Chapter 11. A unified open systems model for explaining organisational change

Doy Sundarasaradula

School of Economics and Information Systems, University of Wollongong

Helen Hasan

School of Economics and Information Systems, University of Wollongong


This paper presents an approach to developing a unified conceptual model to describe and explain change in organisations, viewed as complex systems. The authors propose a model that brings together the traditional open systems model (based on principles of homeostasis, steady state, and cybernetics) and the dissipative systems model (based on thermodynamic non-equilibrium principles) to explain distinctively different phases of change. Gradual and incremental change can be explained by using the traditional open systems model, whereas dramatic and discontinuous change can be explained by the adoption of the dissipative systems model. These two phases of change occur naturally, depending on the nature and pattern of external and internal disturbances. Since the implementation of any information system involves some degree of organisational change, it would be valuable to the IS community to more clearly understand organisational change processes, thereby increasing the possibility of success.

Table of Contents

Closed systems and organisational theories
Closed systems and change
Open systems and organisation theories
Characteristics and mechanics of open systems
Homeostasis and the behaviour of open systems
Organisational life cycle: growth, maturity, decline and death
The dissipative systems model
The theory of dissipative structure
Dissipative structure in physical systems
Order in a non-equilibrium state
Entropy and sustainability of dissipative systems
Implications for organisations
Order through fluctuations and system transformation
Model synthesis and discussion
Theory of punctuated equilibrium and rationale for model synthesis
Homeostasis, adaptation, and transformation
Tools for system manipulation
Bifurcations and self-organisation


We currently dwell in a turbulent environment, one in which change constantly occurs and elements in the environment are increasingly interrelated (Emery and Trist, 1971; Terreberry; 1971; Robbins, 1990). The nature of change has recently tended to be revolutionary rather than evolutionary. One possible explanation is that the progress in information and telecommunication technologies, together with the inception of the Internet as a global computer network, has made the world substantially more interconnected than ever before. This acts as a catalyst in fostering further change so that change is now the norm rather than an occasional occurrence. This poses an immense challenge to academics and practitioners alike in successfully understanding and managing organisations as complex entities.

One of the prime sources of change in organisations is the introduction of new technology (especially information technology) into the organisation (Davenport, 1993; Gasco, 2003; Bertschek and Kaiser, 2004). Recently, the concept of re-engineering was introduced as a means of achieving a dramatic improvement in organisations’ productivity and effectiveness by radically redesigning business processes through extensive application of information technology (Hammer, 1990; Hammer and Champy, 1993; Davenport, 1993). However, the chance that a re-engineering project can be successfully implemented in an organisation is surprisingly low, as organisational inertia and resistance to change must be overcome, and the ability to do this varies from one organisation to another (Robbins, 1990). Moreover, successful implementation of information systems projects in organisations depends on factors apart from technological ones (Johnson, 1996). Therefore, an alternative and distinctive organisational change model is proposed here.

Like living systems, organisations experience gradual, incremental types of change as reflected in their growth, maturity, and decline (Miller, 1978). In addition, they experience an oscillatory type of change due to the operation of feedback mechanisms that work to achieve a steady state or homeostasis (Bertalanffy, 1973; Kramer and De Smith, 1977; Skyttner, 2001). However, if the environmental changes are so great that they are beyond the limits within which the homeostatic mechanisms can cope, the organisation as a system has to transform itself into another form that is more suitable to the new environment. Thus a pattern-breaking type of change can be expected (Leifer, 1989). This kind of change does not occur regularly, although evidence reveals that it now occurs more frequently since the progress in telecommunication and transportation technology acts as a catalyst in fostering the rapid evolution of economic, social and political environments (Rosenberg, 1986; Zuboff, 1988; Ohmae, 1991). These developments are making the world smaller in terms of space and time, and the effects of change in one part of the world can be felt rapidly in the others.

Changes in an organisation consist of two distinctive kinds, namely ‘convergence’ which is typified by an incremental, gradual and adaptive type of change, and ‘reorientation’ which is characterised by a disruptive, discontinuous and transformational type of change (Tushman and Romaneli, 1985, 1994; Tushman and O’Reilly III, 2002). We propose that neither of these models of types of change is, alone, either adequate to explain changes in complex organisations, or can completely explain the phenomena that occur in the change process. Our belief is that the traditional open systems model, which focuses on incremental change, and the dissipative systems model, which focuses on disruptive change, should be applied together as a unified model in order to account for all types of organisational change.