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.

System 3 is where you start to find *management jobs — those that are entirely devoted to communication and administration within the organisation. It’s also where system-level accountability is established; the key activity of the integration and optimization function is to agree the resource bargains with the System I units, and to ensure that they are being kept. And consequently, it’s the first place you might start to look if you think that unaccountability is creeping into the system. We’ll be looking at this a lot, later.

It’s easy to get confused between systems 2 and 3. Both of them look like they’re doing the same thing, in making the operations accountable to one another and to the wider organisation. The difference is that System 2 is all about preventing clashes and managing conflicts, while System 3 is concerned with achieving a purpose. On the ground, a useful way of drawing the distinction is to look at the management functions which everyone agrees to be necessary as opposed to those that they complain about.

*Stafford Beer refers to the part of the system responsible for internal organisation as the ‘metasystem’, one of very, very many newly coined jargon words which I am going to attempt to shield you from.

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.

And this story repeats itself through the history of management science; almost every classic of the literature seems to have described a way of adapting systems to a more complicated world, and then to have become obsolete itself. If you look past the slogans and think about what things like ‘management by objectives’, ‘focus on core competences’ and so on actually mean, they are all different ways of advising executives to restructure their businesses so that they don’t generate complexity faster than it can be managed.