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.

Coordinating the activities of a group of different System I operations is the first real management function in Stafford Beer’s model, and it’s called System 3 — optimization or integration. This part of the system directs the management of each individual operation in order to coordinate their activities towards a particular purpose.

If the System 3 middle management tries to fight the variety generated by the System I operations single-handed, it’s going to be overwhelmed. System 3 is a central coordinating function without the resources to handle that volume of information. Everyone who’s worked in a dysfunctional organisation will recognise this as ‘micromanagement’ and will be familiar with the ways in which it breaks down. The environmental variety coming in from the suppliers and customers doesn’t get handled at the right level because System I employees aren’t allowed to make decisions. Meanwhile, the coordination, communication, integration and planning functions are neglected because System 3 is spending all its time trying to do someone else’s job. Middle management becomes bloated and overstaffed as it tries to add variety to itself, while the operations are miserable because of constant interference from people who don’t really understand what they do.

On the other hand, the central functions can be neglected by taking the opposite approach — that of excessive delegation. If everything is left to the operating-level management, there is no coordination of the resource bargains and no planning. With no adequate System 3 function, the operating units have no means to resolve their conflicts other than through internal politics, with resources allocated by grabbing and hoarding them. Nobody talks to anyone else, and the System I level becomes bloated with ‘operational’ managers who spend all their time treading on each other’s toes and fighting turf wars.

Plenty of organisations have no formally identified central planning department, but the integration and optimisation function is performed by an informal network of System I managers. That’s perfectly possible, as long as they have made the mental leap understanding that from time to time they need to adjust their thinking to perform a coordination role for the benefit of the organisation. Stafford Beer occasionally seemed to suggest that this kind of informal internal networking could be the best way to create System 3, which was why a big lounge at head office with whisky and cigars was important.

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.