Organization as a System
An enterprise system, like any system, can be viewed as either a "black box" or a "transparent box."
When we talk about a "black box," the organization can be seen by analogy with a "person"—as an agent playing a certain role. But we can just as well say that the role of designer is played by John Doe or by the design bureau JSC "Bridge Bureau." The "black box" draws attention to external or role-based behavior.
The "transparent box" draws attention to the internal structure of this "box." Within an enterprise, there are people organized in some way, equipped with tools and resources, and this enterprise provides certain services to others. In this case, it is not that someone from outside requests a function; rather, the enterprise itself offers a particular service to the outside world—so "take it if you want, or don't if you don't want to." This could be a design bureau offering design services, an assembly shop offering assembly services, or a hair salon offering haircuts. Therefore, instead of the word "enterprise" (or "organization"), we can use the more general term—"organizational unit."
An organizational unit is not only an enterprise, but also a department or an individual employee with their own tools, or even a temporary team (a working group). The organization itself also consists of organizational units, but this is just one way to consider the structure of an organization.
We can approach the internal structure of an organization from the perspective of the four main descriptions of a system as a "transparent box." Here, we will not discuss the relatively intuitive spatial and cost descriptions, but will focus on the important distinction between functional and modular breakdowns for the organization system.
Pay attention to the table, which presents the main concepts and differences between the functional and modular perspectives of an organization.
| Functional | Modular |
| Organizational roles: manager, developer, accountant, … | Organizational units: department, division, employee in a position, working group, organization. |
| Function: requested behavior from a functional part. | Service: outward-facing behavior provided by the module. |
| Methods: discipline and tools that allow the creation of a work artifact within the scope of work | Methods: management of resources, timelines, and performers in roles, who directly create the work artifact using the appropriate methods. |
| Logical time: stages with a sequence of methods. | Physical time: project phases with specific times for performing work. |
In the functional perspective, we operate with the concepts of organizational role, method (practice), function, and, in this context, logical time. This perspective helps us understand how an enterprise or a holding (an extended enterprise[1]) operates. Accordingly, we can see why there is a chance (and what enables it) to create the system of interest. It is important for us to understand into which roles the organization can be divided and by which methods the system of interest will be created. For example, when it comes to a new apartment building, we can identify such functional parts of the system-creator as designer, builder, and operator. Who exactly will perform these roles—whether it will be an individual or an organization—is determined in the modular perspective.
The modular perspective operates with the concepts of organizational unit, work, and service, and it deals with physical time. In the work itself, resources, performers, and deadlines are important. Without these, roles and methods are useless, but on the other hand, the work will be uncoordinated if there is no understanding of which methods are required and how they follow one another. Performers or organizational units carry out methods using their tools. We can determine who, with which resources, will perform the work in physical time—in other words, what we are doing today and what we will do tomorrow.
For example, we can say that tomorrow John will be preparing a wall for painting using the sanding method; for this, he has been given a tool and four hours to complete the work. The day after that, a team of plasterers will work with their own tools, carrying out the methods of puttying and sanding.
Just as a structure (module, physical object) is assigned to a role (functional object), we can also say that a work task is assigned to a method. By analogy with an engineering system, the analysis of an organization first takes place by functional parts, and only then by modular ones. First, we need to understand which roles and methods are needed, and only after that determine the work tasks, organizational units, and resources.
For example, a system of interest such as an automobile or an airplane, or a system designed to enable flight, is created not by a single enterprise, but by several. ↩︎