The One Model That Visualizes How Every Living System or Organization Works and Prospers: BUSINESS MODEL CYBERNETICS

Holistic System Thinkers as well as Cyberneticians have long postulated the hypothesis that the structure of every living system or organization (including businesses) is the same and different. Yet, models to visualize this hypothesis are complex and difficult to understand, let alone apply in practical business situations. The Cybernetic (Living) System model of the emerging discipline of Business Model Cybernetics presents a simple and multidisciplinary visualization of how every living system or organization works and prospers. 

The above Cybernetic (Living) System model can be used to visualize, document, create, improve, and innovate on strategy as well as products, services, brands, and business models. 

For more information, see .

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Comment by Rod on April 9, 2014 at 6:05pm

I recently responded to some questions raised by Dr. Ali Anani in another forum regarding the diagram for Business Model Cybernetics. I thought the response would interest more people. So, here it is:


Dr. Anani, your view of the above Cybernetic (Living) System model as nested loops is excellent. A similar view was expressed by the late James Grier Miller whose book, 'Living Systems,' is my favorite work on General Systems Theory. Miller proposed that a generalized living system consists of 8 hierarchical levels (nested loops): cell, organ, organism, group, organization, community, society, and supranational systems. Although there are many ways to illustrate multilevel hierarchies such as in tree diagrams, I find the nested loop visualization to be more intuitive to understand and simple to use especially in representing living systems. I'm glad that the representation of nested loops appeals to you.

With regard to the feedback between the environment and system, I find your question very deep. To recap, you asked: 'Does the system affect the environment the same way the environment affects the system?' My simple answer is, 'It depends.'

In a simple emerging system where many elements are loosely rather than tightly integrated, changes in the system may have little or no impact on the environment. In a tightly integrated ecosystem or networked system, the changes in state of a system have unpredictable impacts on the environment. Sometimes - as in the case of the Butterfly effect in Chaos Theory - the proverbial flutter of a butterfly's wings in the Amazon forest may lead to a proverbial hurricane in Florida, USA.

In business, the relationship between a business system and its environment is well explored by W. Chan Kim and Renee Mauborgne in an article, 'How Strategy Shapes Structure'; see . To summarize, Kim and Mauborgne distinguish between a Structuralist (Red Ocean Strategist using Porter's Competitive Strategy with inherent trade-off of Cost vs. Differentiation) on the one hand and a Reconstructionist (Blue Ocean Strategist using Blue Ocean Strategy that resolves Cost vs Differentiation trade-off) on the other hand.

A Structuralist assumes that boundaries of the existing industry/environment are fixed and works within existing boundaries and structure of the industry/environment to find the fittest Red Ocean business model. In contrast, a Reconstructionist implicitly assumes that a Blue Ocean strategy and business model can reconstruct the boundaries and structure of the existing industry/environment. And indeed, Steve Jobs/Apple has repeatedly demonstrated that existing industry boundaries and structure can be reconstructed; in other words, industries can be redefined. Strategy can indeed reshape structure.

My own preference is to pursue Blue Ocean Strategy and create Blue Ocean business models especially in today's hypercompetitive environment where industry boundaries and structure are very fluid. In any exercise on strategy, one should ensure that the gap between vision and reality is rapidly closing. If there is a growing gap between vision and reality, then a business may be advised to 'pivot' or change its vision. Refusal to pivot the vision may result in serious waste of resources especially money, time, and manpower.

Finally, I'd like to say that a system has impact on both the processor and output. If the system is 'closed', its impact on the processor and output would be greater than that of the environment. In 'open' systems, however, the environment plays a greater role.

I hope that I've managed to answer some of your questions. Nevertheless, should you have further comments or questions, let me know.

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