Interviewer:

Which role does the subject “decisions” have in system theory?

Guest Professor Robert A. Sedlák:

In system theory terms, we believe that organizations are not tangible but are complex social systems, which come into being through processes of communication and are kept alive through them. In this sense, communication is an event which takes place and ends again. Without follow-up communication, a social system would cease to exist. We assume that the decision is the most important communicative event of an organization.

When are decisions necessary?

When there is knowledge and lack of knowledge at the same time. A decision can only be made when different alternatives exist. With a decision, I opt for a presumed future. We are pretending that the future is certain. After the decision, things continue until another decision has to be made.

Why has the system theory a rather critical view on the belief: “Once the Management Board has decided, everything should run well.”?

After each decision, subsequent decisions must be made. Only when subsequent decisions are made in terms of the initial decision, one can speak of an effective decision. Yet, we know that many subsequent decisions in organizations are not made with regard to the management decisions – and thus, do not follow the initial intention.
This provides management with particular challenges.

From a system theoretical perspective, does it make a difference, whether decisions are made by individuals (e.g. executives) or by teams?

First of all, it is important that subsequent decisions are made with regard to the management decision – only then we can speak of a decision in system theory terms. Nowadays, complexity often overwhelms individuals. Therefore, executives are very well advised to involve key players and experts into the process of opinion-forming, to then make smart decisions.

Why do organizations often behave exactly opposed to the actually agreed upon decision?

If decisions are not understood, it often leads to follow-up decisions, which run into a different direction. In that case, the intelligence of the system shouldn’t be underestimated. Furthermore, each decision is given a meaning – does it make sense or is it non-sense. And then it happens…

In addition, I would like to remind that organizations are self-organizing systems. This has to do with obstinacy and unpredictability. Managers are well advised to take the intrinsic logic of organizations into account for decision-making processes and to observe its impacts.

From the perspective of the system theory, which role should the management and executives assume regarding decisions?

I would firstly like to state that every manager is a part of the systems and any steering impulse also affects the management itself. Organizations steer like the management steers and vice versa. This means that the manner in which the decision-making processes are designed significantly influences the quality of the decision. It additionally influences the processes of the subsequent decisions and thus the quality of further decisions. Therefore, management either creates opportunities or prevents them.

Lässt Given that organizations are so complex, can actually anything be decided, which would make a difference for the organization?

We can assume it. If the management decides to close down operations, it makes a difference. As already pointed out: you can decide a lot. The question is whether the closing down of the facility will take place. In my consulting practice, I have often observed that management started with a tiger and ended up with a bedside rug. This is an indication for a decision-making process, which did not go well.

Which recommendation can the system theory give, so organizations can make smart decisions?

We speak of decision premises, which implicitly or explicitly exist in organizations and which the management can influence. They include communication structures, programs (if…then or in order to … ) or people and determine subsequent decisions. Executives are well advised to look at these decision premises and to verify whether these are still adequate (2nd order observation). Additionally, the process and the platforms for how and where decisions are made play an important role. Executives should be self-reflexive to see which decision type they represent. We are well advised to seriously consider the latest findings in brain research and use both the mind and the emotional experience memory when making decisions.

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Nowadays, abstract complex formations are easily referred to as systems, without actually knowing what it means. Multiple sciences explore their origin, development, influence and impact. What benefits do we get from thinking about systems?

In our work, we first differentiate between trivial and non-trivial systems. A trivial system, e.g. an engine – although complex – can be processed according to the classic cause-effect principle. Through the use of an error analysis causes for an unwanted condition or an undesired result can be determined and then be fixed.

We see non-trivial systems as complex and operationally closed systems that are not visible from the outside and cannot be changed. An undesired condition cannot be eliminated in a direct way, but can only be addressed with communicational interventions within the system. However, the outcome of an intervention is not predictable. Even by repeating the same intervention it cannot be assumed that equal results will be achieved.

The non-trivial systems include biological, psychological and social systems, which are self-organizing. The psychic system of a dog, for instance, is unpredictable. If you accidentally step on a dog’s tail, it may result in many different reactions. The first time, the dog can run away. Next time, it can bite you. In this context, we see organizations as complex social systems which are – like psychic systems – unpredictable.

This fact makes me very humble, when it comes to accompany changes in organizations. Since change can only occur from within the system, it has major impact on my intervention repertoire as a consultant.

How do you notice systems in everyday life? Have you come across a system once in your life? Did you have difficulties with it or did you even experience some support? How did you deal with it?

As I already said, it depends on which systems are meant. In consultancy, we particularly deal with organizations, which we see as a special form of complex systems. In family businesses for example, we also focus on the family, shareholders as well as on the advisory board. They are all social systems with different logics. Once different system logics come together, we are dealing with paradoxes, which need to be managed well.

According to my understanding, the basic element of these social systems is communication. In organizations, decisions are the most important communicative event. My role as a consultant is to observe how communication takes place and how decisions are made.
From my perspective, one of the greatest achievements of a consultant is to support a management team to become and remain capable of making smart decisions, which in the end are also implemented. A decision is only a genuine decision when subsequent decisions are based on this taken decision.

Perspectives and opinions of young people are hardly considered in systemically-relevant decisions – may it be politics, economy or science. Yet, they are particularly affected by system-induced crises (unemployment, national debt, pension loss, destruction of the environment). What advice can you give this generation?

The young generation is well-advised to deal with the different system logics and to form their own opinion of what is good or bad.

Only through a personal opinion and positioning it is possible to initiate or to support necessary interventions. Starting from the social benefit that functional systems like politics, economy and science should offer, the next generation has to decide, whether they want to accept the established structures and the respective results. In my generation, we were very critical about the educational system. Still, we haven’t managed to reach real system-changes so far. However, the upcoming challenges will force change and here, each young person should decide, which expectations s/he has towards these systems. This will be the prerequisite to support the right interventions and the matching programs to influence the upcoming requirements for change according to individual needs.

Seit Since Luhmann’s systems theory, nobody believes in individuals being able to change social systems any longer. Nonetheless, discomfort regarding systems, such as the economy or state system, grows. A utopian question: Can there be a system-free future?

According to my understanding, there will always be systems, which make and have to make a contribution to our society. Otherwise, the supply for 10 billion people or more would not be possible any longer. Since social systems are self-organizing systems, we would be well-advised to look closely at whether the systems make the contribution they should make. If it’s not the case, we should feed the need for change into the social communication system and support decision processes that allow change. Looking the other way cannot be the solution – the personal commitment of each and every one is demanded when it comes to shaping the future!

About the person: Guest Prof. Robert A. Sedlák

Robert A. Sedlák is Guest Professor at the East China Normal University (ECUN) in Shanghai and co-founder and director at the ECNU-S&P Research Center for ICT-enabled systemic changes and innovations in Shanghai. Furthermore, he is founder and CEO of the transformis® International Consulting Group.

Since 1987, Robert A. Sedlák has been operating as an independent consultant for DAX listed companies as well as for medium-sized businesses, particularly family-owned companies. Due to his longstanding activity in Asia, with focus on China, he has gained a deep understanding of the differences between the Western and Asian culture for bridging intercultural differences. Based on the newer systems theory, he deals intensively with the self-reference of organizations and, together with renowned scientists in the field of Newer System Theory, he has developed the concept of the self-renewal of organizations.

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Thus, Robert A. Sedlák has been bearing this title already for 18 years. The title is awarded to full-time management consultants, who meet the requirements of the International Council of Management Consulting Institutes (ICMCI).

Since 1987, Robert A. Sedlák has been operating as an independent consultant for DAX listed companies in EMEA, APAC and NADTA as well as for medium-sized businesses, particularly family-owned companies. Through the years, he has become one of the most prestigious systemic organizational consultants.

The focus of his consulting work lies on the Foresighted Self-renewal of organizations. This concept, which was developed with renowned scientists in the field of Systemic Organizational Theory, enables organizations to recognize and capture external signals at an early stage and to use them effectively for a self-renewal process. As a result, “blind spots” can be identified and be worked on. In this way, the organization can prepare for changes in an anticipatory way and operate successfully in the market. With the concept of the “Foresighted Self-renewal”, Robert A. Sedlák sets new standards with regard to strategy development and change Management.

In July 2013, Robert A. Sedlák has been appointed a 5-year Guest Professorship at the East China Normal University (ECNU) in Shanghai. The appointment took place in the context of the Foundation of the “ECNU-S&P Research Center for ICT-Enabled Systemic Change and Innovations.”

Interesting links on the subject

• Profile of Robert A. Sedlák
• Appointment as Guest Professor in Shanghai

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Recall of chocolate bars – Mars reacts to discovery of plastic
On 23.02.2016 the chocolate producer Mars Germany announced the recall of its produced Mars-, Snickers-, and Milky Way bars due to contamination.

Contamination is among the everyday phenomena in food production. The resulting recall campaigns cause image damage and exorbitant costs. Trade is becoming increasingly sensitive and has set up appropriate crisis teams to be able to order immediate recalls after customer complains. The producer is often not involved in these crisis talks and is then forced to act.

Big brands, now Mars, had to pull back products in the recent years because they are limited in handling the topic of‚ contamination.

We collected extensive experience about how contamination can be reduced and how they can be avoided through adequate escalation processes in a successful transformation process with a well-known brand-name.

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Frédéric SedlákSenior Consultant | HR Management
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Executives of the City of Mannheim address current topics

After a brief introduction by the Lord Mayor, Dr. Peter Kurz, Guest Prof. Robert A. Sedlák provided answers to the following questions:

• How do we define organizations from the perspective of systems theory?
• How can the foresighted self-renewal be integrated in organizations?
• What are the associated challenges for executives?
• What are the levers for change?
• What are the paradoxes that executives have to manage?
• What roles do the employees have in change processes and how to deal with it?
• What possibilities for intervention can help to design the change process successfully?
• What are the implications for your change process?

The presentation was followed by an intense and interesting debate.

Mannheim in a change process – a flagship initiative for politics and economy

It is impressive what the Lord Mayor Dr. Kurz and his team have achieved since 2008.
The City of Mannheim can well be considered a benchmark for economic organizations.

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Interesting links

• Mannheim revolutionises municipal activities
• The prototype Mannheim – Information zur Haushaltsaufstellung (pdf-German)

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