Systemic Practice and Action Research, Vol. 18, No. 5, October 2005 ( C© 2005)DOI: 10.1007/s11213-005-8486-2

Peirce and Beer

J. R. Stephens1 and T. Haslett2,3

Received August 10, 2004; accepted August 25, 2005

This paper considers the philosophical background of Stafford Beer’s Viable SystemsDiagnosis (VSD) as profoundly influenced by Charles Peirce. In a general sense, ourwork discusses the VSD theory base in the development of a model for actionabletheory in organizations. This paper examines VSD theory in the Beer trilogy ‘Brainof the Firm,’ ‘The Heart of the Enterprise’ and ‘Diagnosing the System’ and we proposethat a sound set of VSD action principles can be derived from this trilogy. We contendthat the philosophical background underpinning these principles is important. UsingBeer’s ‘Decision and Control,’ we consider that philosophical background and linkOperational Research and the interdisciplinary learning within Cybernetics to moderngeneral systems theory. We explore Beer’s viewpoint on the Peirce depiction of fourmain methods of fixing belief; tenacity, authority, a priori and finally the scientific toassist in that expansion. We consider how knowledge of Beer’s perspective on makingsense of the world is important in the linkage of VSD theory to the managerial problemarena. We relate the Peirce methods to previously reported problem solving exercisesinvolving the VSD ideology, which we will develop individually at a later date. Thispaper reflects our desire to express the interpretation of VSD theory in a language thatthe well-informed manager may readily translate into the third step of testing theory inpractice.

KEY WORDS: Operational Research; Cybernetics; Viable Systems Diagnosis (VSD);management; action; Practitioner/Scholar.

1. INTRODUCTION—THE MANAGER AS APRACTITIONER/SCHOLAR

There is extensive agreement (Espejo et al., 1996; Flood, 1999) that a goodunderstanding of the Viable Systems Diagnosis (VSD) theory base can be derivedfrom the Beer trilogy Brain of the Firm (1971), The Heart of the Enterprise (1979)and Diagnosing the System (1985). This paper is concerned with what we term

1Greyhound Racing Victoria, Melbourne, Australia.2Department of Management, Monash University.3To whom correspondence should be addressed at Department of Management, Monash University;e-mail: thaslett@bigpond.net.au.

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to be the ‘well-informed manager,’ a manager who reads widely in the theoryof management, is involved in discourse about that theory and seeks to use thattheory as the foundation for action in the business context. This paper addressesthe question of what a well-informed manager needs to understand of this bodyof theory to be able to act in the business context. We believe this is possibleif managers pay sufficient attention to some fundamental thinking and theory onwhich the trilogy is grounded.

We have previously expressed similar opinion (Stephens and Haslett, inpress) regarding the practitioner/scholar action context and the thinking and theorythat underpin the trilogy. Here we argued that some principles identified from Cy-bernetics and Management (Beer, 1959) are crucial to the modern understandingof VSD theory. We emphasized that a fundamental understanding of the natureof control—as self-emergence from a system, the concept of the organizationalmachine—as a cohesive collection of items, people and information formingsome purposive system and Ashby’s (1956) Requisite Variety—as being smarterthan the situation you are trying to manage were fundamental tenets for thepractitioner/scholar seeking to test theory in the business context. We reiterate ouropinion that a sound set of action principles derived from Beer’s primary worksshould be considered before managers tackle the trilogy and we see the principlesoutlined in this current paper as complementing and adding to our previous work.

In this paper we argue that principles which can be identified from Deci-sion and Control (Beer, 1966) are vital to the modern understanding of VSDtheory in the workplace. We see our well-informed manager operating in a practi-tioner/scholar action context. Our specific context involves a group comprising sixPhD candidates and their supervisor conducting Action Research (AR) in a diverserange of organisations (Haslett et al., 2002). Five candidates are part time studentsand full time managers. The interactions of this group, which has worked togetherfor the past six years, are seen as central to the development of the well-informedmanager. The context has two fundamental, yet clearly interrelated components.One component involves the collective learning group, which affords a forum formethodological, ethical and practical dialogue. The group has congruity in learn-ing backgrounds, having completed a Masters programme in systems theory andthinking, completing a masters level AR project with their current supervisor andbeing involved in individual exchange programmes within their organisations. Thesecond component involves the individual exchange programmes. The dynamicrelation between a PhD candidate and an active manager constantly contributes tothe development of the practitioner/scholar with a strong theoretical base involv-ing systems thinking and reflective learning being developed to inform managerialpractices. It is in this context that the ideas of this paper have been developed.

This paper arises from two exchange programmes involving two separateorganizations and four cycles of AR. The first involved a redefinition of the roleand a subsequent restructuring of the Board of a not-for-profit organization with an

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annual turnover of $100 million. The second was conducted in the umbrella author-ity for this organization and involved the development and integration of VSD intothe strategic capability of the organization. The researcher was, successively, theCEO of both the organizations. This AR has involved the development of a modelfor actionable theory in organizations, which takes the form of a three-step process.The first step of that development involves the definition and explanation of anappropriate theory base, the second the interpretation of that theory into a coherentset of potential action principles and the third using reflective learning cycles totest and develop that theory in a business context (Stephens and Haslett, 2002b).

2. THEORY BASE

Stafford Beer’s assertion that ‘a more sophisticated kind of science is neededto aid the decision making process of top management (Beer, 1966, p. 15) recog-nises that the principles of scientific management (Taylor, 1911) are fundamentalto operations of organizations. It also provides differentiation for the construc-tion of an appropriate theory base involving top management who are typicallyconcerned with decision-making and control processes. Beer proposed that thedecision-making and control processes of large and complex systems needed toinvolve a more complex and action orientated science. We understand ‘science’ toinvolve the testing and validating of hypotheses (or theories) through experimen-tation in the business context and the further development of the theory. Beer’ssubsequent bequest to management action, Viable Systems Diagnosis (1959, 1966,1968, 1971, 1974, 1979, and 1985) evolved over some 40 years. VSD engagesthe principles of Operational Research (OR) and the interdisciplinary use of thesciences or cybernetic theory to help solve problems involving decision-makingand control in organizations. Our work engages VSD as an appropriate theory baseto involve the first two steps of the model for actionable theory. The paper reflectsour opinion that there is a need to express the interpretation of the theory in alanguage that the well-informed manager may readily translate into the businesscontext

3. ORIGINS OF OR, CYBERNETICS AND VSD

Historically, OR has its roots in the first half of the 20th century. RADAR in1938, then further combat and communication interventions during World War IIaccelerated the influence of OR. The post war era, where Beer is recognisedas one of those who took OR from the army into industry, coincided with achallenge to traditional linear or ‘reductionist’ thinking. This challenge acceleratedthe somewhat unconventional interdisciplinary engagement of the sciences ingeneral systems theory. It encouraged the development of OR theory and thenature of feedback and control mechanisms into a diversity of systems including

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organizations and their management. The translation of OR to involve manageableaction in organisations was termed by Weiner (1948) as a new field of scientificendeavor—cybernetics. Beer’s work has been perhaps more correctly cited (Flood,1999) as operational research and management science (ORMS) and RussellAckoff and C. West Churchman are other noted contributors to the field. VSDengages the principles of OR and the interdisciplinary use of the sciences orcybernetic theory to help solve problems involving decision-making and control inorganizations. This brief historical precis connecting the roots of interdisciplinarylearning to general systems theory and the linking of VSD theory to the managerialproblem arena is designed to help managers solve problems in organizationsthrough a contemplation of their role as organizational thinkers.

We have previously argued that some fundamental principles we identifiedfrom Cybernetics and Management are crucial in the linkage of VSD theory tothe management problem arena. We believe that consideration of these principlescan encourage managers to think differently about their organizations, to thinkdifferently about their role as organizational thinkers and to consider how theorycan lead to action. An example is Beer’s principle of control as self-emergencefrom a system, as a fundamental tenet for managers wishing to develop Beer’sideas in a business context. From this principle we believe managers may learnto view control, not from the narrow sense of the giving of orders and directionsto various parts of the organisation, but from an abstract sense equating to whatactually surfaces from their whole organizational system as they (as part of thatsystem) decide, react and adapt to normal everyday occurrences. We believe thatfrom considering this ‘control’ principle, managers may begin to think differentlyabout their organizations and the part they play in organizational change.

Beer (1966, p. 402) acknowledged that ‘managers work under great pressurevery often, and have little time to think freshly about the nature of the problemswhich their good practice handles.’ He encouraged managers to set aside sometime—to purposely think about the nature of the management role and the deliber-ation of what the rational processes of the brain are really like. Stacey (1993, p. 98)supports Beer indicating that scant regard is paid to the way in which ‘managersmake sense of the world and the manner in which their shared beliefs affect whatthey do.’ Our major concern is the linkage of theory and action and the processesof thought that enable this. Our point of view is quite simple; how do managersunderstand theory if they do not think about the thinking which constructed thattheory?

4. MANAGERS THINKING ABOUT VSD THINKING

We believe that many managers make sense of the world through an un-conscious, devotion to a form of reductionist/quasi-scientific thought. By this wemean a reliance on single cause and effect connections that the scientist endeavours

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to establish in a laboratory. Such an approach seeks to remove the influence ofwhat, in a business context, is a turbulent environment. We are not saying thatconfronting management problems using this thinking is wrong. In some imme-diate and pressing situations, such ‘fire fighting’ approaches may be appropriate.We are emphasizing that reductionist/quasi-scientific thinking is founded on thestereotype of the immediate applicability of clear and definite, stable and repeat-able actions and reactions. And we contend that, in the longer term, managementproblems are often not dealt with adequately by such an approach. We would arguethat the use of systems approaches (Ulrich, 1988, Von Bertalanfy, 1968) to suchsituations involves a more comprehensive and holistic approach. There are a sig-nificant variety of such systems approaches available to managers. Two examplesserve as an indication of this variety. Soft Systems Methodology (SSM) developedby Checkland (1985) was defined by Checkland and Scholes (1990, p. 1) as ‘anorganised way of tackling messy situations in the real world.’ Richardson andPugh (1981, p. 1) describe System Dynamics (SD) as dealing with two importantfeatures of managerial problems. The first of these is that the problems are dy-namic, that is having quantities, which change over time. The second is that theyinvolve feedback. Another important perspective of SD is that of Sterman (1994,p. 308) who observed ‘that the structure of the system gives rise to behaviour.’Both of these approaches involve ways of understanding the complexities of mod-ern organizations and it is this aspect of Systems Thinking that we wish to discussin relation to Stafford Beer.

We consider knowledge of Beer’s perspective on making sense of the worldto be very important in the linkage of VSD theory to managerial problems. Beer’sviewpoint is profoundly influenced by the thoughts of the American philosopherCharles Sanders Peirce (1839–1914). Strongly influenced by the Kantian systemof categories, Peirce is said to be the founder of American pragmatism, whichpermeates the thoughts of Russell Ackoff, C. West Churchman, E. A. Singer(Britton and McCallion, 1994), John Dewey, David Kolb, and Beer. Peirce depictsfour main methods of fixing belief; tenacity, authority, a priori and the last ofwhich alone is the scientific. Beer describes the method of tenacity:

The first method of fixing belief isolated by Peirce might be called the method oftenacity. It begins with a viewpoint, capriciously formed. Perhaps this was somethinglearned at mother’s knee; it might have been revealed by a sailor in a pub; or it is anidea culled from this morning’s newspaper. Typically it is what ‘they’ are saying (andthey ought to know). At this stage, the viewpoint has no special merit for the manwho expresses it, for its casual origins are understood—it is not a belief. However,it is brought out—and increasingly brought out—to be aired. Gradually it becomesinculcated as a habit of thought; eventually it is indeed fixed as a belief. (Beer, 1966,p. 17)

Beer however did not consider the conditioning processes evolving fromtenacity as totally inappropriate, so long as the social economic and industrial

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environments change slowly. We interpret this conditioning to mean that theaffixing of belief by tenacity, where that tenacity has exhibited consistency over(stable) time, gives some ‘rigour’ to the process. But managers need to be awareof the limitations of fixation by tenacity in volatile and dynamic environments. Inour organizations, we have found that VSD has the potential to shift tenacity basedmanagerial belief. We have previously reported (Stephens and Haslett, 2002a) ona problem solving exercise involving the VSD ideology. Here we employed VSDprinciples to help reconstruct tenacity-based information into a ‘local’ knowledgebase of a group of octogenarian Board members many of whom had grown up withthe organization since the 1950s. We have also used some of the systemic aspects ofscenario planning (de Geus, 1994), interactive planning (Ackoff, 1981) and rationalplanning approaches (Stacey, 1993). In particular, System Dynamics simulationtechniques (Sterman, 2000) were helpful in the analysis and understanding of‘tenacity based’ problems. In this approach, the mental models or axioms, whichBeer asserts managers take for granted as being true, are subjected to examinationusing mathematical models derived from the direct experience of the managers.In the end, it needed two interventions using a range of systems interventionsas (Flood and Jackson, 1995) would suggest. The end result was recognition onthe part of the Board that its current skill base needed to be re-invigorated withnew talent and that it was time for older members to encourage and facilitate thatprocess.

Peirce saw another way of establishing belief without being scientific asbeing by the method of authority. Beer believed authority to be a significantmethod that occurs when people see their role in an organization as being anindivisible part of that system. He said that the method of authority is aboutpeople yielding to the culture of the organization or its acknowledged way of doingthings. Beer considered authority to be an irrational process but one that already(1966) partly controls organizations by curtailing innovation and creativity. Wehave noted wide-ranging ‘authority’ examples in organizations. Policies arisingfrom organizational power and politics including employee attendance at meetings,methods of discourse and contribution to decision making processes are significantexamples. On the other hand, relatively minor behavioural ‘expectations’ such asdress standards, passing opinion on policy or suggesting alternative behaviours canincite some fairly major consequences. Quoting the words of Peirce, we believethat the method of authority can be acutely emphasised as:

When complete agreement could not otherwise be reached, a general massacre of allthose who have not thought in a certain way has proven a very effective means ofsettling opinion. (Beer, 1966, p. 22)

Beer highlighted the negative influence of authority as having the ability tode-create or smother a competent man while he still goes about his work. Hereferenced William Whyte’s (1963) Organisational Man as one who conforms,

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often unconsciously to the culture of the organisation. Organisational man ‘thinksby the method of authority’ and must not elicit creative information. We seeadvances in socio-technical systems including search conferencing techniques(Emery, 1980), learning cycles involving tacit/explicit knowledge development(Nonaka and Takeuchi, 1995), systems thinking (Senge, 1990) and advances inparticipatory action research techniques (Reason and Bradbury, 2001) as assistingmanagers who are confronted with problems which may arise from the fixing ofbelief using the method of authority. We have previously reported (Stephens andHaslett, 2001) on organizational success using a rudimentary VSD informationstructure template. Here we adapted a defective organisational ‘belief by authority’system to create a quite rigorous and scientifically orientated routine, which hascontinued to deliver positive outcomes over time.

Beer described the third method of fixing belief, that of a priori, as beingparticularly susceptible to misunderstanding and likely to be confused with scienceitself. He described a priori as involving a series of axioms, which we take forgranted as being true, rather than having been identified through direct experience.The axioms contain unexpressed assumptions that are instinctively accepted in themind as being self evident, as if they existed ‘prior to’ experience. The rationality-based example given by Beer is:

Our stocks are rising fast, but they are rising in proportion to our turnover, so that’s allright. This managerial remark is no trumped-up example: it is often heard. It soundsutterly rational. But the implicit axiom that stocks ought (in some sense) to varyproportionally with turnover is simply not verifiable in most cases. (Beer, 1966, p. 28)

By explaining the mathematics fundamental to this case, Beer showed how abatch size of stock can actually rise as the square root (rather than direct proportion)of turnover, disproving the initial assumption. Everyday a priori examples includeour inherent misuse or disregard of meteorological ‘theory’ to assume a warmtemperature/weather fine or solid showers/farmers happy status, but let us considerproblems arising from managerial a priori belief systems.

Our anecdotal experience verifies Beer’s cited example. We find that a prioriproblems are normally related to (mathematical) inexperience in various dis-ciplines. Examples we have encountered involve managerial assessment of ac-countancy documentation (assessment of cash, depreciation schedules and capitalacquisition) and inventory/time lag inconsistency issues. A priori belief increasesdefective intelligence and contributes to conditions that are not quite as anticipated.It seems to us that particularly inexperienced managers may be instinctively drawntoward direct linear causation, rather seeking or experiencing more qualified (sci-entific) opinion. We believe a priori belief has consistencies with the Nonaka andTakeuchi’s (1995) tacit/explicit argument. Nonaka says that although ‘tacit knowl-edge and explicit knowledge are not totally separate but mutually complimentaryentities,’ objective explicit knowledge has its roots in the rationality of the mind

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and subjective tacit knowledge involves knowledge by experience. We believethat the process of defining and understanding the distinction between these twoforms of knowledge is effectively the same as moving from the third to the fourthmethod of fixing belief.

Peirce’s fourth method of fixing belief is that of science. Beer describedscience as intentional where man instils rigour into rationality: the process is clearand definite, testable and repeatable. The important emphasis here, in relation toideas of science and scientific method, is on the process and how Beer defines it.Beer sees man being part of and influencing organizational ‘experiments.’ Thisis similar but not identical to laboratory based empirical science. We believeBeer consistently viewed his work as the pragmatic interrelation of the manager(scientist) with ‘in vacuo’ scientific fact in the organization (laboratory). Beerstated that ‘the first principle of control is that the controller is part of the systemunder control’ (1972, p. 25), further (Kybernetes, 2000, p. 559) some 30 yearslater, that we live in a world still rife with ‘reductive processes that have dominatedour culture’ where scientific methodologies clearly alienate the scientist from theexperiment. As such, Beer believed pure science fails to adequately consider thediverse exchanges of variables in practice. To emphasize this point we cite aprophetic Beer aphorism:

We incline to live our lives via heuristics and struggle to control them by somewhatlifeless algorithms. (Beer, 1972, pp. 51–57)

We consider that this profound statement epitomizes both individual and or-ganizational reality some 30 years after it was written. We believe Beer’s pragmaticapproach portrays the realities of organizational life where ‘predictions of the ef-fects of change in one department considered ‘in vacuo’ is fairly accurate, but theinteraction of those effects with the effects of change in other departments createsa totally new kind of system out of the whole. The kinds of measurements he (themanager) has been using change their nature and let him down’ (Our emphasis,Beer, 1966, p. 41). To emphasize this point we again revisit Beer’s principle ofcontrol as self-emergence from a system. We believe that managers need to viewcontrol, not from the narrow sense of the giving of orders and directions to variousparts of the organisation, but from an abstract sense of what surfaces from theirorganizational system as they (as part of that system) decide, react and adapt toeveryday occurrences. We see the ‘what surfaces from’ as the consideration ofeveryday feedback that forms a normal, but integral part of our ‘self-emergent’systems. We believe that within a manager’s belief system there must be a clearunderstanding that he/she as the controller is (a) an inseparable part of the sys-tem under control and (b) must interfere with, influence and change that controlsystem. The controller/control statement is central to our argument, but if inter-preted in the light of idealised applied science leads to a misinterpretation of

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the intended interrelation of the manager with ‘in vacuo’ scientific fact in theorganization.

To emphasise this point Beer noted an OR characteristic where solutionsmay be located quite ‘external’ to those possibilities contemplated by (scien-tific) management. The corollary being that a best solution may be excludedby scientific limitations. Beer cited a wartime example involving the sinkingof submarines with depth charges based on pure mathematics. Here the ‘ideain vacuo’ measurements should have, but did not statistically measure up. Em-ployment of the interdisciplinary based OR involved other variables includingweather patterns, water currents, temperature and the interference of people toproduce significantly better results. To conclude his scientific belief, Beer statedthat the scientist needs to engage in interdisciplinary approaches of wide andvaried dimension until these approaches seem to make no substantive differenceto the answers he is getting. Beer’s argument that science is the most effec-tive method of fixing belief comes down to the fact that reality is interpretablethrough different disciplinary lenses. This is concisely summed up in the followingquote:

In fact, the tremendous breakthrough of modern science in physics, in genetics, inbiochemistry and many other subjects is largely due to a realisation that the converseis a collection of probabilities, and to the development of mathematical techniquescapable of uttering descriptions of nature in these terms. The universe as hard solidseparate things that collide with each other and bounced off, that rubbed against eachother and lost energy, that became involved in sequences of events which could nearlybe labelled ‘causes and effects’ may still be the universe of engineering; but as theuniverse of science is has gone forever. (Beer, 1966, p. 55)

We reiterate that Beer’s perspective was heavily influenced by Peirce’s fourmethods of fixing belief. It is, in our opinion, significant in the linkage of VSDtheory to the managerial problem arena. The significance for modern managementwe believe is two-fold. First, it seems logical that the engagement of not useless,but fundamentally flawed belief systems, will increase defective intelligence andtherefore contribute to unusual conditions that are not quite as anticipated inorganizations. Second, given this philosophical background, the fundamental VSDemphasis on the modelling of information flows to provide for corrective feedbackemerging from everyday organizational behaviours is not the least bit surprising.It was perhaps armed with this perspective that Beer developed his thoughts onthe OR and VSD dependence on modelling, but that is the subject for anotherpaper.

Nonaka defines knowledge as a dynamic human process of justifying per-sonal belief toward the ‘truth’. We therefore beg management to recognizethe use and deficiencies involved with the methods of tenacity, authority anda priory and to move toward the method of science in the pursuit of thattruth.

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5. CONCLUDING REMARKS

In our work, we find that it is the unscripted emergence of unusual conditionswithin generalized organizational continuity and pattern that disturbs managers’minds. As managers operating in a practitioner/scholar action context, our workin progress continues to develop the three-step model for actionable theory in ourorganizations. This will be the subject of a future paper. This paper has set out thedeeper elements of our theoretical position, albeit in relatively abstract terms. Wecontinue to struggle with the problem that Beer’s work is dense and complex. Ourwork is designed to provide a bridge to that work for the well-informed practitionermanager.

It remains our desire to express the interpretation of VSD theory in a languagethat the well-informed manager may readily translate into third step experimenta-tion in the business context and the further development of the theory. We reiterateour view that for the modern manager to gain an actionable interpretation of theVSD theory base, a sound set of principles emanating from Beer’s primary worksmust be considered before tackling the noted Beer trilogy Brain of the Firm, TheHeart of the Enterprise and Diagnosing the System. We strongly believe that ‘it isa primary aim of industrial cybernetics to harness this ability of a system to teachitself optimum behavior. To do it, however, it must know how to design the systemin the first place as a machine for teaching itself. There must be exactly the rightflow of information in the right places; rich interconnectivity; facilities for growthof feedbacks and many one transformation circuits; and so no (Beer, 1957, p. 57).We restate that primary definitions and principles identified from Cybernetics andManagement are crucial to this interpretation.

From Decision and Control we believe that the historical linkage of ORand the interdisciplinary learning within Cybernetics to modern general systemstheory is an important principle for managers who are developing actionableplans in their organizations. By exploring Beer’s perspective on making senseof the world according to Peirce’s four main methods of fixing belief, anotherprinciple involving defective intelligence entering our organizational informationflows emerges. These principles complement and add to our previous work. Webelieve that consideration of these principles can encourage managers to thinkdifferently about their organizations, their role as organizational thinkers and howVSD theory can lead to action.

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