State Organisation for Institutional and Systemic Perspective

Dynamic Equilibrium of Organised Things

Organisation is naturally an entity organised in some way. At the same time it is increasingly difficult to talk about stability of processes or states of the organization, if they are subject to turbulent interference. Thus dynamic equilibrium in organisation can be compared to K. Adamiecki's law of inertia of habits, which says, that every change causes resistance. This principle has been transposed into the management from physics and philosophy, where two main laws of contradiction were created: Le Chatelier-Braun (also Le Chatelier's principle, or Equilibrium Law) and Lenz's law (or principle). The first one was formulated in 1884–1888 (Le Chatelier 1926); it says that: whenever the system in equilibrium is disturbed, the system will adjust itself in such a way, that the effect of the disturbance/change is nullified” (Hołyst et al. 2003, p. 241, translated). It as an example of action provoking resistance, where behaviour of the system/organisation may be opposite to desired ones, destructive and with costly results. Although H.L. Le Chatelier (1850–1936) was a chemist, at the same time he was developing a traditional management trend based on scientific organization of work. He developed the organising cycle, which included:

(a) selection of goal to achieve,

(b) checking resources and conditions necessary for achieving the goal,

(c) preparation of resources and conditions,

(d) execution adequate to developed plan of action,

(e) control of results (Kurnal 1972).

The second Equilibrium Law, called Lenz's law, was formulated in 1834 by physicist H. Lenz (1804–1865). According to this principle, each induction process runs in the direction opposite to operating force, that is an induced electromotive force always gives rise to a current whose magnetic field opposes the original change (Stine 1923; Tooker 2007). The resistance in Lenz's law translated into

Fig. 3.1 Dynamic equilibrium model of organisation. Source: W.K. Smith, M.W. Lewis 2011, Toward a theory of Paradox: A Dynamic Equilibrium Model of Organizing, “Academy of Management Review”, Vol. 36, No. 2, p. 389

management is e.g. opposition of employees towards the actions of supervisor, leading finally to counter measures taken by the supervisor.

Models of dynamic equilibrium are used for more than 30 years in issues of international trade, conjunctures and theory of public finance, labour economics and industrial organization. However, too often they are false, since dynamic equilibrium of the organisation or economic system is often built in laboratory conditions and is based on false constructions. It poses challenges, mainly of econometric character, regarding appropriate selection of advanced data of parametric model (e.g. technology, preferences) and difficulties in comparing non-nested models (Villaverde and Rubio-Ramirez 2004). Added to this, especially the group of Dynamic General Equilibrium (DGE) models, very often used macroeconomics, like e.g. Solov's growth model, Ramsey's growth model or Overlapping Generations Model (Heer and Maussner 2005).

In this context the dynamic equilibrium model of organisation developed by W.K. Smith and M.W. Lewis (2011) (Fig. 3.1) can be presented, which consists of three basic functions:

(a) paradoxical tensions of clear and latent character,

(b) responses to existing tensions, which entail repetition of management strategy,

(c) result or influence of given management strategy on sustainable


The presented model fits in explaining the essence of paradox management. They explain how paradoxical tensions can affect the ongoing cyclic process. Paradoxes regard creating competitive projects and processes, whose development and final execution leads to achieving a desired effect. They include tensions between cooperation and competition, empowerment and direction of action or routine and changes (Smith and Lewis 2011). The model shows, that achieving sustainable development is possible through proposition of learning and creativity, facilitates flexibility and elasticity of action and releases human potential in the organisation (Smith and Lewis 2011).

Dynamic equilibrium models are used to describe changeability or uncertainty, e.g. conjuncture cycle fluctuations. They determine two kinds of shock by relating to structural shocks (e.g. preference, social or economic policy) and changeability shocks picturing innovation standard deviation from structural shocks erna´ndezVillaverde et al. 2013).

We may say that dynamic equilibrium may be achieved only through creating some type of management of change, taking into account that:

(a) There is a probability of organisation's bankruptcy due to lack of changes and necessary progress. Organisations should be open to evolutionary internal and external adaptations.

(b) Lack of amplitude of change in the organisation and insufficient efficiency cause low economic efficiency, guaranteeing only medium probability of organisation's survival.

(c) Organisation's ability to activate and mobilise existing resources, and increase productivity allows to make major changes, including management. It guarantees the organisation high probability of survival and development.

(d) Big change in strategic management of organisation and other unsuccessfully introduced changes lead to difficulties or impossibility of effective and efficient use of resources. It can be prevented in many ways and forms of restoring equilibrium by creative and competent managers.

(e) Lack of contextual changes in organisation caused by insufficient introduction of changes by management leads to strong inequilibrium, prevents rational use of resources and threatens with bankruptcy of the organisation (Nicolescu and Nicolescu 2010).

To equilibrium described above in change management a managerial approach focused on efficiency is necessary, whose main factors in global trends are:

(a) speed and scale of changes—burdensome and transformational,

(b) dominating production measures—knowledge and network connections among network employees,

(c) competition forces—as unique in different ways,

(d) character of work—network work supported by knowledge and manual work,

(e) rules of organising—netocracy, namely new power elite, which will govern after neo-liberal period and organise on the basis of technological advantage or network of skills,

(f) organisational power—individuals and small groups within many networks,

(g) people—innovators, heuristic groups, autopoietic groups, that is those

capable of self-production and reproduction of own structures or elements (adaptation to new stimuli),

(h) regulation system—trust, relationships and network standards,

(i) organisational relationships—transorganisational, communities of practice,

(j) market domination—disloyal, impulsive, modern (Bititci et al. 2012).

As we can see then, achieving dynamic equilibrium is and will be a constant process, susceptible to a number of disturbances in opposition to organizational harmony. Thus hierarchical structures—especially in public organisations, should create networks within participative leadership and attempts to stabilise the environment of the organisation.

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