economics of alignment

The structure of the economy is changing

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The presentation describing this pathway within the 3rd epoch domain explores what is happening to organizations and to their role within the larger society?

Digitalisation is changing the balance-of-power between the supply-side and the demand-side of the economy, moving organisations towards having to deal with the multi-sided nature of clients’ demands. Capturing value in this competitive environment depends on a demand-side ability to attend/align to the particular situation of each client and to wrapping any solutions around that client situation as it unfolds over time. This fundamentally changes the way organisations need to compete.

The interest here is in the larger context in which all organizations are working, regardless of whether private, public or not-for-profit.  The assertion is that all organizations are having to place increasing emphasis on the customer journey – the particular experiences of their customers over time within the contexts of their lives. No one organization can ever contain all of a customer’s needs in doing this, as the customer’s demand is always multi-sided and any one organization is always at least implicitly having to collaborate with other organizations in supporting effective responses to the customer’s journey over time.  The larger context is thus always an ecosystem in which the organizing hand of any one organization is increasingly a vanishing hand as organizations develop varying degrees of platform strategy capable of supporting these collaborations, collaborations in which what is doing the organizing is frequently shaped behind the scenes by the way software works. 

From the perspective of the organization, this means seeking to survive in an environment that is volatile, uncertain, complex and ambiguous (VUCA), an environment referred to as turbulent. Not all organizations feel able to respond to this requirement for agility, in which the primary emphasis shifts from the interests of employees to those of customers. An organization’s response to these turbulent environments can be defensive as it holds on to its one-sided relations, but which leads to long term stagnation within the larger ecosystem through a failure to learn and adapt while at the same time being perceived by citizens as prospering at their expense. This defensiveness gains support from the one-sided way of defining GDP, so that no account is taken of the effects of digitization on utility itself.  This leads to an understating of both GDP and productivity measures, and to a systematic blindness to the changes taking place on the demand-side of the economy.

In order to understand what is driving this turbulence, we thus need to understand how the structure of economies is changing.  Globalization, enabled by free-trade agreements, has accelerated the commoditization of products, shifting the focus of all economies towards providing services supported by increasingly complex supply chains.  At the same time, digitalization has intensified this shift towards services by enabling the development of knowledge-based sectors in which value is driven from the way attention is paid to the situation of the customer and from the way suppliers’ behaviors are made to cohere for the client. Thus in 2017, nearly 60% of the US GDP was in the knowledge-based sectors even though only about 40% of the jobs.

So the challenge presented by turbulence involves an organization having to compete within the client’s ‘experience space’, requiring changes in the way it competes and in the way it adds value. This shift means giving primary emphasis to horizontal linkages to the situation of the client, albeit subject to vertical constraints. This involves not just leveraging well-established economies of scale and scope, but adding the ability to deliver economies of alignment to the situation of the client. Competition becomes not just about creating asymmetries between the supplier and its competitors in how to make and deliver things, but also about reducing the asymmetry between itself and its clients in order to know more than its competitors about how to embed services within the client’s experience space at a tempo that fits the life of the client. The life of the organization can no longer be divorced from that of its clients but instead becomes entangled. Faced with such challenges, one-sided responses of defensive organizational cultures prevent the learning and adaptation needed for survival, ultimately being toxic for the life of the organization itself, although not before being toxic in the lives of its citizen-clients.

In order to take up the challenge of these turbulent environments, an organization must master all three asymmetries, the third of which presents a new kind of organisational challenge, namely to be driven from its edges, where it encounters the client’s situation, rather than from a priori assumptions made at its center. If a strategy ceiling is the level above which it is nobody’s business (except the center’s) questioning things, then becoming edge-driven means lifting the strategy ceiling to make everything questionable in the interests of creating value for the client in a way that is sustainable for the organization. Instead of working up-and-over, following the center’s lead, the organization must work across-and-up from its edges.

Double Challenge

What makes a primary source authentic?

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I’ve just been listening to a press briefing being given by President Trump and his team yesterday…  two things struck me as very interesting. 

He was asked by a reporter what he had to say to those who are very afraid just now.  His response was that it was a nasty question and the reporter was a bad reporter.  He then explained that he was an optimist, that it was a matter of patriotic duty to be an optimist, and to promulgate narratives that were not optimistic was to promulgate fake news.

He also spoke in favor of using the anti-malarial drug, asking what people had to lose in trying it.  Better to travel in hope than to criticise. When asked to comment, Dr Fauci did not disagree with the President, but pointed out that they were using different criteria.  While the President’s words were optimistic, based on anecdotal evidence, Dr Fauci’s view, that we don’t yet know if it will work, was based on the current state of clinical evidence.

I wondered what was going on here. It appeared to me to be a collision between two quite different approaches to ‘truth’. The first of these emerged following the Reformation. People were no longer prepared to rely on priests to read the ‘truth’ on their behalf and there was an emancipation of reading, made possible by the Gutenberg and Caxton technologies. The Enlightenment emerged subsequently as a way in which individuals could learn how to read the right way. ‘Science’ as we have come to understand it was born, an ‘expert’ becoming someone who can say what is ‘true’ because they are recognised as knowing the right ways of reading. Except that there are many who would now say that so-called ‘experts’ are just the latest version of the pre-Reformation priests.

This is leading to the second approach to ‘truth’, made possible by social media and internet technology, for example by Google and Facebook. This is an emancipation of authorship in which individuals want to author their own ways of reading, i.e. their own ways of giving meaning to what is going on (wigo).  It gives rise to people choosing to live in their own ‘bubble’, i.e. interacting with people who share the same authorial relationship to wigo, whether from a ‘left‘ or a ‘right‘ perspective. Historians refer to this ‘bubble’ effect as source bias in the way wigo is described (as distinct from the point-of-view of the observer doing the describing).

My hypothesis about what is going on, then, is that when President Trump refers to fake news, he is challenging the source bias of its authors. Those of us identified with the Enlightenment, on the other hand, are hearing what he is saying as challenging the factual basis of the news. Corroborating evidence here for my hypothesis is Zuckerberg’s defense of “primary source speech” last October, in which he equated it with giving voice to people. In practice, this meant Facebook not censoring politicians’ campaign material. In effect, President Trump is claiming the right to give voice to his views. We are questioning the factual basis of his views.

After the Reformation, society developed ‘science’ as a way of choosing between different ways of reading, institutionalised by universities. Are we now going to be seeing the institutionalisation of right ways of authoring? Is a dictatorship of a majority the way of determining which bubble we should be living in? What is to constitute ‘truth’ in an age of emancipated authorship?  In an age of ‘critical studies’, in which it is as if each of us has at least one book in us, what, for example, makes a book worth writing? What would we say makes a primary source authentic?

The authenticity of feelings we have about something rests upon our personal valency for that way of feeling, ‘valency’ here meaning that which fits with our personal history. A bubble emerges through sharing aspects of our personal valency reflected in what we take to be ‘true’. To question our personal valency, therefore, is to question the authenticity of our speaking. What is in question here is not what we are saying so much as our ability to entertain doubt about the ‘truth’ of what we are saying.[1] I guess what distinguishes President Trump, then, is his wish that we not entertain doubt about what he is saying. How weird is that?

Notes

[1]. This invokes Peirce’s ‘irritation of doubt’, from his 1877 paper on “The Fixation of Belief” in Popular Science Monthly 12 (November), pages 1-15. This is the fourth in a series of ways of establishing ‘truth’ – (i) by common sense, (ii) by the method of authority, (iii) by a priori assumptions and (iv) by working through an ‘irritation of doubt’ raised by an existing ‘truth’. I consider the challenge presented by the fourth of these in Boxer, P. J. (2018). “Working with ‘the irritation of doubt’: the place of metaphor.” Socioanalysis 20: 27-50.

centre vs edge, ethical challenge

Working on the edges

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by Philip Boxer
The following set of notes emerged from a conversation with Sandy Henderson about the forensic approach – an approach to understanding and beginning to address ‘systemic bias’.[1]

Implicit in the way a person speaks about what is going on (wigo) is a way of framing meaning. The frame contains wigo for the speaker in the sense of providing a way of giving meaning to their experience of wigo.[2] The wigo being contained needs to be distinguished here from the way wigo is held, which means to limit the granularity and detail of the phenomena that need containing.[3]

  • This way of framing rests on implicit assumptions that govern its reasoning.
  • The assumptions implicit within a frame can be reinforced by a cycle of process-outcome-consequence (a process undertaken to achieve an outcome has consequences that reinforce the frame’s way of containing wigo).
  • Outcomes are about what happens while consequences are about how those outcomes impact on the interests of those invested in the frame’s outcomes.
  • The frame can be disrupted by a consequence that cannot be contained by the frame’s implicit assumptions.
  • This disruptive consequence can ‘flip’ the person out of the frame into an ‘other’ frame resting on different implicit assumptions with its own reinforcing P-O-C cycle that is able to contain the disruptive consequence but in which interests are invested differently.

A dilemma emerges if the ‘other’ frame also encounters disrupting consequences such that the person is ‘flipped’ back to the P-O-C cycle under the previous frame, giving rise potentially to an oscillation between two frames.

  • When this happens, this oscillation takes place around a ‘gap’ representing the aspects of wigo that neither frame is able to contain.
  • Any frame is vulnerable to the possibility of being disrupted by ‘flipping’ outcome-consequences. There are thus always ‘other’ frames possible and different kinds of dilemma, therefore, each revealing gaps representing different kinds of impossibility.
  • The way this ‘gap’ is encountered (and the impossibility that it represents to either frame) will be symptomatic of the way each frame is being held in order to limit the disrupting consequences encountered by each of their P-O-C cycles.

Holding frames in a way that limits disrupting consequences creates a ‘systemic bias’[4] that is manifested in three ways:

  • The first is by a flight to the personal aka scapegoating – an explanation in terms of individuals’ responsibility that leaves the frames themselves unacknowledged.
  • The second is by turning a blind eye to granularity and detail that would make disrupting consequences apparent by insisting on an existing way of holding frames.
  • The third is by the disclusion of the interests of persons identified with consequences that would disrupt existing ways of holding and containing frames. To disclude is to exclude the interests of a person from consideration and dismiss as irrelevant any granularity and detail of wigo relating to those ‘other’ interests that could give rise to disrupting consequences.[5]
  • All of these manifestations of systemic bias provoke hostility and mistrust and create injustice for those affected. An injustice here means that interests are being served at others’ expense that are in some way unnecessary, excessive and/or unjustifiable.

Any challenge that is permitted to existing ways of holding frames could give rise to new frames and new kinds of gap. If a challenge is not permitted (intentionally or otherwise), the resulting injustice can be approached as a (serial) ‘murder’ of innovations – the potential frames whose creation is thereby prevented.[6]

  • Such murders may be ‘investigated’ by treating as ‘crime scenes’ the P-O-C cycles in which the injustices arose and identifying the means, opportunity and motive through which the ‘murders’ took place.
  • Probable cause aka ‘reasonable grounds’ for the systemic bias may be established by identifying the means, opportunity and motive for the scapegoating, turning a blind eye or disclusion.
  • Motive may be established through establishing the particular interests being served by the existing ways of holding frames. The systemic nature of the ‘murders’ may then be identified with those standing to benefit from them who have the means and opportunity.
  • For ‘probable cause’ to be established, however, we need ‘detectives’ – persons whose personal valency leads them to sense the injustices and to have the drive to do the forensic work involved.[7] The intention behind establishing ‘probable cause’ is, of course, a successful ‘prosecution’ that changes the repeated behaviors towards ‘others’.

The exploration of a situation felt to be problematic and/or unjust in some way – and an individual’s valency for recognising it – can be achieved through a way of using the ‘plus-one’ process. This sets out to look beyond the ‘truth’ of an individual’s narrative of a situation in order to uncover the dilemma they are experiencing in the situation, and to explore the nature of the gap between its frames with its underlying impossibility.

  • This plus-one process involves three people with a fourth person in a witness role. The plus-one process itself starts with a narrating of a situation by a speaker (1) to a listener (2) in the presence of a person in the plus-one role (3). The following three stages are repeated three times as the three people rotate around these three roles. The person in the witness role bears witness to the whole process of rotating roles.
    Stage 1 involves, in the first iteration, the articulation of the narrative about the situation experienced as problematic/unjust from the speaker’s perspective. Subsequent stage 1 narratives are in each case of a situation experienced by the speaker that shows the meaning of the metaphor they previously identified from their plus-one role.
    Stage 2 involves clarification of the narrative by the listener.
    Stage 3 is the production of a metaphor by the ‘plus-one’ based on a counter-transferential ‘hunch’ about the narrative framing within which the narrative unfolded as it emerged from the speaking-and-listening.
  • The metaphor represents the plus-one’s sense of the shape of the speaker’s relation to the situation that has emerged. The metaphor derives from the feelings evoked in the plus-one by the speaker’s articulation of the narrative and its subsequent clarification by the listener.

The witness will subsequently use the three metaphors that emerge from the plus-one process to hypothesise an ‘other side’ of the original narrative articulated by the speaker as a first step in formulating the gap between the two frames and the underlying impossibility it represents.

  • Having elaborated this ‘other side’ as an alternative P-O-C cycle narrating of the original situation, it needs to be validated by relating the ‘flipping’ consequences in each frame back to the original narrative and defining the oscillation between them.
  • The witness’s final step is then to hypothesise the nature of the gap between the frames and the underlying impossibility it represents.

Two questions then arise that define the focus of a Lacanese parallel process[8]: (i) what is it about the way this dilemma is being held that sets it up in this way; and (ii) what is the nature of the original speaker’s valency for this way of its being ‘set up’. [9]

Notes
[1] ‘systemic bias’ is apparent, for example, in institutional racism. I have written about ‘systemic bias’ in a number of its guises. In its extreme forms it edges over into being ‘white collar crime’. The forensic rule in these kinds of case is ‘to follow the money’:
“Defences against innovation: the conservation of vagueness.” (2014) Defences Against Anxiety: Explorations in a Paradigm. D. Armstrong and M. Rustin. London, Karnac: 70-87.
“Betraying the citizen: social defences against innovation.” (2015) Organisational & Social Dynamics 15(1): 1-19.
“Working forensically with toxic thinking: what doesn’t kill you makes you stronger.” (2015) 32nd Annual Meeting of the International Society for the Psychoanalytic Study of Organizations. Rome, Italy.
“Caring beyond reason: a question of ethics.” (2016) European Academy of Management Conference. Paris.
“On the betrayal of the other’s trauma: the ethics of questioning unconscious investment in turning a blind eye.” (2016) 33rd ISPSO Annual Symposium. Granada.
“Working with defences against innovation: the forensic challenge.” (2017) Organizational and Social Dynamics 17(1): 89-110.
[2] ‘Contains’ aka returns meaning, following Bion’s thinking about what transforms beta-elements to alpha-elements. Beta-elements are experienced as bizarre, provoking anxiety. To contain is therefore epistemic in its effects, transforming the bizarre into something that can be given meaning to. Meaning must nevertheless be understood as meaning ‘for me’, i.e. for the individual trying to make meaning.
[3] ‘Holding’ aka limiting the complexity and granularity of the phenomena being faced, following Winnicott. By granularity is meant the scale or scope of detail present in the phenomena. The way the child was held by the family situation protected the child from being exposed to phenomena that could be overwhelming or traumatic, inducing a fear of imminent annihilation.  To hold is therefore ontic in its effects, defining reality itself for the child in which the bizarre might occur. A useful account of the important role of ‘ontological scaffolding’ is to be found in Lane, D. A. and R. R. Maxfield (2005). “Ontological uncertainty and innovation.” Journal of Evolutionary Economics 15.
[4] ‘Systemic bias’ aka way of sustaining an identification of interests in the way the frame(s) produce outcomes, the consequences of which are reinforcing of those interests.
[5] To both dismiss and exclude is to disclude…  the exclusion limits the granularity and complexity of the phenomena under consideration, while the dismissal reflects the way of framing.
[6] I use ‘murder’ here because it leads us to the detective genre, which is a valuable metaphor for the thinking about the challenges of working forensically. Typically, the detective is having to be relentless in the pursuit of what happened while at the same time having to battle with forces of authority that want the case closed for other reasons. See also the use of this metaphor in dilemmas as drivers of change.
[7] A brief summary of the detective genre would start from the detective’s code: dedicated to the victim, economical if not thrifty in his or her expenses and personal habits, loyal to his or her profession, cooperative to some degree with the police, concerned with self-survival, and unwilling to be duped by anyone. I have written about forensic work in Boxer, P. J. (2017). “Working with defences against innovation: the forensic challenge.” Organizational and Social Dynamics 17(1): 89-110.
[8] Not to be confused with the Balint approach to shadow consulting, which corresponds more to the role of the plus-one.  This approach to parallel process is a further development aimed at tackling the ethical challenges inherent in the original situation.
[9] Of course taking up either of these questions implies addressing the other question in some way. This implies an ethic to the extent that it demands that a manager takes responsibility for his or her own valencies. This points towards a kind of Hippocratic oath for managers – to abstain from doing harm. It also links us back to understanding what is constitutive of unintentional errors.

plus-one process

The fourth ‘witness’ to a plus-one process

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by Philip Boxer

You are in the role of ‘witness’ to a plus-one process. Your task is to develop a reading of the dilemma implicit in the original situation and to form a hypothesis about its underlying impossibility.[1] The repeated way this situation may occur reflects the way the larger environment ‘sets it up’ by the way it holds it.[2] A forensic process aims to understand the means, opportunity and motive for such repetition.  Your task as a ‘witness’ involves the following steps:

  1. Be a silent witness to the whole plus-one cycling of narratives, clarifications and metaphors. Take as many notes as you can of what is being said as it is said. Pay particular attention to the way the metaphors provide ways of reading the original situation.[3]
  2. Approach the original situation from the perspective of parallel processes and situate it in relation to the plus-one process, the speaker and the actors within the speaker’s narrative.
  3. Summarise the narrative of the original situation in terms of the processes and outcomes described, and its framing assumptions. Create a ‘headline’ that characterises these framing assumptions and identify consequences that follow from the process-outcomes that form a frame-reinforcing cycle.[4]
  4. Decide whether the narrative of the original situation is identified with the dominant frame within the larger context in which it arises, or with an ‘other’ position.
  5. Examine each of the three metaphors in turn, in each case identifying the implicit dilemma it gives voice to, i.e. what is included by the metaphor and what is excluded.[5]
  6. Align one side of each metaphor with the way the narrative framed the original situation and then create an alternative framing that is aligned with what is excluded. Give this alternative framing its own ‘headline’.[6]
  7. Develop a framing assumption, processes, outcome and reinforcing consequence for this alternative framing.[7]
  8. Develop consequences that ‘flip’ each frame into its alternative and disrupt the current frame-reinforcing cycle. Satisfy yourself that these ‘flipping’ consequences describe an oscillation between the two frames.[8]
  9. Hypothesise what the underlying impossibility might be around which this oscillation takes place[9] and consider what it might be about the way the whole dilemma is framed that ‘sets up’ this oscillation.[10]

The mutually exclusive nature of the frames emerging from the plus-one process raises the question of how the oscillation between them is ‘held’ by the larger environment. This ‘holding’ refers not only to the resourcing available from the larger environment (with all the attendant constraints that this resourcing imposes), but also to “the management of experiences that are inherent in existence”,[11] such as the completion (and therefore the responses to non-completion) of processes as defined by that larger environment.

Notes
[1] What we want to get to is a formulation of the dilemma implicit in the situation and its underlying impossibility.  To do this we work with the following dilemma template:

[2] The treatment of the situation as a ‘crime scene’ is a way of approaching the question of whether or not this way of holding the situation is necessary, or whether it serves particular interests. See Boxer, P.J. (2017) Working with defenses against innovation: the forensic challenge, Organisational and Social Dynamics, 17(1) pp89-110.
[3] In a plus-one process, the nature of a preoccupying situation emerges from an originating narrative that frames the situation as articulated by a ‘speaker’ and clarified by a ‘listener’. The role of the ‘plus-one’ is to produce a metaphor based on a counter-transferential ‘hunch’ about the nature of the shape of this framing narrative as it relates to what is going on in this situation (‘wigo’). This metaphor is based on the feelings evoked in the plus-one by the relation of the speaker to the whole situation in the narrative as it is spoken, and at the same time points to an alternative ‘other’ narrative to the one articulated by the speaker.

The relations within the plus-one process represent a way of framing what is going on (1 – wigo). Based on the concept of a ‘discursive practice’, the dominant frame is the way of framing ‘authorised’ by the power and knowledge of the dominant culture. This ‘way of framing’ may be characterized (i) by the authorized positions from which sense may be given to it through how the narrative is read (3), (ii) the unifying theme (4) through which its narratives can be made to cohere, reflected in the plus-one’s metaphor for the narrative as a whole, and the objects and concepts in terms of which the narrative is expressed by the speaker (2). The the speaking-and-listening axis (3-2) subject to the framing model (4) provide a shorthand for the way inter-subjective meaning is established.
[4] The dominant frame thus determines the performativity of inter-subjective relations formed subject to its power/knowledge relations. Referring back to the dilemma representation in [2]:

  • the ‘frame’ is defined by its ‘unifying theme’, entailing an ‘axiomatic’ unquestionable assumption that governs its performativity with respect to wigo;
  • the ‘processes’, ‘outcomes’ and ‘reinforcing consequences’ are what maintain the performativity of this framing of ‘concepts’ and ‘objects’ with respect to what is going on (wigo) in the originating situation, as made sense of by the listener.

[5] The metaphors are created each time by the person in the ‘plus-one’ position, who has been listening to the way the speaking-and-listening process has made sense of the situation narrated by the speaker. This metaphor is chosen because it best speaks of the overall sense that has emerged for the plus-one from the speaking-and-listening about the situation. The plus-one has then elaborated on the metaphor as if it were a dream, making no attempt to relate its contents to the situation. This enables a good ‘feel’ to develop for what the metaphor is getting at.
[6] This is a matter of looking for the choice that was implicit in the metaphor. In effect we are looking for the ‘nightmare stage’ of the narrative situation speaking to the metaphor. For more on this way of reading a narrative in terms of the stages of ‘anticipation’, ‘dream’, ‘frustration’, ‘nightmare’ and ‘miraculous’, see betraying the citizen.  The plus-one metaphor thus points towards an alternative ‘other’ narrative that enables the witness to formulate an alternative framing narrative of the originating situation. The validity of this ‘other’ narrative for the original speaker depends on establishing corroborating evidence of a ‘flipping’ consequence that can disrupt the performativity of the originating frame, flipping those involved with wigo into an alternative framing narrative subject to a different axiomatic.
[7] This alternative narrative is implicitly bound to the originating narrative through the way it will capture an oscillation. The ‘otherness’ of the alternative narrative reflects the way it is repressed by the dominant narrative, lying ‘below the surface’ of the speaker’s consciousness until it is brought to light, in this case by a plus-one process (Naylor, D., S. Woodward, S. Garrett and P. Boxer (2016). “What do we need to do to keep people safer?” Journal of Social Work Practice.). Taken together with the dominant narrative, however, it will point towards the underlying impossibility.
[8] The origin of this approach to understanding dilemmas lies with the Milan method of systemic family therapy (Cronen, V. E. and W. B. Pearce (1985). Toward an Explanation of How the Milan Method Works: An Invitation to a Systemic Epistemology and The Evolution of Family Systems. Applications of Systemic Family Therapy: The Milan Approach. D. Campbell and R. Draper. London, Grune & Stratton.). The following representation is a way of thinking about the oscillation over time between its two sides (Hampden-Turner, C. (1990). Charting the Corporate Mind: From Dilemma to Strategy. Oxford, Basil Blackwell.).

  • The two Γ’s on the left and on the right frame ways of giving meaning to what is going on (wigo). The frame on the left is the dominant frame, while the frame on the right is ‘other’.  Within each frame there is an implicit assumption held axiomatically, governing the reasoning within the frame. The cycle of process-outcome-consequence then reinforces this assumption.
  • There is also a ‘flipping’ consequence that disrupts the self-reinforcing cycle within a frame, pushing the people involved with what is going on (wigo) into a different frame.
  • The mutually exclusive nature of the two frames reflects an underlying impossibility, represented by the black dot.


[9] The dilemma’s implicit relation to an underlying impossibility is the relation to the objet petit a of an underlying lack, apparent in the oscillation around the black spot and referred to as ‘what is Really going on’ (wiRgo). For the person in the role of witness, the emergence of the ‘other’ framing reflects an underlying ambivalence implicit in their framing of the originating situation.
[10] Campbell, D. and M. Groenbaek (2006). Taking Positions in the Organization. London, Karnac.
[11] Winnicott, D. W. (1960). “The Theory of the Parent-Infant Relationship.” International Journal of Psycho-Analysis 41: 585-595.

ethical challenge

The fourth dilemma: an ethics for the fourth estate?

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by Philip Boxer
The need for asymmetric leadership arises when an enterprise must be dynamically responsive to its clients one-by-one in the way it supports a client’s experience. Examples would be providing a weather forecast for a particular operational mission, the health care of a patient with an ongoing condition, supporting a bank’s management of its capital adequacy within changing regulatory constraints, or providing multiple versions of a print newspaper for different readerships: {weather; healthcare; capital adequacy; news}.

A consequence is the need to move towards privileging the demands of a horizontal relationship to a singular demand, even though while remaining subject to constraints imposed by vertical accountability relationships. I have referred to this approach to governance elsewhere as an East-West dominant approach. In the example cases, this involves being able to dynamically align behaviors {forecasting; orchestrations of care pathways; risk exposure; print version} to the singular demand {mission profile;  patient’s condition; risk situation; community of interest}.  Inherent to this approach is the notion that the client’s demand is asymmetric to the supplier’s thinking, so that there is always a value deficit – a ‘more’ still to be addressed {the forecast is never wholly accurate; the condition is never fully understood; the information about the credit risk is always imperfect; the news always leaves the community of interest with unanswered questions}.

To think through what are the distinguishing characteristics of the ecosystem of organisations necessary to sustaining these forms of dynamic alignment, a fundamental distinction has to be made between the stratification needed to sustain responses to symmetric as distinct from asymmetric forms of demand. While the former strata must deliver economies of scale and scope, the latter strata must deliver economies of alignment. These strata are shown in the following in terms of strata 1-4 supporting symmetrically-defined market segments, and strata 5-6 addressing the orchestration and synchronisation of responses to asymmetric demands one-by-one:[1]

4th-dilemma1
The squiggly line marks a fundamental tension between the supply-side orientation of maximising the value to be derived from ‘possible behaviors’ through creating economies of scale and scope (creating as much value as possible for the supplier without jeopardising the customer relationship); and the demand-side orientation of minimising the client’s value deficit through creating economies of alignment (creating as much value as possible for the client without jeopardising the sustainability of the supplier). Each ‘box’ represents a matrix. The relationships between these matrices reflect three asymmetries that have to be managed in bringing the supply-side into relation with the demand-side, depending on the nature of the relationship that suppliers take up to clients’ demands (and how much is left to clients):

  • 1st asymmetry: the technology (1) is not the product (2)
  • 2nd asymmetry: the business (3) is not the solution (4)
  • 3rd asymmetry: the client’s demand (5) is not the client’s experience (6)

Viewed from the perspective of an individual client, a business focused on minimising the client’s value deficit can never hope to provide all the supply-side solutions that have to be orchestrated and synchronised with the client’s situation – it takes an ecosystem of suppliers. A fourth asymmetry emerges, therefore, to the extent that the value deficit is to be minimised.[2] In the examples these would be the domains in which there was effective know-how capable of {forecasting in a dynamic complex adaptive weather system; intervening on the body’s dis-ease; analysing the dynamic interactions between a business model and its environments; editorialising content in relation to particular readers’ interests}.  This fourth asymmetry is that

  • what the client experiences is never all of what the client wants

Holding this fourth asymmetry[3] means empowering the edges of the organisation where this asymmetry is encountered.[4] This brings us to the question(ing) of an ethics for the fourth estate.

The fourth dilemma facing the fourth estate
Consider the fourth of our case examples.  Reporters are despatched into the field to assemble material that can generate news stories. These are orchestrated within an editorial narrative to be read by different communities of interest:

The fourth asymmetry is that whatever actually gets read is never the whole story – a gap is always left. So does the fourth estate pursue the gaps, or does it make do with what it can easily find from existing sources? This is the ethical question for the fourth estate – some would say its raison d’être in a democracy.  Returning to our examples, an ethical challenge can be identified in each case: {forecasting when lives are at stake; early diagnosis greatly improving future quality of life; the value is in enabling the client to sustain the indirect benefits of the investment; a lack of real understanding destroys the ability of citizens to hold others accountable}.

Notes
[1] These strata are explored in more detail in a series of postings linked to by the summary: So you say you want to put your clients first… These matrices represent possible behaviors. As is described in these postings, however, the actual behaviors are determined by ‘organisation’ imposed by people. In the diagram below, this organisation, which is constraining behavior in matrices 1-6, is shown as the ‘B’ matrices. The oval matrices represent the limiting behaviors (0) and dimensions of deficit (7):
Note how ‘possible behaviors’ are thus made subject to vertical accountabilities, while the experience of value deficits are subject to the way behaviors are horizontally linked to situation.  Giving priority to value deficits therefore involves some degree of surrendering sovereignty in the way vertical accountability is imposed.
[2] This means putting the ‘domain of relevance’ into question, questioning the nature of the private good being served by the relationship. See the concept of strategy ceiling.
[3] The organisation focused on this fourth asymmetry must adopt a tripartite approach to leadership, capable of holding this inevitable tensions between minimising the value deficit while still remaining a sustainable organisation:
4th-dilemma2
[4] The concept of rings and wedges provides a way of thinking about how the supply-side and demand-side are held in relation to each other. The tripartite approach, taken in the example below from work on leadership qualities, involves leadership that can balance the vertical constraints of operational leadership with the horizontal outcomes demanded by Front-Line leadership:
ringsvwedges2

Asymmetric Demand

So you say you want to put your clients first…

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by Philip Boxer BSc MBA PhD

So you say you want to put your clients first. By saying this, I assume you have decided that product/service excellence is not sufficient for you to survive.[1]

In order to put your clients first, you are going to have to think not in terms of the survival of your enterprise, but in terms of the survival of the ecosystem of which you are a part, and of sustaining a place in it.[2] Two things follow from this:

1. There are things to get clear about the way your enterprise currently operates:

2. To get a better handle on what “putting clients first” means, you will then need:

Notes
[1] For the competitive positioning of your enterprise not to be sufficient, in terms of its product/service excellence, you must be facing some kind of dynamic in the relationship that you must sustain with your client-customers. This means transitioning to a relational approach to competitive positioning (see value propositions at the edge).
[2] Whether or not being relational is in the interests of your enterprise is a question of the economics of one-sided versus multi-sided markets. When faced with multi-sided demands, the effect of using silo’d organisation, characteristic of positional competitive positioning, is that it results not only in the costs of alignment falling on the client-customer, but also in the costs to the sources of demand within the larger ecosystem being 30%-50% greater (see competing within ecosystems).
Why? Because while the client-customer is getting a worse service (that they have to compensate for themselves as best they can), the supplying organisations get paid too much for a one-sided approach, the additional expenditures going to the suppliers at the expense of the client-customer.  In the private sector this can be left at the door of ‘market failure’ i.e. the suppliers don’t want things to change because it will work against their interests. In the public sector, however, this means that the citizen pays twice – indirectly in taxes to pay for one-sided suppliers, and directly through having to pay too much for inadequate services and/or paying for the gap personally if they can afford to.
The key issue here is this form of ‘market failure’ aka an inability to sustain a relational form of organisation. Hence the question: do you really want to put your customers first?

Stratification

On being edge-driven: outside is inside

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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:

pan8
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:

pan9
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]

pan9a
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.)

Asymmetric Demand, Effects Ladder

Surrendering sovereignty through business platforms and K-type propositions

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by Philip Boxer BSc MBA PhD

What happens when an enterprise must respond to its client-customers one-by-one? The enterprise will face demand asymmetry and therefore will need to be able to make under-determined choices at its edges over the extent of any value deficit it seeks to address in creating shared value.  The multi-sided nature of the demand will require that the enterprise must support multi-sided relations between multiple product/services and therefore a business platform that is itself multi-sided, these business platforms then requiring network-based architectures. This all means that we are dealing with supporting novel emergence of a third kind.[1]  What does all this mean for how we define the enterprise?

K-type propositions dynamically align orchestrations of product/services to customer situations
The minimal macrostates of this third kind of novel emergence, defined by matrices 5 and 5b, are based on the maximal microstates of the r-type and c-type propositions generated by novel emergences of the 1st and 2nd kinds:
pan7
Note the ‘big data’ matrix here, representing all possible traces of behavior, whether generated directly or indirectly, which support the K-type dynamic alignment processes, along with the platform (matrix 4-platform), through which multiple product/services are dynamically aligned to the customer situations in matrices 6 and 7.[2]  Whereas the effects ladders (matrix 6) define how effects are generated on the overall demand situations of client-customers (matrix 7B), Matrices 5 & 5B define the K-type propositions through which ‘big data’, the platform and the product/services are orchestrated and aligned to the customer situations.

If we think of a patient’s condition as a demand situation, then a hospital is not only the source of treatments (the columns in Matrix 4).  It is also a platform that supports the orchestration and synchronisation of many treatments around the condition of the patient. Another example related to dogs would be the following from Garmin:

Delta Smart is the on-collar training device and activity tracker that works in tandem with the Garmin Canine app on your compatible smartphone. Your pup is more than just a pet, so get the tools you need for effective training and a more comprehensive look at your furry friend’s activity, even when you’ve been away. Our system lets you monitor and train with bark detection/limiting, behavior corrections, activity monitoring and more.

In this case, Garmin is supplying a platform that is a combination of smartphone app and an on-collar training and tracking device. It is also providing the ‘big data’ traces of the dog’s behavior. The point here, however, is that the orchestration and synchronisation of these capabilities within the dog-owner’s context-of-use are left to the dog-owner.  In other words, unlike with the hospital that is itself providing K-type propositions, in this case the platform is aimed at enabling the dog-owner to develop their own K-type propositions.

Novel emergence of the third kind
‘Big data’ and the platform together with matrices 4-5-5B generate economies of alignment: the ability to create additional ways of organising the business relationship with a customer over time, not only reducing the average cost of alignment of business operations to the dynamics of each customer relationship, but also reducing the costs to the client-customer of the value created. Creating economies of alignment are critical to competing within ecosystems by creating indirect value.  In the context of healthcare, there are not just the economies of alignment arising from shortening the length of the patient’s journey through the hospital’s care pathways.  There are also economies of alignment arising for the patient such as reduced recovery times and less travel to-and-fro for appointments.

The tension between supply-side sovereignty and being edge-driven
There is an essential difference between a sovereign supply-side approach to markets, and an edge-driven demand-side approach to the client-customer’s demand situation:

  • the sovereign supply-side (positional) approach does as much as possible for its management without jeopardising its market relationships, while
  • the edge-driven demand-side (relational) approach does as much as possible for its client-customers without jeopardising the sustainability of the enterprise.

In the context of a hospital, the positional approach will be concerned with such things as operating-theater utilization, bed occupancies and costs-of-treatment.  In contrast, the relational approach will be concerned with such things as the patient’s length-of-stay, recovery times and re-admission rates. This tension between the positional and the relational is apparent when all the matrices are put together:
pan6
Whether the supply-side or the demand-side are dominant depends, of course, on the competitive dynamics of the ecosystem within which this tension is experienced.  In the case of the hospital, are the costs evaluated at the level of the hospital itself, or at the level of the through-the-life-costs of the patient’s condition.  What makes it difficult to move towards being edge-driven is not just the surrender of sovereignty necessary to becoming edge-driven. It is also difficult because establishing demand-side accountability is inherently more complex.  Nevertheless, all enterprises have to go through a P-K-c-r cycle, as described in value propositions at the edge. The issue facing an enterprise, therefore, is the tempo at which this cycle repeats itself, and how much time has to be spent in each part of the cycle.[3]

Notes
[1] Novel emergences and their relation to the four asymmetries, the first three of which we have met before (see the three asymmetries):

[2] Of course not all behaviors leave a trace, not all traces are captured for later recall, and of all the traces that could be captured, not all actually are. Even if traces are captured, there is no reason to assume that they are used in any way for the purposes of managing. For example, looking at commissioning of health care, much data is collected about patients, but the ways of examining that data are not organised in such a way to make the patient’s experience over time accessible for the purposes of managing outcomes.
[3] See also managing over the whole governance cycle – ‘destination’ involves P-type and K-type propositions, ‘comparison’ and ‘custom’ are different kinds of c-type proposition, and ‘cost’ is r-type.

Effects Ladder

Defining Demand Asymmetry: demand situations, effects ladders and P-type propositions

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by Philip Boxer BSc MBA PhD

Demand asymmetry is a fourth asymmetry: the client-customer’s experience always leaves him or her with something more to be desired.[1] It means that a client-customer’s demand can never be fully satisfied – there will always remains a value deficit. The assumption here is that, however hard a client-customer tries to bring into consciousness what it is that s/he needs, s/he will never be able to say all of it – there will always be a deficit.  This deficit may not be apparent until a supplier tries to respond to the client-customer’s demand, when the ways in which the product/service supplied is experienced as falling short of what was hoped for – the client-customer experiences a value deficit. Examples of value deficits would be: the veterinary product didn’t make the owner’s dog better; the patient’s condition remained chronic after all those treatments; the minister’s congregant remained unconsoled despite his or her ministrations; the equipment did not perform as command expected once it was deployed in the field; the citizen felt that s/he had been duped by the government; the meal did not measure up to expectations; the performance didn’t manage to pull it off; etcetera.

Demand situations and effects ladders
In each case the need is experienced by an embodied subject who has tried to articulate, with the help of others, what it is that he or she wants.  The situation in which the need is experienced is a demand situation.  An effects ladder is a way of unfolding as much as possible about the nature of the situated behaviors that, together, are expected to meet the needs of the demand situation.  The situated behaviors are customer situations that can be addressed by value propositions.

In one-by-one consideration of a client-customer’s demand, we are formulating strategy at the edge: we are asking what is needed to address the demand situation of the active client-customer within his or her particular context-of-use on a sustained, through-the-life-of-the-relationship basis? [2] The effects ladder provides a way of thinking through what this involves. It starts with the demand situation in the client-customer’s problem domain – the client-customer’s context-of-use in which s/he is seeking to create value and/or to reduce a value deficit. In this problem domain, the client-customer’s demand situation is defined in terms of drivers.  These drivers are the ways in which the client-customer experiences the situation in terms of pain/pleasure. For example, the owner of a much-loved dog wants to make sure the dog receives all possible care as an important part of his or her life. It is important to note, here, that drivers reflect the way an embodied subject experiences the demand situation.

P-type propositions[3]
To make the client-customer’s demand situation tractable, it has to be broken down into constituent customer situations within a Knowledge Domain that are individually amenable to value propositions.  These value propositions ultimately draw upon c-type product/service capabilities in support below ‘c-level’, meaning that their delivery can be customized without knowledge of the client-customer’s context-of-use. An example above c-level would be caring for the dog at a kennels.  An example below c-level would be customized delivery of food supplies.[4] The laddering effect comes from the way individual customer situations are built and sustained in support of the larger overall effect on the demand situation. A P-type proposition involves defining an effects ladder:
ladder4
The relation of a demand situation to its constituent customer situations is always one of novel emergence
We can relate this kind of analysis of demand to the previous postings on stratifying relations of novel emergence as follows:
pan4
The driver properties desired by the client-customer in the form of demand situations are novel forms of emergence (Matrix 7B) brought together from component client-customer situations (matrix 7) in the form of an effects ladder (matrix 6).  These matrices 6-7-7B then form the context-of-use into which value propositions must be delivered one-by-one.

The customer demand is not the experience
Two kinds of value deficit arise here, therefore, in the way the client-customer experiences the effects ladder.  The first of these defines the third asymmetry, that the client-customer’s demand is not the client-customer’s experience:

  1. There will be a value deficit left by the way a value proposition addresses a client-customer situation.  Beyond that, however,
  2. The effects ladder will itself be a hypothesis (a P-type proposition) about how the needs of the demand situation may be met, so that the experience of its composite effects will be constitutive of a novel emergence in the embodied experience of the subject(s) on whom it is producing its effects.[5] This embodied experience will itself leave a value deficit.

Note that for the client-customer, the demand situation is what is being experienced ‘on the surface’, while its constituent situations involve the client-customer reaching deeper into their experiencing to distinguish its different aspects.  This relation of surface-to-depth is captured by the relation of matrix 7b to matrices 6 and 7.

The next posting will describe the processes of alignment and supporting platform needed to  deliver value propositions into this context, giving rise to the first kind of value deficit above.

Notes
[1] The four asymmetries, then, are:

  1. The technology is not the product.
  2. The business is not the customer’s solution.
  3. The customer’s demand is not the customer’s experience.
  4. The customer’s experience always leaves him or her with something more to be desired.

These can be read back onto the psychoanalytically-based dilemmas of ignorance: (top-down vs bottom-up; espoused theory vs theory-in-use; affiliation vs alliance; object vs sinthome).
[2] For large-scale cases considering the implications of through-life management, see meeting the challenge of health care reform, valuing agility through a demand-led approach to capability management and managing the system-of-systems value cycle. These are all cases involving the need for ‘type III’ agility.
[3] See rcKP – value propositions at the edge.
[4] For more on these different kinds of value proposition, see value propositions at the edge.
[5] Note that this will be a fourth kind of novel emergence, the third being of the processes of alignment needed to deliver value propositions.

Stratification

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

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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.
pan2
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.

DEFENCES AGAINST ANXIETY ARE DEFENCES AGAINST INNOVATION