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There have been suggestions made by people in the field that Open Systems Theory creates problems. Discuss what problems could arise when using Open Systems Theory. Given these problems, is it worth using Open Systems Theory in an organization?
If Open Systems Theory is good for the organization, why are there organizations that are successful yet do not use Open Systems Theory?
Systems theory describes the concepts and relationships between organizations, groups and individuals (Cummings & Worley, 2009). Systems exist at various levels. As an example, under the larger societal system, there are organizational subsystems, and within an organizational system there are departmental subsystems such as sales and marketing, finance, human resources, research and development, and operations. The organization coordinates and supports the activities of the departments to enable the organization to achieve its overall goals as a unified system.
Open systems theory describes how an organization interacts with its environment. While it is not possible for an organization to operate as a completely closed system, early theories treated organizations as closed systems. The open systems model describes an organization that acquires inputs from the environment, transforms these inputs into outputs using people and technical processes, and returns these outputs to the environment as products and services. Once back in the environment, the organization’s outputs can provide feedback to the organization as input.
Open systems are aligned with organic, flexible structures. Systems theory suggests that there is not one universal best way to design an organization. As an example, a restaurant purchases raw food product, china, linens, and other goods from suppliers. Using these products, the restaurants culinary and service staff transform these inputs into outputs as specific, culinary experiences for the restaurant’s customers. Customers provide feedback by showing support by returning to the restaurant, and by sharing feedback with other potential customers.
Interaction with the Environment
An organization’s environment refers to everything outside of the organization’s system that can affect the organization’s performance or outcomes; either directly or indirectly (Cummings & Worley, 2009). Environmental factors that affect an organization include the availability of human resources, raw materials, customer demands, governmental regulations, competition, the economy, and technology. States and regions attract organizations by promoting an educated workforce or by supporting regulations that are friendly to business. A shortage of beef may influence a restaurant to promote chicken, pork and fish items on its menu. A slowing economy affects the number of products that a manufacturer will produce.
An organization receives inputs from the external environment. These inputs may be human resources, raw materials, information, energy, or services. As an example, a bakery acquires flour and other baking products from outside sources. A car dealer acquires information on a customer’s credit score before approving a loan. A hotel may acquire outside night cleaning services to supplement its operation.
Transforming is the process that organizations use to convert inputs into outputs. In most instances, transformation involves both people and technology in the form of tools, techniques, or methods used in converting inputs to outputs. As an example, schools strive to transform learners into educated individuals who will be future contributors to society. Banks transform deposits into auto loans and mortgages. On a larger scale, the government transforms citizens’ taxes into social benefits, infrastructure, and national security.
Outputs are the products and services from the transformation process that are returned to the environment. Boeing and Airbus receive metal, bolts and other parts as inputs from the environment, and transform these inputs into airplanes, which they return to the environment as outputs. A catering venue acquires human resources, wedding cakes and other supplies from the outside environment and transforms these into wedding experiences and other social events as outputs to the environment.
Boundaries provide definition between organizational systems and their external environments. In closed systems, boundaries are fixed and rigid whereas in open systems boundaries are fluid and flexible. Establishing the boundaries of organizations of social systems can be quite arbitrary compared to the fixed boundaries in mechanical or biological systems. As an example, a self-proclaimed social entrepreneurial company might respond to a market in which adults sought new learning opportunities by acquiring faculty lectures from leading universities and transforming their lectures with the use of technology into an output of free certificate-classes to millions of learners around the world. An innovative, entrepreneurial organization desiring to help innovators and inventors bring new products to market may acquire the ideas of innovators and inventors as inputs. Through financing, production planning, and strategic positioning, the company collaborates with inventors and brings new products to market as outputs.
Feedback refers to the information regarding the performance or output of the organization. In open systems theory, feedback is limited to information that is used to control the future functioning of the organization (Cummings & Worley, 2009). This information can be used to maintain the organization in a steady state, as may be the case in a manufacturing organization producing a consistent product or it may be used to help the organization adapt to a changing environment. Feedback provides valuable information to an organization or industry. As an example, the housing bubble burst in 2008 gave homebuilders information to decrease the number of new homes being built. Without this information from the external environment, homebuilders would have continued to build homes, contributing to the existing surplus supply of homes.
Open systems theory includes the concept of equifinality. In closed systems, there is a specific cause and effect relationship between the initial and end state of the system (Cummings & Worley, 2009). As an example, when a worker presses the “on” switch of a machine, the machine powers up. The machine is either “off” or “on.” In social systems, equifinality refers to an organization’s ability to achieve similar results or outputs in different ways. As an example, an organization that provides overnight lodging to customers may offer a bed-and-breakfast, economy, mid-scale, upscale or luxury, boutique, or resort experience to its guests.
In open systems theory, an organization’s effectiveness is related to the alignments between the organization and its environment, inputs and transformations, transformations and outputs, and between the subsystems of the organization (Cummings & Worley, 2009). Alignment refers to the extent to which each of the parts of a system support one another and the total system. When there is a lack of alignment, organizations demonstrate symptoms of ineffectiveness and inefficiency. All parts of an organization and its external environment need to align for the organization to be effective.
Cummings, T. G. & Worley, C. G. (2009). Organizational Development & Change. Mason, OH: South-Western.