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.

So now we move on to the higher functions. I picked the example of an orchestra for this part of the explanation because there’s a clear boundary between decisions made during its performances (the operations) and other kinds of decision. Conducting an orchestra in a piece of music is a particular job, but a lot of other decisions need to be made to provide the context for the performance. As well as the ‘here-and-now’ functions which ensure that the music is played, the orchestra needs to be able to make higher-level choices — picking the repertoire and deciding where and when the performances will happen. The conductor might be involved in this, or there might be an artistic director or a tour manager — the point is that the function needs to exist.

This is System 4 of the model, often described as the intelligence function. Its defining characteristic is that while System 3 manages things happening ‘here-and-now’, System 4 is responsible for ‘there-and-then’. It is meant to be dealing with information from those parts of the environment that aren’t in direct contact with System I, and so which are capable of generating shocks that can’t be handled by the ‘management by exception’ system. The usual reason why this part of the environment isn’t detected by the operations is that it doesn’t exist yet; the key job of System 4 is to make sure that the resource bargains System 3 strikes with operations will remain feasible following anticipated future structural changes. *

It’s also important to note again that systems of this sort don’t necessarily match up to organisation charts, and that individuals can appear in different roles in different functions and contexts. For example, when on stage the piano player is part of System I operations, and will follow the conductor’s instructions. If, however, the orchestra is accompanying Elton John, the piano player will also be involved in higher levels of management and decision-making — because the piano player is Elton John!

*What about coping with unanticipated structural changes? We’ll get there in a minute, but the honest answer might be ‘sometimes they don’t’. A viable system is one capable of surviving indefinitely and of adapting to unanticipated shocks — which doesn’t mean that it can adapt to everything.

System 5 is what Stafford Beer calls philosophy or identity. That might sound like an odd name to give the job of variety engineering to balance two competing management systems, but he does this because there’s a specific technique that’s best suited to this task, and ‘identity’ or ‘self-creation’* is a good name for it.

It matters what kind of an orchestra this is. Having a consistent identity is a great way of reducing the variety you need to deal with, because it means that there are a lot of possibilities that can simply be ignored.

Beer uses the Greek Word autopoiesis *but, really, there is no need.

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.