Variety Engineering

Any organization for it to be viable it must be capable of dealing with complexity of its environment.  Organizations are not able to create the same amount of complexity internally as their environment expose: only variety absorbs variety (Beer) therefore to cope with complexity, the variety the organization can produce has to be amplified towards the environment at the least possible costs and the variety that environment exposes has to be attenuated towards the organization.

Variety is the measure of the number of different states in system. The variety of system therefore depends on the context in which it is embedded and also who is observing that system.  The larger the variety of actions available to a control system, the larger the variety of perturbations (deviation/disturbance) from stated goal and it is ability to compensate.

The key aspect of variety engineering is not about counting of possible states of a system but rather matching the possible states. The proliferation of variety in complex systems makes it difficult or rather nearly impossible to control therefore effective control requires capability to create a level of variety through regulative action which matches the variety of complex system to be regulated.

Control or regulation is most fundamentally formulated as a reduction of variety: perturbations with high variety affect the system’s internal state (stability criteria), which should be kept as close as possible to the goal state, and therefore exhibit a low variety.

By ‘viable system’, Stafford Beer means a system capable of maintaining a separate existence, of surviving on its own’. Organisations are seen by Beer as systems, i.e. goal-directed entities made up of interacting parts, operating in an environment of some kind. The central issue is: what form of internal ‘architecture’ is required if these systems are to be viable? Beer’s answer to this question is built upon a fundamental concept in cybernetic thinking, namely the Law of Requisite Variety (LRV) .

The Law of Requisite Variety, which states, to regulate a system, the regulator must be capable of generating at least as much variety as that exhibited by the system being regulated. Crudely-speaking, this law stipulates that the ‘variety’ of a ‘control system’ must equal or exceed the variety of that which is being regulated (variety is defined as the number of possible ‘states’ a system can be in). Therefore “only variety absorbs variety’.

Dealing with Complexity of the Environment :

Any organization if it is to viable it has to be capable of dealing with the complexity of its environment. Generally organization can hardly create same amount of complexity internally as their environment expose even though this is required because only variety absorbs variety’ (Beer) . In order to absorb this variety the variety the organization can produce has to be amplified towards the environment.

The design of amplifiers and attenuators of variety is called variety engineering. System governance requires that managers deliberately design, control the diffusion of variety through the organization system.

Variety Attenuators

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Attenuators are  perceptual apparatus that filters (attenuates) the variety of the environment and only look for what is relevant and filter out (exclude) what is “irrelevant” . Attenuators select aspect of the signal which are relevant and discard aspects of what is not relevant. Market research is an example of carefully designed attenuators .

Variety Amplifiers

Operation and Management also amplify their own variety to increase their power over the environment by using intelligence to amplify the effects of management action.

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Management  and operations use intelligence to amplify the effect of relevant action with the sole purpose of maintaining  their identity, in spite   of perturbations in their environment  in the face of pressures from their environment.

Attenuation is the attempt to stop or inhibit the proliferation of variety. Attenuation is effective if variety can be deflected and absorbed somewhere else in the system. Filtering is an example of a means of decreasing system variety; e.g., natural selection.

Absorption occurs when regulatory variety expands to match the amount of variety in the system, allowing the system to remain stable and continue to consistently reach desired states. An example of this is when a store has sufficient inventory and salespeople to successfully handle the needs of potential customers.

The three fundamental components management control, process, and environment must be maintained, dynamically, in homeostatic equilibrium in order to have a stable system.

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The figure above shows two types of arrows indicating the attenuation, or reduction, of variety, and the amplification, or increasing, of variety. The variety surrounding the environment will always be greater than that of the operation which in turn will be greater than that of the management of the operation.

The Operation can cope with its Environment, as long as it can successfully absorb the variety from it, by attenuating the incoming variety, and amplifying its own variety back to it. Likewise, Management can cope with the Operation as long as it can successfully absorb the variety from it, by attenuating the incoming variety, and amplifying its own variety back to it. If these requirements are met, the system can maintain Homeostasis.

MANAGING VARIETY

In organizational terms, variety is about ensuring that the capabilities of the systems which regulate are sufficient to deal with the complexity of the problems which they have to deal with. There are two ways of coping with variety in complex systems:

  • Unfolding through recursive organizational structures
  • Horizontal Attenuation or Amplification of variety

It is essential for any organization that it develops techniques for survival in a changing environment: it must adapt itself to its economic, commercial, social and political surroundings and learn from experience.

This means it can maintain itself in a state of equilibrium. If these requirements are not met, the system will become unstable, eventually leading to its collapse.

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Organizational variety engineering fundamental  objective is to balance varieties (Homeostatic) of the system which have different variety levels through attenuation and amplification:

  • Environment which has huge variety : High Variety in respect to operations
  • Operation which has less than the environment: Low variety in respect to environment requiring amplification.
  • Management even less variety of the operation and the environment

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The challenge is to balance the varieties (high variety block to low variety block) of the operations & environment and management & operation.  Possible examples of Variety Engineering:

To attenuate variety  

  • Standardize communication
  • Standardize processes
  • Ignore and filter out unimportant information , filter unnecessary detail
  • Deal with exceptions only
  • Aggregate similar cases
  • Model the environment and organizational behavior (causal loop diagram)

To amplify  variety

  • Empower subordinates
  • Hire more experienced employee
  • Train existing employees
  • Collaborate with external agents
  • Customize product/service offering
  • Multiply product/service offering or options to existing
  • Combine multiple products/services

Variety needs to be managed actively along all communication channels between environment and operations, and operation and management.

Control or regulation is most fundamentally formulated as a reduction of variety: perturbations with high variety affect the system’s internal state, which should be kept as close as possible to the goal (stability criteria) state, and therefore exhibit a low variety. One important implication of the law of requisite variety is that the member of a system that has the most flexibility also tends to be the catalytic member of that System.

Attenuation means reduction of the variety of possible disturbances given the essential variables . Variety attenuators apply to disturbances coming from the environment to the organization. It is also possible to attenuate variety of possible disturbances coming from organization to its management.

The organization and management may use variety amplification to cope with residual variety of disturbances, Amplification means increasing regulatory environment need to cope with remaining disturbances given the selected variables and existing attenuators.

Amplification has two domains; amplification from the organization towards the environment as well as amplification from management towards organization.

Design Framework with respect to Variety Engineering  

The fundamental purpose with respect to variety engineering is to manage stability criteria between environment and operations, or operation and management to achieve homeostatic balance.  The function of homeostasis aims at creating stability and not stagnation. Without stable reference point it is not possible to determine the amount of change and its direction (steering and governance) in an organizational system influenced by continuous changes.

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Homeostatic loop analysis has to cover complete system inclusive of environment, operation and management. Systemic imbalance is attained if homeostatic balance is only achieved between either environment and operation and not operation and management.

  • Homeostatic balance between Environment (high variety) and the Operations (Low Variety). The Operation can cope with its Environment, as long as it can successfully absorb the variety from it, by attenuating the incoming variety, and amplifying its own variety back to it.
  • Homeostatic balance between Operation (high variety block) and Management (Low variety block) Management can cope with the Operation as long as it can successfully absorb the variety from it, by attenuating the incoming variety, and amplifying its own variety back to it

The organization and management may use variety amplification to cope with residual variety.Amplification means increasing regulatory environment need to cope with remaining disturbances given the selected variables and existing attenuators.

Amplification has two domains; amplification from the organization towards the environment as well as amplification from management towards organization.

The purpose of the homeostatic loop analysis is to achieve homeostatic balance within the stability criteria between high variety and low variety considering that from a complexity perspective it is generally not possible to define systemic responses for every possible disturbance.

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Transducers encode or decode messages that cross a system boundary. Whenever the information carried on a channel crosses a boundary it undergoes transduction.

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Homeostatic Loop analysis schematics consists of the following elements:

  • System in focus overview: With respect to vertical unfolding complexity define at the specific level of attention what it does and why and how.
  • Recursion Number and name
  • Loop analysis point to point relationship : Environment to operations or Operation to Management
  • Attenuators and amplifiers are only possible given selected goals (defined stability criteria) Stability criteria: For the system in focus define the stability criteria. Examples Goal Sales or XXX for market XZY (relevant environment )
  • High Variety Block : Requisite variety to match …
    • Attenuators Output transducers
    • Attenuators channels
    • Attenuators input transducers
  • Low Variety Block : Requisite variety to match
    • Amplifiers output transducers
    • Amplifiers channel
    • Amplifiers input  transducers

An example of possible scenario. In this case it could be a global auto manufacturing company purpose is to supply new vehicles and support to the market such as spares and maintenance. One of the operational units relates to auto manufacturing and supply at the regression level of a specific country and target market (environment). The level of regression is unfolding complexity to level that the ideal stability criteria can be achieved with effective variety engineering. Multiple attenuators and amplifiers loops are put in place in order to achieve desired stability criteria.

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The stability criteria goal states cannot exceed the agreed with meta mgt optimal system potentiality of the combined S1 of the recursive level in question.

This then implies a further homeostatic loop analysis between Operation (high Variety) and management (low variety ) to define the stability criteria (goal state) of production based on recursive level system potentiality and available negotiated resources, compliance, quality ect…

The production goal state should allow for safety factor (achievable targets) knowing difficulty in achieving optimal system performance.

Effective homeostatic loops analysis provide for system ideal goals, adaptation initiatives (do the right things) in order to achieve overall homeostatic balance and viability.  The goal states from ideal baselines for effective governance via control tower in order to continuously monitor the efficacy of the stated initiatives.

Key terms:

A System is a group of interconnected elements which mutually influence one another through causal loops and feedback.

Variety relates to the phenomena of change or variation within a system. Diversity is variety with respect to space.

Dynamic fluctuation is variety with respect to time. Complexity and uncertainty are a result of the combination of both types of variety.

System variety is the amount of potential variation within a system in a particular time and space. Too little variation and diversity leads to rigidity and stagnation. Too much diversity leads to instability and chaos.

Regulatory variety relates to the number of actions or responses necessary to react appropriately to variation and direct the system to a positive outcome. Technological innovation is a means of increasing both regulatory variety and system variety.

Flexibility is the potential for adaptive variation in a system. Flexibility comes from having sufficient system variety and regulatory variety.

A system may try to either attenuate or absorb diversity. Requisite variety has to do with the amount of flexibility required to deal with change.

 

 

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