Closed systems do not realistically represent real organisations because organisations are open rather than closed. Thus, any theories or models that treat organisations as closed systems are inadequate. Furthermore, although closed system models work best in a relatively static environment, such environments are rare and likely to become even less so.

Depending on environmental demand or contingency, organisations respond to perturbations in the environment either via an adaptation process, which can be viewed using an open systems model or homeostatic equilibrium model, or transformation, which is best viewed using a dissipative systems thermodynamic non-equilibrium model. Adaptation operates in response to limited environmental disturbances, but beyond these limits organisations need to transform themselves into more sophisticated forms that are more complex and capable of managing higher levels of environmental contingencies. However, a complex system must be in a far-from-equilibrium condition, which is characterised by instability, so that transformation can occur.

In adaptation, changes in the environment require that organisations modify some of their properties (strategy, structure, procedures or technology, and size) to be aligned with that environment. But adaptation cannot accommodate cultural change, which involves changing of people’s beliefs held at a deep level. When organisations have to cope with an extremely high environmental contingency, transformation, which is a more substantial and pervasive form of change that includes the change of organisational culture and its political web, must be introduced to ensure their survival.

Since the environment of organisations is ever more complex and dynamic, we argue that a unified model, which encompasses both adaptation and transformation, should be developed and empirically tested with the aim of better representing and understanding change in organisations.