ORIGINAL PAPER Money, Time and Variety Engineering: The Application of Cybernetics to the Diagnosis and Design of Financial Performance Management Systems S. P. Morlidge Published online: 23 May 2009 Ó Springer Science+Business Media, LLC 2009 Abstract Variety engineering was the term coined by Stafford Beer to describe the management of the system of constraints placed on an organisation. Successful variety engineering involves working with the demands of Ashby’s Law of Requisite Variety; matching regulatory variety with that of the situation being regulated. Money is an important mechanism for variety engineering: the allocation of financial resources helps amplify variety; its withdrawal attenuates. This paper argues that budgeting, the conven- tional approach to the management of financial resources, demonstrably does not have requisite variety. This fact could be manifest in a range of undesirable patterns of behaviour. The practice of budgeting has not, however, been seriously challenged by systems theorists nor alternative mechanisms proposed. This paper sets to remedy this by describing how the cybernetic regulation of the flow of financial resources can be incor- porated into the framework provided by Beer’s Viable Systems Model. Keywords Cybernetics  Variety engineering  Budgeting  VSM  Regulation Background Most of us would concur with Lennon and McCartney that ‘money can’t buy me love’. It does, however, buy you choice. In cybernetic language, money helps engineering variety; the number of states a system is capable of adopting. The absence of money attenuates variety (and so constrains choice), having money amplifies variety (creates choice). The term ‘variety’ was coined by Ashby (1957), and the concept underpinned his ‘Law of Requisite Variety, which stated that, for a system to be effectively regulated, the variety of a regulator must be equal to or greater than the variety of environmental perturbations. Since variety is constrained by money, we might expect that the way in which an orga- nisation manages the flow of money—how available resources are deployed—would be S. P. Morlidge (&) Hull University Business School, Kingston upon Hull, Hull, UK e-mail: Steve.Morlidge@satoripartners.co.uk S. P. Morlidge Satori Partners Ltd., Glencairn, Holmesdale Road, South Nutfield, Surrey RH1 4JE, UK 123 Syst Pract Action Res (2009) 22:235–247 DOI 10.1007/s11213-009-9124-1