A Model-based Management Approach
using the Viable System Model (VSM)
FEATURED PAPER
By Michael Frahm
Baden-Württemberg, Germany
and
Dr. Martin Pfiffner
Pfäffikon, Switzerland
Abstract
The following article is an introduction to the design of megaproject organizations based on the viable system model. It combines approaches from project management with approaches from systems theory. The understanding of complexity and how it is effectively managed by the organizational code is a central theme. After referring to current research and a short introduction, the application is shown by using an example. The article shows how important the „applied“ management model is for a successful management of mega projects.
Keywords: Majorprojects, Megaprojects, System Theory, Viable System Model, Organisation, Complexity
- Introduction
Megaprojects are complex organizational structures that significantly influence both their parent organizations and their environment (Müller, Drouin and Sankaran 2020). Regardless of which criteria are used to measure their success, such projects are extremely complex (Hu, Chan, Le & Jin 2015; Pitsis, Clegg, Freeder, Sankaran & Burdon 2018), which makes their management very difficult (Shenhar and Dvir 2007; Söderlund 2010). But how can we understand them organizationally? One analysis (Lundrigam, Gil & Puranam 2015) suggests that mega-projects can be understood as a hybrid form of meta-organization. Accordingly, megaprojects are pluralistic hierarchical mixed systems, which have both closed and open system properties and are divided in their core and periphery. A central question here, in the context of performance, is the distribution of power or hierarchy and the functioning of the information and decision-making processes in the system. Denicol, Davies & Pryke (2021) propose that megaprojects be conceptualized as dynamic production systems and built and developed in a life-cycle oriented manner. They also emphasize the importance of viewing the organizational elements of megaprojects through a systems lens in order to develop solutions for improving their performance. Denicol, Davies and Pryke (2021) developed a conceptual framework for this, called Project System Organization (PSO), which gives fundamental guidance on how to organise a megaproject’s structure through its lifecycle.
Following the work of Lundrigam et. al (2015) an approach is needed that maps both closed and open system characteristics, the distribution of power and hierarchy, and the functioning of information and decision-making processes in organisation. Following Denicol et. al. (2021) it is important to view the megaproject organization through a system lens to understand them and improve their performance. The need for this systemic perspective in project management was also emphasized by other scholars (Müller, Drouin, and Sankaran 2019; Tannir, Mills and Krystallis 2019; Jaradat 2015 ). The model-based management approach which the authors will present with this article can meet the above required demands (Lundrigam et. al 2015; Denicol et. al. 2021) and answer the question in the organisational dimension at any scale and thus provides a blueprint for organisational design of megaprojects through a systems lens.
The organizational management can only be as good as the model on which it is based. The Conant-Ashby theorem (1970), also known as the good regulator theorem, states that every good regulator of a system must be a good model of that system, and that this model must be rich enough to be able to explain what really matters. The authors argue that Stafford Beer’s (1959, 1972, 1979,1984, 1985) Viable System Model (the VSM) is just such a rich and suitable systemic model of organizational design and complexity management (Espejo and Reyes 2011). It is an effective model for diagnosing, designing and managing complex systems, including megaprojects (Bourne 2019; Tannir, Mills and Krystallis 2019; Sankaran, Müller, Drouin 2020). In this way, the gap in the lack of holistic traditional hierarchical approaches from project, program and portfolio management can be closed by observing the success-critical aspects of organizational design and governance from a systems perspective (Müller, Drouin and Sankaran 2020; Lewis and Millers 2009)
Below, the VSM is applied to diagnose the organizational structure of an example megaproject, based on a real megaproject, through its construction phase at different organizational levels and from an owner perspective. It is argued that the functioning of complex organizations can be understood by decrypting their “DNA” at several management levels (so-called levels of recursion, as explained later), from their mother company through programmes and projects to subprojects. By DNA, is meant an organization’s generic organizational code — or in other words, its structure, its processes, its communication, its control, its neurology and its coupling with the environment.
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How to cite this paper: Frahm, M., Pfiffner, M. (2023) Decrypting the DNA of Megaprojects – A Model-based Management Approach using the Viable System Model (VSM).; PM World Journal, Vol. XII, Issue II, February. Available online at https://pmworldlibrary.net/wp-content/uploads/2023/02/pmwj126-Feb2023-Frahm-Pfiffner-decrypting-the-dna-of-megaprojects.pdf
About the Authors
Michael Frahm
Baden-Württemberg, Germany
Michael Frahm studied civil engineering and business law in Stuttgart, Kaiserslautern and Saarbrücken. Management courses at HEC Paris, HHL and Northwestern University. Winner of the Young PM Award of the GPM (IPMA) in 2010. Certification as Senior PM of the IAPM and certification as Advanced System Thinking Practitioner of the SCiO. Author of construction project management books with a systems perspective. Numerous articles and lectures on engineering and management. Lecturer on major project management and systems practice. More than 15 years of experience in the construction industry. Director of SCiO in German-speaking countries. Vice President of the EFBK- European Forum for Construction Cybernetics. He can be contacted at michael.frahm@systemspractice.org or Orcid: https://orcid.org/0000-0001-8470-6147 or Linkedin: https://www.linkedin.com/in/michael-frahm-65220573/
Dr. Martin Pfiffner
Pfäffikon, Switzerland
Martin Pfiffner lives in Pfäffikon (ZH). He is married and has a daughter. In the 1990s, he studied economics at the University of St. Gallen (HSG) and earned his doctorate. At the time, he served as an assistant to professors Peter Gross (sociology, multi-option society) and Fredmund Malik (systems-oriented management theory). Later he studied in Canada and in Wales with Professor Stafford Beer, the pioneer of management-cybernetics.
Pfiffner is one of the world’s leading experts on the practical implementation of the Viable System Model and Syntegration. Over the last thirty years, he has advised numerous economic, public, and private entities across the world, helping them get back on track and achieve success. His work centers on “The third dimension of organization,” which he defines as the neurology of an organization. His most recent book is The Neurology of Business: Implementing the Viable System Model (2022). Pfiffner argues that this neurology, rather than organization charts or business processes, determines whether a company is viable.
Until recently, Pfiffner managed Team Syntegrity Europe AG. He was head of the innovation group “Management Cybernetics & Bionics Division” at the Management Center St. Gallen and also responsible for developing management bionics. He is a founding member and curator of the International Bionic Center IBZ in Munich. He also initiated the Cwarel-Isaf-Conferences for management cyberneticists from all over the world.
For many years, he lectured at the University of St.Gallen (HSG), sharing his knowledge of applied management cybernetics. Between 2011 and 2016, he served on the board of the Swiss Society for Organization and Management. He is a Fellow of the Cybernetic Society England (CybSoc), a member of the International Society for System Sciences (ISSS), and an active member of Metaphorum, a society dedicated to studying the life and work of Stafford Beer. In 2017, together with several friends, he launched the Fondation Oroborus to promote management cybernetics.
Dr. Pfiffner can be contacted at m.pfiffner@fondation-oroborus.ch or on LinkedIn at: https://www.linkedin.com/in/martin-dr-pfiffner-07534459/
