Category Archives: Stratification

The layering of the relationship between supply and asymmetric forms of demand.

On being edge-driven: outside is inside

by Philip Boxer BSc MBA PhD

We have seen in distinguishing task systems, sentient organisation and sovereignty that an enterprise with supply-side sovereignty has no difficulty establishing its boundary or perimeter as an ‘open system’.  Furthermore, its definition of primary task is derived from the way it asserts sovereignty over its behaviors.  But what does it mean to say that an enterprise has multiple primary tasks?  In terms of business platforms and K-type value propositions, it means dealing with client-customers one-by-one, or at least primary task by primary task, ‘primary task’ being specific to customer situation rather than to the enterprise as a whole.  This is the challenge facing an enterprise when faced with the need to innovate or to compete in turbulent highly-connected environments in which it must surrender sovereignty in order to be able to respond one-by-one to the demands it encounters at its edges.

How is an edge-driven enterprise to be defined?

How, then, is an enterprise to be defined, if it is not to be in terms of its primary task and its boundary or perimeter?  To answer this question, we need to return to this graphic from the previous posting, and to consider the nature of the tension between the vertical (hierarchically imposed) accountabilities imposed on individual enterprises within an ecosystem, and the horizontal linkages (i.e. accountabilities to task outcome, ultimately to the client) dominating the ways in which K-type value propositions are aligned to customer situations:
pan6
The relation of novel emergences of macrostates of the first and second kind (products & services and product/services), which define the vertical accountabilities, can be thought of in terms of their ‘height’ above a base level of maximal microstates, shown on the left below.[1] In contrast the microstates of customer situations can be thought of as at a depth ‘below’ a surface of novel emergences of macrostates of the fourth kind (i.e. demand situations), shown on the right below:

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Novel emergences of the third kind, however, aligning multiple supply-side product/services via effects ladders to demand situations, compose maximal microstates at depth on the right to minimal macrostates at height on the left:

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The outside is inside
These alignments compose supply-side sovereignty with demand-side situations within an ecosystem of suppliers, value propositions and client-customers which have the topology of the Klein bottle:[2]

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The key characteristic of this topology is that it is a one-sided ‘non-orientable’ surface.  To travel on this surface and return to a point of origin can flip the traveler upside down – there is no inside distinct from an outside, since inside is outside and vice versa:
150px-Surface_of_Klein_bottle_with_traced_line.svg

For an enterprise to engage in edge-driven demand-side alignment, therefore, implies that the enterprise can no longer define itself by a relation between an inside and an outside.  Rather it must do so by the way it takes up the causes of client-customers’ demand situations as its own.[3] These causes involve forming networked interventions that dynamically orchestrate and align supply-side products and services to reduce client-customers’ value deficits.

Asymmetric leadership
Value for the enterprise comes to be defined by the value created through reducing the client-customer’s value deficit.[4] This creates a new kind of challenge for leadership. It requires that the north-south bias towards sovereignty be replaced by an east-west dominant system of governance, and it requires a double alignment of know-how that enables quality to be driven from the edge through triple-loop processes of learning.

Notes
[1] In evaluating platform architectures within ecosystems, in which the supplier’s relation to indirect value is modeled, this ‘height’ relation is separated out into a ‘behavior articulation’ of novel emergences of the first kind and a ‘constraint articulation’ of novel emergences of the second kind. The ‘value articulation’ captures novel emergences of the fourth kind, while the relation between the three articulations capture novel emergences of the third kind.
[2] “In mathematics, the Klein bottle is an example of a non-orientable surface; it is a two-dimensional manifold against which a system for determining a normal vector cannot be consistently defined. Informally, it is a one-sided surface which, if traveled upon, could be followed back to the point of origin while flipping the traveler upside down. Other related non-orientable objects include the Möbius strip and the real projective plane. Whereas a Möbius strip is a surface with boundary, a Klein bottle has no boundary.  For comparison, a sphere is an orientable surface with no boundary.” (from Wikipedia)
[3] ‘Cause’ here refers to Aristotelian cause, in particular the final cause. This is the other side of the third of the dilemmas of ignorance, i.e. affiliation versus alliance.
[4] This concept of value is that which defines multi-sidedness – the value is more in the impact on the demand-side network of relations than on the supply-side networks of production. (This is the revolution currently taking place in the economic logic of societies subject to digitalisation and globalisation.)

Stratifying relations of novel emergence subject to supply-side sovereignty: r-type and c-type propositions

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.
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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 [1]:

  • 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.[2] 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.[2] 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:
pan3
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.

Notes
[1] 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).
[2] r-type and c-type value propositions are two of the four kinds of value proposition defined in rcKP – value propositions at the edge.

On stratification

by Philip Boxer PhD

Why the interest in stratification?
A colleague, Simon Western, referred me recently to Actor-Network Theory and the work of Bruno Latour in the context of a conversation about the behaviour of health care networks.

  • His point was that the value of this approach was in the way it focused on ‘following the interactions’, including in a network anything that “modifies a state of affairs by making a difference”.[1] Physical objects that constrain or enable interactions are thus just as important in defining a network as are human actors.  His observation was that standardisation, while restrictive if it became overly prescriptive and bureaucratic, could be liberating, “underpinning all successful business networks”.  Just enough standardisation was the key, for without minimal standardised interfaces, nothing happened.  His examples were:
    • Ryan air- the biggest airline in Europe, grown from nothing on the basis of standardisation creating behaviour change from all stakeholders, to grow a huge network of passengers and air travel;
    • McDonalds- standardised processes, fueled by entrepreneur franchise ownership + fantastic supply chain networks
    • Facebook and Twitter – phenomenal growth through simple standardised frames for individuals to fill with their own personalised content
  • I commented that I thought standardisation per se was insufficient in understanding what made networks effective, the issue being to understand their stratification.  Thus standardisation operated within some of the strata of a stratification and then in different ways depending on the nature of the relationship to demand that the network as a whole was mobilising.[2]
  • His response was that my use of strata and layers spoke more of an engineering project, geology or construction site rather than the fluid complexity of networks. Following Latour’s understanding of networks, his point was that “standardisation and structure are actants within networks, but not the architecture of them.”

So here we were with what looked like a disagreement – follow the networks of interactions and the worlds they construct versus how are the worlds of networks built? In what follows, I explore the ways in which there is no disagreement between these positions.

Follow the networks of interactions and the worlds they construct
In relation to what does a network form?  A useful place to start here is the social object.  An example of a social object would be the condition of a patient[3], but the condition encountered as an event – some singular moment in which there is something about the condition that disrupts existing understandings and/or irrupts in a way that insistes on being attended to [4].  A social object represents a particular affective relation to a situation in which some aspect of the situation itself is experienced as complex, question-generating, endlessly unfolding and incomplete.  The social object is to be distinguished from a ‘real’ object, being like a flag around which people may gather allied in relation to the situation that the flag signifies.[5]  Its efficacy in serving as a social object depended on there being a fit between the nature of its incompleteness and the individuals’ own experience of lack – an identification between some aspect of an individuals’ unconscious lack and the imaginary form given to it by the social object.[6] This ‘gathering around’ takes the form of a network of interactions that includes not only people as actants, but tools, technologies, ways-of-thinking and anything else that enables a current state of affairs to be modified by the differences it makes in the interactions. In the case of our patient, it is hopefully a gathering around the cause of addressing his or her condition.

Latour introduced the notion of punctualisation as a way of thinking about how actants are related to as ‘black boxes’[7]:

the way scientific and technical work is made invisible by its own success. When a machine runs efficiently, when a matter of fact is settled, one need focus only on its inputs and outputs and not on its internal complexity. Thus, paradoxically, the more science and technology succeed, the more opaque and obscure they become.

The definition of these black boxes ‘punctualise’ the actants between which interactions are taking place, and when there is some breakdown in the interactions, such black boxes are ‘depunctualised’ in the sense of being opened up themselves as a network. It is this relationship of embeddedness of networks as elements of networks that is described as a ‘stratification’.

Latour further distinguished a ‘real’ object “not by virtue of being tiny and fundamental, but by virtue of having an intrinsic reality that is not reducible to its sub-components or exhausted by its functional effects on other things.”[8] This is consistent with a view of all objects and systems as forms of novel emergence, even though it is convenient for many of such objects to be considered ‘objective’ in the sense of their existence being inter-subjectively agreed as independent of the observer .[9]

So now we have networks, each one formed by interacting actants allied by a relation to a social object the relation to which operates as the (final) cause of the network.  Such networks are stratified by the ways in which they are constituted in relation to embedded networks that are ignored so long as the network as a whole performs as expected in relation to its cause.

How are the worlds of networks built?
The ambiguity in this heading is intended.  We are interested both in finding ways of describing the way networks are punctualised into strata, and also interested in how new forms of punctualisation become possible in pursuit of new kinds of effect.  Latour identified a second type of  ‘intentional’ object that “has no interior of its own, but exists purely on the interior of some other object”.[8] The descriptions of interacting actants from which stratified networks are constructed have this intentional nature.[10] Looked at like this, it is possible to see why Simon was concerned.  In terms of the following diagram, by seeking to identify the ways in which structures might shape the ways in which actants interacted with each other, we would also be creating new understanding of the actants within the network itself. [11] How so?

actantsSuch structure structures an actant’s way of understanding his or her interactions with the network. The actant is subject to this structuring, over-determining the way that they attribute ontic status to their constructions.[12] Using this approach, three kinds of depunctualisation can be articulated in the ways in which these structuring structures structure the way actants’ constructions are made. These depunctualisations are particular to the actant’s subjection to the structuring structure that they embody.

These depunctualisations are referred to as asymmetries, producing a stratification of six types of embeddedness.  When this stratification is projected into the actant’s constructions, they articulate the embeddedness of underlying technologies in relation to the social objects of actants embodying demands within their contexts-of-use[13]:

  • The first asymmetry, separating a product/service from the technology embedded in it.
  • The second asymmetry, separating a solution delivered to a customer from the business organisation embedded in its processes of delivery.
  • The third asymmetry, separating the customer’s experience of the solution within their context-of-use from the customer’s demand.

When the delivery of a product/service, solution or experience is by a network that can be identified with a single organisation, its embedded behaviors describe a theory-in-use that may or may not correspond to what members of the organisation say they are doing.[14] When the relationships between these embedded behaviors become fixed by supply-side interests, they are fixed by an accountability hierarchy. [15]  The delivery of a particular customer’s experience is more likely, however, to be identified with a number of organisations operating as a network, describable also as a ‘system of systems’. [16] For such networks to function effectively, there has to be sufficient agility in the relationships between its embedded systems for them to be capable of being aligned dynamically in response to accelerating tempos in the emergence of new forms of demand. [17]

No disagreement?
Why should we not want to think about the ways in which networking is made impossible by the ways in which it is not possible to punctualise? The engineer in me wants to find ways of overcoming such impossibilities. But my colleague is right in pointing out that what always comes first must be the desire motivating the formation of the network.

Notes
[1] Bruno Latour (2005) Reassembling the Social: An Introduction to Actor-Network-Theory, Oxford University Press. p71
[2] Standardisation can be applied both to the way supply is coordinated and also to the way demand is defined in relation to the client/customer’s context-of-use. These two forms of standardisation have to be managed over a governance cycle. The examples of Ryan Air, McDonalds, Twitter and Facebook belong to particualr parts of that cycle in which there is competition on ‘customisation’ and/or ‘cost’.
[3] Accountable know-how in relation to the patient’s particular pathway is about much more than cost. The process of healthcare must be (and must be expected to be) a collaboration around a social object (the patient’s experience) in the full sense of the word. See Learning about Clinical Commissioning from the USA
[4] ‘Event’ is being used here “the problem of irregularity and indetermination, of the unforeseen and the unforseeable, of the eventually subversive and the disruptive.” See Parker, I. and D. Pavon-Cuellar (2014). Lacan, Discourse, Event: New Psychoanalytic Approaches to Textual Indeterminacy. New York, Routledge.
[5] This understanding of a social object is written about more fully in The social object – distinguishing Kleinian, ‘real’ and Lacanian objects. In explaining the basis of these social objects, Karin argued that the ‘real’ object came to serve as a social object to the extent that it supported a being-in-relation, mutuality or reciprocity between individuals on the basis of enabling temporal synchronisation or on the basis of establishing a shared temporal immediacy – individuals able to collaborate around a shared task, or individuals able to be present to each other in some situation (in contrast to the more familiar spatial synchronisation and immediacy of a face-to-face meeting). Furthermore, to the extent that this mutuality was experienced, it was experienced as a ‘We’-ness embedding the individual in a larger context, but derived from the nature of the shared situation rather than from an institutional affiliation.
[6] This understanding of the relation to ‘lack’ is developed further in a conversation on the refusal of (symbolic) castration. It is to be understood not in the sense of something unconsciously known but not yet brought to consciousness (an interpretive unconscious), but as something radically unknowable in relation to the unconscious per se – a real unconscious (in the sense of the Lacanian Real, not in the sense of ‘real’ reality). See Soler, C. (2014[2009]). Lacan – The Unconscious Reinvented. London, Karnac.
[7] Taken from Bruno Latour (1999) Pandora’s hope: essays on the reality of science studies. Cambridge, MA. Harvard University Press.
[8] Quoted from Harman, G. (2009). Prince of Networks: Bruno Latour and Metaphysics (Anamnesis). Melbourne, re.press. This is teh definition of novel emergence.  See later posting distinguishing novel emergence from hierarchy.
[9] This leads to an understanding of embedded strata of novel emergence as an effect of the interest and capabilities of the observer rather than an inherent property of that-which-is-observed. See Ryan, A. (September 2006). “Emergence is coupled to scope, not level.” Complexity – Complex Systems Engineering 13(2): 67-77. See the following series of postings.
[10] The ‘intentional’ nature of these objects may be understood as themselves networks that, in addition to their synchronic characteristics as a network, also have diachronic characteristics to do with the tempo at which they exhibit their behaviours, corresponding to a timespan of discretion. See Timespan of discretion and the double alignment of ‘know-how’.  For more on the significance of tempo, see [17] below.
[11] Category theory is one medium in which the relationships between these actants may be thought about. See A Categorial expression of Demand Asymmetry.
[12] The nature of such ontic assumptions are described in Describing what is going on (wigo)
The Oxford English Dictonary defined ‘ontic’ as follows: “Of or pertaining to knowledge of the existence or structure of being in a given entity.” Thus any ‘realist’ assertion of ontology is mediated by the ontic assumptions being made by the observer-entity making the assertion i.e. an ontology is built by an entity making ontic assumptions. The 4-quadrant model gives us a way of thinking about what kind of ontic assumptions the entity is making. The concept of the strategy ceiling further elaborates on the way these ontic assumptions are held by an entity in the form of stratified relations between the enterprise and demand.
[13] For more on these layers see 3 Asymmetries.
[14] These behaviors relate to each other in the form of a stratification of nested contexts which places the supply-side behaviors of the enterprise in relation to the demand-side contexts with which it interacts. Where such a relationship does not exist, we may say that the strategy ceiling of the enterprise prevents it. See The strategy ceiling.
[15] East-West dominance means having a business agile enough to support the particular relationships of embeddedness needed to sustain a relationship to the distinct forms of demand arising at its edges. Under these conditions, the 6-layer stratification is no longer usefully thought of as a hierarchy, but rather as a particular structuring of the alignment between supply and demand. Note that it is only by including the third asymmetry that the stratification can no longer be thought of as hierarchy. See When is a stratification not a universal hierarchy?
[16] Such networks involve distributed collaboration in a complex system-of-system multi-enterprise context over which there is no single source of control. See Enterprise Architecture for Complex System-of-Systems Contexts.
[17] The tempo at which an enterprise creates new uses for its systems is different from that of its acquisition or systems development processes. For example, the military continues to confront the issue of how fielded systems can support the agility needed by its deployed forces. This problem of diverging tempos applies to a variety of large-scale, software-reliant enterprises-such as those found in healthcare and digital communications. See Building Organizational Agility into Large-Scale Software-Reliant Environments.

Describing what is going on (wigo)

by Philip Boxer BSc MBA PhD
The case of the Homeless Charity uses a 4-quadrant/4-colour model for describing the ‘being’ of the enterprise.  What does this mean?

The behaviour of the enterprise reveals assumptions that are built into its structures and processes – ‘theories-in-use’.  What we are doing with this model is trying to characterise the nature of these assumptions.1

  • First come assumptions about ‘primary task’.  On the supply-side, these are assumptions about the way the work of the enterprise needs to be organised if it is to be viable. In this example, these are assumptions about the way it is possible to help people who are street homeless to bear their own histories.  On the demand-side, these are assumptions about what particular forms of demand need to be asserted if the needs arising in the overall situation are to be satisfied. In this example, these are the assumptions that the street-homeless person is making about what will enable them to cope with their particular history.
  • Next come assumptions about ‘primary risk‘.  These are assumptions about the relationship dynamics the enterprise needs to sustain between the supply-side and the demand-side if it is to sustain itself over time.  In this example, these are assumptions about what can be done for the street homeless within the funding and time constraints created by the way the enterprise works.
  • Finally come assumptions about the ‘domain of relevance’.  These are the ontic2 assumptions the enterprise is making in the way it engages in what it is doing – assumptions built into what information it tracks, how it uses its resources, how it accounts for what it is doing, and so on.

The 4-quadrants/4-colours are therefore ways of speaking about the effects of these assumptions about task, risk and relevance on the way the enterprise ‘is’. These form the backcloth against which any attempt to ‘intervene’ on the enterprise will be played out.3

Footnote
[1] An ‘espoused theory’ emerges along the speaking-and-listening axis described in The ‘Plus-One’ exercise.  What we are trying to describe with the 4-quadrants/4-colours is the ‘theory-in-use’ implicit in the ‘wigo’ behavior of the organisation that  is being spoken about.  This wigo will itself be being organised by the (more or less) implicit assumptions built into its structures, the relationship between which is represented by the ‘other’ dotted line axis.
[2] The Oxford English Dictonary defined ‘ontic’ as follows: “Of or pertaining to knowledge of the existence or structure of being in a given entity.”  Thus ontical inquiry is concerned with the ontology of particular entities.  Thus any ‘realist’ assertion of ontology is mediated by the ontic assumptions being made by the observer-entity making the assertion i.e. an ontology is built by an entity making ontic assumptions.  The 4-quadrant model gives us a way of thinking about what kind of ontic assumptions the entity is making. (For an example at another scale, see ‘why critical systems need help to evolve‘).  The concept of the strategy ceiling further elaborates on the way these ontic assumptions are held by an entity in the form of stratified relations between the enterprise and demand.
[3] In the case of the Homeless Charity, the learning cycle it is capable of supporting is defined by the author’s relationship to the charity.  This cycle is a way of describing a reflexive consultation within an ecosystem defined by 4 relationships between 5 layers of engagement:

The 4-quadrant/4-colour model describes the bottom two layers of this ‘stack’.

The strategy ceiling

by Philip Boxer

It is only with the full relational form that the ethos of action learning has to pervade the enterprise as a whole. Up to that point, the assumption the enterprise makes is that it can rely upon Faustian pacts with individuals operating at its edges to deal with demands that go beyond the complexity of its own business models.

An enterprise differentiates its behaviors in relation to its environment to create value, while at the same time trying to sustain its identity through retaining some form of competitive advantage. How successful it is depends on the kinds of competitive asymmetry it can sustain, which in turn depends on its ability to integrate differentiated behaviors. The strategy ceiling is a way of thinking about how an enterprise does this.

The strategy ceiling is that level above which it is “none of your business” how an enterprise competes – the assumptions above the strategy ceiling are the tacit taken-for-granted basis on which the enterprise determines its behavior built into the way the enterprise operates at ‘design-time’.[1]  Thus the four forms of ‘causal texture‘ described by Emery and Trist (1965) demand a progressive differentiation of layers of behavior for which there needs to be a corresponding progressive articulation of ‘run-time’ assumptions about how to differentiate behaviors, and therefore a progressive lifting of the strategy ceiling imposed at ‘design-time’. Tacit assumptions have to be made explicit and dynamically responsive to demands differentiated at ‘run-time’.
ceilings2
These layers stratify the relation between the enterprise and demand, and as these layers are progressively articulated, so the means of integrating the behavior of these layers needs to be progressively articulated.[2]  The result is the following five-by-five, in which each move to the right is an increasingly differentiated response to a demand for behavior at ‘run-time’.  And each move to the right  involves a lifting of the strategy ceiling.  The result is four different organizations of the relationship between the enterprise and its competitive environment, the last of which is further divided by the nature of the good that it serves [3]:

  • operational integration – how, for whom and why things are done as they are remain unquestioned.  It is sufficient to focus is on operating the business model as it is.
  • professional integration – bodies of know-how have to be developed for how things are done in order to scale efficiencies, but the customer is still defined by these ways of doing things.
  • positional integration – different types of demand from customers are defined by the different market positions through which the enterprise chooses to compete based on assumptions it makes about the WHY of competitive advantage. The WHAT, the HOW and the WHO-for-WHOM of the enterprise model are varied dynamically to achieve maximum competitive advantage in those chosen markets.
  • relational integration – all aspects of the way enterprise competes are capable of being aligned to particular demands, including the way the enterprise competes. This form of integration is distinguished from positional by the ‘squiggly line’ because to be effective, the enterprise has to move from a N-S dominant approach to one that is E-W dominant.

Of course the level of the strategy ceiling reflects the basis of authority assumed by those in control of the enterprise.  So each move to the right involves a different balance of power. In all but the last two columns, therefore, top management reserves unquestioned ‘sovereign’ rights over these assumptions. In the last two columns, what remains are assumptions about how the domain of relevance is defined for the enterprise.  For top management to put the good of the enterprise over that of its clients is defined here as the supplier’s private good. [4]

Considering just the middle three columns, a specific version of these strategy ceilings is described in Meeting the Challenge of Health Care Reform.  The progression is from a professional (treatment-centric) through a positional (episode-of-care-centric) to a relational (through-the-life-of-the-condition-care-centric) approach, the changes in the way differentiated behaviors are integrated being expressed in terms of architectures.

Footnote
[1] ‘Design-time’ is distinguished from ‘run-time’, the latter being the time of the dynamic operational interactions of the enterprise with its environment. Where there is a strategy ceiling there is an a priori constraint placed on the way the enterprise competes imposed at ‘design-time’ constituting the strategy of the enterprise as a whole. This is taken up latter in tempo, entanglement and east-west dominance.
[2] These strata emerge as a way of understanding the relationship of an enterprise to its edges – see finding the edge. They are further elaborated in the series of postings linked to by ‘So you say you want to put your clients first…’.
[3] Simon Western refers to ‘eco-leadership’ as an emerging characteristic of asymmetric leadership in his book on discourses of leadership. While he approaches leadership from the perspective of different kinds of social zeitgeist, eco-leadership is also a response to the leadership demands made by the need to sustain a relational culture, where the unit of analysis has to become the ecosystem and not the enterprise per se.  His other forms of leadership can usefully be seen as responses to the leadership demands of the lower strategy ceilings:

  • ‘controller’ leadership responding to the ‘operational culture’, instituting a taylorism applied to the way management is itself organised;
  • ‘therapist’ leadership responding to the resultant professional culture, in which the central concern becomes the ways individuals are able to take up their roles within the business model; and
  • ‘messiah’ leadership responding to the ‘positional’ cultures that emerge from sustaining the competitive advantage of business models with respect to their market positioning, the point being that to transform and realign these cultures to new definitions of ‘market’ is ultimately a center-driven choice.

Of course the only reason for an enterprise to increase the differentiation of its behavior is on order to maintain congruence with its environment. Thus while Simon approaches the discourses in terms of their progressive emergence in society, the above relates them to the particular way identities are invested in the enterprise .
[4] Later versions of the ceilings includes another row at the top for the domain of relevance (see why is a stratification not a universal hierarchy). Whether or not this level is open to questioning or not depends on whether the good of the enterprise is put before or after the good of the client. This is the distinction between ‘guild ethics’ (the good of the enterprise comes first) and ‘professional ethics’ (the good of the client comes first) respectively. See, for example, Kenneth Pope’s address: The Code Not Taken: The Path From Guild Ethics to Torture and Our Continuing Choices

Why is a stratification not a universal hierarchy?

by Philip Boxer

In describing the 3 asymmetries, Richard establishes a six-layer stratification relating underlying technologies to ultimate contexts-of-use. Thus in the case of orthotics, if we approach it from the point of view of a manufacturer of orthotic footwear, these layers look like increasingly general descriptions of the contexts within which the underlying technology will come to be used: technology=soles, product=footwear, business=footwear-to-order, solution=fitted footwear, customer demand=orthopedic patients, customer experience=difficulties in mobility. Is this therefore not just a hierarchy moving from the particular of the technology to the general of its uses?

If, as a supplier, we want to take a symmetric view of demand, then this is true – ‘orthopedic patients with difficulties in mobility’ is a general definition of the footwear manufacturer’s market.

But in distinguishing the third asymmetry we define the relationship to demand as being to a particular context-of-use that demands a particular form of orchestration and composition of services and products in order to satisfy it. Thus if we take up the perspective of the customer experience=the patient’s experience of living with their condition through its life, then the customer demand=that treatment for my condition that will have the greatest impact on my through-life experience at this time, and the solution=the treatment that is fitting for the current situation within its through-life context. Not surprising, then, that one of the major issues faced when insourcing clinicians employed by the manufacturers was how to reflect the through-life dimension of performance in the way the clinical service was contracted.

In finding the edge, we describe the particular form of orchestration and composition needed in response to asymmetric demand in terms of a wedge of services that needs its own four-colour model of how it is aligned to demand. Thus for our patient, the customer experience is in the black quadrant, the customer demand and its particular solution in the red quadrant, the business and its product(s) in the white quadrant, and the technology in the blue quadrant. East-West dominance means having a business agile enough to support the particular white-red organisation needed to sustain a relationship to the distinct forms of demand arising at its edges. But now the 6-layer stratification can no longer be thought of as a hierarchy, but rather as a particular structuring of the alignment between supply and demand – something more horizontal than vertical.

The way we understand the four-colour model is therefore central to the way this alignment is defined. In order to be able to construct it, three distinctions have to be made:

  • Internal//External: what is internal to the way we do business vs what is not. This distinguishes the provider of the insourced clinical service from the environment into which the service is being provided.
  • Viability//Identity: the way things work vs what determines the shape of the way things work. Clinicians learn about how orthoses are made and how they can be used on the musculo-skeletal system (the way things work), but the particular ways these are shaped depend on the patients’ characteristics and the way the manufacturer chooses to do business.
  • Addressed//Ignored: the domain of reality (later called the domain of relevance) being addressed vs not addressed. The domain defined from the point of view of the manufacturer is going to be much narrower than that defined from the point of view of the patient’s needs. The way the domain is defined is fundamental to governance-at-the-edge, and implicates the ‘I’ of the beholder. Thus when demand is assumed to be symmetric, the ‘I’ can be the view from the top/centre of the supplying business. But when it is assumed to be asymmetric, the ‘I’ must be defined collaboratively through the way the relationship at the edge is itself constructed.

The 3 asymmetries and their associated economies correspond to the relationships between the blue-white, white-red and red-black quadrants, accounting for the particular way the quadrants are held in relation to each other. By including the third asymmetry, the stratification can no longer take the form of a universal hierarchy, but instead must be particular to the relationship to demand. It is this which presents the business with its double challenge, and the necessity to shift from an object-oriented to a subject-oriented approach to modeling the relationship of the enterprise to the demands of its clients.

The three asymmetries

by Richard Veryard
Demand Asymmetry means that the forms of demand are increasingly specific to the context in which they arise.

The first asymmetry involves separating out technology from the supply of specific products. This requires modelling of possible behaviors that can be supported (so Microsoft or car manufacturing has to modularize itself in support of families of technology use).

The second asymmetry requires separating out business models that can organize supply from the solutions that are on offer. This requires modelling of the possible forms of business geometry (so rail maintenance or retail services have to use a franchise model to allow the variation in business organization to accommodate the variety of ways in which the service needs to be implemented).

And the third asymmetry requires separating out the different contexts of use within which a demand arises. This requires modelling of the possible forms of demand within the contexts in which they arise (so that financial or care services are having to take up the way the through-time wealth/conditions are managed in a way that responds to different forms of context-of-use). The result is a stratification that describes six layers of organisation through which underlying technology is brought into relation with ultimate context-of-use:

It is worth considering what happens if these asymmetries are ignored.[1]

  • In the first asymmetry, this means defining the product by the technology. This is typical of the early stages in the emergence of new technologies. (Do you remember how we used to have to use mobile phones?).
  • In the second asymmetry, this means defining the solution for the customer by the way the business is organized. (Do you remember how large businesses used to relate to their customers before CRM?).
  • And in the third asymmetry, the solution to the problem presented by the customer is assumed to be what the customer actually needs. (Have you ever received a prescription from the doctor that turns out only to treat the symptom?).

Source: Metropolis and SOA Governance. Part 1: Towards the Agile Metropolis

Notes
[1] There is a fourth ethical dilemma, therefore, that is the dilemma of whether or not to hold the other three dilemmas open…