Task C3.3: Review Requisite Variety

What is Task C3.3?

Task C3.3 is part of the "Decide" phase in the Viability Canvas methodology, specifically within the "Stabilize" step (Step C3). This task instructs you to "Following these changes, consider your existing Systems 1 and 2 and see if they now have the capabilities to deal with the entire complex of operational units."

Purpose of Reviewing Requisite Variety

The purpose of this task is to ensure that after adjusting operational units and their coordination mechanisms, they collectively have sufficient capability to handle the complexity they face. This serves several important functions:

1. Variety matching: Ensuring that Systems 1 and 2 have the "requisite variety" to match the complexity they must manage
2. Capability assessment: Identifying any remaining capability gaps after initial adjustments
3. Structural validation: Confirming that your organizational structure is appropriate for the complexity it faces
4. Preventing overload: Ensuring that no part of the system is overwhelmed by variety it cannot absorb
5. Anticipating needs: Identifying where additional capabilities might be needed as complexity evolves

By reviewing requisite variety, you ensure that your design creates a system capable of handling its environment effectively without constant intervention from higher management levels.

Understanding Requisite Variety

In cybernetics and the VSM, "requisite variety" refers to Ashby's Law, which states that "only variety can absorb variety." This means that a system must have at least as much internal complexity (variety) as the environment it aims to control.

In organizational terms:

• Systems 1 (operational units) must have the capabilities to handle their specific environments
• System 2 (coordination mechanisms) must have the capabilities to handle interactions between operational units
• Together, they must be able to absorb most of the variety without requiring constant intervention from System 3 (operational management)

If requisite variety is lacking, the system will be constantly overwhelmed, leading to firefighting, escalations, and instability.

How to Complete Task C3.3

To review requisite variety effectively:

1. Assess environmental complexity for each operational unit:
   • What range of demands does each unit face?
   • How frequently do these demands change?
   • What level of unpredictability exists?
   • What specialized knowledge or capabilities are required?
2. Evaluate operational unit capabilities:
   • Do units have the skills and knowledge to handle their environments?
   • Are decision-making authorities appropriate to their responsibilities?
   • Do they have access to necessary resources and tools?
   • Is their internal organization sufficient for their level of complexity?
3. Review coordination mechanisms:
   • Are System 2 coordination mechanisms robust enough to handle inter-unit dependencies?
   • Do they provide sufficient damping of oscillations between units?
   • Can they adapt to changing patterns of interaction?
   • Do they effectively process and distribute relevant information?
4. Identify variety gaps:
   • Where does environmental complexity exceed current capabilities?
   • Which units or coordination mechanisms are most frequently overwhelmed?
   • What types of decisions are regularly escalated due to insufficient local capacity?
5. Consider potential consequences of these findings:
   • Need for reconsidering segmentation at the system-in-focus level
   • Potential requirement to add or remove layers in the decision structure
   • Adjustments to capability development priorities
   • Modifications to information systems

Example Application

In a software development organization:

• Complexity assessment: Development teams face rapidly changing technical requirements, complex integration dependencies, and unpredictable customer feedback.
• Capability review: Teams have technical skills but lack decision authority for cross-team priorities and resource allocation.
• Coordination evaluation: Current coordination relies on informal communication, leading to frequent conflicts and delays.
• Variety gap identified: Current structure cannot handle integration complexity without constant management intervention.
• Potential solution: Create a dedicated integration team with clear authority, or implement a more robust coordination mechanism with explicit decision rules.

In a healthcare setting:

• Complexity assessment: Patient care units face varied patient conditions, unpredictable emergencies, and complex interdepartmental dependencies.
• Capability review: Units have clinical expertise but lack real-time information about resource availability across departments.
• Coordination evaluation: Manual coordination processes cause delays and inefficiencies during peak demand.
• Variety gap identified: Information flow insufficient for real-time coordination needs.
• Potential solution: Implement real-time resource tracking system accessible to all units, or create a dedicated coordination role with authority across departments.

Strategic Considerations

When reviewing requisite variety:

1. Layered approach: Address variety absorption first at the operational level, then through coordination, and only then through management intervention.
2. Right-sizing: Ensure that organizational complexity matches but does not excessively exceed environmental complexity.
3. Capability building vs. structural change: Sometimes the solution is developing new capabilities rather than changing structures.
4. Automation potential: Consider where information systems can absorb routine variety, freeing human capacity for more complex issues.
5. Future-proofing: Consider not just current complexity but anticipated future complexity.

By thoroughly reviewing requisite variety, you can identify where your system design may still have gaps in its ability to handle complexity effectively, and take appropriate measures to address these gaps before they lead to operational instability.