (1971). Fundamentals of ecology. Philadelphia: Saunders.
Parsons, T. (1971). The system of modern societies. Englewood Cliffs, NJ: Prentice-Hall.
Saviano, M. (2015), The Viable Systems Approach (vSa): what it is, what it is not. 2013 Naples Forum on Service, June 18.
Vargo ,S. L. (2015), Foundations and Advances in Service-Dominant Logic. ICServ 2015, July 7.
Vargo, S. L., & Lusch, R. F. (2005), Academic presentation for the Otago Forum on Service-Dominant Logic, November 21.
Vargo, S. L., & Lusch, R. F. (2008). Service-dominant logic: continuing the evolution. Journal of the Academy of marketing
Science, 36(1), 1-10.
Von Bertalanffy, L. (1968). General systems theory: Foundations, development, applications. Braziller, New York.
www.asvsa.org
Essential references
Questions ???