Open Systems Theory

Open Systems Theory (OST) is a modern systems-based changed management theory designed to create healthy, innovative and resilient organizations and communities in today’s fast changing and unpredictable environments.

As organizations and communities conduct their business they influence and change their external environments, while at the same time being influenced by external changes in local and global environments. This two-way influential change is known as active adaptive change. Organizations and communities are open systems; changing and influencing each other over time.

To ensure viability an Open System must have an open and active adaptive relationship with its external environment. In other words, a healthy viable Open System has a direct correlation with respect to changing values and expectations over time with its external environment. The corollary therefore is that if the values and expectations of a certain organization or community are out of sync with those that exist in the external environment then that particular organization or community will eventually become unhealthy and unviable.

This understanding has led to the development of Open Systems Theory, which is a state-of-the-art systems-based change management body of knowledge designed for today’s turbulent and unpredictable environment. It is being utilised by many successful organizations, including corporate giants such as Microsoft and Hewlett Packard.

People too are open systems. Through their actions they influence and change their external environment, and at the same time are constantly being influenced by changes in the external environment. From an employee’s perspective, the organization itself is their immediate external environment. The aggregated effect of this influential change between people, their organization and/or community and the external environment is known as socio-ecological (people-in-system-in-environment) change. In today’s globalised and networked world socio-ecological change is relentless and increasing exponentially.

The prime driver of this change is the increasing rate of change in people’s values and expectations in the external environment. People are constantly changing their minds about decisions they will make, including what products and services they will buy and how they’ll buy them. The rate of socio-ecological change is being accelerated by globalisation, deregulation, and technological change. All these factors are combining to produce fierce competition for organizations and communities as well as causing unprecedented turbulence and uncertainty.

Consider for example, the impact social networking technology can have on consumer decision making. When Johnson & Johnson ran TV advertisements in the US pushing mothers to take the painkiller ‘Motrin’, an outraged community immediately got onto Facebook and Twitter to vent their spleen. It was a marketing and PR disaster that caused problems for months. A mismatch of values and expectations is also occurring within organizations resulting in huge productivity losses. As the Johnson & Johnson example highlights, people as consumers speak out and demand their rights. However, when these same consumers arrive at their workplaces, which are mostly bureaucratic, command-and-control structures, they are often treated like irresponsible children.

But people are increasingly well educated, sophisticated and independent. They are increasingly less likely to suffer the authoritarianism they experience within bureaucratic structures. They are also less likely to tolerate managers assuming they are inadequate human beings. The outcomes of this mismatch of values are low motivation, innovation and productivity and high turnover and absenteeism. And the problem is endemic. Only 18% of the Australian population are engaged in their work, 62% are not engaged, and 20% are actively disengaged according to David Croston in his 2009 book ‘Employee Engagement’. To ensure viability today and prosperity tomorrow both organizations and communities must have, over time, an open and actively adaptive relationship with their external environments.

The only known body of knowledge that has been specifically developed to help organizations and communities produce an active adaptive relationship with external environments is Open Systems Theory. Active adaptive organizations and communities know they can’t operate as closed systems and ignore what’s happening in the world around them. They are open systems that:

  • Quickly identify embryonic changes and opportunities in the external environment;
  • Actively influence the environment for a sustainable future; and
  • Are designed to adapt and respond at lightning speed to make the most of their opportunities