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

Thursday, September 1st, 2016

by Philip Boxer BSc MBA PhD

In distinguishing emergence from hierarchy, the stratified relation of novel emergence was described of a product produced from underlying component technologies.  This relation was linked to the first asymmetric dilemma distinguishing technology from product.   In this posting, a second asymmetric dilemma is identified distinguishing the supplying business from the customer solution offered to the market.

The ‘outputs’ of the systems-of-interest in Matrix 1B – products and services – may be sold directly into markets, or they may form the constituent parts of value chains in Matrix 2.  The properties of these value chains constitute minimal macrostates that, when organised by a supply-side organisation of chains in Matrix 3B, result in the properties of minimal macrostates supplying product/services out of Matrix 3. Matrix 3 is thus representing the way matrix 3b brings together the outputs of chains in Matrix 2 for supply to particular product/service market niches.
Continuing again with the Bob Martin example distinguishing emergence from hierarchy, the products and services from multiple forms of novel emergence described in Matrices o-1-1B were brought together by value chains in Matrix 2 and offered together to customers from matrix 3 as product/services concerned with remedies and prevention:

Bob Martin’s innovative advertising campaigns from the 1930’s onwards led to the Bob Martin range quickly expanding from the original conditioning powders to remedies and preventative healthcare products for a wide range of canine and feline ills. Leading brands such as Pestroy were originally launched as far back as 1936.

Novel emergence of the first and second kinds
Key here are stratified novel emergences, the products and services out of Matrix 0-1-1B being embedded in the product/services out of Matrix 2-3-3B. These two kinds of novel emergence relate to two aspects of supply-side business: novel emergence of the first kind effecting changes to the physical form of things in creating new kinds of product or service; and novel emergence of the second kind effecting changes in appearance and/or location in reaching different markets [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:
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.

[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.

The ‘wickedness’ of socio-technical ecosystems

Thursday, April 15th, 2010

by Philip Boxer

Software-intensive ecosystems—systems with large numbers of independent software-intensive and human agents and adaptive behavior—are an increasingly important social, financial, and political force in the world. These systems are different from traditional “closed-world” systems: they are constantly evolving, they have no centralized control, they have many heterogeneous elements, their requirements are inherently conflicting and unknowable, failures are normal, and the boundary between people and systems is blurred. [1]

Such ecosystems have emergent properties – properties which their original designers could not predict – and present a kind of “wicked” problem.[2] Wicked problems have the following characteristics:

  • There is no definitive formulation.
  • They have no stopping rule.
  • Solutions are not true-or-false, but good-or-bad.
  • There is no immediate or ultimate test of a solution.
  • They do not have a well-described set of potential solutions.
  • Every implemented solution has consequences.
  • Every wicked problem is essentially unique.
  • Every wicked problem can be considered to be a symptom of another problem.
  • The causes of a wicked problem can be explained in numerous ways.
  • The planner (designer) has no right to be wrong.

Wicked problems are thus not amenable to traditional reductionist analysis. As Rittel and Webber say: “As we seek to improve the effectiveness of actions in pursuit of valued outcomes, as system boundaries get stretched, and as we become more sophisticated about the complex workings of open societal systems, it becomes ever more difficult to make the planning idea operational”. We simply cannot draw a box around the “system” and analyze it. This presents us with a challenge not just at the level of the software ecosystem, but also at the level of the socio-technical ecosystems that they support. While this challenge appears to undermine our ability to do any meaningful analysis, simply not analyzing such ecosystems is not an acceptable option given that society is increasingly dependent on them – for example, the ecosystems supported by the internet and the “smart grid” for energy production and distribution.

The US Army considered the impact of these wicked problems on the Commander’s Appreciation and Campaign Design, which it defined as “ill-structured”. It concluded that a different approach to problem solving was needed that was inductive in nature, concerned with producing “a well-framed problem hypothesis and an associated campaign design—a conceptual approach for the problem.” [3] Thus as much attention had to be paid to the way the problem was framed (i.e. to the way the boxes were defined), as to the subsequent analysis of what was placed within those boxes. The conclusion reached was as follows:

“The issue is whether a commander should begin by analyzing the mission, or whether complexity compels the commander to first understand the operational problem, and then—based upon that understanding—design a broad approach to problem solving. The answer to this question depends upon the problem and the mission. If the problem is structured so that professionals can agree on how to solve it, and the mission received from higher headquarters is properly framed and complete, then it makes sense to begin with the analysis of the mission (breaking it down into specified, implied, and essential tasks). However, if the problem is unstructured (professionals cannot agree on how to solve the problem), or the mission received from higher headquarters is not properly framed (it is inappropriate for this problem), or higher headquarters provided no clear guidance (permissive orders), then it is crucial to begin by starting to identify and understand the operational problem systemically. This is one of the functions of operational art.”

Another way of stating the challenge, therefore, is to analyze our understanding of the contexts-of-use into which our systems are being deployed before analyzing any proposed architectures for such systems, or proposed architectural changes, to ensure that they are as suitable as possible given our understanding of those contexts-of-use. In this way, architecture analysis becomes an alignment mechanism, ensuring that the software infrastructure that we build is as appropriate as possible for the needs of the contexts-of-use, which collectively form a socio-technical ecosystem.

These socio-technical ecosystems are distinguished by the presence of both task systems and the social systems of meaning that they support. [4] In order to examine the architectural characteristics of both software-intensive and socio-technical ecosystems, traditional architectural analysis must be extended to account for how alignment impacts on the wicked (ill-structured) nature of ecosystems. Such an analysis can give us insight into the properties of an ecosystem and can help us reason about the alignment of the ecosystem with the goals of its many stakeholders.

[1] This perspective on complex adaptive systems exhibiting organized complexity is to be found in Northrop, L., et al., Ultra-Large-Scale Systems: The Software Challenge of the Future. June, 2006, Pittsburgh: Software Engineering Institute, Carnegie Mellon University.
[2] The original use of this term is to be found in Rittel, H. and M. Webber, Dilemmas in the General Theory of Planning. Policy Sciences, 1973.
[3] TRADOC, Commander’s Appreciation and Campaign Design. 2008.
[4] The original work on this emphasized that while sentient and task groups might correspond, the nature of task systems and snetient systems were essentially incommensurable. Quoting from Miller, E. J. and A. K. Rice (1967), Systems of Organization: The Control of Task and Sentient Boundaries. London, Tavistock: “We have considered many different words – commitment, identity, affiliation, cathexis – to denote the groups with which human beings identify themselves, as distinct from task groups, with which they may or may not become identified. We have chosen sentient – ‘that feels or is capable of feeling; having the power or function of sensation or of perception by the senses, 1632’ (Shorter Oxford English Dictionary) – as expressing most clearly what we mean. We shall therefore talk of sentient system and sentient group to refer to that system or group that demands and receives loyalty from its members; and we shall talk of a sentient boundary to refer to the boundary round a sentient group or sentient system. We shall use sentience to mean ‘the condition or quality of being sentient’ (Shorter Oxford English Dictionary)”.

The impact of differences in context

Tuesday, December 27th, 2005

by Charlie Alfred

by Charlie Alfred
Philip, To answer the question in your last blog on distinguishing the 3 asymmetries, the first test to see how clearly you are describing the issues would be for me to echo back my understanding of the three asymmetries (taken from the Governance article):

1. Isolate variations in technologies 

This asymmetry is fundamentally on the supplier side, although consumers may experience the result sometimes. For example:

  • PC manufacturers deal with different processors, memory chips, monitors, disk drives
  • Software developers deal with different databases, messaging systems, libraries, etc.

The result of this asymmetry might be invisible to the consumer (e.g. standardization of parts), or may show up as a quality difference in the product or service (e.g. auto X has a better stereo).

2. Isolate variations in business models
This asymmetry appears to straddle the supplier and consumer side. Each supplier in an industry chooses a business model that forms the basis for how they intend to complete. This business model choice will make the supplier more attractive to certain types of customers and less attractive to others.

  • Airlines: Southwest Airlines vs. United vs. Virgin Atlantic
  • Automotive: Honda vs. Mercedes vs. Hummer
  • Retailing: Wal-Mart vs. Macy’s vs. Home Depot

Consumers are affected by this asymmetry because they either must lock into a specific business model of their suppliers, or figure out an effective way to incorporate two or more (and know when it is best to use one instead of the other).

3. Isolate variations in context of use
This asymmetry predominantly affects the consumer side, as perceived value is a function of what the consumer does with the product or service. Not only can this asymmetry vary between consumers, it can also vary over time for the same consumer. For example, a person with a health club membership might use the facilities to:

  • workout to develop strength
  • workout to develop flexibility
  • workout to develop aerobic capability
  • exercise to lose weight
  • bring the kids to the swimming pool for recreation (and give mom a break)

I believe I got these right, and they are explained pretty clearly in your paper. However, I’m not sure that I understand how the SUV example is a good illustration of asymmetry #1. If I understand it correctly, I see this example as representing either asymmetries #2 and/or #3:

  • #2 Different SUV manufacturers clearly have different target markets and business models. For example, Land Rover and Jeep focus on off-road travel, while the Mercedes ML, BMW X3, and Acura MDX are targeted toward the urban luxury segment.
  • #3 Many SUV buyers select their vehicles anticipating a variety of uses, then end up discovering a few new ones after purchase. For example, someone might buy a Jeep for its off-road and towing capabilities, then get married and have kids and find value in the all-wheel drive and anti-lock braking safety features.

I think that the dynamic context-driven asymmetries are a very interesting concept. And I agree with you that the challenge of preparing for them is magnified by the difficulty of anticipating them. I’ve found with my own work on value models, that two things are absolutely essential:

  1. Very crisp, clear examples that illustrate the abstract concepts and make them real for other people. It looks like you are doing this pretty well. I really like the heart transplant, progressive disease, and investment management examples.
  2. A good description of the process that people might use to get to the endpoint. In my experience, a large percentage of people aren’t comfortable dealing with an abstract model. They need to see some sort of sequential process backing it up. I had trouble getting the value models ideas through to several bright engineers until I created an example (using a source code control system). Once that was in place, then the light bulbs began to come on at a faster rate.

I like your question about dealing with the third form of asymmetry (dynamic, context-driven). On the surface, this challenge seems daunting. A supplier wants to be prepared for whatever the consumers might need in whatever context they find themselves in. Given that the supplier’s preparedness is only going to be as good as what he is able to anticipate, this potentially has all of the earmarks of a Catch-22.

I believe that the path toward successfully addressing this challenge lies in modeling the contexts themselves. In other words, the typical reason that a consumer or supplier will be motivated to change their behavior is because something in their environment changed that alters their value experience. This includes understanding:

  • what forces drive certain contexts,
  • how and why the contexts change,
  • what the magnitude and direction of the change is,
  • how the changes impact the value models of the participants in the context.

Consider weather forecasting as an example. Changes in high and low barometric pressure, warm and cold frontal boundaries, air temperature, and relative humidity tend to trigger changes in weather. If these changes are serious enough and a blizzard is forecasted, I want to be sure that I have portable heaters, flashlights, and a few days supply of food and water. When faced with a serious storm, a strong desire for my family’s safety and my own helps predict my context-specific behavior. The same argument might be made for a person with a chronic and/or progressive disease, or a business whose market or competitors pose new challenges.

Abraham Maslow showed us that the basic forces that motivate people’s behavior are fairly straightforward and reasonably consistent across the population (at a high-level of abstraction). While the details start to fragment (i.e. not all people perceive safety or belonging the same way), two things are often true. First, these motivation drivers tend to have some consistency over time for an individual, and second, large numbers of individuals tend to think alike. My hypothesis is that differences in makeup from person to person has less of an impact on their wants and behavior than the differences in the context that they find themselves in.
Happy New Year
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Responding to diversity in Value Models

Friday, December 23rd, 2005

by Charlie Alfred
Philip, Thank you very much for your comments on separating the supply-side from the demand-side. I agree with the points you raised, and have a few observations to share:
1. You observed that my article approaches the problem from the provider-side. Given the nature of my job, my original goal was to teach people I worked with about how to do a better job of software architecture. This is the main reason that the article takes this point of view.
My belief is best expressed by Dr. Russell Ackoff, former professor at the Wharton School of Business. He discusses the sibling processes of synthesis and analysis. He observes that analysis has been the predominant model of thought since the Industrial Revolution. Take a whole, break it down, and study the pieces in isolation.
Ackoff suggests that while analysis helps you to explain how things work, it doesn’t give you enough context to understand why they need to work that way, and what might cause them to change. To do this, you must study how a subject (system) functions in its larger context(s). This begins to expose which expectations, obstacles, and constraints are imposed on the subject.
In short, as a result of this research, I’ve come to the conclusion that an architect needs to:
a) start with synthesis to understand context (both shared and diverse),
b) use analysis to formulate approaches to challenges, analyze trade-offs, and mitigate risks, and
c) use synthesis to consider the feedback effect of the solution on the contexts, etc.
Ackoff’s writings have also convinced me that the scope of a system must expand to include all elements with significant inter-dependencies. The little bit of thinking that I’ve done on the subject of value suggests that the consumer and supplier sides cannot really be considered independently. This is the subject of my next observation.
2. You mention the two perspectives of value: consumer-side and supplier-side and raise the question about whether they can (and should) be considered independently or must be considered together.
As a general rule, I think that they cannot be considered in isolation:

a) In the long run, there is no supply-side value where there is no demand-side perceptions of value. In cases where demand-side utility curves are strong and inelastic, and suppliers have major market power, “long run” can be quite a long time. For example, OPEC can ignore the needs of its customers for price, supply, and to a lesser extent quality. However, this has the side effect of stimulating research into alternate sources. I agree that diversity on the demand side tends to strongly influence market segmentation in more competitive markets. While this happens a lot in dynamic markets, it also happens in ones that were thought to be stable. Southwest Airlines low fares/low cost approach has been extremely effective against United, American, and Delta.

b) Supply-side innovations often change utility curves on the demand side, by changing consumer’s perceptions of what is possible. Today, I can’t write a paper or report without having my web browser open and Google ready to run. My iPod Nano is so small and holds so much music that I want to take it to work. If I’m away from home and need to make a phone call, I pull my cell phone out of my pocket. 10 years ago, I was quite content without any of these things. It wasn’t that I was unaware of the benefits of instantaneous research, portable entertainment, or accessible communication. The main reason I was content with less than that, was that I had no idea that major improvement was possible. However, once exposed to the innovations, my utility curves (and hence, my value expectations) were reshaped for ever.

c) When faced with significant diversity in value perceptions by consumer, a provider can be faced with a difficult juggling problem. If the provider attempts to craft individual solutions, its development and operating costs can go up. If the provider attempts to create a solution that can be tailored to each context, it risks creating something that doesn’t fit any of them very well. Consider a sport utility vehicle. Buyers who like to drive it off-road want a lot of ground clearance. Suburban moms like the fact that a higher clearance gives them better visibility of the road. However, a higher clearance also tends to mean a higher center of gravity, which increases the risk of rollover in sharp turns. This is not much of a plus for the driver who wants the all-wheel drive for driving in snowy and icy climates.

In summary, the consumers and providers both win when the provider understands the value models and challenges well enough to combine the right set of diverse needs into a solution, while omitting the ones with incompatible challenges.

3. I agree completely with your point about Porter’s use of horizontal and vertical linkages. To me, the notion of linkages was key, and differentiating between those that are internal and external was less significant.
I find it more interesting that the “architectural decisions” of the firm (value change) are what determine its cost and differentiation drivers. For example, an airline like United has chosen a hub/spoke architecture and a variety of airplane types. This lets it have very frequent departures and match aircraft sizes to the flight lane. OTOH, Southwest standardizes on a small number of aircraft and prefers direct flights. This lets it reduce the costs of training and maintenance, and reduce the cost of operating large hubs. The different business architectures appeal to diverse sets of passengers, because the passengers have different utility curves. In effect, linkages tie directly back to the value models of the consumer(s) and provider(s) and the constraints
that the environment enforces on its own (e.g. how far can a 727 fly without refueling?). As a related note, I love Christensen’s concept of discontinuous innovation.

In summary, I believe that necessity is the mother of invention, and value model diversity on the demand side will force the supply side to better satisfy it. It may not be a painless transition, because a lot of firms haven’t learned how to:
a)Forget about their own agenda, and immerse themselves in their customer’s context
b)Learn how to be jugglers and figure out which things can be juggled together and which cannot.
Let me know what you think.
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Value-Driven Architecture

Saturday, December 17th, 2005

by Charlie Alfred

by Charlie Alfred
I am the author of an article on Value-Driven Architecture that was published in the same issue of Microsoft Architecture Journal as the one that you wrote on SOA Governance. I finally had the opportunity to read your article during the past couple of weeks, as well as the earlier one you reference (Metropolis), written by Pat Helland.
It was very interesting to see how you both took the concept in different directions. Pat focused on the service-provider side, and emphasized the benefits of standardization and high-speed transportation (networks). You took a more systemic view and emphasized how diversity often is not limited to service
provider implementations, but instead reaches more deeply to affect the service API’s as well as the workflow management (or other control structures).
Someone at the 2004 Software Product Line Architecture conference in Boston made a very interesting observation:
“The ROI of a software product line comes from leveraging the commonality. However, you cannot achieve this effectively until you also identify and manage the variability.”
I believe this quote sums up a lot of the philosophy difference between Pat’s article and yours. Pat seems to be making the “benefits of leveraging the commonality” argument, while you do a very good job of articulating how difficult “managing the commonality” can be.
Both of these notions are essential and relate back to one of the central themes of the article I wrote on “Value Driven Architecture.” In order to know where to accommodate diversity and where to leverage commonality, you must have a way of identifying and contrasting context-specific challenges
(where each context consists of a set of like-minded stakeholders who are affected by equivalent obstacles and constraints). By contrasting the key challenges and their priorities side-by-side, the architect begins to clarify which challenges are similar enough to leverage with a standardized approach, and which ones require more diverse approaches.
Again, thanks for the thought-provoking article.
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