The PSI Theory: Understanding the Operation of Organisations

Abstract

The PSI theory is a theory about the operation of organisations. PSI stands for Performing in Social Interaction. Based on the CIAO (Communication, Information, Action, and Organisation) paradigm, a communication-centric view is taken on the cooperation of people in enterprises, as manifested in business processes. The fundamental notion in understanding the operation of organisations is the coordination act. It consists of a performer, an addressee, an intention, and a product. The performer and the addressee are actors, that is, subjects filling an actor role. Actor roles are the units of authority and responsibility. Coordination acts can be performed verbally, non-verbally, and tacitly. They are the key elements in (business) conversations, which are the constituting parts of (business) transactions. A transaction is carried out by actors in two roles: the initiator and the executor. The executor brings about the product of the transaction to the benefit of the initiator. The process of a transaction is a path, possibly including iterations, through a universal transaction pattern, which consists of one main pattern and four revocation patterns. The latter serve to revert the state in the main pattern to a previous state. Because of the inherent connection between an actor role and the transaction kind of which fillers are the executor, the combination of the two is called transactor role. Transactor roles are the universal building blocks of business processes. Performing a coordination act results in creating the corresponding coordination fact. The time attributes of coordination facts are: the creation time and the event time, defined as the time at which the fact comes into existence. Regarding products (which consist of one independent production fact and a number of dependent facts), the notion of operative time (i.e., the time at which the product becomes effective) is distinguished, next to its event time, that is, its coming into existence, and its creation time. A fundamental principle in the PSI theory is that actors act autonomously, also if they are guided by business rules. Based on this principle, precise definitions are developed for the notions of authority, responsibility, accountability, and competence.