This brings us to a central truth about organizations: they are inherently messy. There are no panaceas, no structures that solve all problems. Any attempts to completely eliminate the mess are doomed to failure. Yes, there are costly inefficiencies in decentralization, but the fire of personal ownership—of being our own little business—elevates human motivation and stimulates innovation in powerful, albeit somewhat chaotic, ways.

We need to move from competitive ideation, trying to push our individual ideas, to collective ideation, collaborative ideation. It isn’t about having the number one best idea, but having ideas that come from, and work for, more people.

When we speak of systemic change, we need to be fractal. Fractals—a way to speak of the patterns we see—move from the micro to macro level. The same spirals on sea shells can be found in the shape of galaxies. We must create patterns that cycle upwards. We are microsystems.

Put slightly differently, the behavior of the whole can’t be predicted by the behavior of the parts examined separately. Only by considering the relationships between parts can you explain a system’s behavior. There are man-made systems and nature-made systems. In every case, how elements interrelate is what matters most. Consider the striking difference between graphite, the soft gray substance in pencils, and a diamond, that sparkling gemstone so prevalent in engagement rings. Although we know them as profoundly different substances, both consist exclusively of carbon atoms.

An organisation does things, and it systematically does some things rather than others. But that’s as far as it goes. Systems don’t make mistakes — if they do something, that’s their purpose. But it also works the other way around. Systems don’t have inner desires, so they don’t do things intentionally either. There’s just a network of cause and effect. We might think they’re conspiring, but they’re working within structures that made the outcome inevitable. Or we might see everything as a terrible cock-up, but we don’t understand that the outcome was the inevitable result of the way the system works.

The overlapping of different systems — and the tendency of individuals to have different roles at different levels of abstraction — is a key part of Beer’s theory, and one of the main reasons why his diagrams got so complicated. He claims that every ‘viable system’ needs to have all five of the functions described so far in order to be capable of long-term survival, but that every such system can also be seen as System I within a larger system. Similarly, since we defined System I as part of an organisation that could in principle be a viable separate organisation, the internal management of System I needs to have its own equivalents to systems 2, 3, 4, and 5; it needs internal regulation, optimisation and intelligence, and a balancing, identity-preserving function of its own.

Often, when you’re trying to diagnose why a system is failing, you need to consider both the larger system in which it’s embedded and the organisation within its operations. A great source of management problems, for example, is that organisations often fail to identify some of their operations as distinct systems, and so they lack their own internal ‘higher functions’. A division of this sort will generally be a ‘problem child’; unable to absorb its own environmental variability, it will bounce from crisis to crisis, taking up disproportionate time and effort on the part of the middle managers to which it has been assigned.