Each of us as a person is a constituent of society and its governance and economic systems, as well as of the larger system of humankind.  That is to say, we are living systems collectively constituting a deeply interconnected hierarchy of semi-autonomous whole-parts in mutual relation.  Thus our actions and interactions in these systems—as individuals, groups and organizations—are of utmost importance to the viability of these systems. 

Moreover, since humankind is a higher order system than nature, since the natural environment can exist without us but we can’t exist without it, our actions affecting the wellbeing of nature in effect impact our wellbeing. Similarly in regards to the economic system and the system of government, we can exist without these systems but these systems can’t exist without humankind. The implication here is that both the economic system and the system of government—which are social holons or human activity systems within humankind—must function in harmony with the nature of humankind to maintain viability.

Thus ensuring that our individual and collective actions are in harmony with our larger systems through the use of feedback loops is critical to maintaining the health and wellbeing of these systems as well as each of us.  In short, maintaining harmony with the systems we constitute is essential to survival and maintaining viability.

In the human body, because each whole-part is rule bound (i.e. genetically coded) regulation is part and parcel to normal functioning—that is individual and collective functioning is integrated—toward maintaining harmony and stability.  For example, in the system homeostasis relative to body temperature is maintained about the standard or set point of 98.5°F by the hypothalamus. Receiving input from both the blood and the skin the hypothalamus sends information to various sub-systems in the body toward regulating body temperature—activating sweat glands for cooling or activating muscles (i.e. shivering) for warming.

An unchecked increase or decrease in temperature could prove disastrous.  Hence the need to regulate the functioning of subsystems to ensure the physical viability of the individual is obviously clear. Just imagine given the complexity of the system without regulation we could not continue to exist—we would have no viability.

It’s About Perspective

As another illustration consider the economic system and its larger societal system in regards to the issue of corporate ethical, social and environmental responsibility.  Many business minded people—executives and business professors alike—frame the issue of corporate ethical, social and environmental responsibility as a profit enhancing issue; asking the question does being ethically, socially and environmentally responsible enhance the organization’s performance?

This question flows from a 17^th century mechanistic perspective from which it is believed that the business of business is profit and that the unit of survival is the separate business enterprise.  Moreover, following this dualistic and atomistic system of thought its associated either/or thinking places the economy above and against the environment—us versus it—in exploitation for material gain.  Business gaining profit is more important than humankind having a sustainable and livable environment.  In light of profit being the sole intent, corporate ethical, social and environmental responsible action is viewed as a cost against profit, and thus such responsible action is often determined not to be profitable in the short-term.

Generally, the contextual horizon of many decisions dictate that if an issue is not proximate in time or location it is unimportant—and therefore such action is dismissed as an unnecessary expense. Those who are so attached to what they desire for themselves become oblivious to the wider and greater effects from what they are doing and thus can’t possibly act in harmony with the world around them.  Talk about needing to be on a short leash!

Absent of a systems view, most find it difficult to understand the stewardship imperative and its importance to the viability of the systems of which we are a part.  Most can’t understand why corporations not acting in a socially, ethically and environmentally responsible way would be a threat to the viability of its larger systems (e.g. economy, society and humankind), and inevitably to themselves.  Why everyone maximizing his/her own gain cannot be beneficial for all is just not understood.

Letting whole-parts do as they please, as if they were independent entities without constraint, would be disastrous. Absent of the regulation of whole-parts, any system is highly susceptible to threats to its wellbeing and viability. Hence the need for regulation of industry can’t be ignored, especially given that an atomistic view and the belief that the business of business is profit are so prevalent.  Since homeostasis must be realized for the system to sustain viability, regulation is not interfering or tampering it is a necessity!

Better Management Relies on Feedback

Regulation requires two fundamental things: a) timely and continuous free flow of information/data connecting input and output (known as feedback) and b) the guidance of fundamental principles of operation.  The latter provides the criteria for proper and productive use of the former toward maintaining both whole-part and system stability (aka homeostasis). Without the guidance of principles or precepts that operationally define system supportive functioning of whole-parts in relation to the larger system, self-regulation affording sustained viability would not be possible.

Moreover, the less the variation about the rule of operation the more efficient and the more stable the system.  Since stability is a requirement for predictability, which is a very important management capability for effective decision-making, regulation through proper use of feedback makes for better management.

If managers in business let everyone go wherever and do whatever self-interest determines the business it would be chaos.  The business would fail; it would be cease to exist!  Managers in business organizations appear to know this at some level, because many management practices seek to control what people do in the organization.  Logically, why is it that many business leaders are against regulating business within the economic system?

Regulation for Viability

Management of and by results is the common approach toward seeking control.  Accordingly those in authority seek to control results by establishing measureable goals and holding people accountable to deliver the results. Of the many problems with this approach the most significant include: it assumes the parts have no wholeness, that they are just dependent parts; it assumes that controlling other semi-autonomous people is quite possible; the focus is solely on the outcome; variation in outcome is not understood toward building knowledge; and the determination of the goal is grounded in the egoistic desire for material gain and doesn’t require understanding the system’s capability and its interdependence with the larger system. 

As discussed in Statistically Speaking, because of the significance placed on getting results now as well as the general belief that we are self-interest maximizing beings, people develop a habit of mind that leads them to disregard the system itself and their influence on it and others.  Moreover the inherent variability and patterns emerging over greater spans of time that would foretell of an impending danger are rendered imperceptible because of the short-term materially focused mindset.

When the usual concern is for monthly, quarterly or yearly results (as if these are discrete events), then patterns developing over longer periods will be both unimportant and imperceptible. The urgent and self-interest concerns get all the attention whereas the really important (more) longer term developing issues and community-oriented (i.e. ‘we’) issues are believed inconsequential and thus disregarded.  Inevitably the effect of this misplaced attention is the source of what will garner attention once it becomes an in-the-moment urgent crisis sometime in the future.

A recent case in point is offered by the 2008 financial crisis.  Though the 2008 financial meltdown was predicted by a few people years before their warnings were either imperceptible or ignored by regulatory overseers as well as investment bank executives.  Recall, because self-regulation requires a) timely and continuous free flow of information/data connecting input and output and b) the guidance of fundamental principles, inherent in these are the transparency of actions and transactions of whole-parts as well as the recognition that whole-parts are interdependent with and not independent of the larger system.

In this case investment banks transferred (their) risk via credit default swaps under the cover of darkness (these were not transparent transactions) with self-interest maximization as the guide in their decision-making.  That is to say, interdependence of the investment bank with the larger system was not integrated into the decision-making process.  The needed harmony of the bank with both the economic system and society—through the guidance of fundamental principles placing the concern for ‘we’ on par with what’s in it for ‘me’—toward supporting the (larger) system’s viability was not a decision criteria.  What’s in it for ‘me’ and to hell with ‘we’ seems to have been the guiding principle.

Self-Regulation Requires Guidance

Organizations, and other social holons, are not the same as the physical body in regards to self-regulation.  In the latter each whole-part is genetically coded for integrative functioning toward homeostasis but in the former individuals or groups are guided by beliefs and value systems which they consciously or subconsciously choose.  The problem is that not all systems of thought are automatically self-correcting and self-improving.  On this point, far too many individuals operate as if on automatic pilot, absent of an inquiring and critically thinking mind so the chosen system of thought guiding their behavior is never questioned.

Thus for human activity systems such as organizations (and other social holons), to avoid disaster at the hands of self-interest seeking individuals and groups it is misguided to conclude that adding a performance criterion is all that is needed for control.  Seeking to control does not equate to or lead to self-regulating action!  Moreover self-regulating action is far more effective and efficient.

There must be guiding principles and feedback (linking input and output) that inform decisions and actions of all whole-parts, thus enabling self-regulation. Deming’s Plan-Do-Study-Act cycle offers a wonderful framework to incorporate as a rule in all work toward facilitating self-regulation.  The guiding principles must pave the way for individuals and groups to bring into focused attention their dual (I-We) responsibility as whole-parts—the gravity of vision in this regard is unquestionable.

A vision that resonates within people will help shed light on the meaningfulness and usefulness of feedback and make clear their role as stewards of the system.  That is self-regulation is most probable when individuals, groups and social holons are aware of and understand their whole-partness within the system and least probable when individuals, groups and social holons are self-interest maximizing. That is self-interest is far too narrow and limited of a focus to be a guide for harmonious action.  As reminded from the Taoist classic Huainanzi in the Book of Leadership & Strategy, “a small fixation of attention results in a large measure of heedlessness.”