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.

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.

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.

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.