Chapter 3. The Enterprise as a Living System

This chapter is about the need to liberate the enterprise from the grip of the mechanistic model and the criticality of treating a business as a living system. The chapter also covers the key characteristics of living systems and their implications for a company.

For decades, enterprises have been modeled as closed-ended systems, the rationale for which is discussed in this chapter. Closed-ended systems, for example, machines, are largely insulated from the external environment and incapable of learning on their own. Hence, although they are highly predictable and stable, systems are not capable of sensing, responding, and adapting to changes in the environment. Open-ended systems, also known as living systems, on the other hand, interact with the environment through the exchange of information, learn from interactions with the environment and, therefore, are able to evolve by adapting and responding to change, for example, humans have evolved from apes.

It can be concluded that organizations modeled as close-ended systems find it extremely difficult to evolve with a changing environment. For an enterprise to sense, respond, and adapt to change, it needs to be transformed to become an open-ended or living system.

The chapter will explore the following topics: