by Philip Boxer BSc MBA PhD
In distinguishing emergence from hierarchy, the stratified relation of novel emergence was described of a product produced from underlying component technologies. This relation was linked to the first asymmetric dilemma distinguishing technology from product. In this posting, a second asymmetric dilemma is identified distinguishing the supplying business from the customer solution offered to the market.
The ‘outputs’ of the systems-of-interest in Matrix 1B – products and services – may be sold directly into markets, or they may form the constituent parts of value chains in Matrix 2. The properties of these value chains constitute minimal macrostates that, when organised by a supply-side organisation of chains in Matrix 3B, result in the properties of minimal macrostates supplying product/services out of Matrix 3. Matrix 3 is thus representing the way matrix 3b brings together the outputs of chains in Matrix 2 for supply to particular product/service market niches.
Continuing again with the Bob Martin example distinguishing emergence from hierarchy, the products and services from multiple forms of novel emergence described in Matrices o-1-1B were brought together by value chains in Matrix 2 and offered together to customers from matrix 3 as product/services concerned with remedies and prevention:
Bob Martin’s innovative advertising campaigns from the 1930’s onwards led to the Bob Martin range quickly expanding from the original conditioning powders to remedies and preventative healthcare products for a wide range of canine and feline ills. Leading brands such as Pestroy were originally launched as far back as 1936.
Novel emergence of the first and second kinds
Key here are stratified novel emergences, the products and services out of Matrix 0-1-1B being embedded in the product/services out of Matrix 2-3-3B. These two kinds of novel emergence relate to two aspects of supply-side business: novel emergence of the first kind effecting changes to the physical form of things in creating new kinds of product or service; and novel emergence of the second kind effecting changes in appearance and/or location in reaching different markets :
- matrix 0-1-1b generating economies of scale: The ability to create additional output from an existing capability, reducing average unit cost. (i.e. producing more output from the same technology infrastructure). The focus here is on the ability to replicate some particular form of novel emergence. When supplied to a customer, this is defined as an r-type value proposition. With Bob Martin’s, an r-type proposition would be the ability to make the conditioning powders described in distinguishing novel emergence from levels of hierarchy
- matrix 2-3-3b generating economies of scope: The ability of a business to extend the scope of its operations across different markets reducing average operating costs. (i.e. covering more markets with the same business process infrastructure). The novel emergence here is in the ability to deliver some particular form of product/service capability through customization where and when it is needed. Delivered in the form demanded by the customer, it constitutes a c-type value proposition. With Bob Martin’s, a c-type proposition would be the ability to deliver customized ranges of remedies and preventative healthcare products to customers.
Imposing 3rd order sovereignty through supply-side regulation
Referring back to the different orders of behavioral closure being described here, however, even though the figure is representing stratified novel emergence, what are being represented are still only 1st order systems (Matrices 0, 1, 2 and 3) and 2nd order organisation (matrices 1B and 3B). In order to account for the 3rd order sovereignty, however, we need to add a further matrix to which Matrices 1B and 3B can themselves be made subject. This Matrix MB represents the forms of supply-side regulation through which sovereign owners can impose vertical accountability on the 2nd order organisation in Matrices 1B and 3B:
Taken together, these matrices will describe 1st, 2nd and 3rd order behavioral closures imposed on the supply of products, services and product/services to their chosen markets. The amount of detail in the matrices will reflect the resolutions chosen to distinguish maximal microstates and minimal macrostates defined in distinguishing novel emergence from levels of hierarchy.
 These are the economies of scale and scope, distinguished from economies of alignment described by matrix 4-5-5b with respect to customer situations in matrix 6-7-7b (defining demand situations and effects ladders).
 r-type and c-type value propositions are two of the four kinds of value proposition defined in rcKP – value propositions at the edge.