Archive for the ‘economics of alignment’ Category

The Governance of Quality

Monday, January 27th, 2014

by Philip Boxer BSc MBA PhD
Over a period of three years, 1994 to 1997, I consulted to an organisation providing residential care for men and women with mental health disabilities.  This was in the middle of the changes taking place in the UK to introduce ‘internal markets’ and the de-institutionalisation deemed necessary to providing ‘Care in the Community’.

The work was undertaken together with Barry Palmer[1], and presented at the 1997 ISPSO Annual Meeting in Philadelphia under the title The Architecture of Quality. The work established a way of enabling the organisation to adapt its work to this newly emerging environment in which the proactive pursuit of individuals’ care in the community could be put first.  It did this by tackling the north-south bias in the architecture of the organisation and establishing the need for asymmetric forms of leadership capable of realising east-west dominant forms of governance.[2]

By 2001, the CEO and senior management team of the organisation had left, and the organisation had begun reverting to its previous role as a provider of sheltered accommodation.  A more recent paper describes the subsequent events that led to this eventual outcome – The Governance of Quality. One response to this more recent paper would be to characterise the Trustees of the organisation as lacking courage.  But why should a Board of Trustees choose

  • innovating to deliver new levels of service to residents at lower cost while having to learn a whole lot of new ways of doing things, and
  • dealing with a whole lot of compliance issues for which historically they knew accountability could be reliably ‘delegated’, but would no longer be able to be ‘delegated’ so easily?

The Trustees chose the entirely reasonable alternative of running the traditional model of providing accommodation plus basic services under the auspices of housing provision.  The Trustees passed the test of whether the alternative they chose was “reasonable”: a reasonable person could not have been expected to choose otherwise.  But was this work we were engaged in together about what was reasonable? To quote the CEO:

I would not want to just look at the Trustees’ behaviour and motivation. I also resisted stepping beyond my know-how. I carried resistance while simultaneously espousing doing different. This is why I think the link to extreme sports is a useful one and perhaps to courage in general[3]. What is it to do the right thing? And how does one ‘know’? I think that ideas have been under-emphasised in any leadership framework. Instead, the emphasis has been on emotional intelligence which, while being important, is just not enough – being ‘good’ does not guarantee that things will work better!

Two kinds of learning emerged about the intervention from looking back at the process overall:

  1. There was a parallel process going on from the beginning, in which the CEO was receiving personal support in coping with how he took up this new role, support that had preceded his new role.  Having taken up the role as CEO, I was consulting to him concurrently with this other support, my task being to help him develop ways of tackling the leadership challenge he faced.  The splitting of these two aspects of support to the CEO – containing anxiety and innovating – paralleled the way support to the organisation was split between the governance task facing the Trustees and the leadership task facing the CEO. The full implications of this split did not become apparent until 2001.  Barry and I were not able to work the parallel process effectively.
  2. The envisioning of internal markets and de-institutionalisation was accompanied neither by any understanding of how the transition should be managed, nor by any support for the transition itself.  The rhetoric was that all this should be ‘left to the market’.  Even had we addressed the split in our consultation to the organisation, Trustees and Management together would have had to act very strategically to survive the disruptions to funding that would have arisen during the transition – a transition that is still ongoing!  This was because the economics of an east-west dominant organisation are both different to and more complex than those of the north-south dominant form.

But there was something more that we learnt, in that what we thought was the challenge of the case turned out to be much more of a challenge than we realised at the time…

  • Yes, the way the intervention unfolded was hugely particular to the situated nature of both us and the organisation;
  • Yes, both Trustees and Management needed courage, although possibly not as much courage as that of residents resisting being ‘parked’ in their lives by the (counter-resistance of the) existing organisation; and
  • Yes, we consultants needed to grasp the fundamentally different kind of economics that were being engendered by operating explicitly in a turbulent environment in which residents had to be responded to one-by-one.

But beyond all of that,

  • We consultants needed to recognise that what was being demanded of us in our way of working was a relationship to anxiety that involved our being prepared to ‘pay with our being’ – to go beyond what we knew and to put ourselves ‘on the line’.[4] That had to include our relationships with each other, through which the parallel process would have needed to be worked much further [5]

Which brings us back to the place of anxiety, our courage in all this and the different nature of the relationship to anxiety involved in innovation.[6]  Again to quote the CEO:

What I also know now is the investment I had in ego psychology, which Barry perhaps shared. Nailing the attitude to anxiety was one of the most important things noted in both versions of the paper. Any work had to be anchored to making it better for patients, a ‘work’ that we all had to have an investment in.

Notes
[1] Alongside the paper on The Architecture of Quality, other relevant papers by or with Barry are Meeting the Challenge of the Case (except that in retrospect, the challenge of this case was more than we thought at the time!), In which the Tavistock paradigm is considered as a discursive practice (thinking about how to situate the approaches associated with Barry’s role with the CEO as manifesting a particular form of discursive practice), and The Tavistock Paradigm: Inside, outside and beyond (laying the foundations for a new set of questions to which we are still trying to find adequate responses).
[2] Simon Western addresses these forms of leadership in his writing on eco-leadership.
[3] This is a reference to current thinking going on about the role of courage in overcoming defences against innovation – see the conclusion to Counter-resistance is always on the side of the supplier-provider.
[4] Which we had nevertheless formulated in 1994 in Meeting the Challenge of the Case, even if we hadn’t realised the extent of it.
[5] This comes up as a central issue in facing the future of the psychoanalytic study of organisations.
[6] This is to be the focus of a forthcoming paper to be presented at the 2014 Annual Meeting of ISPSO in Santiago – ‘Betraying the citizen: social defences against innovation’.

Requisite Authority: when is triple-loop learning *necessary*

Wednesday, October 2nd, 2013

by Philip Boxer BSc MBA PhD

What organisation needs asymmetric and tripartite approaches to leadership? Why engage in triple-loop learning driven by dilemmas in sustaining relationships to individual clients’ demands?  What makes action research using plus-one processes so important?

Approached from the drivers of organisational scope, the answer to each question is: any organisation, once responding to the horizontal drivers of performance becomes more important than remaining subject solely to the constraints imposed by its vertical controls, since under these conditions the organisation is in a complex and therefore ‘turbulent‘ environment in which clients must be responded to one-by-one. Health and social care are good examples of such an environment, but all industries are moving towards this condition under the influence of information technologies and the increasing prevalence of multi-sided demands, the necessary corollary being the use of platform strategies.[1] Another kind of answer is: “if competition pushes you into the ‘red zone’ in the diagram below”.

It is easier to understand this ‘red zone’ if we start by considering what makes triple-loop learning not necessary. The diagram approaches this in terms of the way role and task are aligned to each other, requisite authority being whatever role definition is congruent with the task demands on the organisation. Triple-loop learning is  not necessary as long as the ‘red zone’ can be avoided, the ‘double diamond’ providing a diagnostic tool for identifying this condition:

diamond1

  • Task: Either there are no dynamic cross-boundary relations to demand situations that are driving performance (e.g. providing medical equipment), or, if there are, then they can be responded to solely in terms of a choices defined by the organisation ex ante (e.g. providing a menu of in-home services)
  • Role: Either there is no accountability for performance in the demand situation (e.g. performance of the equipment once sold is down to the purchaser), or, if there is, then the accountability is to the person who signed the contract and not to performance within the situation itself (e.g. “if you are not satisfied with my performance, then take it up with my manager and don’t complain to me”).

Requisite authority involves there being congruence between the role and task sides of this diagram.  Lack of congruence means either too much organisational complexity or inadequate organisational support, depending on which way it goes.

We can add labels to the different parts of this diagram to make it clearer when triple-loop learning does become necessary:
diamond2

  • Task: There is a dynamic relationship to the client’s situation that demands the dynamic alignment of differentiated behaviors and that involves dynamic linkages across the boundaries of the organisation (e.g. a care pathway has to be configured and continuously adapted to the needs of the individual client).
  • Role: Responsibility for responding appropriately involves bringing together a number of services from different organisations and holding them accountable in ways that are sustainable and that relate explicitly to performance within the client’s context-of-use (e.g. a care manager responsible for through-life management of the client’s condition and accountable directly to the client).

Examining a particular case situation, a hospital group wanted to provide seamless care to patients admitted through their Emergency Department (ED).  The task on the right was therefore to provide a condition-centric episode of care, the episodes being designed one-by-one.  The problem was that the ED was in a matrix relationship to the specialist wards with which it had to negotiate admission after having admitted the patient to ED.  This negotiation was constrained by considerations other than the patient’s condition, such as the receiving ward’s budgets.
Diamond3The proposed solution was to create an ED diagnostic team that had the power to determine where a patient went from ED.  The danger with this was that did not provide requisite authority, simply relocated where power was held without addressing the underlying challenges of designing and aligning care pathways that were sustainable across the hospital group’s ecosystem.  The solution was to set up a forensic process that could track and evaluate the performance of the ecosystem in order to learn what forms of agility were needed beyond the establishment of the diagnostic team.

The outcome from this process was a new organisational capability to backtrack ED admissions and to examine them as symptoms of failure in the primary social and healthcare systems.  This led to new ways of managing patients’ chronic conditions and failures in care funding.

Notes
[1] The multi-sided platform strategies of Apple, Google and Amazon are also good examples of this, as are the failures of Nokia and Blackberry through their continuing pursuit of one-sided strategies in environments demanding multi-sideness.

Leadership Qualities and the North-South bias

Thursday, August 8th, 2013

by Philip Boxer BSc MBA PhD
A recent examination of the Leadership Qualities Framework, developed by the UK’s National Skills Academy, shows just how difficult it is to counteract the bias of North-South dominant assumptions about governance and leadership[1], even as in this case where there is very clearly a wish to do so.[2]  This bias becomes apparent in the assumptions made about the nature of strategy and its relation to hierarchy.

Policy, Strategy and Tactics
The framework gives a special role to strategic leadership with its own additional qualities: creating the vision and delivering the strategy. In the forward to this framework, Norman Lamb MP points out the following:

Good social care has the potential to transform people’s lives. It can help them realise independence, exercise meaningful choice and control over the care and support they receive, and live with dignity and opportunity. Good social care has the potential to transform people’s lives. It can help them realise independence, exercise meaningful choice and control over the care and support they receive, and live with dignity and opportunity. High quality leadership, embedded throughout the social care workforce, is fundamental to the delivery of high quality care. At the same time, we need to reach beyond the workforce and bring leadership skills and capabilities to service users, their carers and the communities in which they live and work.

For leadership to fulfill this promise, it must at least aspire to responding to people’s lives one-by-one. Put another way, in order to transform a person’s life, a particular combination of services need to be dynamically aligned to that person’s needs over time that remain particular to that person’s situation and context. This alignment of services has to be run East-West to reflect the fact that its design is inevitably entangled with the way they impact on that person’s experience.
N-S-E-W
This means that leadership has to enable the organisation to hold a dilemma – a tension between securing economies of scale and scope from the way component services are provided, and securing economies of alignment from the way these component services are combined in relation to any one person’s needs. This tension can be represented by the concept of rings and wedges: rings (securing economies of scale and scope) can provide well-defined services that are effectively provided by North-South dominant forms of governance, while wedges (securing economies of alignment) align combinations of services in particular ways that can be effectively provided by East-West dominant forms of governance.
ringsvwedges
So what is wrong with thinking in terms of strategy-and-tactics? The industrial world names as ‘strategy’ what the military calls ‘operations’, while the industrial world names as ‘policy’ what the military calls ‘strategy’.[3] Relating the industrial names to the NSEW model<sup[4],

  • tactics are about using know-how(W) to make the best possible use of capabilities(S),
  • strategy is about developing the most effective know-how(W) for addressing a particular kind of demand(E), and
  • policy is about determining what variety of demands(E) can be addressed within the context of the organisation as a whole(N).

The point about East-West alignment is therefore that strategy has to be determined at the level of the individual wedge and it is the policy frame that creates the conditions at the level of the organisation as a whole within which the ring-wedge dilemmas can be supported effectively.  Strategy has to be held at the edge of the organisation within a unifying policy frame.

The vertical and the horizontal axes of governance
Which brings us to the relation of strategy and hierarchy. The Leadership Qualities Framework proposes that it be applied at four levels of leadership as follows:

  • Front-line Worker – Care Assistants, Care Workers, Volunteers, Students, Graduates, Temporary Ancillary Staff and Practitioners
  • Front-line Leadership – Supervisors, Team Leaders, Shift Leaders
  • Operational Leadership – Registered Managers, Service Managers
  • Strategic Leadership – Senior leaders, Directors and Managers who are responsible for directing and controlling the organisation

The issue here is that these levels are defined hierarchically (in the sense that each one is accountable to the level above it), as opposed to being defined in terms of the tensions held between them, which look different in terms of rings and wedges:
ringsvwedges2

  • Operational Leadership becomes responsible for supply-side leadership of defined services, accountable for the way these services can deliver outcomes in combination with other services[5];
  • Front-Line Leadership becomes responsible for demand-side leadership at the edge of the organisation, accountable for the dynamic alignment of combinations of services appropriate to the situation and context of a demand[6];
  • Front-line workers become responsible for task leadership, ensuring that a particular alignment of services is delivered effectively; and
  • Strategic leadership becomes responsible for asymmetric leadership – leadership which enables the organisation to hold and sustain a dynamic balance between its supply-side and demand-side.[7]

Asymmetric leadership is about enabling dilemmas to be held effectively E-W
The use of hierarchy has to be placed in the context of networked forms of organisation and distributed or collaborative approaches to leadership.[8] Operating within these turbulent complex ecosystems cannot be managed independently of the dynamics in the environment. In the place of hierarchy with its defined outputs as an overarching organising principle therefore comes the containing of dilemmas and a double challenge.[9]

Notes
[1] The difference between North-South and East-West dominant assumptions about governance is introduced here, with comment on the consequences of North-South dominance on the East-West axis here.
[2] A close reading of the detailed content of the framework clearly recognises the issues raised in this blog. The difficulty is that the conceptual scaffolding within which the framework is constructed rests on presumptions of hierarchy. For more on conceptual scaffolding, see Lane, D. A., R. Emilia, et al. (2005). “Ontological uncertainty and innovation.” Journal of Evolutionary Economics 15.
[3] For more on this three-way distinction, see creating value in ecosystems: establishing a 3-level approach to strategy.
[4] Another way of understanding the relations between policy-strategy-tactics is in terms of the dual span of complexity and associated timespan of discretion, complexity and timespan being synchronic and diachronic ways of describing a system. In these terms the actors within a system are subjected to (i.e. constrained in their choices by) structure; and narrative takes place within the context of actors’ lives. Policy is thus structural in its effects, strategy is about asserting and sustaining difference between actors, and tactics are the unfolding of narrative within this context. A forensic process therefore examines the implicit effects of structure on narrative in order to identify how its constraints ‘kill’ certain kinds of narrative i.e. prevent certain kinds of outcome.
diamond4
Jaques’ insistence on discrete levels of discretion can be understood in these terms as relations of subjection.  The figure above is derived from Figure 5 in Christian Dominique and Stephane Flamant, “Strategic Narrative: around a narrative intervention assisted” French Management Review, 2005/6 No. 159, p. 283-302.
[5] This is referred to as the primary task of the service…
[6] … while this is referred to as the primary risk faced by the particular relation to demand. See quality as the driver at the edge for more about these two axes.
[7] This creates challenges for the organisation, both enabling its client-customers to be related to one-by-one by authorising leadership at the edge, and also by creating appropriately agile supporting platforms and infrastructures that make this sustainable. This kind of complex organisation I refer to as quantum organisation.
[8] For more on the architectural implications of quantum organisation, see architectures that integrate differentiated behaviors
[9] For more on the different nature of complex environments, see the drivers of organisational scale.

The value of establishing the economics of alignment

Wednesday, September 14th, 2011

by Andrew Harrison

How can we convincingly show the value of aligning services to the needs of the individual service user?

  • It is a truism at the moment that outcomes can be improved for vulnerable service users facing complex problems, if multiple service providers can align their offers with each other.  But it is also a truism that if alignment involves managing a more complex collaboration between different service providers, then the costs of alignment are going to go up, irrespective of the improved outcomes.

How is this trade-off between cost and benefit to be managed? And in whose interests is it to provide this collaboration?

  • Consider the vulnerable individual facing multiple deprivations for whom local government has a duty of care.  We can begin to answer these questions if we look at the costs of that individual’s ‘through-life’ service experience, and consider where the costs (of a lack of collaboration) fall over time by service providers. By modeling the whole scope of the ‘through-life’ service, we can demonstrate that the ‘through-life’ costs are increased, with the increased direct costs falling on local government, while the increased indirect costs fall on both the individual and other public services.

As things stand, no-one is managing this trade-off, it being in no-one’s direct interests to manage it: reducing through-life costs is not a valid basis for increasing this year’s budgets to include costs of alignment.  So on what basis could increased costs of managing alignment be justified in terms of their benefit in reducing ‘through-life’ direct and indirect costs?

  • This would need to be more than the usual cost benefit analysis.  We would need to assess the direct and indirect value to both service users and service providers within the context of the larger ecosystem within which they were interacting with each other over time. We would need to establish that there were some contexts in which managing the economics of alignment could/might provide real traction on ‘through-life’ costs, and by implication where it could/might not – the economics of alignment within the context of the way the larger ecosystem performed being a deciding factor.

So, by establishing the economics of alignment, we could make the case for alignment of services in terms of their quantifiable impact on costs and benefits, as well as appealing to the value of improving outcomes.