It was realised, by the 1960s, that the assumption that organisations are closed systems was no longer tenable. The fact that organisations exchange resources with their environment is incompatible with the assumption in the closed systems model of lack of interaction and interdependence between the system and its environment. This realisation could possibly be explained by the increase in the complexity and dynamism of the environment (e.g. technological, social, economic, and political) and the impact of these changes on organisations required organisational theorists to rethink the validity of the previous model and its assumptions. This led to the inception of a new generation of theories, which were based on the open systems model, that were dominant during the 1960s and through the 1970s.
The concept of equilibrium and steady state conditions need to be clarified before we go further into how open systems operate. In a closed system, equilibrium is achieved when opposing variables in the system are in balance (Miller, 1978). In addition, the equilibrium can be static or dynamic. The former is commonly found in closed systems while the latter is a property of an open system. Since living systems are open systems, with a recurrent alteration of fluxes of matter, energy, and information, their equilibrium is dynamic. Miller (1978) termed the dynamic equilibrium a ‘flux equilibria’ or ‘steady state’. The term dynamic equilibrium has, however, also been utilised interchangeably in both closed and open systems (Bertalanffy, 1973). We argue that both closed and open systems can exhibit equilibrium; however, in the latter case, the equilibrium is ‘quasi’ rather than being a true one as in closed systems.
In the previous paragraph, a steady state was characterised as a dynamic equilibrium that exists in open systems. According to Kramer and De Smith (1977), a steady state refers to an open system maintaining an unchanging state even when input and output are still in operation. This makes the system appear static to the observer despite the fact that the flow of resources through the system is dynamic and continuous. A popular example of this is the maintenance of the human body temperature at 37° Celsius. In this case, the amount of heat generated by the body’s metabolism is kept equal to the heat lost to the environment. As a result, a constant body temperature can be maintained.
The most important quality of an open system is that it can perform work, which is unachievable in a closed system in an equilibrium state because a closed system in equilibrium does not need energy for the preservation of its state, nor can energy be obtained from it. In order for it to perform work, it is necessary that an open system is not in an equilibrium state. Nevertheless, the system has a tendency to attain such a state. As a result, the equilibrium found in an organism (or any open system) is not a true equilibrium, incapable of performing work. Rather, it is a dynamic pseudo-equilibrium (or quasi-equilibrium) kept constant at a certain distance from the true equilibrium. In order to achieve this, the continuous importation of energy from the environment is required (Bertalanffy, 1950, 1973).
The homology between an open system and human or work organisations can be drawn from the chain of logic mentioned in the previous paragraph. A fictitious organisation, which is largely closed to the external environment, will eventually lose its alignment with the environment because only limited or no resources (i.e. materials, energy, and information) from the environment are allowed to cross the boundary into the organisation. This leads to a misalignment between organisational strategy-structure and the environment, which results in substandard performance as the acquisition and usage of resources become inconsistent with the demand from the environment. The organisation that persistently performs poorly will deteriorate over time and, we argue, is on the way to equilibrium according to the second law. On the other hand, a viable organisation needs a continuous inflow of new members for new ideas, skills and innovations, raw materials and energy to produce new products and/or services, and new information for reasonable planning, strategy formulation and coordination. Only the importation of these resources from the environment can keep it away from equilibrium and can allow it to perform its activities in a viable manner.
It should be noted at this point that the meaning of equilibrium as it is used here, is ‘entropic equilibrium’ in which equilibrium is maintained at the expense of structure (Grey, 1974; Van Gigch, 1978). In other words, the system’s structure and organisation will deteriorate over time, according to the second law, if there is no importation of energy and materials from the environment and processing of information. Another type of equilibrium will be introduced in the next section.
It is necessary for many systems to maintain their equilibrium in changing environments or disturbances, otherwise they cannot function properly or their goals cannot be attained. In living systems, the process of self-maintenance or ‘homeostasis’ is essential to ensure their survival and viability. The term homeostasis is referred to by Flood and Carson (1993) as a process by which a system preserves its existence through the maintenance of its dynamic equilibrium. This equilibrium is termed ‘homeostatic equilibrium’ (Van Gigch, 1978). Thus, a mature organism as an open system appears to be unchanged over a period of time because there is a continuous exchange and replacement of matter, energy, and information between the system and the environment. Homeostasis can be explained mathematically as follows (Flood and Carson, 1993): If we define x(t) as the state vector at time t and x(t+s) as the state vector at time t+s, the preservation of the system’s condition over a relatively short period of time can be represented by a statement: x(t) = x(t+s), which means that at t+s, the identity of the organism may appear to be unchanged; however, the actual materials that constitute the organism at time t will be partially or entirely replaced by time t+s. This can be shown graphically as in Figure 11.1, “Homeostasis in an open system at t and t+s. Adapted from Flood and Carson (1993).”.
Homeostasis is not only one of the most important properties of any living organism, but is also readily applicable to human or work organisations treated as open systems. The organisation needs to recruit new employees to replace those who retire; it also needs raw materials, energy, and information for use in its processes and operations to maintain a steady state. In fact, an organisation that appears externally static and unchanged to outside observers is internally in a state of flux, in a state of dynamic equilibrium.
Another significant aspect of an open system in a state of dynamic equilibrium is that it relies on feedback mechanisms to remain in that state. Based on Boulding’s system hierarchy, which classifies the system according to its complexity, it is not surprising to find that properties exhibited by systems lower in the hierarchy are also found in those higher in the hierarchy because the latter are built on the former (Boulding, 1956). Therefore, a system that is classified as an open system would possess all the qualities that belong to the system at a cybernetic (or self-regulated systems) level. The behaviour of open systems is, to a great extent, determined by the feedback mechanisms present in them. There are two types of feedback that operate in most systems, namely negative and positive. Negative feedback reduces or eliminates the system’s deviation from a given norm, so a negative feedback mechanism tends to neutralise the effect of disturbance from the environment so the system can maintain its normal course of operation. On the other hand, positive feedback amplifies or accentuates change, which leads to a continuous divergence from the starting state. Positive feedback works together with negative feedback in living systems (e.g. in organisms, and organisations too, both types of feedback are present during growth even though the net result is positive). However, the operation of positive feedback alone will eventually result in the system’s disintegration or collapse. Negative feedback plays the key role in the system’s ability to achieve a steady state, or homeostasis.