Requisite Variety for Decision Factories!

In today’s post, we continue the Mistakes of Mainstream Management (MMM) series and discuss the perils of ignoring Ross Ashby’s Law of Requisite Variety. Before we discuss the law, I’d like to first drive home its importance.

Stafford Beer, the father of Management Cybernetics (which he described as the science of effective organization) said it well:

Ross Ashby was a pioneer in cybernetics and the author of the book, ‘An Introduction to Cybernetics’. In the book, he introduced the concept of variety and used that to formulate his ‘Law of Requisite Variety’, which is simple, yet profound:

Variety, in this context, means the number of possible states or behaviors of a system or a situation. This means that the regulator of the system should have enough variety to absorb rapid changes in its environment (e.g. pandemic triggered chip shortage). External variety is always larger than internal variety. So the regulator must have the means to attenuate unwanted external variety and at the same time to amplify internal variety in order to stay viable.

Note that variety here depends on the ability of the observer - this is a key implication from second order cybernetics. These ideas were developed later by Stafford Beer with regards to organizational control and viability.

Table of Contents

• Mainstream management has let us down

• Attempts to amplify variety

  • Real-world example

  • Organizing for Complexity

Mainstream management has let us down

Technology was initially heralded as a means to boost productivity and grant us more leisure time. Yet, the paradox we face today is that tech. companies themselves are grappling with their own productivity challenges. Their employees often endure long hours, experience burnout, and struggle to maintain a healthy “work-life balance”.

There is a fundamental mismatch between the nature of modern knowledge work and the organization of it. That's because our current management principles, methods and practices are not able to cope with the complexity of our environment and our own internal organization.

In businesses run by executives (vs. founders), it is VERY easy to forget that the point of the game is to stay in the game - long-term viability. Not to optimize for a specific output variable like quarterly revenue or profit margin. They end up installing attenuators and amplifiers at the wrong ends which then cripples innovation and results in the corporation’s slow march to irrelevance in the long-term, while the executives collect cash and stock bonuses in the short-term.

Attempts to amplify variety

There have been multiple attempts to solve for this in the past. Amazon's ‘separable single-threaded’ teams approach is a popular example. A simple flip in perspective here is to organize around work (e.g. projects) and not job families.

Work happens cross-functionally anyways. Small cross-functional individuals (who are empowered to make decisions) who are neither regularly interrupted by external teams to get their work done nor juggling multiple “priorities” can obviously accomplish a lot. This is why Jeff Bezos famously said

Here's the excerpt/story from the book, 'The Everything Store':

I’ll now present a real world example of how a publicly listed company organizes for complexity - in a unique way, and discuss it from the lens of Ashby’s Law.

Subscribe to "I'm Serious" to read the rest.