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The Breckenridge Institute® uses an open systems model of organizations. The diagram below depicts the structures and systems of an organization as an organic, process-oriented system that exists within the context of organizational climate and culture, and is open to influences of the external environment upon which it is dependent for its survival.

All living systems are composed of patterns and structure that are linked together by dynamic processes. On the open systems view, organizations are like organic, living, goal-seeking organisms where their structures and systems reach a state of equilibrium within the context of their internal climate and the forces and pressures from business environment outside the organization. As David Hanna puts it, “All organizations are perfectly designed to get the results they get! For better or worse, the system finds a way of balancing its operation to attain certain results.” The diagram below has three main elements:

  • Strategic View
  • Execution
  • Organizational Climate

The Strategic View defines the overall direction, goals, and objectives of an organization, given its purpose in the external environment. The Execution perspective reflects the key elements needed to execute the organization’s plans, direction and accomplish its work. The Organizational Climate in an organization is the experience of what it’s like to work in an organization day-to-day and a reflection of the underlying, tacit assumptions and cultural norms that compose its underlying cultural norms.

Open Systems Diagram

Perhaps the greatest value in using an open systems model to analyze and characterize an organization’s culture is that it provides a framework for focusing cultural assessments on: a) addressing specific challenges or issues that the organization is facing, b) improving business processes and tangible work practices, and c) helping organizations to get the results they want.

Other key elements of an open systems model that manifests itself in organizations are defined below.

  • Organizational Boundary: All organizations and organizational units have a border or boundary that differentiates them from other social entities. Types of boundaries include the following: a) physical (building, location, geography), b) time-related (work shift, time zone), c) social (hierarchal, disciplinary, functional), d) language (national, industry), e) psychological (the distribution of personality preferences) and f) cultural (shared, unquestioned beliefs, values and stereotypes about how to see the world). The organizational boundaries must be permeable to the external environment in order for the company to survive, but the degree of permeability must be consciously designed and monitored. When organizational boundaries are too permeable, the forces, pressures, and demands of the external environment can be overwhelming. When boundaries have too little permeability, and organization gets cut off from the resources it needs to survive and grow.
  • External Environment: The external environment is everything that is outside of the organizational boundary. Although organizations must interface with customers and suppliers in order to survive, there are enormous, but subtle differences between being inside the organizational boundary as an employee, and being outside in the external environment as a customer, supplier or competitor. Since the vast majority of things in the external environment are not relevant or value-added to an organization’s purpose or survival, an organization develops an interaction style based on its culture and the personality preferences of managers and key personnel. Some organizations try to ignore the external environment and become a closed system. Others attempt to manipulate and control the external environment which is difficult because they have little or no control over industry trends, market preferences, and competitors. A more effective strategy is to establish an Essential Tension™ between: a) the strengths and weakness of an organization’s structures, systems, and culture, and b) the opportunities, threats, forces and pressures exerted on the organization from the external environment.
  • Purpose-Need: All living organisms have a purpose and reason for existing. Organizations are goal-seeking organisms that are free to pursue their chosen path as long as they meet the expectations of the larger context of the external environment. An organization must link the vision and purpose of it managers and key personnel to tangible needs in the external environment. Meeting these needs becomes the organization’s purpose – its reason for existing. The elements of an organization’s Strategic View shown in the figure above function like an implicit contract between the organization and the external environment. Achieving the goals and commitments in this contract ensures the organization’s survival. The goals and objectives in an organization’s strategic plan should function as internal targets established by managers and key personnel that guide the organization toward fulfilling its purpose in the external environment.
  • Business Results (Tactical Feedback): Tactical feedback is an indicator of the degree to which an organization is on course in achieving the goals it committed to in its implicit contract with the external environment. Consequently, the data that constitute Tactical Feedback are often called Business Results because they are literally the financial and non-financial results produced by an organization.
  • Business Context (Strategic Feedback): Strategic feedback is an indicator of the degree to which an organization is connected to, and monitoring, the external environment, e.g. industry trends, the needs of market segments, and the activities of competitors and suppliers. Whereas Tactical Feedback tells an organization whether or not they are achieving the goals and objectives that have set for themselves, Strategic Feedback indicates the degree to which an organization is aligned with the realities of their purpose and the tangible needs of customers in the external environment. Consequently, this is often referred to as the Business Context.
  • Inputs: Much like the human body uses food, oxygen, and water from its environment to survive and grow, an organization must obtain information on industry trends and the needs of market segments, as well as financial, human, and material resources from the external environment in order to survive and achieve sustainability. When an organization lacks sufficient resources from the external environment, it begins to weaken and will ultimately die.
  • Transformation: Like any organic system, the inputs into an organization must be transformed by business processes into other forms (products and services) by the elements of the Strategic View and Execution. The outputs from the transformation-process are exported to the customers in the external environment in the form of products and services provided by an organization.
  • Outputs: Products and services are exported to the external environment by an organization to meet the tangible needs of customers, thus fulfilling the organization’s purpose and making good on the commitments that managers and key personnel made in their implicit contract with the external environment.
  • Organizational Climate: Probably the most easily understood manifestation of an organization’s culture is Organizational Climate, e.g. the day-to-day experience that people have when working in an organization. Like an atmosphere that permeates the workplace, Organizational Climate is characterized by things like level and type of employee morale; confidence in management; openness to change; conflict and pressure; a spirit of creativity and innovation; fair process; and a no-blame philosophy.

It is important to note that the more defined the structures, systems, and culture are in an organization the less impact sub-cultures and the personalities of individuals will have on day-to-day operations because the differing ways of “seeing” and “doing” get eclipsed by these formal ways of doing business in end-to-end, enterprise-wide business processes. The less defined the structures, systems, and organizational climate are the more impact sub-cultures and the personalities of individuals will on day-to-day operations because the informal power and authority of personality fills the void of formal authority and power. In other words, people are the processes. The question that should be asked by an organization is, how much of the job gets done by the formal structures, system, and culture, and how much has to get done by the informal power and authority of sub-cultures and individual personalities where people are the process?

Using an open systems approach will enable an organization’s managers to: a) identify results that the organization is not getting that you wish you were, b) isolate which elements of the organization’s structures, systems, and culture are derailing the desired results, c) characterize the root causes of patterns of ineffective performance in the organization’s culture, e.g. tacit assumptions, beliefs and values, d) redesign the configuration of structures, systems, and culture to get different results, e) predict what the new results will be, and f) confirm the practical reality of organizational and cultural change with key performance indicators (KPIs) and quantitative measures of performance that show that positive change is actually occurring.

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