A policy system design that can benefit from the dynamics of small group behavior without suffering from the adverse effects associated with group thinking, in which the members of small groups acquire a concurrence seeking tendency, is comprised of three subsystem functions: (1) a sub-system normative function which requires that small groups be assigned to ensure that an agency persist while it undergoes elaboration to confront changing internal and external conditions; (2) a sub-system strategic function which requires small groups to act on transforming the "ideal ends" resulting from goal formulations to the most "feasible means" for their realization; and (3) a sub-system tactical function which requires small groups to operationalize the policy goals and objectives in concrete applications. The concepts of policy system design integrate the social interaction of small groups and the systems interaction of the policy subsystem functions. (JAC)