Management systems and residual variety

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Ashby’s Law states that in order to regulate a system, the regulator must be able to generate at least as much variety as that exhibited by the system under control.  At first sight, however, this condition appears impossible.  It is clear that any system will be more complex than the sub-systems it contains: an organisation’s business environment is more diverse than the enterprise; the range of possible actions of any team is greater than the repertoire of responses by its managers.  How, for instance, can a few executives on a board of a company or a government department regulate a large estate of specialist operational property without understanding the full complexity of the system under their control?  The diagram on the top of the opposite page indicates two strategies for resolving this apparent contradiction: management can block, filter or attenuate the impact of unwanted external disturbances; or management can amplify or lever its influence on its environment.

There are countless ways in which a manager can reduce the number of distinctions needed to regulate a situation or task.  One of the best ways to do this is to build a model of the system being controlled; by definition, models provide a simplified representation of real, complex situations.  On the one hand managers can filter information by requesting reports or through techniques such as management by exception, and on the other hand they can amplify their influence on a situation by delegating or hiring staff and consultants, creating strategic alliances, organising training courses, running advertising campaigns, and working through supply chains.  Some strategies are difficult to categorise: ISO 9000 requires organisations to appoint a specialist quality manager - this might amplify the variety of management, but if it leads to staff taking the view that quality is not their concern then the variety of the system will be greatly reduced and performance will suffer; similarly, IT systems can be useful tools to amplify or attenuate variety, but they often end up swamping managers with unnecessary information and restricting their available options.

The key to understanding how Ashby’s Law affects management systems is to recognise that no individual can deal with all the variety at all times, but that the organisation needs to be designed as a whole to absorb day-to-day disturbances and still achieve its aims.  In such a situation, the role of management is to deal with the variety remaining in the system after the background complexity has been absorbed through the processes of self-organisation and self-regulation - see diagram at the bottom of the opposite page.  At board level, this residual variety might be as simple as a yes / no decision.  

The choice of strategies used to attenuate variety in the system or amplify the variety of a manager will depend upon the social and technical context - the organisational structure - within which the manager operates.  Management systems within organisations structures which resemble tall pyramids reduce the residual variety faced by managers by introducing intermediate levels of management and imposing constraints on the behaviour of the lower levels.  Flatter structures, having a broader span of control and shorter feedback loops, achieve requisite variety by empowering people to respond more autonomously to problems.  The following section of this paper explores the implications for the design of a business management system in the context of both types of organisation.

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