Competitive Exams: Closed System Vs Open System

Closed System View of Organizations

The classical management theorists assumed that the primary goal of organizations was economic efficiency, and that organizations were essentially closed systems. Consequently, they regarded organizations as rational and economic entities.

According to Louis E. Boone and David L Kurtz, Closed systems are sets of interacting elements operating without any exchange with the environment in which they exist. This definition implies that closed systems require no inputs

human, technical, etc. From the external environment in which they exist. But no organization can be a totally closed system. For instance, even a relatively closed system, like a wind-up alarm clock, requires outside intervention when it slows down or goes out of order. Thus, a totally closed system is only a theoretical concept. Different systems differ in the degree to which they depend on the external environment for information, material and energy inputs.

The two basic characteristics of a closed system are:

  • It is perfectly deterministic and predictable.
  • There is no exchange between the system and the external environment.

If the initial conditions and the stimuli in a closed system are known, the final condition, i.e.. the result can be predicted with certainty. Let us consider the example of a pool table. Prior knowledge of the following conditions and stimuli make it possible to accurately predict where each ball will come to rest:

  • the position of every ball on the table
  • the elasticity of the bumpers
  • the coefficient of friction between the balls and the table
  • the force with which the cue ball is hit
  • the direction of the cue ball
  • the type of spin on the cue ball

Classical management theorists borrowed certain ideas from the closed-system concept that was popular during that period of time. As a result, these theorists emphasized structure and attempted to eliminate environmental disruptions that could affect their studies of planned systems activities.

Open System View of Organizations

Traditional closed-system views (like scientific management, the universal process approach, and bureaucracy) ignored the influence of the external environment. This sometimes led to the failure of plans and inefficient handling of resources. Unlike the closed-system approach, the open-system concept stressed the need for flexibility and adaptability in organizational structure, and the mutual interdependence between the organization and its external environment. According to this concept, organizations should be adaptive and should take into consideration the influence of the external environment. According to Andy Groove, former CEO of Intel Corp, A corporation is a living organism, and it has to continue to shed its skin.

The modern open-system model of organizing allows an organization to interact with its environment and evolve its organizational structure gradually over time. Thus, open systems are based on a biological model rather than a physical one.

Boone and Kurtz define an open system as a set of elements that interact with each other and the environment, and whose structure evolves over time as a result of interaction.

The open-system concept is based on the assumption that no system is totally deterministic or predictable because of the uncertainties in the external environment. Here again, let us consider the example of the pool table. As a player strikes the cue ball, his or her opponent may pick up a ball from the table. This disturbs the game and it now becomes impossible to predict where the balls will ultimately come to rest. This is analogous to the influence of the environment on the system.

An organization is a system consisting of several subsystems which interact with one another. The organization, in turn, is a subsystem of a larger system social, political, economic or legal system. System-to-system interactions, like the movement of capital (example: Corporate borrowings), the movement of goods and services (example: International trade), and the movement of people in and out of the labor force, are as important as the systems themselves.