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 Authors:
Sergio Barile and Francesco Polese
The Viable Systems Approach and its potential contribution to
marketing theory
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Reference:
Various Authors, Contributions to theoretical and practical
advances in management. A Viable Systems Approach (vSa),
International Printing, Avellino, 2011.
www.asvsa.com
[email protected]
139
CHAPTER VI
THE VIABLE SYSTEMS APPROACH AND ITS POTENTIAL
CONTRIBUTION TO MARKETING THEORY
Sergio Barile and Francesco Polese
SUMMARY: 1.1. Introduction. – 1.2. Marketing theory. – 1.2.1. Marketing
theory at a turning point. – 1.2.2. Relationship marketing and networks. –
1.2.3. Service-dominant logic and service science. – 1.2.4. Links between
S-D logic and SS. – 1.3. General Systems Theory and Viable System
Approach. – 1.3.1. General Systems Theory and systems properties. –
1.3.2. Viable System Approach. . – 1.3.2.1. Theoretical roots of (VSA). –
1.3.2.2. Fundamental concepts of (VSA). – 1.4. Applying (VSA) to
marketing theory - synthesising S-D logic and SS through (VSA). – 1.4.1.
Complexity. – 1.4.2. Decision making. – 1.4.3. Open systems and systems
boundaries. – 1.4.4. System viability. – 1.4.5. Governance and
relationships. – 1.4.6. Consonance and resonance. – 1.5. Conclusions and
implications. – 1.5.1. Major conclusion. – 1.5.2. Implications for future
research. – 1.5.3. Implications for practitioners. – 1.5.4. Future academic
developments
1.1. INTRODUCTION
Contemporary thinking on marketing theory is turning away from
abstract structures and formalised frameworks to embrace new ways
of thinking that seek to align marketing theory and practice with the
real perceived needs of the market. As Grönroos (2002:140) has
observed:
...what we are experiencing today with the growing awareness of the
relationship marketing approach is a return to the natural systemsoriented way of managing customer relationships that existed before
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marketing became a far too clinical decision making discipline, and an
over-organized and isolated function … What marketing deserves is
new approaches, new paradigms, which are more market oriented and
where the customer indeed is the focal point as suggested by the
marketing concept.
Several authors have thought along similar lines. In the 1990s
customer relationship management (CRM) became an extension of
relationship marketing directed to implement relational thinking in
business systems, and in the 2000s service-dominant (S-D) logic took
the lead in service thinking.
The contention of the present study is that these approaches, and
marketing theory in general, can be augmented by the fundamental
principles of the ‘Viable Systems Approach’ (VSA) (Golinelli, 2000,
2005, 2009; Barile, 2000; 2008). The (VSA), which has been
developed and widely diffused within the Italian cultural community
in the past decade, is a multidisciplinary approach that is linked with
network analysis and general systems theory. Despite its solid
theoretical foundations, the (VSA) is not strictly a theory; rather, it
represents a methodological approach that is useful for the
comprehension of complex phenomena involving individuals,
communities, business, and society in general. The aim of this
contribution is to assist researchers, scholars and practitioners to gain
a better understanding of the characteristics and potential of (VSA) for
application in modern marketing theory.
The paper is structured as follows. The next section describes
recent trends in marketing theory, with a particular focus on
relationship marketing and service research. The third section
proceeds to describe the roots and principles of the (VSA). The fourth
section applies the principles of (VSA) to contemporary marketing
theory. The final section present the major findings and implications
of the study.
1.2. MARKETING THEORY
1.2.1. Marketing theory at a turning point
Marketing theory and practice are in search of new approaches
and new overarching theories. It has been suggested that marketing
The Viable System Approach and its potential contribution to marketing theory 141
theory is in need of a new paradigm of conceptual thought
(Gummesson, 2002; Ghoshal and Moran, 2005). As Gummesson et al.
(2009:1) have observed:
Intriguing issues such as complexity, system thinking, human
behaviour, competitiveness, and service systems … all require new
marketing and management theory. New approaches to marketing have
been brewing for the past three decades, challenging the 1960s
marketing management and marketing mix. These include service
marketing and management, relationship marketing and customer
relationship management (CRM), and relational and network
applications … The discipline has reached a turning point …
In parallel with these developments, the boundaries of the
marketing discipline have been enlarged. The American Marketing
Association’s updated definition of marketing (approved in October
2007, downloaded 28th December 2010) reflected this by defining
marketing in very broad terms:
Marketing is the activity, set of institutions and processes for creating,
communicating, delivering and exchanging offerings that have value for
customers, clients, partners and society at large.
According to Grönroos (2002), these ideas of marketing as a
wide-ranging discipline that is involved with the wider society in
which it functions, represent a return to marketing roots—in contrast
to the trend in the mid-to-late twentieth century, when marketing
research became a rather over-organised, inward-looking, and isolated
function.
In noting this wider (societal) perspective on marketing,
Gummesson (2002:326) also drew attention to the need for new
approaches to marketing theory:
Marketing is such a captivating, confusing and rich field that no one has
been able to sort out its constituent elements and their links on a higher
conceptual level, a more general and systemic theory.
It would thus seem that marketing theory is broadening its
outlook and returning to its roots in the marketplace of society. As it
does so, there is concern that marketing now lacks theory to replace
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the conventional “certainties” that are being discarded. As
Gummesson et al. (2009:1) have commented:
We are left with a fragmented and confusing view … calling for
more systemic and integrative theory.
Several scholars have seen dangers in this situation. For example,
Lusch (2007:267) has warned:
If the community of marketing scholars and their professional
associations does not take a lead role in studying and researching
marketing as a societal process and institution, this type of research will
be left exclusively to scholars outside marketing and, most likely,
outside business.
Against this background, it seems that marketing theory requires
a new perspective of interpretation of the discipline. According to
Gummesson (2005), there is a need for a shift from description of
substantive detail to a greater degree of abstraction and generalisation.
In this regard, the emergence of relationship marketing, servicedominant (S-D) logic, and service science have been important
developments (Dann and Dann, 2007). Each of these is considered in
more detail below.
1.2.2. Relationship marketing and networks
Relationships between people are characteristic of both social life
and business life. As Gummesson (2005) observed: “Life is a network
of relations, and so is business”. No individual or business exists in
isolation, especially in the modern world of interconnected
information and communication technologies.
The trend toward interconnected globalisation has led to a reevaluation of the role of relationships in business competitiveness and
survival. There is a growing recognition that relationships represent
distinctive and valuable resources that should be carefully developed
and maintained. This is especially so in view of the growing relevance
of services in all business sectors—including manufacturing
industries, which are increasingly augmenting their goods offerings
with additional services. The adoption of such a service-oriented
framework in business models and management strategies has
The Viable System Approach and its potential contribution to marketing theory 143
fundamentally altered the way in which businesses relate to the market
in the modern service economy (Rullani, 1997; Grönroos, 2000).
Relationships between persons and businesses are increasingly
regarded as valuable resources in the contemporary service economy,
precisely because a ‘service’, by its very nature, is essentially an
activity that is performed by one person (or group) for the benefit of
another person (or group) within the context of a relationship between
the two parties. In other words, services are essentially relational in
nature (Rust, 2004). Services provide assistance and expertise, rather
than a tangible product, within an interaction between a provider and a
client, who usually know one another (Katzan, 2008; Pine and
Gilmore, 1999). Moreover, the inherent customisation of a service
provided to a known client involves a co-productive relationship in
which providers and clients both act as participants in the service
process. Indeed, the relationship between the two parties represents
the key characteristic that differentiates a service-system model from
the traditional transactional model of goods-based economics
(Normann and Ramirez, 1994; Normann, 2001).
The relational nature of services is also apparent in the concept of
a ‘service solution’. According to Grönroos (2008), services can be
understood as a series of activities in which resources (employees,
physical resources, goods, systems of service providers) are used in
interaction with the customer in order to find a solution to the
customer’s needs. From this perspective, a ‘service solution’ involves
the activities of many actors within a co-creation logic (Prahalad and
Ramaswamy, 2004; Vargo et al., 2008). As Polese et al. (2009)
observed, service can thus be understood as an “interaction between
entities in a reticular system … to improve value co-creation outcomes
under a win–win logic inside interrelated processes”.
The increasing emphasis on a relational approach to business and
marketing has led to a proliferation of research under the umbrella of
relationship marketing — within which CRM has become a prominent
element. CRM basically assumes a dyadic customer–supplier
relationship, which is, of course, the core of marketing. Recent
research has advanced this proposition by taking account of the
articulated ensemble of actors that characterise both the supplier side
and the demand side of the dyad in the real world. The ‘one-to-one’
dyadic relationship between supplier and customer has been expanded
to more complex ‘network-to-network’ interaction in which visible
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and invisible interactions, common purposes, and resource sharing all
play a critical role.
All relationships exist within networks. As Capra (1997)
observed, “life consists of a network of relationships in which we
interact”. Network theory, therefore, has much to offer CRM in
business. In accordance with the relational approach to business
described above, network theory considers every entity to be a
dynamic operant resource that engages in reticular (networked)
interactions involving many-to-many relationships (Prahalad and
Ramanswamy, 2004; Lovelock and Gummesson, 2004; Achrol and
Kotler, 2006; Gummesson, 1993, 2006, 2008). According to this
perspective, networked relationships determine every organisation’s
behaviour, strategies, and policies—which are calibrated with a view
to achieving mutual satisfaction and optimal outcomes from the
relationships among components and/or organisations (Womack and
Jones, 2005; Lusch et al., 2007).
According to network theory, organisations are not autonomous
entities; rather, they are dependent upon individuals and the networks
of relationships that exist among them (Vicari, 1991). Just as
individuals habitually interact in accordance with accepted cultural
norms of behaviour, business networks also adopt certain social
patterns and cultural attitudes in their iterative interactions with other
parties. In particular, successful business networks seek to develop a
culture of ‘win–win’ relationships, rather than engaging in short-term
opportunistic behaviour. They seek to do this by fostering and
maintaining a shared willingness to enhance co-creation processes
through long-lasting relationships and shared values. This requires
continuous improvement in the interactions among network elements
with a view to optimising resource allocation, collaborative
advantages, and cooperative strategies (Castells, 1996; Gulati, 1998;
Capra, 2002). Such relationships are characterised by exchanges of
pertinent information in the context of increasing commitment and
trust (Richardson, 1972; Hakansson and Ostberg, 1975).
Various terms have been used to describe these voluntary ties
among businesses and other economic entities, including ‘heterarchy’
(Hedlund, 1986) and ‘polycentic structure’ (Forsgren et al., 1991);
however, the term ‘network’ has now become generally accepted to
describe this emerging economic entity (Bartlett and Ghoshal, 1990).
Network theory seeks to analyse the phenomena of resource-sharing
and goal-achievement in such networks in terms of various
The Viable System Approach and its potential contribution to marketing theory 145
organisational
constructs—including
‘nodes’,
‘connections’,
‘aggregating forces’, ‘central control’, ‘dynamic equilibrium’, and
‘structural variability’ (Richardson, 1972; Jarrillo, 1988). These
constructs are utilised in network theory to analyse and explain the
multiple contributions to value creation within the observed systems.
In doing so, the traditional notion of the supply chain has been
replaced by a logic of co-production within constellations of systems
and so-called ‘virtuous cycles’ (Lusch, 2011).
In contrast to the traditional conceptualisation of the value chain,
network theory goes beyond the notion of a distinctive resource
(related to an individual entity’s fixed capacities) to embrace the idea
that every entity has the ability to reconfigure its own service systems
in collaboration with the other entities in the network to produce a
synergistic ‘service value network’ (Allee, 2000) in which all the
networked entities are ‘embedded’ (Granovetter, 1985). Apart from
the various service providers within such a service value network,
another key element in network theory is represented by network
enablers. Such enablers promote interactive exchange processes and
the essential development of positive relationships within the network
through direct and indirect connections with external interdependent
service systems (Polese et al., 2009). Enablers thus represent the less
‘visible’ relationships among the overt entities of the network
(suppliers and clients), but they nevertheless make an essential
contribution to the competitiveness of the whole system (Polese,
2009).
In summary, network theory holds that service systems can best
be understood as networks in which functional interdependencies exist
among the various participants in order to succeed in the face of
increasing environmental complexity (Richardson, 1972; Hakansson
and Snehota, 1995). According to this view, transactional models and
linear sequential supply chains are now obsolete (Stampacchia and
Russo Spena, 2010). In contrast, networked interactions are
understood as the driver of value as the participating actors develop a
joint process of collaborative value creation, thus creating a distinctive
competitive advantage through their networked relationships.
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1.2.3. Service-dominant logic and service science
Drawing on the notions of relational marketing and network
theory (as described above), new marketing proposals have been
introduced in recent years. In particular, service-dominant (S-D) logic
and ‘service science’ (SS) have become especially prominent.
According to the emerging paradigm of S-D logic, service is
defined as the application of specialized competencies (knowledge
and skills) through deeds, processes, and performances for the benefit
of another entity or the entity itself (Vargo and Lusch, 2004, 2006,
2008). Moreover, according to S-D logic, value does not reside within
a production process to be reflected in the market sale price (in
accordance with the conventional paradigm of value-in-exchange);
rather, value is perceived and co-produced by customers in a cocreation process, before being realized as value-in-use as the value
offering is transformed and consumed (Vargo and Lusch, 2006, 2008).
Service is thus realised in terms of the mutual benefits and the mutual
satisfaction of co-creation processes (Lusch et al., 2007).
In terms of relationships, S-D logic thus proposes that the
customer is a co-producer of service, and that marketing is a process
of doing things in interaction with the customer. Customers are
therefore active participants in relational exchanges and coproduction. In this sense, S-D logic posits that all business consists of
relational service activities. Moreover, S-D logic recognizes that these
relational service activities are conducted within integrated serviceprovision systems, that involve relationships among many
organisations. In Darwinian terms, these ‘service ecosystems’ are
‘conditioned’ (or influenced) by a variety of systemic elements
(technological, economic, political, and social).
S-D logic thus proposes a paradigmatic shift from a goodsdominant (G-D) logic that emphasises value-in-exchange through
transactions to a much more challenging (indeed revolutionary)
perspective of value-co-creation and value-in-use. This has
implications
for
many
disciplines—including
marketing,
organisational studies, public administration, economics, and many
other social sciences. For the purposes of the present study, its
emphasis on interactions and collaborative activities means that S-D
logic clearly posits business as a network of relational service
activities.
The Viable System Approach and its potential contribution to marketing theory 147
The second recent proposal in marketing theory noted above, socalled ‘service science’ (SS) adopts a scientific view of service that
emphasises the role of service systems (Alter, 2008). According to SS,
service is understood as a dynamic system of interacting and
interdependent parts (people, technologies, and business activities)
that creates and delivers value, thus achieving and maintaining a
sustainable competitive advantage (Maglio et al., 2006; Maglio and
Spohrer, 2008).
In emphasising service systems, SS is thus focusing on networks
of relationships as the fundamental elements in the concept of service
(Spohrer et al., 2007). According to SS, value co-creation is the
outcome of value proposition-based interaction mechanisms (Spohrer
et al., 2008), in which relationships between interacting systems,
based upon a ‘win–win’ logic, are consciously developed to achieve
mutual satisfaction and optimal outcomes for all parties involved
(Maglio and Spohrer, 2008).
SS has become a new multidisciplinary research endeavor
involving computer science, behavioural psychology, organisational
theory, industrial engineering, business studies, management sciences,
and social sciences. This research ground is based upon the
practitioner’s perspective, with a view to delineating the factors that
characterise service systems and their performance in the world of
business.
1.2.4. Links between S-D logic and SS
It is apparent from this brief description of S-D logic and SS that
both emphasise the themes of: (i) the centrality of continuous
interactions among actors; (ii) networked relationships; (iii) value cocreation; and (iv) the notion of a service system. However, in pursuing
these common themes targeted to marketing research advances, the
two approaches have somewhat different emphases. S-D logic places
particular emphasis on service exchange among various
complementary and differentiated actors, whereas SS places more
explicit emphasis on understanding complex service systems and the
promotion of service innovation. In many ways, it might be said that
S-D logic represents a cultural/philosophical approach to service,
whereas SS represents its scientific research ground.
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1.3. GENERAL SYSTEMS THEORY AND VIABLE SYSTEMS APPROACH
1.3.1. General Systems Theory and systems properties
A General Systems Theory is “[…] a logical-mathematical discipline, in
itself purely formal but applicable to the various empirical sciences. For
sciences concerned with “organized wholes”, it would be of similar
significance to that which probability theory has for sciences concerned
with “chance events”; the latter, too, is a formal mathematical discipline
which can be applied to most diverse fields, such as thermodynamics,
biological and medical experimentation, genetics, life insurance
statistics, etc” (von Bertalanffy, 1968:37).
Deeper study into the various realities, especially in the scientific
field, other than those lying within the range of interests of a firm,
makes it possible to highlight and acquire new ideas and knowledge,
new methods of investigation, and new models of analysis, which
make up an important source of wealth, and give greater value to the
observation of system’s dynamics. A General Systems Theory is
based on a sometimes logical-formal (reductionist), sometimes
heuristic-general (holistic) approach to the problems and phenomena
under observation, which suggests how it could contribute to lay the
foundations for numerous scientific disciplines.
As above pointed, from a system viewpoint every system at a
certain level is in relation with supra-systems and sub-systems. The
first ones are hierarchically ordered in function of their being more or
less critical and influential towards the system; the seconds ought to
be directed and managed by the system in order to contribute to its
finality (Barile, 2008). The introduction of these concepts challenges
the question regarding system boundaries, which has very little sense
in this kind of optic. Contact creates participation; a given system
tends to absorb supra-systems and sub-systems (components) in order
to develop as a whole system (Barile, 2008).
About system theories we can notice how:
• General System Theory (GST) replaces vitalism (teleology)
with something else, so it develops the concept of “goal seeking and
self controlling behavior” (von Bertalanffy, 1962:13); from
biophysics, systems are the “complex of interacting components,
concepts characteristics of organized wholes such as interaction, sum,
The Viable System Approach and its potential contribution to marketing theory 149
mechanization, centralization, competition, finality, etc., applying this
to concrete phenomena” (von Bertalanffy, 1962:13).
• Open System Theory (OST) focuses about a dichotomy
concepts: the organization (the system) and the environment in which
it is involved. The Theory considers two order cybernetics adaptive
level, referred to the informative deviation (counteraction – first level;
amplification – second level), and reflects about organizations’
capacity to adapt themselves to shifts in environmental conditions
(with or without information processing need) (Boulding, 1956; Katz
and Kahn, 1978).
• Viable Systems Approach (VSA) represents a Grand Theory
both proposing a new representation of the behavioral approach to
business and the relative interactions with its context (the theory)
(Beer, 1972; 1975), and suggesting a new interpretation of
consolidated strategic organizational and managerial models (the
practice). It enables the analysis of relationships among enterprise’s
internal components (sub-systems), as well as the analysis of
relationships between enterprises and other influencing systemic
actors of their context (supra-systems) (Golinelli, 2000; Barile 2008).
1.3.2. Viable Systems Approach
Given the similarities that exist between S-D logic and SS,
especially their shared conception of service as a relational
phenomenon, there have been various attempts to link the two. The
present study suggests that the ‘Viable Systems Approach’ (VSA) is a
promising avenue for making such a linkage. More generally, as
markets and marketing become increasingly complex, it is likely that
complexity theory, network theory, and systems theory will play more
prominent roles in future marketing developments. Against this
background, the present study contends that the (VSA) represents a
promising approach to modern marketing theory.
1.3.2.1. Theoretical roots of (VSA)
The (VSA) is a systems-based approach to business theory that
has become increasingly prominent in Italian academic circles in the
past decade. The origins of systems theory go back to the 1950s when
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scholars from various scientific and social disciplines developed an
interdisciplinary theory based on the concept of systems (von
Bertalanffy, 1956). Systems thinking shifted the focus from the parts
to the whole; that is, it perceived reality as an integrated and
interacting unity of phenomena in which the individual properties of
the isolated parts become indistinct, while the relationships between
the parts (and the events they produce through their interaction)
became much more important. By adopting the view that “system
elements are rationally connected” (Luhmann, 1990), the systems
approach sought to explain a phenomenon in its entirety (von
Bertalanffy, 1968). This shift of focus from the components
themselves to their relationships suggests that from the attention to the
individual elements displayed by the observer should shift to a focus
on the relationships among the elements, and this should be
accomplished without losing sight of the identity of each individual
element.
Drawing on such systems thinking, the (VSA) interprets observed
actors and their environments beginning with an analysis of the
relationships among fundamental elements, and proceeding to a
consideration of more complex related systems (von Bertalanffy,
1968). The fundamental unit of analysis is a system made up of many
parts (Parsons, 1971). Every entity (an individual, a consumer, an
organisation, or a community) is perceived as a system that is made up
of interlinked sub-components that strive towards a common goal.
As a multidisciplinary theory, (VSA) has drawn on several key
concepts derived from other disciplines. These include: (i)
homeostasis and equifinality from ecology (Hannan and Freeman,
1977); (ii) autopoiesis from chemistry and biology (Maturana and
Varela, 1975); (iii) cognitivism from sociology and psychology
(Clark, 1993); and (iv) information technology from cybernetics
studies (Beer, 1975). Indeed, according to Golinelli (2000), (VSA)
perceives an organisation as “… an open system [that is] aimed,
organic, autopoietic, cognitive, [and] cybernetic”. (VSA) thus offers a
new conception of phenomenological reality that synthesises
philosophical, sociological, mathematical, physical and biological
approaches.
An important concept in (VSA) is the notion of a firm as a viable
system—that is, a firm is a viable system if it has the ability to enhance
its survival capacity continuously over time. According to (VSA), this
is the end goal of the firm as a system. This depends on the efficacy
The Viable System Approach and its potential contribution to marketing theory 151
and the efficiency of the interactions among the component parts of
the system within every business arena. Moreover, the firm as a viable
system interacts with other systems, which can be identified as ‘suprasystems’ and ‘sub-systems’.
The so-called ‘supra-systems’ are more or less critical in their
influence on the focal system, whereas the ‘sub-systems’ are directed
and managed by the focal system in a manner that contributes to its
viability (Barile, 2008). The introduction of these concepts challenges
the notion of ‘system boundaries’, which has very little relevance in
this perspective. Indeed, according to Barile (2008), a given system
tends to absorb ‘supra-systems’ and ‘sub-systems’ in order to develop
itself as a viable system.
1.3.2.2 Fundamental concepts of (VSA)
It is apparent from the above discussion that (VSA) focuses on the
analysis of relationships among socio-economic actors in search of
viable interacting conditions (Golinelli, 2000, 2005; Golinelli et al.,
2001; Barile, 2000). In doing so, (VSA) enables an analysis to be made
of the relationships that exist among an enterprise’s internal
components, as well as an analysis of the relationships between
enterprises and other systemic actors in their environment.
According to (VSA), an enterprise develops as an open system
that is characterised by:
* many components (both tangible and intangible);
* interdependence
and
communication
among
these
components; and
* activation of these relationships in order to pursue the
system’s goal.
(VSA) is based upon ten fundamental concepts (FCs) (Barile and
Polese, 2010b). These FCs, which are summarised below, are
described in greater detail in Table 1.
• FC 1: Systems approach: Individuals, organisations, and
social institutions can all be understood as systems that consist of
elements directed towards specific goals (Beer, 1975).
• FC 2: Systems hierarchy: Every system (of level L) identifies
several supra-systems, positioned at a higher level (L+1), and several
sub-systems, located at a lower level (L-1) (Parsons, 1971).
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• FC 3: Reductionism and holism The interpretation of
complex phenomena requires a synthesis of both a reductionistic view
(analysing elements and their relationships) and an holistic view
(capable of observing the whole) (von Bertalanffy, 1956).
• FC 4: Open systems and systems’ boundaries: Systems are
open to connection with other systems for the exchange of resources.
A system boundary is a changing concept within which all the
activities and resources needed for the system’s evolutionary dynamic
are included (Beer, 1975).
• FC 5: Autopoiesis, homeostasis, and self-regulation: In a
complex environment, each system is stimulated to become an
‘autopoietic’ self-organising system (Maturana and Varela, 1975) in
order to reach a ‘common finality’. A system is able to maintain a
state of internal equilibrium through its ability to adapt (Hannan and
Freeman, 1977). According to the notion of system ‘homeostasis’
(Beer, 1975), a system maintains its own specific identity by not
modifying its internal features excessively in an attempt to achieve
internal and external equilibrium.
• FC 6: Structures and systems: Every system is constituted by
individual elements that have assigned roles, activities, and tasks. The
passage from structure to system involves a passage from the static to
the dynamic, as the focus moves from individual components and
relationships to an holistic view of the observed reality. In this regard,
the principle of ‘equifinality’ refers to various systems reaching the
same end state from different starting conditions (that is, from
different structures) by taking different evolutionary paths (Hannan
and Freeman, 1977; Doty et al., 1993; Meyer et al., 1993).
• FC 7: Consonance and resonance: The term ‘consonance’
refers to the potential compatibility between systems elements;
however, for system survival, real systemic harmony needs to be
achieved as ‘resonance’, which refers to elements operating in a
distinctive fashion for a single purpose (Nigro and Bassano, 2003).
Resonance is thus harmonious systemic interaction, whereas
consonance is structural and relational (Barile, 2008).
• FC 8: System viability: A system’s ability to survive is
determined by its capacity, over time, to demonstrate consonant and
resonant behaviour (Piciocchi and Bassano, 2009; Piciocchi et al.,
2009). A viable system can dynamically adjust its structure and
The Viable System Approach and its potential contribution to marketing theory 153
behaviour to achieve consonance with its context, and thus preserve
its stability.
• FC 9: Adaptation and relationship development: Firms are
able to compete and survive in a particular context if they engage in
continuous dynamic processes of change (Golinelli, 2000, 2010;
Barile, 2008; Saviano and Berardi, 2009). Competitive enterprise
behaviour requires the ability to identify and manage functions and
relationships, establish communication channels, organise information
flow, and rationalise and harmonise enterprise development with the
environment (Barile and Gatti, 2007; Christopher, 2007).
• FC 10: Complexity and decision-making: Complexity refers
to a particular combination of multiplicities and autonomies in a given
context. The decision-maker needs to distinguish between: (i)
‘variety’ (which refers to possible variants that a phenomenon might
present to the observer at a given time); (ii) ‘variability’ (which refers
to observed changes in variety over time); and (iii) ‘indeterminacy’
(which refers to whether it is possible to fully understand a given
phenomenon) (Golinelli, 2010). (VSA) relates the difficulties of
decision making to the problem of complexity; that is, cognitive
alignment between the observer and the observed system is a problem
of knowledge and information.
Table 1: The ten fundamental concepts (FCs) of (VSA)
Fundamental concepts
Comments
F
C
1
Individuals, organisations, and social
institutions are systems that consist of
elements directed towards a specific
goal.
F
C
2
Every system (of level L) identifies
several supra-systems, positioned at a
higher level (L+1), and several subsystems, located at a lower level (L-1).
F
C
3
The interpretation of complex
phenomena requires interdisciplinary
approaches, and should synthesize both
a reductionistic view (analysing
elements and their relations) and an
holistic view (capable of observing the
whole).
People, families, networks,
enterprises, public and private
organisations are complex actors, all
of which can be understood as
systems.
Every hierarchy of systems is
determined by observation from a
specific perspective. The designation
of a ‘supra-system’ or a ‘sub-systems’
is thus subjective.
The contribution of relationships
(static, structural) and interactions
(dynamic, systemic) is fundamental to
the observed phenomenon (reality).
154
F
C
4
F
C
5
F
C
6
F
C
7
F
C
8
F
C
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CHAPTER VI
Systems are open to connection with
other systems for the exchange of
resources. A system boundary is a
changing concept within which all the
activities and resources needed for the
system’s evolutionary dynamic are
included.
Nothing happens in isolation. The
exchange of information and service
of open systems is fundamental within
every system dynamic.
Within systems boundaries not only
property resources are valorized, but
many available, thus accessible
resources (even though these are
owned by other systems.
Viable systems are autopoietic and self- Every system is autopoietic, and is
organising; that is, they are capable of
thus able to generate new internal
self-generating internal conditions,
conditions.
which through self regulation, support
Every system is also self-organising
the reach of equilibrated conditions, thus as it continuously aligns internal and
synthesising internal possibilities and
external complexity.
external constraints.
These two characteristics are the basis
for sustainable behaviour in the face
of opportunities and threats.
Every organisation is constituted by
The passage from structure to system
components that have specific roles,
involves a passage from a static view
activities, and objectives, which are
to a dynamic view, and focus shifts
undertaken within constraints, norms,
from individual components and
and rules.
relations to an holistic view of the
From structure emerges a system
observed reality. From the same
through the transformation of relations
structure, many systems can emerge
into dynamic interactions with subas a consequence of the various
systems and supra-systems.
combinations of internal and external
components designed to pursue
various objectives.
Systems are consonant when there is a
Consonant relationships refer to the
potential compatibility among the
static view (structure) where you
system’s components. Systems are
could just evaluate the chances of a
resonant when there is effective
positive and harmonic relation.
harmonic interaction among
Resonant relations are referred to a
components.
dynamic view (systemic) where you
could evaluate concrete and effective
positive and harmonic interactions.
A system’s viability is determined by its Viability is related to the system’s
capability, over time, to develop
competitiveness and to the systems
harmonic behavior in sub-systems and
co-creation capability.
supra-systems through consonant and
resonant relationships.
Business dynamic and viability require
The evolutionary dynamics of viable
continuous structural and systemic
systems demonstrate continuous
changes focused to the alignment of
alignment between internal potentials
internal structural potentialities with
and external expectations.
external systemic demands.
The Viable System Approach and its potential contribution to marketing theory 155
F Viable systems continuously align
C internal complexity with external
10 complexity in order to better manage
changes affecting its viable behaviour.
Decision-makers within these cognitive
processes are influenced by strong
believes, his/her interpretational
schemes, and information.
Internal and external alignment is
achievable through a cognitive
alignment, a knowledge process that
includes chaos, complexity,
complication, and certainty (through
processes of abduction, induction and
deduction).
Source: Adapted from Barile and Polese, 2010b
The aim of this synthetic exposure was to provide some of the
founding concepts of the (VSA) clear to the reader (Golinelli 2000,
2005, 2008, 2009; Golinelli et al, 2002; Barile 2000, 2008, 2009a):
a) a viable system lives, its aim is to survive within a context
which is populated by other (viable) systems;
b) every context is subjectively perceived by a viable system’s
top management (the decision-maker) from analyzing its environment
(a macro-system in which the decision maker is immerged)
distinguishing and identifying its relevant supra-systems (resources
owners) in relation with its objective;
c) context is the synthesis of a reticulum of viable systems,
within which it is possible to distinguish a certain number of systems
(relevant supra-systems), which are able to condition top management
decisions;
d) the system’s structural definition and the level of consonance
between its evolved components (interacting supra and sub systems),
define a given system’s grade of elaboration;
e) a viable system has the capability of dynamic adjusting
(auto-regulation) its structure: hence we may refer consonance to the
system’s attempt to correctly interpret contextual signals, and
resonance to the concretization of the consequent competitive
behavior in order to maintain stability (if the system satisfies external
expectations and needs displayed by relevant supra-systems.
1.4.
APPLYING (VSA) TO MARKETING THEORY SYNTHESISING S-D LOGIC AND SS THROUGH (VSA)
As previously noted, the contention of the present study is that
(VSA) has the potential to make a substantial contribution to the
development of new marketing theory. Indeed, there are many
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CHAPTER VI
parallels between the concepts of (VSA) (as shown in Table 1) and
modern marketing thinking—especially with regard to the general
focus on the customer and the development of such concepts as
service-dominant (S-D) logic, service science (SS), customer
relationship management (CRM), total quality management (TQM),
relationship marketing, and many-to-many marketing (Gummesson,
2008). All of these concepts are coherent with (VSA)’s heavy emphasis
on viable systems and the importance of harmonious relationships
between ‘supra systems’ and ‘subsystems’, which can (as noted
above) include customers, suppliers, and networks as ‘systems’.
In particular, the present study proposes that the (VSA) is a
methodology capable of synthesising the cultural/philosophical
approach of S-D logic with its research ground, represented by SS.
Although S-D logic, SS, and (VSA) share several complementary
features, and although the correlations among the three are strong, it is
nevertheless true that they appear to represent different conceptual
levels. In particular, S-D logic represents a philosophical/cultural
approach to service, whereas SS represents the scientific research
ground of S-D logic, and (VSA) represents an analytical methodology.
Nevertheless, given that S-D logic, SS, and (VSA) are all strongly
based upon relationships, it is arguable that a productive synthesis of
the three is possible.
In figure 1 the scientific positioning of the three theories are
presented; as suggested S-D logic is perceivable at a higher level,
being it at relevant level of abstraction and generalization, whereas
(VSA) may be the scientific and methodological bridge of S-D logic
with SS, which – for its intrinsic operating objectives - is positioned
on the service ground, at a practical level.
The Viable System Approach and its potential contribution to marketing theory 157
Figure 1: Synthesis between S-D logic and SS through (VSA)
S‐D Logic
Culture
VSA
Approach
Service Stage
Service Science
Source: Our elaboration on Barile and Saviano, 2010
With a view to integrating (VSA) with marketing theory in
general, and recent service research advances in particular, Table 2
presents the ten fundamental concepts (FCs) of (VSA) in parallel with
their implications for marketing theory. Some of the more important
implications are discussed in more detail below.
Table 2: Implications from (VSA) for marketing theory
(VSA) fundamental
Implications for marketing theory
concepts
FC 1: Systems approach
Customers, business, communities, and actors can all
be seen as systems.
FC 2: Systems hierarchy
Every actor (system) in a market is a resource
integrator that coordinates its own resources
(components/sub-systems)
and
a
set
of
acquired/available resources (released by suprasystems).
A full understanding of the market and the co-creation
interaction requires both an holistic view of the whole
and the analysis of individual elements and their
relationships.
FC 3: Reductionism and
holism
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FC 4: Open systems and
systems boundaries
Modern marketing theory recognises that enterprises do
not create value in isolation.
There is now appropriate recognition of the roles
played by multiple actors and interested parties in
various value co-creation processes within a customer
balanced centricity.
The notion of co-creation is inherently associated with
vanishing boundaries between actors within markets.
FC
5:
Autopoiesis,
homeostasis, and selfregulation
In pursuing its ultimate goals, every business requires
the internal capacity to evolve and self-regulate in order
to adapt to external changes and survive in the long
term.
Businesses constantly strive to meet market
requirements by changing their value propositions.
Every actor has a structure (set of capacities) that must
be organised to meet the demands of the market. In so
doing, businesses are transformed from static structures
to dynamic systems.
Consonance (potential compatibility between systems
elements) and resonance (harmonious interaction
among actors in service interactions) well represent a
model describing ideal and rewarding co-creation
exchanges among actors of service experiences.
Every actor in a market attempts to behave in a viable,
sustainable, and harmonious manner in pursuit of its
own goals.
Service systems seek to establish positive and
harmonious interactions with other systems to
strengthen value co-creation processes and experiences.
Positive interactions between providers and customers
are dynamic and always changing as subjective
judgments vary with time.
Marketing theory is increasingly focused on networks
of relationships within which interactions take place.
The complexity of such networks is a problem in terms
of the knowledge and cognitive alignment that is
required between the decision-maker’s system and the
observed reality.
FC 6: Structures and
systems
FC 7: Consonance and
resonance
FC 8: Systems viability
FC 9: Adaptation and
relationship development
FC 10: Complexity and
decision-making
Source: Our elaboration
1.4.1. Complexity
Modern marketing theory is not characterised by simple causeand-effect relationships; rather, it is concerned with networks of
relationships within which complex patterns of interactions take place
The Viable System Approach and its potential contribution to marketing theory 159
(Gummesson, 2001). Given this complexity, rational decision making
is becoming increasingly difficult (Saviano et al., 2010).
According to (VSA), decision-making in the face of such
complexity is essentially a problem of accumulating sufficient
knowledge to establish cognitive alignment between the decisionmaker’s system and the observed reality. According to Christopher
(2007), the probabilistic complexity throughout a corporation can be
effectively controlled only by an equivalent amount of probabilistic
complexity in the controller.
Given the complexity, dynamism, and instability of contemporary
markets, businesses have to adopt a policy of continuous change. They
must formulate new models of the business scenario to enable them to
develop more effective solutions to emerging customer
expectations(Ng et al, 2010) . In so doing, they must take into account
all the other actors and stakeholders that might possibly influence its
relationships with the market.
1.4.2. Decision Making
The observation of reality today shows increasing complex
phenomena affecting business, individuals, government and, in
general every decision maker. All the attempt to undertake robust and
solid decisions, strategies, behavior seem to fail for the number of
elements to take into account (variety), and for their changes during
time (variability). Moreover there are unknown and unpredictable
additional elements which, indeed, can influence the result of any kind
of process, development, interaction (Saviano, 2001).
In this mainframe what are the fundaments of customers
decisions or of a business marketing plan definition? What are the key
elements affecting sustainable decisions and strategies? (VSA) relates
the difficulties of decision making to a problem of complexity, of
cognitive alignment between the observer and the observed system: it
is all a problem of knowledge and informative variety. Knowledge
development processes, in our opinion and according to (VSA), may be
initially represented by abductive inferences, later verifiable
inductively. This process may be graphically represented by a curve
(the equation is
, where the possible alternatives of a
learning process (or of a decision making process), are declined for a
viable system. On the ordinates entropy is represented, whereas
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CHAPTER VI
horizontally information flow is shown. Decision making is affected
by information. At an early stage of the dialogue, or of the learning
process, information is not ordered, it is chaotic, it is probably
insufficient to enable a full comprehension of the problem (the curve
is hence steep, and goes vertically upwards showing an increase of
entropy). As information flows, and the learning process effectively
takes place, this entropy gradually goes down to lower levels. This is
the gradual process that starts from chaos, via abduction passes
through complexity and via induction fosters complication, and finally
throughout deduction arrives to awareness.
Since the introduced awareness is related to cognitive alignment
processes among systems, it has to be pointed how it represents a
subjective awareness, referable to the decision maker and the observed
complex reality, and not perceivable upon a general level. A
biochemical engineer can reach a satisfactory level of confidence
about an observed process, since its knowledge about the element
affecting the result may be high, if not total, but of course an architect,
lacking of basilar knowledge about biochemistry may find the same
process very complex.
Figure 2: From chaos towards certainty in decision making
Source: Barile, 2009
The Viable System Approach and its potential contribution to marketing theory 161
One of the most interesting inference of this proposal is the
rationalization, and consequent management of the decision making
process in order to design and look for cognitive alignment. If
satisfactory decision making is due to knowledge and informative
resonance (Barile, 2009b) between the involved decision makers,
hence a deeper look at their value systems, interests and rooted
cultural traits should to be attempted (Polese and Minguzzi, 2009) in
order to better comprehend the elements affecting complexity
management.
1.4.3. Open systems and systems boundaries
Enterprises do not create value in isolation (Håkansson and
Snehota, 1989); rather, they engage in cooperative value-creation
processes that involve multiple actors and resources (Prahalad and
Ramaswamy, 2004). Indeed, the term ‘co-creation of value’, which
has emerged so prominently in the context of S-D logic (Vargo and
Lusch, 2004; 2008; Lusch et al., 2007), is inherently associated with
vanishing boundaries between actors within markets. In this regard,
the (VSA) notion of ‘open systems’ is clearly applicable to modern
marketing theory in describing the concept of shared value co-creation
among multiple actors.
1.4.4. Equifinality
When referring to the concept of autopoiesis, homeostasis, and
self-regulation (see FC 5) the (VSA) implies that systems dynamic is
based upon the important concept of ‘equifinality’, which means that
for a system many paths can lead to the same goal (Hannan and
Freeman, 1977). This latter concept seems relevant to modern ideas of
sustainable marketing strategies. Modern marketing theory has moved
the emphasis from strategies targeted at specific clients towards
strategies that are directed to a wider set of external (and internal)
actors—including customers’ communities, partners, suppliers, and so
on. In other words, it seems that modern marketing theory recognises
that there are many ways to achieve a goal in marketing proposals. If
the end goal of marketing is the satisfactory behaviour of one actor in
relation with many other actors, the (VSA) concept of equifinality —
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CHAPTER VI
that there can be numerous paths to the same result — would seem to
be applicable to modern marketing theory. After all (Storbacka and
Nenonen, 2009:366)
...in order to balance the heterogeneity of customers, customer
relationships and portfolios, firms have simultaneously develop
differentiated business models [as] configurations of inter-related
capabilities. [...] A particularly important driver of relationship
performance is the configurational fit between internal and
relational capabilities.
1.4.5. System viability
(VSA) proposes that viable systems are able to survive in a
particular context as a result of dynamic processes of adaptation,
transformation, restructuring, and so on (Golinelli, 2009). In a similar
vein, S-D logic recognises that providers gain market share and
competitive advantages through appropriate adaptations to external
changes and stimuli (Vargo and Lusch, 2008). This continuous
learning process requires constant monitoring and evaluation of
accumulated technological knowledge and innovation to re-orient the
tasks and objectives of the system.
Thus viability describes the evolution of the system since it can
capture the dynamic of its components especially with reference with
the variation of system’s traits due to internal characteristics and
external opportunities. Indeed, (VSA) goes beyond that, in the attempt
to:
o classify the external supra-systems (in order to understand
which of them are more critical and influential for business behaviour);
o establish a qualitative method to measure the system
capability to satisfactory behaviours (based upon affinity of cultural,
knowledge, value and other dimensions).
These suggestions seem to fit with every decision maker acting as
a player in a marketing experience when pursuing a co-creating
process involving many actors (supra and sub systems). For these
reasons, the important (VSA) concept of a viable system seems to be
attuned to modern marketing’s emphasis on adaptation and
innovation.
The Viable System Approach and its potential contribution to marketing theory 163
1.4.6. Governance and relationships
Much of (VSA) theory is based upon relationship governance and
management. In particular, (VSA) emphasises the system’s ability to
foster relationships through dynamic and harmonious interactions.
This is closely aligned with the concept of value co-creation in S-D
logic, which basically refers to a process in which all actors need to be
satisfied in a mutual win–win interaction. However, despite the
importance of relationships in both S-D logic and SS, neither
explicitly addresses the issue of how these relationships can be
managed for the benefit of all actors.
In this regard, (VSA) has much to contribute in terms of the
design and management of positive interactions among actors. (VSA)
emphasises the importance of dynamic models that are based on
multi-criteria decision-support systems that are capable of reaching
satisfactory conditions through continuous feedback from other
systems (including customers and suppliers) to production processes.
In modern marketing terminology, this constitutes ‘co-design’, ‘coproduction’, and ‘co-creation’. (VSA) thus proposes a model that is
likely to be useful for marketing theory in terms of relationship
management among the actors whose resources need to be integrated
for a successful service exchange.
1.4.7. Consonance and resonance
According to (VSA), every viable system’s development involves
the harmonisation of the system with its supra-systems and subsystems through consonant and resonant behaviour. In marketing
terms,, consonance and resonance represent the potential and realised
competitive strategies employed by every successful firm in search of
resources and harmonious relationships with other actors in their
network.
(VSA) thus postulates a gradual process of consonance and
resonance between network actors through cognitive harmonisation
(Barile and Polese, 2010a). In parallel with this notion, (VSA)
introduces the concepts of enactment and sense-making (Weick, 1995)
as being crucial for effective consonant and resonant behaviour.
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Through enactment and sense-making, these actors learn how to fulfill
the needs of potential partners and customers.
1.5. CONCLUSIONS AND IMPLICATIONS
1.5.1. Major conclusion
The Viable Systems Approach (VSA) is a complexity theory that
draws upon a variety of disciplines, including chaos theory,
autopoiesis (self-organising systems), and fractal geometry (among
others). It thus has the potential to provide a more comprehensive
understanding of contemporary marketing theory by its integration of
network, relational, and systemic perspectives. Although emergent
marketing theories, especially service-dominant (S-D) logic, have
greatly enhanced marketing theory, the present study has argued that
these new theories can be augmented by certain aspects of the (VSA)
perspective.
According to Gummesson (2002), the complexity of marketing
make it a “… poor context for conceptual understanding and
development of contemporary phenomena”. If Gummesson (2002) is
correct, a full comprehension of this complex phenomenon requires a
complexity theory; as Ashby’s (1958) basic law of control asserted:
“… only variety can absorb variety”. In this regard, (VSA) is not being
proposed as being a ‘higher theory’ than other marketing theories;
rather, it provides a broader perspective that includes pertinent aspects
of systems thinking and complexity theory. Given the growing
complexity of marketing itself, (VSA) has much to offer contemporary
marketing theory.
1.5.2. Implications for future research
(VSA) provides many potential avenues for future marketing
research. In particular, Parson’s (1971) hierarchy principle (1971),
which formed the basis of the second fundamental concept of (VSA) in
Table 2, is likely to have many applications in business-to-business
(B2B), business-to-customer (B2C), and customer-to-customer (C2C)
marketing. In these areas, value co-creation and value experiences are
extremely complex when dealing with so many actors in many-to-
The Viable System Approach and its potential contribution to marketing theory 165
many co-creation service experiences (Gummesson and Polese, 2009).
A broader perspective that is capable of differentiating distinct roles
and needs from various observational standpoints is required
(Prahalad and Bettis, 1986; Pels et al, 2009). (VSA) in general, and the
hierarchy principle in particular, could well provide a fruitful
framework for future research in this area.
However, despite the intuitive relevance of this and other aspects
of (VSA) to contemporary marketing theory, more research is needed
to deepen the suggested theoretical correlations. The present paper has
described only a little of the potential contribution that (VSA) might
make to advances in modern marketing theory. Further work is needed
to provider breadth and depth to the intriguing possibilities revealed in
the present study.
1.5.3. Implications for practitioners
The (VSA) concepts of consonance and resonance represent key
factors for successful interactions and competitive success. In terms of
practice, consonance refers to the appropriate design of a business
process in relation to a firm’s distribution partners, whereas resonance
refers to the contractual agreement between the parties that realises the
desired win–win interaction. For example, a potentially efficient emarketplace platform developed by a retailer represents consonance,
but it is only when customers and partners effectively adopt the
platform that effective resonance takes place for everyone’s benefit.
1.5.4. Future academic developments
Table 3 compares (VSA) with various developments in marketing
theory—beginning with the ‘4Ps’, and progressing through
relationship marketing, many-to-many marketing, and S-D logic
Comparing these developments with (VSA), it is apparent that the
progression of marketing theory is congruent with the characteristics
of (VSA).
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CHAPTER VI
Table 3: Comparison of marketing paradigms
Paradigm
Focus
Main
Final
aspects
purpose
Point
of view
Traditional
Transactions Client
Market share
Marketing
acquisition and growth
Management
Internal
(business
unit)
Focus
Customeroriented on the
supplier’s
conditions
Relationship Relationships CoLong term
External
Two party
marketing
operation competitiveness (relational) Focus
(suppliercustomer
relationship)
Many-to-many Networked Customer- Network
External
Multi-party
marketing
interactions balanced
reinforcement (reticular) focus
centricity
(network of all
stakeholders)
S-D logic
Service
Co-creation Competitive
Both
Multi-party
adaptive actors internal
focus
and
external
( VS A)
Systems
Viability
System survival Both
Multi-party
internal
focus
and
external
(systemic)
Source: Our elaboration
The (VSA) approach thus appears to be fully coherent with
contemporary market theory, which emphasises that the survival
capacity of a firm (that is, the end goal of a viable system) is a
function of its value-creation capacities through co-operation with
other actors, linked to the technical, cognitive, and relational aspects
of the particular context in which the firm is located. The result is a
complex value-creation process of consonance and competitiveness in
which value creation and value diffusion are complementary aspects
of the same process of “extended value” (Barile and Gatti, 2007).
Finally, the contribution of (VSA) to Marketing Theories derive
from its systemic view, as well as from the main relevant aspects
coming from its new paradigmatic vision. It seems as if efforts ought
to be directed in putting marketing discussion at an higher level, in
fact the more general the theory, the better our ability to understand
major changes in market conditions and the usefulness of
technological advances (Gummesson, 2002). Principally we believe
The Viable System Approach and its potential contribution to marketing theory 167
that, given the systemic nature of value creation, it is important for
managers to adopt a systemic approach, a general level observation of
the observed complex phenomena in order to enable value exchanges
with customers; since value can only be accessed on a relative basis,
that is in comparison to competitor offerings (Lusch, Vargo and
Tanniru, 2009), the systemic approach may enable a viewpoint
fostering a wider perspective comprising partners, competitors, market
requests and so on.
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