The viable systems model applied to a smart network: the case of the UK electricity market
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& 2004 JIT Palgrave Macmillan Ltd. All rights reserved 0268-3962/04 $30.00 palgrave-journals.com/jit
Special edition
The viable systems model applied to a smart network: the case of the UK electricity market Duncan R Shaw1, Bob Snowdon2, Christopher P. Holland1, Peter Kawalek1, Brian Warboys2 1
Manchester Business School, The University of Manchester, Manchester, UK; Department of Computer Science, The University of Manchester, Manchester, UK
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Correspondence: DR Shaw, Room 1.16, Manchester Business School, Booth Street West, Manchester M15 6PB, UK. Tel.: þ 44 161 275 6469; Fax: þ 44 161 275 7134; E-mail: [email protected]
Abstract We investigate the concept of Smart Business Networks by using Beer’s Viable System Model (VSM) to analyse how such a network mitigates the affect of emergent, and therefore unforecastable, demands upon the networked businesses. We examine the requirements for network smartness, highlight some significant properties of one Smart Network and use our case analysis and concepts from systems theory to suggest some general properties such as natural stability and distributed capability. We have found that smartness is distributed and shared behavioural process standards can act to stabilise complex systems. This is important because it mitigates emergent behaviour within increasingly complex business networks. The contributions of our article apply both to academics and business practitioners and are in its illustration and investigation of one Smart Business Network including how the smart capability functions at a strategic, business process and technical level; and the use of Beer’s VSM to analyse an electricity market. Journal of Information Technology (2004) 19, 270–280. doi:10.1057/palgrave.jit.2000028 Published online 12 October 2004 Keywords: complexity; complex systems; stability; Smart Business Networks; Viable System Model; electricity markets
Introduction eer (1979) and Checkland (1981) have written extensively on how organisations and networks exist within complex environments, which generate emergent demands upon them (Anderson, 1999: 218). In order to remain viable, these networks have to be able to fulfil these demands but as Haeckel and Nolan (1996) pointed out: emergence cannot be forecasted and so a sense and respond capability is required. The object of the study is to understand how unforecastable, unplanned for and potentially devastating exogenous shocks to businesses can be mitigated by the benefits of being part of a network with what we have labelled ‘smart’ properties. The contributions of our article apply both to academics and business practitioners and are in its investigation of the concept of Smart Business Networks. In one such network, an electricity market, we illustrate how the smart capability
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functions at a strategic, business process and technical levels using Beer’s viable system model (VSM) to analyse it. Research method Our case study of the UK electricity market is an illustration of a complex system that generates highly volatile emergent
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