The Concept of "System"
It is not too uncommon to think of a system as individual parts that are involved in dynamic interactions. VSM thinking requires that you step away from thinking about the constitute parts and how they react with one another, toward a focus on the process and the purpose of that process. The system boundaries are thus drawn around the process and not the parts of the organisation.
Surely a lion in a zoo is the same as a lion in its natural habitat? Not necessarily. Yes, the object (in this case a lion) is technically identical, but system is not. The system of having a lion in a zoo has a purpose to attract visitors, whereas the system of having a lion in its natural habitat has the purpose of being a predator at the top of a food-chain. Thinking about systems in this way, highlights how the individual parts of the system is not all that relevant. The process, and the purpose of the process, is more pertinent when trying to build a viable system model.
The Concept of "Variety"
In VSM thinking the concept of variety also plays an important role and needs to be viewed in a specific way. Take a classroom environment. The class will consist students that posses a variety of different backgrounds, home situations, prior knowledge, motivations etc. The role of the teacher is to somehow teach the lesson in a manner that reduces the variety of approaches to one that can be broadly viable to the variety of different learning requirements of the students present. This type of thinking about variety has important implications for the VSM. Firstly, the complexity of a system is now viewed on the number of different possible variations. Secondly, the Law of Requisite Variety (Ashby), states that the variety of different options in a system must be equal or less than the variety of options available to the regulating system to which it belongs to. If the higher order system does not contain sufficient options to adapt to all the possible variations it needs to regulate, then the entire system is not suitable to meet all extremes. Therefore there are only two strategic options. Either the variety of the regulating system is increased, or the variety of the sub-system is decreased. So going back the classroom example, - either the school increases the number of available classes so that the same lesson can be taught in different ways, or the school streamlines the students to reduced variety of learning needs.