This article is mainly based on articles in international professional journals forming the author's dissertation paper entitled ‘Informatics and Systems Science Applications for Analysis and Structural Improvement of a Municipal Organization’. The article may be seen as an attempt to relate certain concepts of LST (living systems theory) to the activities of a municipal organization mainly represented by the capital of Sweden. This article deals partly with concepts of indicators of fulfilment of an activity's desired outcome according to its main purpose and the difference between these concepts with consideration of a municipal organization. However, a most important part of the article is devoted to giving an example of the implementation of the critical subsystems in a restructuring and planning process where zero-base budgeting together with breakthrough thinking have vital roles to play. Thus, through a coupling of the principles of the critical subsystems to the principles of zero-base budgeting and using breakthrough thinking it could be possible to achieve an effective investigation of a municipal organization and its problems. The article also deals with certain paradigmic influences in society which also can influence a municipality. Copyright © 1999 John Wiley & Sons, Ltd.