Businesses may operate using an open or closed system. This approach of organization may be throughout the company, or various departments may operate as open or closed within the same business.
An open business model allows ideas to flow between departments and even with other organizations. This type of system is more flexible and responds according to the information received. An advertising firm that constantly studies the marketplace and adjusts its practices to outside trends and interests would be considered an open system.
In contrast, a closed organizational system does not communicate or depend on other areas to function. This system can be efficient because there are very stringent procedures to follow and no outside influences to interfere. For example, an assembly line department would most likely function as a closed system. Widgets will be produced in a consistent matter over a long period of time with little change from outside sources.
Traditionally, companies functioned using a closed systems approach. However, with the global marketplace and fast changing landscape, an open system of organization is often more advantageous to organizations in the present.