Viable Systems Model (VSM)

Viable Systems Model (VSM) in Small Businesses:

  • The Viable Systems Model (VSM) is a systems thinking framework developed by Stafford Beer that focuses on understanding and improving the viability and adaptability of organizations. While originally conceived for large organizations and systems, the principles of the VSM can be applied to small businesses to enhance their organizational structure, communication, and effectiveness. The VSM provides a holistic view of an organization’s functions and interactions, helping small businesses better adapt to their dynamic environments on their journey to success.

Why Is the Viable Systems Model Important for Small Businesses?

  • The Viable Systems Model is important for small businesses for several reasons:

1. Holistic Perspective:

  • It offers a holistic perspective of the organization, allowing small businesses to see how various functions and components interact.

2. Adaptability:

  • The VSM emphasizes adaptability and the ability to respond to changes in the external environment, a crucial factor for small businesses.

3. Improved Communication:

  • By defining clear roles and responsibilities, the VSM can improve communication and collaboration within small business teams.

4. Efficiency:

  • The model identifies areas of redundancy and inefficiency, helping small businesses streamline their operations.

5. Sustainability:

  • It promotes long-term viability by ensuring the organization can effectively deal with challenges and uncertainties.

Key Aspects of the Viable Systems Model in Small Businesses:

  • Applying the Viable Systems Model in small businesses involves several key aspects:

1. System Components:

  • The VSM consists of several key system components, including the system itself (the small business), its various subsystems (departments or functions), and external environments.

2. Communication:

  • Effective communication and feedback loops are critical in the VSM to ensure that information flows between the system components efficiently.

3. Recursive Levels:

  • The VSM features recursive levels of analysis, where each system component can be seen as a system in itself, creating a nested structure.

4. Autonomy and Control:

  • The model defines levels of autonomy and control within the organization to balance centralized decision-making with local autonomy.

5. Flexibility:

  • The VSM emphasizes the need for flexibility and adaptability to respond to changing external conditions.

Steps to Apply the Viable Systems Model in Small Businesses:

  1. System Mapping: Identify and map the various components of your small business, including departments, functions, and external stakeholders.
  2. Define Roles: Clearly define roles and responsibilities for each component, ensuring that they contribute to the overall viability of the business.
  3. Communication Structure: Establish effective communication structures, including feedback loops, to ensure information flows throughout the organization.
  4. Feedback Analysis: Continuously analyze feedback from various system components to identify areas of improvement.
  5. Adaptation: Implement changes and adaptations based on feedback and analysis to enhance the viability and effectiveness of the organization.

Key Strategies for Effective Application of the Viable Systems Model in Small Businesses:

  • To effectively apply the Viable Systems Model in small businesses, consider these strategies:

1. Cross-Functional Teams:

  • Encourage cross-functional collaboration to address complex challenges and ensure communication across departments.

2. Continuous Learning:

  • Foster a culture of continuous learning and adaptation to respond to changing circumstances.

3. Feedback Culture:

  • Promote a culture of open feedback and constructive criticism to improve organizational functions.

4. Flexibility:

  • Be willing to adjust and adapt the organizational structure and processes as needed.

5. External Scan:

  • Regularly scan the external environment to anticipate changes and trends that may impact the business.

VSM Subsystems

The Viable Systems Model (VSM) is a systems thinking approach developed by Stafford Beer. It’s a framework for understanding the functioning and management of complex organizations. While it’s often applied to large organizations, its principles can be adapted to small businesses. In a small business context, the VSM can help identify and manage subsystems essential for effective operations. Let’s explore the suggested VSM subsystems and their roles in small business management:

1. System 1: Operations or Production

  • Role: This is the core of the business, where products or services are produced. In a small business, it’s where day-to-day activities take place, such as manufacturing, service delivery, or sales.

2. System 2: Coordination

  • Role: System 2 ensures that System 1 functions smoothly. It involves coordinating resources, scheduling tasks, and overseeing quality control. In a small business, this can be the management or administrative team responsible for organizing daily operations.

3. System 3: Control

  • Role: System 3 monitors and controls the performance of System 1 and 2. It establishes key performance indicators (KPIs) and ensures that processes align with the business’s goals. In a small business, this may involve tracking sales, expenses, and operational efficiency.

4. System 4: Intelligence

  • Role: System 4 gathers and analyzes external information that can impact the business. This includes market research, customer feedback, and industry trends. In a small business, this can be the responsibility of marketing or strategy teams.

5. System 5: Policy

  • Role: System 5 sets the overall direction and policies for the business. It defines the long-term goals, values, and strategies. In a small business, this role may be held by the owner or top management, who establish the business’s vision and objectives.

6. System 6: Ethics and Values

  • Role: System 6 ensures that the business operates ethically and responsibly. It establishes guidelines for ethical behavior and compliance with laws and regulations. In a small business, this can be particularly important to maintain reputation and trust.

7. System 7: Identity

  • Role: System 7 defines the unique identity and culture of the business. It shapes how the business is perceived by employees, customers, and stakeholders. In a small business, this often reflects the values and personality of the owner or leadership.

In a small business context, these VSM subsystems may not always be distinct roles or departments but rather responsibilities that individuals or small teams fulfill. For example, the owner or manager may wear multiple hats, overseeing System 1 (operations), System 2 (coordination), and System 3 (control)…

Effective small business management requires recognizing the interdependence of these subsystems and ensuring that they work in harmony to achieve the business’s objectives. Small business owners can use the VSM as a framework to assess and improve their organizational structure, decision-making processes, and overall business viability.

Real-World Example:

A small manufacturing company in Canada adopts the Viable Systems Model:

  • The company identifies key departments, including production, quality control, sales, and finance, as system components.
  • Clear roles and responsibilities are defined for each department, and communication channels are established to ensure that feedback and information flow smoothly.
  • The organization continuously monitors market trends and customer feedback, making adjustments to production and product offerings as needed to remain viable and competitive.


Through the application of the VSM, the manufacturing company enhances its adaptability and responsiveness to market changes.

The Viable Systems Model provides small businesses with a framework to understand their organizational structure, communication, and adaptability. By applying the principles of the VSM, small businesses can improve their viability, enhance communication and collaboration, and better navigate dynamic and uncertain environments on their journey to success.