Organizations As Systems

A system consists of a set of components working together to produce a result. When referring to the components of a system, the question "Which one is the most important?" should not arise. Raising this question is like asking which component of your car is the most important: tires, engine, steering wheel, or gas tank? The elements of a system must all work together to produce a result. No component can be a "star." To work properly, each component depends on others. If the elements can work independently of one another, then what they form is an aggregate, a heap, not a system.

The components of an organizational system are its various functional areas. Consider the following functional areas at LaBisco -- a company that manufactures, sells, and distributes cookies and crackers.

• Marketing determines customer needs and trends.
• Research and development (R&D) takes marketing ideas and converts them into products we can eat. In other words, it develops processes and formulas for creating new products and improving existing ones.
• Engineering and manufacturing figure out how to mass produce the product for the marketplace. It takes the initial prototype and determines the best way to manufacture it in great quantities cheaply without losing the taste and texture of the original sample.
• Sales demonstrates to the retailer that the products are indeed profitable and that consumers will want them.
• Finance watches the budget and identifies the most effective way to run the business.
• Human resources assures that the right people with the proper training are filling all these roles and that there is adequate teamwork to get the job done.

A good way to see why all these components have to work together is to see what would happen if they did not. Describe four specific scenarios of failure, at LaBisco, due to lack of proper coordination among these components. In each scenario, take one of the above functional areas, cut it off from the others in terms of information flows (assume it receives no information or the wrong information from other areas), and then analyze the effect this will have upon the overall business performance of LaBisco.