The various levels of importance of the five structural components of the Viable System Model (VSM) at different stages of a system’s S-curve development regarding improvement of its viability.
Date of Issue2007
College of Business (Nanyang Business School)
Companies have growth trends similar to biological systems that follow S-curve development. An S-curve growth trend starts slowly, followed by a strong growth phase and a decline. Each stage has its own characteristics. To stay viable during all stages of the S-curve, a company must adapt its strategy and structure according to the characteristics of each stage. The Profit Impact of Market Strategy (PIMS) program has determined important performance indicators for each stage. Some of these strategic factors, such as market share or fixed-capital intensity, have a constant influence on profitability. Others, such as innovation, vertical integration, or productivity, are examples of strategic factors whose impact on profitability varies during the different S-curve stages. These PIMS insights are mapped to the five structural components of the Viable System Model (VSM). The resulting hypotheses define the levels of importance of the five structural components of the VSM at different stages of a system’s S-curve development in order to improve its viability. The term importance refers to the investment of money, time, care, talent, attention, and reward toward the different structural components of the VSM.