OSTO System Model: Difference between revisions

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The '''OSTO System Model''' is based on the OSTO System Theory, which comprehends complex [[system]]s and [[organization]]s as living systems and maps these by means of the OSTO System Model. The [[model (abstract)|model]] is [[cybernetic]] in nature and is deduced from the theory of [[Ecological sanitation|closed loops]]. The basics of this [[theory]] have been formulated by David P. Hanna in the [[1980’s]]1980s and have been published for the first timeinitially in 1988.<ref name="Hanna" /> The model assumes that several central transformation processes take place on the inside of a complex [[organization]]. These are deeply influenced by mutual reactions between the inner life of the organization and the outside (environment). In terms of closed loop theory, the OSTO System Model depicts the essential elements of such a living system in its [[wikt:interconnectedness|interconnectedness]], dependencies, and reciprocal reactions. Thinking in [[Biological network|network]] structures is, thus, a crucial part of the OSTO System Theory.

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The [[Acronym]]acronym “OSTO” stands for '''o'''pen, '''s'''ocio'''t'''echnical, '''e'''conomic ([[German language|German]]: “oekonomisch”) aspects of a system. With regard to [[organizations]] and economically working [[companies]], the model takes into [[consideration]] the openness of systems towards their environments as well as the fact that they are [[wikt:multidimensional|multidimensional]], socio-techno-economic structures. Taking into consideration these four aspects, the model displays the [[complexity]] of such a system in its numerous [[dimensions]].

The '''OSTO System Model''' is based on the OSTO System Theory, which comprehends complex [[system]]s and [[organization]]s as living systems and maps these by means of the OSTO System Model. The [[model (abstract)|model]] is [[cybernetic]] in nature and is deduced from the theory of [[Ecological sanitation|closed loops]]. The basics of this [[theory]] have been formulated by David P. Hanna in the [[1980’s]] and have been published for the first time in 1988.<ref name="Hanna" /> The model assumes that several central transformation processes take place on the inside of a complex [[organization]]. These are deeply influenced by mutual reactions between the inner life of the organization and the outside (environment). In terms of closed loop theory, the OSTO System Model depicts the essential elements of such a living system in its [[wikt:interconnectedness|interconnectedness]], dependencies, and reciprocal reactions. Thinking in [[Biological network|network]] structures is, thus, a crucial part of OSTO System Theory.

The [[Acronym]] “OSTO” stands for '''o'''pen, '''s'''ocio'''t'''echnical, '''e'''conomic ([[German language|German]]: “oekonomisch”) aspects of a system. With regard to [[organizations]] and economically working companies, the model takes into [[consideration]] the openness of systems towards their environments as well as the fact that they are [[wikt:multidimensional|multidimensional]], socio-techno-economic structures. Taking into consideration these four aspects, the model displays the [[complexity]] of such a system in its numerous [[dimensions]].

==Fields of application==

The OSTO System Model is a concrete model of the OSTO thought framework. In practice this model is used as a managerial and reflection tool.

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OSTO has developed concepts for [[education]] and human resource development in line with the systemic qualification of managers (“SYMA®”).

The approach is mainly taught at the [[University of Klagenfurt]] and at [[RWTH Aachen University]].

It is mainly concentrated in the institute of [[cybernetics]] as well as at the chair of information management in [[mechanical engineering]] and at the center

for learning and knowledge management. Each year, more than 1000 [[students]] acquire knowledge of the OSTO System Theory during a mandatory course

in their studies of [[mechanical engineering]].

===O for open system===

In the OSTO System approach, [[organizations]] are analyzed as open systems. In this context, the attribute “open” refers as well to the spatial and subject

level as to the temporal aspect. On the spatial and subject level, not only intended but also unintended exchange with the environment is analyzed.

Systems are hardly ever closed. In consequence of that, [[wikt:bidirectional|bidirectional]] reciprocal exchange between a system and its environment has to be monitored very

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===S for social system parts===

The [[social]] side of the system comprises the classical areas of [[design]] and process organization, information and decision procedures,

division of functions and tasks, as well as the reward and control system. This aspect does, however, also consider the motivation throughout the

company and the relationships among [[employees]] and the overall [[organizational culture]]. For understanding this part and its influence on the whole

system it is crucial to know that trust plays the most important part in all procedures and processes in which [[humans]] are involved.

===T for technical system parts===

The technical side of the system mainly focuses on the material aspects of companies, such as [[machines]], [[Capital equipment|equipment]], internal and external architecture

as well as [[tools]] and procedures. Additionally, it comprises the conceptualization of [[technology]] with regard to centralized and/or decentralized solutions.

Another problem that is tackled within this part of the model is the question as to how technical concepts and tool further [[fragmentation (cell biology)|fragmentation]] of work or – if

intended so- in how far they enable integrated wholesome work structures.

===O for economic system parts===

The economic side of the system describes all aspects which are directly linked to the [[economic efficiency]] of the organization, such as [[revenue]] trends, [[productivity]] development, [[control (management)|control]]ling procedures, [[remuneration]] systems, [[investment]] and [[budget]] planning, fiscal aspects, [[lead time]]s, [[cost]] structure]], etc.

==Formation and development==

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schools]] and consultants tried to develop new forms of organizational development since: They intended to understand the internal and external complexities

of companies by developing thought frameworks and creating models.

Up to this point, there were models describing [[organizations]] as [[tayloristicTaylorism|Tayloristic]] structures with [[division of labor|subdivision]] of work (design and process organization).

These models are still in use. However, they bear the disadvantage of being incapable of depicting the necessary [[flexibility]]. The systemic approach

represents organizations as living [[organisms]] which need to flexibly adapt to new conditions. The new aspect of these models is the fact that they consider

the internal and external complexity of an organization and the social psychological phenomena in and around an organization enter the scope of analysis.

The three most important models in this development are the viable system model (cf. [[Stafford Beer]], 1959), the new St. Gallen Management Model

(cf. Rüegg-Stürm, 2002) and the OSTO System Model. These models structure the ([[multidimensional]]) [[complexity]] of large organizational structures into

[[illustrations]] of one or more dimensions. Another, rather non-famous model, is the “Sensitivity Model” by [[Frederic Vester]].<ref name="Vester" />

The OSTO System Model is based on the “Organization Performance Model” which has been developed, tested and published by David P. Hanna in 1988 in his

time as a consultant for [[Procter & Gamble]]. Further important participants in this development include [[Clark]]/Krone 1972,<ref name="ClarkKrone" /> Krone 1974<ref name="Krone" /> and Krug 1992.<ref name="Krug" />

Later on, the model has been further developed and systemized for [[science]] by Heijo Rieckmann ([[Klagenfurt University]]) and [[Klaus Henning]] ([[RWTH Aachen University]]) as well as for systemic consulting of organizations by Renate Henning.

==Description of the model and its variations==

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===Components outside the system environment===

====System Borderborder====

Every [[organization]] is separated from its environments (at least) theoretically by differing [[borders]]. Possible forms of such borders are: Physical

(e.g. [[buildings]]), temporal (e.g. work shifts), social (e.g. teams), or psychological ([[stereotypes]], prejudices) system borders. In order to describe and define a system as accurately as possible it is necessary to determine the borders of a system very carefully. It is a current perception that system borders are partly permeable.<ref name="Hanna97ff"/>

====Environment====

The environments of a [[system]], i.e. everything outside its borders, have a strong influence on every [[organization]]. The model assumes that systems without

any environment that they interact with cannot exist. A system that is hardly influenced by an environment described as an [[autarkical]] system. On the

contrary, a system that is strongly formed by external influences is named a dependent system. In the context of [[companies]] an environment can be as

diverse as to be the marketplace, customers, political conditions etc.

====Reason for existing====

The reason for existing of a system – also to be grasped as the purpose – is the contractual, reciprocal relationship between the system and its environments. It describes which need of the environments is to be satisfied by the core processes of the organization. The Reason for Existing can never be defined [[unilaterally]], which separates it from unilateral, personal interests. In its form it is not to be seen as static, but is also influenced in various ways from the inside and by external factors of the system such that a regular comparison with [[reality]] is important. In conjunction with the mission and the goals the Reason for Existing incorporates the overruling “company strategy”.

====Mission====

Next to the Reason for Existing, for every [[living system]] a sound mission that is oriented towards the [[future]] bears many advantages. The mission questions the long-term [[sensibility]] of the Reason for Existing. The internal [[motivation]] and identification on the one hand and the acceptance in [[society]] on the other hand are maintained through long-term, future oriented thinking. The mission focuses on sensibility with regard to [[sustainability]] based on individual, cultural, ethical and further aspects.

====Ultimate anchor====

In applied practice, the Ultimate Anchor plays a minor role. It deeply analyses [basis and meta value, views on life and the [[world]], images of people and gods which creates the framework of [[convictions]] and beliefs in which “questions for meaning” are shaped.] <ref name="Morgan"/>

Mission as well as Ultimate Anchor were added to the OSTO System Model by Rieckmann and Henning in the second half of the 1980´s1980s since both aspects become increasingly important under the influence of [[globalization]] and [[crisis]] in society.,

===Components within the system===

====Output====

An appropriate depiction of the initial outputs is necessary for the organizational [[diagnosis]]. In that regard it is important that “Output” comprises both numerically graspable as well as qualitative aspects (e.g. work place satisfaction, motivation etc.). It is just as important to capture the factually or seemingly useless initial results and not only the “official” or “desired” results.

====Outcome====

The term “Outcome” comprises all financial events of an [[organization]]: [[Income]] from product sales, from [[R&D]], etc. It is intended so that the term is slightly broader such that the organization under [[scrutiny]] utilizing the model decides itself whether “Outcome” includes prices, [[sales]] volume, return on investment ([[Return on investment|ROI]]), or other aspects.

===Process version===

The OSTO System Model points out that inside an organization the information from the environment, the Reason for Existing and the outputs/outcome are turned into real results through transformational processes. The model provides two explanations for that

*[[Implementation]] through core processes and transformational processes (process version)

*Realization through [[strategies]], [[design]] elements, and [[behavior]] (structural version)

[[File:OSTO System model process.jpg|rightthumb|500pxright|OSTO System model process]]

[[File:OSTO System model structure.jpg|rightthumb|500pxright|OSTO System model structure]]

The process version explains the processing of information from the environment, the reason for existing and the outputs/outcome by means of a transformational process. This process is made up of three central core processes. The term “core process” is to underline that only processes that go to the core of the subject matter, i.e. those which ensure the existence of the [[company]], are relevant. There are three core process that are to be distinguished:

====Task Corecore Processprocess (TCP)====

The task core process comprises all activities, [[communications]], actions, etc. which aim at creating the system results (output).

====Individual Corecore Processprocess (ICP)====

An important basis for all processes of within a system is the [[energy]] (work power, [[performance]]) which each single person in a system provides and is capable of deploying towards the [[goal]]sgoals of a system. The systemic approach describes this by the term “Individual Core Process”.

====Social Corecore Processprocess (SCP)====

Throughout the social core process, the humans in an organization work towards the goals of a system. In the SCP, the individual core process and the task core process are linked such that [[synergy]] effects are yielded from [[collaboration]].

===Structural version===

The Structural version explains the system’ssystem's internal transformation process through [[strategies]], [[design]] elements and (system-) behavior. The transformational process is such structured by the design elements of the company. They are intended to concentrate and to structure all processes and structures within an [[organization]]:

====Goals and Strategiesstrategies====

In the OSTO map, the goals of a company belong to the internal design of an organization, i.e. the so-called transformational [[Business process|process]]. With respect to systemic [[ theory]], the goals are to be grasped as an internal specification and are derived from the reason for existing. They define the internal needs for actions. For reaching the goals it is necessary to formulate [[strategies]] that define how things are to be implemented such that the goals are achieved. The strategies are realized by appropriate adaptions to the design elements.

====(System-) Behaviorbehavior====

In every system/organization there is an abundance of very different behavioral [[patterns]] (e.g. [[leadership]] behavior, work behavior, etc.) which are produced by the design elements. This implies that the system behavior can only be influenced through the design elements. Since systems are dynamic processes, they are not oriented towards subjects but rather towards events. The overall system can have characteristics which are not inert to any of its component parts (loyal/[[cooperative]] characteristic) and does in general not behave like the sum of its parts. The OSTO System Model is currently the only model of this kind which closely analyses the behavior of an organization.

====Design Elementselements====

=====HumanPeople (HP)=====

The design element human comprises the members of a company/organization and their roles ([[Aptitude|talents]], qualifications etc.), expectations and needs of material character. Furthermore, the network of socio-emotional [[Social relationship|relationship]]s and interaction circumstances (“[[climate]]”) is included in these conditions of [[collaboration]].

=====Technology and Systemssystems (T)=====

[[Technology]] as a design element comprises the technical [[machines]], the means of [[production (economics)|production]], [[property]] plant and equipment, etc. and the relationships among them, i.e. all material and spatial conditions of a system.

=====Organizational Structurestructure (OOS)=====

The organizational structure describes the designoperating procedures and processprocesses of an organization, i.e. the functions, [[hierarchies]], reporting structures as well as the regulation of processes in temporal, spatial and subject aspects.

=====Functions and Taskstasks (F&T)=====

Functions and tasks as a design element is derived from the open [[property]] of companies/organizations. It comprises the description of the tasks which stem from [[customer]] needs as well as the division of tasks as specific work orders, expectations towards functions, jobs, etc. Consequently, it is possible to develop processes in order to install and foster changes in organizations.

=====Decision-Makingmaking Systemsystem (DS)=====

The decision -making system describes where, how, to whom, on which level, at which spot and by means of which tools decisions are made. It furthermore describes which [[mechanism (sociology)|mechanism]]smechanisms, processes, [[Business rule|rule]]srules etc. guide the decision processes.

=====Information Systemsystem (IIS)=====

The information system describes who receives or does not receive which information when, from whom and by which means. It also analyzes why this is so.

=====Reward and Controlcontrol Systemsystem (RCS)=====

Amplifying and reduction systems of material and immaterial as well as formal and informal character are described through the [[reward system|reward]] and control system of an organization. As such it analyzes mechanisms and procedures which observe and guide human and technical behavior, results and processes. This includes amongst others [[remuneration]] structures and the unwritten rules of a company.

=====Development and Renewalrenewal Systemsystem (DRS)=====

By means of the development and renewal system the flexibility as well as the performance and adaption capacities of an organization are maintained and increased. This can also revolve around a group of employees within the company which have the mandate to develop the company internally and externally. Generally, this can be subsumed under the term [[innovation]] management]].

===Side Effectseffects – “Feedback"feedback Loops”loops"===

According to the model, [[feedback]] is of crucial importance for the survival of a system, i.e. of an organization that is confronted with [[turbulent]] environments. As systems are to be understood as open systems they rely on feedback loops in order to remain existent. The feedback consists of loops that have a guiding, stabilizing and renewing effect on the system. According to literature there are four types of feedback.

====Quality Feedbackfeedback====

[[Quality (business)|Quality]] feedbacks are reactions to the quality of the [[output (economics)|output]]. Usually, all types of [[quality management]] use quality feedback as a starting point of their methods.

====InnovationRenewal Feedbackfeedback====

[[Innovation]]Renewal feedbacks report reaction of the environment with regard to the reason for existing. This form of feedback is to analyze the demands of the environment (e.g. [[Business development|Development]] of new [[market (economics)|market]]s).

====Responsibility Feedbackfeedback====

Responsibility feedbacks question the mission of the system. They refer to the long-term chances of survival of the system and its environment (earth-humanity-future-problem). In that regard the focus of this form of feedback is [[sustainability]].

====Awareness Feedbackfeedback====

[[Awareness]] feedbacks contain information about basic “truths” – about humans, the way humans live together and transcendent [[values]] – and about absolute (“true”) values. In this context, the consequences for the system and the members of the system (e.g. through religious orientations) are reflected.

==Delineation from Otherother Managementmanagement Conceptsconcepts==

The OSTO System Model is, just like the St. Gallen Management Model and the [[Viable System Model]], to be categorized into economic and sociological system theory. The difference from these rather production oriented models is the fact that the OSTO System Model is process oriented and assumes an open system which is guided by permanent [[feedback]]. In contrast to other models it analyzes systems independently from [[hierarchies]] and is not based on management ratios. It is also the only model which takes (system-) behavior into consideration. Additionally, conscious and unconscious goals and strategies are rendered visible and intended as well as unintended outputs are unveiled and taken into consideration.

==Critical Acclaimacclaim==

The model assumes that the central transformational processes marked in the model take place on the inside of a complex [[organization]]. However, the concepts with regard to system and organization are not definitely pointed out in theory. On the part of system theory there is hardly any link to the modern theory of social systems with their core concepts of the observed observer and the [[autopoiesis]]. On the part of organizational theory, [[Karl E. Weick]] described the problem that the term organization leaves open in how far a special behavior of an involved person takes place at a certain place or refers to a certain place very early on. In the same manner it is not clear in how far behavior is controlled by an organization or contributes to the embodiment of an organization or if both or none of this is true.<ref name="Pugh01"/> [[Gareth Morgan (authorbusiness theorist)|Gareth Morgan]] also alluded to the fact that organizations can be analyzed from different perspectives.<ref name="Rieckmann"/> Dependent upon the perspective the analysis yields pronouncedly different implications for the design, change, and the guiding- and leadership concepts.<ref name="Weick"/>

==External Links==

*Learning to lead in turbulence: [http://www.osto.de/fileadmin/PDF/Learning_to_lead_in_turbulence.pdf]

==References==

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<ref name="Krug">H. E. Krug (1992): ''Diagnose und Design komplexer Organisationen.'' In: K. Henning und B. Harendt (Hrsg.): ''Methodik und Praxis der Komplexitätsbewältigung.'' Berlin.</ref>

<ref name="Morgan">[[Gareth Morgan (authorbusiness theorist)|Gareth Morgan]] (1986) ''Images of Organization'', Sage</ref>

<ref name="Pugh01">[[Derek S. Pugh]] and [[David J. Hickson]] (1996) ''Writers on Organizations'', Fifths Edition 1996; Penguin Books, London; {{ISBN|0-14-025023-9}}, Seite 208–213</ref>

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==Bibliography==

* Buro, Thomas (2000): Gestaltung globaler Luftfracht-Transportsysteme mit Hilfe des OSTO-TOC-Ansatzes. Düsseldorf: VDI. Reihe 12: Verkehrstechnik/Fahrzeugtechnik, Nr. 439.

* Clark, J. V./Krone, C. (1972): Towards an overall View of Organizational Development in the early Seventies. In. Thomas, J. M./Bennis, W. G.: The Management of change and conflict. Harmondsworth. S. 284f.

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* Marks, Siegfried (1991): Gemeinsame Gestaltung von Technik und Organisation in soziotechnischen kybernetischen Systemen. Düsseldorf: VDI. VDI-Reihe: Technik und Wirtschaft, Nr. 60.

* Michulitz, Christiane (2005): Kommunikationsprozessanalyse – ein interdisziplinärer Beitrag zur Analyse der Kommunikation in Organisationen. Unternehmenskybernetik in der Praxis, Band 11: Shaker.

* [[Gareth Morgan (authorbusiness theorist)|Morgan, G.]]: Images of Organization, Sage Publications, Inc; Updated edition 2006, {{ISBN|1-4129-3979-8}}.

* Petzold, Stephan (2001): Einführung der Balanced Scorecard als Performance-Meß-System für systemische Organisationsentwicklungsprozesse. Unternehmenskybernetik in der Praxis, Band 4: Shaker.

* Rieckmann, Heijo (2000): Managen und Führen am Rande des 3. Jahrtausends. Praktisches, Theoretisches, Bedenkliches. 2., durchgesehene Auflage. Frankfurt am Main, Berlin: Peter Lang. {{ISBN|3-631-35865-2}}

* Rieckmann, Heijo/Weissengruber, P. (1990): Managing the Unmanageable? Oder …... lassen sich komplexe Systeme überhaupt noch steuern? Offenes Systemmanagement mit dem OSTO-System-Ansatz. In: Kraus, H./Kailer, N./Sandner, K. (Hrsg.): Management Development im Wandel. Wien. S. 27–96.

* Taylor, J. R./Lerner, L.: Making Sense of Sensemaking, in: Studies in Cultures, Organizations and Societies, 1996, Vol. 2.2, pp.&nbsp;259 ff.

* Ulrich, H./Probst, G.J.B. (1989): Anleitung zum ganzheitlichen Denken und Handeln – Ein Brevier für Führungskräfte. Bern, Stuttgart: Paul Haupt.

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[[Category:Management]]

[[Category:Business]]

[[Category:Leadership]]