Task A4.1: Identify the System 3 Elements

What is Task A4.1?

Task A4.1 is part of the "Observe" phase in the Viability Canvas methodology, specifically within the "System Three: Optimization" step (Step A4). This task instructs you to "Identify the relevant units belonging to System 3."

Purpose of Identifying System 3 Elements

The purpose of this task is to identify the parts of your organization that fulfill the System 3 function - operational management that optimizes the whole system by providing an overall view and initiating improvements. This serves several important functions:

1. Recognizing optimization mechanisms: Identifying the parts responsible for improving the organization as a whole
2. Understanding operational management: Mapping the functions that stabilize internal operations
3. Clarifying the meta-system: Identifying key components of the management system that sits above operational units
4. Resource allocation governance: Understanding how resources are distributed among operational units
5. Identifying synergy mechanisms: Recognizing functions that create coherence across operational units

By identifying System 3 elements, you gain clarity about how your organization optimizes its operations, allocates resources, and creates coherence across different units.

Understanding System 3

In the context of the Viable System Model, System 3 is responsible for:

• Operational management of the entire complex of System 1 units
• Providing an overall view of the organization's inner workings
• Initiating improvements based on this balanced view
• Creating the environment and context for effective collaboration between operational units
• Optimizing resource allocation across operational units
• Ensuring accountability of operational units
• Creating synergy across the organization

System 3 is described as "Inside and Now" - it takes care of the organization's inner workings and present functioning. Most cost centers, like HR, marketing, controlling, and finance departments, are typically allocated to System 3.

How to Complete Task A4.1

To identify the System 3 elements in your organization:

1. Review your organizational structure:
   • Look for departments, roles, teams or functions responsible for operational oversight
   • Identify groups that have a "whole system view" of operations
   • Consider support functions that serve multiple operational units
2. Focus on functions that:
   • Allocate resources across operational units
   • Establish performance standards and expectations
   • Ensure coordination between operational units
   • Create and enforce policies that apply across operational units
   • Look for synergies and optimization opportunities
3. Typical System 3 elements include:
   • Financial management and controlling
   • Human resources management
   • Marketing management (the strategic part, not execution)
   • Quality management
   • Operations management
   • Procurement management
   • Compliance functions
4. Be mindful of scope:
   • Focus specifically on your System-in-Focus, not all units in the organization
   • If a function belongs to a higher organizational level than your System-in-Focus, it is not considered part of your System 3
5. Document your findings:
   • List all the identified System 3 elements
   • Note their main responsibilities related to optimization and coordination
   • Consider how they interact with System 1 units

Example from a Manufacturing Organization

In a manufacturing company, System 3 elements might include:

• Production planning: Coordinates production across different manufacturing units
• Central procurement: Manages purchasing and supplier relationships for all production lines
• Quality assurance: Ensures standards are maintained across all manufacturing operations
• Production controlling: Monitors performance and initiates improvements
• HR department: Manages personnel policies and practices across all units
• Finance department: Allocates budgets and monitors financial performance

By identifying these System 3 elements, the organization gains clarity about how operational management functions and how these elements create coherence and optimization across operational units.