Any management system within an organization can be said to be "open" or "closed." An open systems interacts with other systems through the free passing of information, whereas closed systems operate on their own with little or no influence from the outside world. Closed systems have the advantage of being efficient because there are clear procedures that are not affected by outside influences. The best way to understand closed systems is to see how they are used in organizations.
A business that operates an open system interacts with its environment through giving and receiving information. In a closed system, interactions only happen within the specific system, which means closed systems are shut off from the outside environment, and every interaction is transmitted inside that closed system. Workers in closed systems within an organization don't communicate with other departments about their activities, nor do they receive input from other departments.
Advertisement Article continues below this adAn assembly line is a closed system, because the day-to-day activities that take place are not dependent on or influenced by external forces, such as what other assembly lines are doing or interactions between mid-level and executive-level management. Assembly line workers complete their daily tasks without having to worry about their work being interrupted by an event such as a staff meeting. Assembly line workers must also adhere to a rigid set of procedures that ensure efficiency and productivity. Any interaction outside of this very precise system can throw off productivity, and wreak havoc with schedules that are often made months or years in advance.
The research and development division of a business is a closed system, because the people responsible for developing new products or new technology work without consulting other divisions in the company. This means that R&D workers are insulated from external influences and don't interact with anything outside of their system. For an R&D division, operating as a closed system helps business owners protect valuable intellectual property that could be worth millions in the life cycle of a new product or service.
Advertisement Article continues below this adSome businesses maintain proprietary trade secrets that they must guard to prevent the competition from stealing this information. To keep these secrets, companies sometimes establish a closed system, in which those documents are not available to other departments within the organization, and are shielded from external threats by virus and hacking protection systems.
In this closed system, there is no need for interaction outside of the system, because everything the system requires to function properly is contained within the system itself. In fact, external interaction in this instance would expose the business to consequences that could reverberate for years to come.