Leading organisations without boundaries: quantum organisation and the work of making meaning

by Philip Boxer BSc MBA PhD

The following is the abstract to a paper accepted for presentation at the 13th Annual Meeting of the International Society for the Psychoanalytic Study of Organisations (ISPSO) at Oxford UK, July 2013:

Doing many different things at the same time
What happens when an organisation has to be many different things at the same time in how it relates to its clients? Digitalisation and the internet lead every client to expect more dynamic interaction with their particular situation, context and timing. Familiar examples from the perspective of the client are healthcare, financial services, air travel, mobile apps and the home delivery of food. Organisations that are interacting dynamically in different ways with each of their individual clients are best understood as being without boundaries. This paper uses a ‘quantum’ metaphor to think about this, considering each individual client interaction as a ‘quantum’. Quantum theory argues that the ‘classical’ reality of which we are conscious is quite different to the underlying reality of distributions of quantum states [1, 2]. This quantum metaphor provides a way of thinking about something very similar going on in relation to the underlying reality of organisations. The work of ‘quantum organisation’ by these organisations becomes that of making meaning within the client’s particular situation, context and timing. The paper uses examples from healthcare to elaborate on this use of the quantum metaphor, and draws conclusions about the leadership needed by these organisations without boundaries.

When Jack Welch asked for a ‘boundaryless organization’, General Electric didn’t get rid of its boundaries [3]. It rearranged its vertical, horizontal, industry and geographic boundaries so that it could better thrive, and shifted its focus to creating structured networks [4, 5]. Structured networks are a response to the need to address value creation at the level of the business ecosystem [6, 7]. This shift is apparent in manufacturing [8], and it is even more apparent in healthcare [9]. Organisations that interact dynamically with their clients are presented with demands that are multi-sided, in the sense that the context of the demand becomes at least as important as the demand itself [10, 11]. Thus, it may be clear that you need a heart transplant, but your healthcare has to be at least as concerned with the context of your body and your lifestyle if the transplant is to be effective. To create value for the multi-sided demands of patients within a healthcare ecosystem, a healthcare clinic must align a unique care pathway to manage the chronic symptoms of each of its patients [12]. The organisation of such a clinic is not easily understood as a socio-technical open system with its boundary conditions “directly dependent on its material means and resources for its outputs” [13]. How then is the work of such an organisation to be understood, if not in terms of how it manages its boundaries?

Distinguishing the ‘operative’ from the ‘regulative’
Emery and Trist argued that while open-systems models enabled material exchange processes to be dealt with between the organization and elements in its environment, “they did not deal with those processes in the environment itself which were the determining conditions of the exchanges”. “Those processes were themselves often incommensurate with the organisation’s internal and exchange processes” [14] p30. This led Trist to restrict the term “socio-technical” to ‘operative’ organizations, distinguishing them from ‘regulative’ organizations. Regulative organizations are “concerned directly with the psychosocial ends of their members and with instilling and maintaining or changing cultural values and norms, the power and the position of interest groups, or the social structure itself” [13]. Trist later called these regulative organisations ‘referent’ because they were defined by their relation to the ecosystem as a whole [15], and by their boundary conditions. These regulative or referent organisations were instead focussed on aligning the behaviour of an ecosystem to particular interests, in a way that parallels the work of the healthcare clinic to align care pathways to the interests of its patients. Accepting this difference means losing a direct identification between a physical system and the system of meaning of which it is a realisation. This forces us to abandon the direct identification of boundary with container [16] and re-examine the concept of containing.

Implications
In place of this direct identification, the paper argues that the work of regulative or referent organisations has to be understood as one of making meaning rather than managing across a boundary. This work involves a container-contained relation that returns meaning to the other (the patient) with respect to what the other experiences as ‘bizarre’ or anxiety-inducing (the symptoms). Containment involves making sense through a work of transformation within the context of a ‘vertex’, or a way of organising meaning [17]. Two conditions follow from this for the healthcare clinic to be effective in organising the care of its patients:

  1.   The ecosystem must act as a supporting infrastructure that is appropriately ‘agile’. This means that it can simultaneously support a wide variety of alignments of care services[18]. In this sense, the ecosystem must be able to sustain many different states of alignment at the same time, each of which is a ‘quantum’ state. For the patient, this quantum state is the singular behaviour of the ecosystem, while for the ecosystem, it is one of many simultaneous states it must be able to support.
  2. Its leadership must make it in the interests of its clinicians to contain the patient’s particular experience within its local multi-sided context, and must make it possible to form effective workgroup collaborations able to align appropriate care pathways [19, 20]. This process of containing the patient’s experience of his or her symptoms becomes the process by which a singular state of the ecosystem is aligned to the local environment of the patient in the form of a unique care pathway. The paper argues that the regulative or referent role of the clinic makes it an organisation without boundaries; the processes by which it is enabled to create agility and alignment are better described in terms of quantum organisation. The paper explores these two conditions characterising quantum organisation using examples from healthcare. It draws conclusions on the leadership demanded of such an organisation, and on its psychoanalytic implications.

 

References
1. Rosenblum, B. and F. Kuttner, Quantum Enigma: physics encounters consciousness. 2006: Oxford University Press.
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4. Goold, M. and A. Campbell, Designing Effective Organizations: How to Create Structured Networks. 2002, London: Jossey-Bass.
5. Provan, K.G. and P. Kenis, Modes of Network Governance: Structure, Management, and Effectiveness. Journal of Public Administration Research and Theory, 2007. 18: p. 229-252.
6. Trist, E., A Concept of Organizational Ecology. Australian Journal of Management, 1977. 2(2): p. 161-176.
7. Porter, M.E. and M.R. Kramer, Creating Shared Value: How to reinvent capitalism – and unleash a wave of innovation and growth. Harvard Business Review, 2011(January-February).
8. Iansiti, M. and R. Levien, The Keystone Advantage: What the New Dynamics of Business Ecosystems Mean for Strategy, Innovation, and Sustainability. 2004, Boston: Harvard Business School Press.
9. Porter, M.E. and E.O. Teisberg, Redefiining Health Care: Creating Value-based Competition on Results. 2006, Boston: Harvard Business School Press.
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11. Evans, D.S., Some Empirical Aspects of Multi-Sided Platform Industries. Review of Network Economics, 2003. 2(3).
12. Rouse, W.B., Health Care as a Complex Adaptive System: Implications for Design and Management. The Bridge, 2008. 38(1): p. 17-25.
13. Fichtelberg, J., H. Murray, and B. Trist, Social Engagement of Social Science: A Tavistock Anthology: The Socio-Technical Perspective. 1997: University of Pennsylvania Press.
14. Emery, F.E. and E. Trist, The Causal Texture of Organizational Environments. Human Relations, 1965. 18: p. 21-32.
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16. Palmer, B., The Tavistock paradigm: Inside, outside and beyond, in Organisations, Anxieties and Defences: Towards a Psychoanalytic Social Psychology, R.D. Hinshelwood and M. Chiesa, Editors. 2002, Whurr: London. p. 158-182.
17. Bion, W.R., Learning from Experience. 1962, London: Heinemann.
18. Boxer, P., et al. Systems-of-Systems Engineering and the Pragmatics of Demand. in Second International Systems Conference. 2008. Montreal, Que.: IEEE.
19. Bion, W.R., Attention and Interpretation. 1970, London: Tavistock.
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Competing within ecosystems: sustaining ways of creating indirect value

by Philip Boxer PhD

What follows is the abstract and presentation given as an invited talk at the School of Systems & Enterprises, Stevens Institute of Technology:

The challenge
Organisations driven to avoid losses and improve gains must ultimately achieve new levels of value for their customers if they are to survive in the long run. This in turn means transforming the way they create value. As the competitive pursuit of value moves them further and further away from products towards services [1], value becomes increasingly specific to the customer’s context-of-use, and dependent on the organisation’s capacity to learn from those contexts [2]. The complexity involved in delivering this value is organised, and not just emergent from amongst the interactions between multiple organisations and stakeholders [3, 4]. To organise complexity, the forms of agency demanded of actors present them with unprecedented challenges, not only in defining relevant relationships between systems and environments, but also in defining the architectures organising the complexity [5, 6].

If we compare the approach to value creation in healthcare to that in manufacturing, we find the focus of effort moves beyond managing the supply-side complexity of supply chains [7]. The clinician has to manage the demand-side complexity of aligning services to the patient’s condition within a healthcare system that is a complex adaptive system with no overseer [8]. How is complexity to be ‘organised’ within such an environment? What forms of agency does this ‘organising’ demand of actors? And what approach to creating value does this imply?

A closer examination of the assumptions making healthcare delivery different to manufacturing has revealed eight differences [9]. From these eight (in single quotes below), two main challenges can be drawn:

    1. In considering ‘the expectations of customers’, there always remains an unknowable aspect of the customer’s need. It is experienced by the customer as a value deficit, and only becomes apparent over time as new forms of demand. The tempo at which these new forms of demand emerge is much faster in healthcare than the tempo at which manufacturing has classically designed new ways of delivering value.
    2. Bridging between the supplier’s design tempo and the customer’s demand tempo are the clinicians’ processes of alignment. The tempo of these processes link suppliers’ products and services together in ways that challenge the traditional uncoupling of supply from demand. They entangle the way any individual supplier creates value with others’ ways of creating value. This leads to the emergence of complex adaptive behaviours by the larger system because of the circular paths of causation they set up. This entanglement puts in jeopardy the classical supplier’s expectations concerning their ability to be certain with respect to ‘their knowledge of their future’, ‘the traceability between their performance and the result for the customer’, ‘the longevity of the production process’, ‘the ability to buffer the production process against variability in levels of demand’, ‘the connection between cost of production and revenue from the customer’, ‘the variability in their work processes’, and ‘the costs of production’.

How are these challenges to be taken up within a service environment such as healthcare?

Responding to the challenge
The presentation reports on research into the way suppliers use platform architectures to capture indirect value within business ecosystems [10]. Examples are used to illustrate how the concepts of value deficit and entanglement lead to a different approach to understanding the role of a supplier within an ecosystem. This difference is based on considering the relationships that suppliers have to indirect forms of demand, and the organisational processes by which suppliers’ products and services can be aligned with those of other suppliers to meet those demands. These indirect forms of demand render customers’ demands multi-sided [11], and reflect indirect forms of value.

The costs associated with these indirect forms of value include the costs of aligning suppliers’ products and services to the customer’s demand, and fall ultimately on the customer. Driven by their value deficits, the accelerating tempo at which customers make demands increases these costs of aligning products and services. The opportunity created for the supplier by multi-sided demands therefore comes from capturing some part of the economies in the costs-of-alignment that it can create for the customer. This in turn means that the supplier must adopt a platform architecture capable of capturing indirect value [12, 13].

The reported research uses a framework that (i) describes the variety of indirect demands, (ii) the organisation of the alignment processes, and (iii) the agility of the supporting business platforms, where agility is defined as the variety of indirect demands a platform can support at a given tempo. This framework is ‘triply-articulated’ because of the need to articulate relationships among three types of sub-model: (i) the organisations of value implicit in indirect customers’ demands, (ii) the social entities and supporting systems managing the supply and alignment of products and services, and (iii) the socio-technical systems generating these products and services. The framework enables the derivation of a layered analysis of the risks to which the capture of indirect value exposes a supplier, and provides the basis for an economic valuation of changes in the agility of platform architectures.

Implications of the research
The presentation discusses the nature of the complexity that makes this way of thinking about the relationships between suppliers and customers ‘non-classical’. Thus entanglement means moving from a one-sided to a multi-sided understanding of markets, which changes the unit of analysis from the supplier to the ecosystem with which the supplier is interacting. Analysing market behaviours in a way that is driven by a tempo of demand organised by customers’ value deficits means that there are many different local environments within which market behaviours are expected to be aligned.

A quantum metaphor will be used to cast light on what makes this way of thinking ‘non-classical’. The varieties of simultaneous behaviours which the business platform must be able to support are a superposed set of states. Each customer’s local environment collapses a singular local state from this platform that need not be correlated with states experienced in other customers’ environments. This collapse takes place through the local coherence created by alignment processes organised by shared meaning established within the customer’s local environment.

Two implications can be drawn from this way of thinking: first, agile platforms have to be engineered to support this level of variety in simultaneous complex behaviours; and second, forms of agency have to be developed within an organisation through which many forms of simultaneous local coherence may be created and sustained cost-effectively at its edges.

References
1. Prahalad, C.K. and V. Ramaswamy, The Future of Competition: Co-Creating Unique Value with Customers. 2004, Boston: Harvard Business School Press.
2. Rouse, W.B., A Theory of Enterprise Transformation. Systems Engineering, 2005. 8(4): p. 279-295.
3. Carlson, J.M. and J. Doyle. Complexity and robustness. in Proceedings of the National Academy of Science. 2002.
4. Doyle, J.C., et al., The “robust yet fragile” nature of the Internet. Proc natl Acad Sci USA 102(41), 2005: p. 14497-14502.
5. Rouse, W.B., Complex Engineered, Organizational and Natural Systems. Systems Engineering, 2007. 10(3): p. 260-271.
6. Barandiaran, X., E. Di Paolo, and M. Rohde, Defining Agency: individuality, normativity, asymmetry and spatio-temporality in action. Journal of Adaptive Behavior (Rohde, M. & Ikegami, T, (Eds) Special Issue on Agency), 2009: p. 1-13. This reference points to the singular and non-rational nature of the agent (“non-rati0nal” in the sense of not being governed by ‘rules’) .
7. Porter, M.E. and M.R. Kramer, Creating Shared Value: How to reinvent capitalism – and unleash a wave of innovation and growth. Harvard Business Review, 2011(January-February).
8. Rouse, W.B., Health Care as a Complex Adaptive System: Implications for Design and Management. The Bridge, 2008. 38(1): p. 17-25.
9. Rouse, W.B., et al. Models of Complex Enterprise Networks. in Second International Symposium on Engineering Systems. 2009. MIT CAmbridge, Massachusetts.
10. Boxer, P.J., Evaluating Platform Architectures within Ecosystems: modeling the relation to indirect value, in School of Engineering and Information Sciences. 2012, Middlesex University.
11. Evans, D.S., Some Empirical Aspects of Multi-Sided Platform Industries. Review of Network Economics, 2003. 2(3).
12. Gawer, A. and M.A. Cusumano, Platform Leadership: How Intel, Microsoft, and Cisco Drive Industry Innovation. 2002, Boston: Harvard Business School Press.
13. Evans, D.S., A. Hagiu, and R. Schmalensee, Invisible Engines: How Software Platforms Drive Innovation and Transform Industries. 2006, Cambridge: MIT.