Issue Policy vs. Systems Policy (S. 42-43)

While the subject level and the system-related management level are related to each other, they are entirely different in nature. In natural systems and in corporate management practice, they overlap or are often interlinked to an extent where it is difficult to tell them apart. In order to do so, one needs to develop an eye, even a sense for their interaction, and have access to the right models and methods to differentiate them and put them into a sensible order. Part of that is dealt with in this book.

At the two levels – the subject-matter and the systems level – we face different core problems in the management of business organizations. The key issue at the subject level is how to make profit. At the system level, the key issue is how to maintain a business system for an unlimited amount of time. Doing business and staying in business are two entirely different sets of skills and targets. At the system level we have the phenomena of shaping, directing, and regulating complexity. Regulating, direction, sorting out, and shaping are different forms of the same thing: of dealing with complexity. Hence, the subject level and the system-related directional level rest on two different knowledge bases.

The subject level is all about markets, products, technologies, personnel, and finances. It is about growth, revenues, costs, and profits. These are the familiar categories of managers’ business environment. The foundation of the subject level is the economic sciences, in particular business economics, as well as technical disciplines and natural sciences.

At the directional level, however, it is not the growth targets for each business line that are of primary concern. The central topic here is the principles for regulating growth as such, or the way in which the company grows. Typical questions are, for instance, whether growth is healthy or unhealthy, stable or unstable, and how much growth the company can take without getting out of control.

In other words, at the level of direction-setting and regulation, as opposed to the subject level, the central theme is functioning sustainably. It is all about the company’s basic ability to operate, about issues of stability and flexibility, of conservation and renewal, of adaptation, evolution, and the ability to develop further. The foundation for the directional level is cybernetics, the science of regulating and functioning (as has been mentioned before). Closely linked to it are its sister disciplines, system theory and bionics.

So the subject level is about operating the business, the directional level is about shaping a system for the operating of businesses, and about the shaping of systems for entire business systems. For instance, the global success of McDonald’s is not owed to hamburgers but to the system that McDonald’s has chosen for the way it works. The company’s general managers are really system architects and system designers, which in the complexity- driven society will be the central tasks of top and general management, in particular of CEOs. Another case in point is Microsoft, whose success stems from the company’s general management rather than its product, while DaimlerChrysler was not able to master, at the top management level, the complexity of a major merger.