OSTO System Model

In the OSTO System approach, organizations are analyzed as open systems. In this context, the attribute “open” refers as well to the spatial and subject level as to the temporal aspect. On the spatial and subject level, not only intended but also unintended exchange with the environment is analyzed. Systems are hardly ever closed. In consequence of that, bidirectional reciprocal exchange between a system and its environment has to be monitored very closely. Internal relationships as well as external dependencies of the entire system have to be grasped in order to develop a long-term strategy that takes consequences into consideration.

The social side of the system comprises the classical areas of design and process organization, information and decision procedures, division of functions and tasks, as well as the reward and control system. This aspect does, however, also consider the motivation throughout the company and the relationships among employees and the overall organizational culture. For understanding this part and its influence on the whole system it is crucial to know that trust plays the most important part in all procedures and processes in which humans are involved.

The technical side of the system mainly focuses on the material aspects of companies, such as machines, equipment, internal and external architecture as well as tools and procedures. Additionally, it comprises the conceptualization of technology with regard to centralized and/or decentralized solutions. Another problem that is tackled within this part of the model is the question as to how technical concepts and tool further fragmentation of work or – if intended so- in how far they enable integrated wholesome work structures.

The economic side of the system describes all aspects which are directly linked to the economic efficiency of the organization, such as revenue trends, productivity development, controlling procedures, remuneration systems, investment and budget planning, fiscal aspects, lead times, cost structure, etc.

Every organization is separated from its environments (at least) theoretically by differing borders. Possible forms of such borders are: Physical (e.g. buildings), temporal (e.g. work shifts), social (e.g. teams), or psychological (stereotypes, prejudices) system borders. In order to describe and define a system as accurately as possible it is necessary to determine the borders of a system very carefully. It is a current perception that system borders are partly permeable.[6]

The environments of a system, i.e. everything outside its borders, have a strong influence on every organization. The model assumes that systems without any environment that they interact with cannot exist. A system that is hardly influenced by an environment described as an autarkical system. On the contrary, a system that is strongly formed by external influences is named a dependent system. In the context of companies an environment can be as diverse as to be the marketplace, customers, political conditions etc.

The reason for existing of a system – also to be grasped as the purpose – is the contractual, reciprocal relationship between the system and its environments. It describes which need of the environments is to be satisfied by the core processes of the organization. The Reason for Existing can never be defined unilaterally, which separates it from unilateral, personal interests. In its form it is not to be seen as static, but is also influenced in various ways from the inside and by external factors of the system such that a regular comparison with reality is important. In conjunction with the mission and the goals the Reason for Existing incorporates the overruling “company strategy”.

Next to the Reason for Existing, for every living system a sound mission that is oriented towards the future bears many advantages. The mission questions the long-term sensibility of the Reason for Existing. The internal motivation and identification on the one hand and the acceptance in society on the other hand are maintained through long-term, future oriented thinking. The mission focuses on sensibility with regard to sustainability based on individual, cultural, ethical and further aspects.

In applied practice, the Ultimate Anchor plays a minor role. It deeply analyses [basis and meta value, views on life and the world, images of people and gods which creates the framework of convictions and beliefs in which “questions for meaning” are shaped.] [7]

Mission as well as Ultimate Anchor were added to the OSTO System Model by Rieckmann and Henning in the second half of the 1980s since both aspects become increasingly important under the influence of globalization and crisis in society.,

An appropriate depiction of the initial outputs is necessary for the organizational diagnosis. In that regard it is important that “Output” comprises both numerically graspable as well as qualitative aspects (e.g. work place satisfaction, motivation etc.). It is just as important to capture the factually or seemingly useless initial results and not only the “official” or “desired” results.

The term “Outcome” comprises all financial events of an organization: Income from product sales, R&D, etc. It is intended so that the term is slightly broader such that the organization under scrutiny utilizing the model decides itself whether “Outcome” includes prices, sales volume, return on investment (ROI), or other aspects.

The OSTO System Model points out that inside an organization the information from the environment, the Reason for Existing and the outputs/outcome are turned into real results through transformational processes. The model provides two explanations for that

• Implementation through core processes and transformational processes (process version)
• Realization through strategies, design elements, and behavior (structural version)

OSTO System model process

OSTO System model structure

The process version explains the processing of information from the environment, the reason for existing and the outputs/outcome by means of a transformational process. This process is made up of three central core processes. The term “core process” is to underline that only processes that go to the core of the subject matter, i.e. those which ensure the existence of the company, are relevant. There are three core process that are to be distinguished:

The task core process comprises all activities, communications, actions, etc. which aim at creating the system results (output).

An important basis for all processes of within a system is the energy (work power, performance) which each single person in a system provides and is capable of deploying towards the goals of a system. The systemic approach describes this by the term “Individual Core Process”.

Throughout the social core process, the humans in an organization work towards the goals of a system. In the SCP, the individual core process and the task core process are linked such that synergy effects are yielded from collaboration.

The Structural version explains the system's internal transformation process through strategies, design elements and (system-) behavior. The transformational process is such structured by the design elements of the company. They are intended to concentrate and to structure all processes and structures within an organization:

In the OSTO map, the goals of a company belong to the internal design of an organization, i.e. the so-called transformational process. With respect to systemic theory, the goals are to be grasped as an internal specification and are derived from the reason for existing. They define the internal needs for actions. For reaching the goals it is necessary to formulate strategies that define how things are to be implemented such that the goals are achieved. The strategies are realized by appropriate adaptions to the design elements.

In every system/organization there is an abundance of very different behavioral patterns (e.g. leadership behavior, work behavior, etc.) which are produced by the design elements. This implies that the system behavior can only be influenced through the design elements. Since systems are dynamic processes, they are not oriented towards subjects but rather towards events. The overall system can have characteristics which are not inert to any of its component parts (loyal/cooperative characteristic) and does in general not behave like the sum of its parts. The OSTO System Model is currently the only model of this kind which closely analyses the behavior of an organization.

The design element human comprises the members of a company/organization and their roles (talents, qualifications etc.), expectations and needs of material character. Furthermore, the network of socio-emotional relationships and interaction circumstances (“climate”) is included in these conditions of collaboration.

Technology as a design element comprises the technical machines, the means of production, property plant and equipment, etc. and the relationships among them, i.e. all material and spatial conditions of a system.

The organizational structure describes the operating procedures and processes of an organization, i.e. the functions, hierarchies, reporting structures as well as the regulation of processes in temporal, spatial and subject aspects.

Functions and tasks as a design element is derived from the open property of companies/organizations. It comprises the description of the tasks which stem from customer needs as well as the division of tasks as specific work orders, expectations towards functions, jobs, etc. Consequently, it is possible to develop processes in order to install and foster changes in organizations.

The decision-making system describes where, how, to whom, on which level, at which spot and by means of which tools decisions are made. It furthermore describes which mechanisms, processes, rules etc. guide the decision processes.

The information system describes who receives or does not receive which information when, from whom and by which means. It also analyzes why this is so.

Amplifying and reduction systems of material and immaterial as well as formal and informal character are described through the reward and control system of an organization. As such it analyzes mechanisms and procedures which observe and guide human and technical behavior, results and processes. This includes amongst others remuneration structures and the unwritten rules of a company.

By means of the development and renewal system the flexibility as well as the performance and adaption capacities of an organization are maintained and increased. This can also revolve around a group of employees within the company which have the mandate to develop the company internally and externally. Generally, this can be subsumed under the term innovation management.

According to the model, feedback is of crucial importance for the survival of a system, i.e. of an organization that is confronted with turbulent environments. As systems are to be understood as open systems they rely on feedback loops in order to remain existent. The feedback consists of loops that have a guiding, stabilizing and renewing effect on the system. According to literature there are four types of feedback.

Quality feedbacks are reactions to the quality of the output. Usually, all types of quality management use quality feedback as a starting point of their methods.

Renewal feedbacks report reaction of the environment with regard to the reason for existing. This form of feedback is to analyze the demands of the environment (e.g. Development of new markets).

Responsibility feedbacks question the mission of the system. They refer to the long-term chances of survival of the system and its environment (earth-humanity-future-problem). In that regard the focus of this form of feedback is sustainability.

Awareness feedbacks contain information about basic “truths” – about humans, the way humans live together and transcendent values – and about absolute (“true”) values. In this context, the consequences for the system and the members of the system (e.g. through religious orientations) are reflected.