Asymmetric Design

by Bernie Cohen

The field of modeling is rich in terminological confusion and misunderstanding, in which some of the terms have formal definitions that are radically different from their everyday usage. An eminent MIT Professor of Engineering used to introduce his students to the subtle concepts of precision, accuracy and significance with the following (non-PC) example.

You ask a lady her age and she tells you she is 35. This statement has a precision of plus or minus 6 months, could be inaccurate by as much as 10 years and, if she is attractive, has no significance whatsoever.

What follows is an attempt to cast some light on the terminological confusion and misunderstanding.

• In mathematics, a theory is an abstract algebraic structure, with a signature defining the syntax of its sorts and operations and a set of axioms defining equivalence classes over its syntactically valid expressions. The assertion that certain statements are, or are not, in the same equivalence class is a theorem, which may be proved within the formal system in which the theory is expressed. A theory is said to be consistent if no two of its theorems contradict each other and complete if every valid expression in it is provably true or false. (Godel’s Incompleteness Theorem raises its ugly head here: no theory powerful enough to define arithmetic can be both consistent and complete.).

This definition may seem completely meaningless to the engineer, or even to the scientist, but theories are, indeed, devoid of any ‘meaning’ in the sense that they do not refer to anything in the world of experience.

• A model, in this context, is a theory morphism that assigns a set to each sort, and a function to each operation, of a theory, in such a way that all the axioms of the theory hold in the model. That such a morphism does or does not constitute a model of the theory is a theorem.

Still not very meaningful until we interpret the sets in our models as referring to the values taken by certain kinds of things in the world and the functions as referring to the behaviours of those things. Now our model becomes a theory (in the scientific sense) of any part of the world in which things of those kinds occur.

Actually, such a model of the world initially has the status of a hypothesis, which must be rigorously tested before graduating to the status of theory. Hypothesis testing is the foundation of scientific method. Unlike mathematics, whose methods deal largely with verification using formal proofs, scientific method works largely with refutation, the demonstration that a hypothesis is false. Sir Karl Popper went so far as to insist that any hypothesis that was not, in principle, refutable could not be deemed to be scientific at all, thereby excluding astrology from the sciences.

Hypothesis refutation involves a combination of mathematical proof and empirical observation. The method is to prove a theorem in the underlying theory whose interpretation predicts certain as yet unobserved behaviour of things in the world. An experiment is designed, using suitable effectors, sensors and instruments, to induce the predicted behaviour. This procedure is effectively an investigation of commutativity. Given any function in the model and any value in its domain, we may execute that function on that value and then interpret the result in the world. Alternatively, we could first interpret the function and its input value and observe how that part of the world behaves. If the theory and its interpretation commute, then these two procedures should always produce the same result.

If the predicted behaviour is not observed, non-commutativity has been demonstrated and the hypothesis is deemed to be false. If, however, the behaviour is observed, we have not proved commutativity, but merely that the interpretation of that particular function with that particular value gives an accurate account of the observed behaviour. The hypothesis is not deemed to be true, but merely to have survived that test. A hypothesis that has survived many such tests, repeated by different experimentalists in different conditions, especially where the predicted results are, in some cultural sense, surprising, is eventually granted the status of a law, although that terminology has fallen into disuse.

Actually, hypotheses are not cast and tested individually. Rather, collections of them are interrelated and stand or fall together as a body of theory that defines and governs some branch of science. Their interrelationship stems from their shared ontology, the way that they identify and distinguish things in the world. Contrary to popular belief, the world is not ontologically prior, that is, empirical reality does not consist of distinct objects. Rather, each of us impresses upon our experience of empirical reality our own ontology, constructed to suit our purposes and circumstances. For example, the Inuit distinguish many more kinds of snow than do other North Americans because they both experience much more of it and have to make their living through it (literally). As W. V. O. Quine put it, ‘to be is to be the value of a variable’.

It was once believed, by Plato, Porphyry, Leibniz and other eminent philosophers, that there was a universal ontology, that is, that all the things in the world could be uniquely classified under a hierarchical scheme of differentiation. Sadly, those days have gone. Even if such an ontology was proposed, its universality could not be verified. Science has already encountered many instances of ontological change. For example, for many years, chemistry recognised a type of thing called phlogiston which was given off when a combustible substance was burned, and another called calx which was the residue left after the departure of the phlogiston. Now we have no place for phlogiston in our ontology but we can retain calx as referring to the oxidised residue of burning.

So in order to communicate among scientific disciplines, we must find ways of composing our different ontologies, finding mappings among their terms that do not violate any of the theories on which the laws of the various disciplines rest.

One way of doing this is to construct a GUT (Grand Unifying Theory), or TOE (Theory of Everything), which is indeed a major project in physics today. The problem has been to reconcile general relativity and quantum mechanics, hypotheses which are as close to laws as anything in science but which, unfortunately, contradict each other. The approach, as it has been on many other occasions, is to introduce new ontological distinctions ‘underneath’ those of the competing hypotheses, which can then be re-expressed, and subsequently successfully composed, in the new ontological structure. In this case, the elements of the new ontology are strange things indeed. Just as we had got used to fundamental ‘particles’ that were also ‘waves’ and could be observed only for fleeting moments at ridiculously high energies, we were presented with their unobservable components, the quarks, and with the quarks’ inconceivable components, 14-dimensional strings.

But although a successful TOE would reduce physics to a single theory, we would not reduce our accounts of our empirical experience to its ontology. The reductionist programme was once a cornerstone of scientific philosophy but those days are long gone and engineering was largely responsible.

by Richard Veryard
We can use the three asymmetries to appreciate different strategies for security and trust, such as deperimeterization. First we need some definitions: Boundary refers to a discontinuity in a physical system, Perimeter to a discontinuity in a social system, and Edge to a discontinuity in systems of meaning. As with the asymmetries, these build on each other, so a perimeter includes a ‘virtual’ boundary, and an edge includes a ‘virtual’ perimeter. Thus where we place boundaries, perimeters and edges reflect where we place the three asymmetries. It also determines the way we are able to approach security and trust.

For example, deperimeterization can be understood as an effect of the third asymmetry. A traditional perimeter defence assumes that rights and obligations (social) coincide with certain physical divisions (boundaries). Deperimeterization means it is no longer feasible to align the levels of security with the social boundaries, because the social system is itself losing its cohesion under the influence of the third asymmetry.

Assuming symmetry means being able to run something as a closed system – the way it interacts is wholly defined by the supply-side, so control is possible. With the breaking of the first symmetry, the use of the technology is defined by its outputs, and not its internal functioning. But we can still apply a fortress approach to this, so long as we can wholly define the boundary across which the outputs are to be provided. The metaphor here is the fortress.

With the second symmetry being broken, our business changes from being defined by its outputs to being defined by its ability to organise business processes that deliver solutions. But the supplying business organisation is still in control of this, although the complexity of what is ‘inside’ is greatly increased by its now explicitly socio-technical nature. The fortress metaphor is still possible here, but understood now in terms of a dynamic frontline (e.g. Nato warfare across Europe).

It is with the third symmetry being broken that we get the necessity for defence in depth (they can strike from anywhere), asymmetric threat (they can play by their own rules), and agile/manoeuvrist conflicts that require power-to-the-edge and synchronization at the edge. This is the environment in which collaborative composition is necessary because of the complexity of the demand environment which you are trying to interact with. (The military metaphor here would be “operations-other-than-war” where you have to work with the inhabitants etc.) It is this latter third symmetry-breaking that creates the de-perimeterization effect.

For more on deperimeterization, see my report on Agile Security for SOA in the CBI Journal for June 2006 (subscription required). My other writings on trust and security can be found here.

by Philip Boxer

I have been a strategy consultant to organisations for over 20 years, supporting leadership teams across many different industry sectors, both public and private. My focus has been on the challenges organisations face from asymmetric forms of demand and the mitigation of risks associated with failing to develop requisite agility. This blog has traced some of the ideas emerging from this work, and I have developed a number of methods and tools needed to support strategy formation and collaborative design processes, including visual PAN and its associated forms of analysis. In 2006, a report was published detailing an application of this form of structural modeling (An Examination of a Structural Modeling Risk Probe Technique), written by staff at the Software Engineering Institute (SEI) at Carnegie Mellon University.

In March 2007 I started work as a senior member of technical staff working with the Integration of Software Intensive Systems (ISIS) team, within the Dynamic Systems Programme at SEI. The aim of this work is to bring visual PAN and its associated forms of analysis into the public domain.

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=orthopaedic 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 - ‘orthopaedic 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 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.

by Philip Boxer

The traditional ‘V’ of the software verification cycle is described in PSS-05-10 by the European Space Agency as follows:

“Software development starts in the top left-hand corner, progresses down the lefthand ’specification’ side to the bottom of the ‘V’ and then onwards up the right-hand ‘production’ side. The V-formation emphasises the need to verify each output specification against its input specification, and the need to verify the software at each stage of production against its corresponding specification.” (March 1995)

Work within INCOSE by Jack Ring and others on ‘Intelligent Systems Engineering‘ makes this ‘V’ the lower part of a System Value Cycle that seeks to align its focus on System with an upper inverted ‘V’ focused on Value with the problem to be addressed at its apex, and the relationship between the two ‘V’s focusing on Purpose. In our terms, the bottom ‘V’ is about designing a structure-determined system (of systems), while the top ‘V’ describes the structure-determining processes by which such a system is itself composed with other systems to useful ends.

Hillary Sillitto in the INCOSE 2006 conference relates this cycle (here) to the way the scope and boundaries of the resultant system emerge from this cycle through the way four different kinds of question about degrees of freedom are answered:

Each of these questions relate to different constituencies with differing vested interests in how they are answered. How, then, is this cycle to be managed as a whole? What happens if we approach this cycle not from the point of view of the systems, but from the point of view of the demands?

As long as the problem remains a generic one based on symmetric assumptions about the nature of demand, the top ‘V can be addressed independently of the bottom ‘V’. But as soon as the demand situation is such that the demands emerging from it are necessarily asymmetric and dynamic (as described here), this is no longer possible - the systems have to be understood as more than socio-technical, and it becomes necessary to model the structure-determining as well as the structure-determined processes.

The need for Through-Life Capability Management (TLCM) is one such situation. The acquisition framework needed to support it is still emerging (see here), but it represents a step-change in the relationship between purchaser and provider that involves both parties in the whole cycle. We can expect to see the need for it emerging elsewhere as the asymmetric and dynamic nature of demand becomes increasingly insistent, for example:

• In healthcare, with the through-life management of patients’ conditions, and

• In education, with the through-life management of the responses to individual children’s needs.

TLCM is an emerging form of asymmetric governance.

by Philip Boxer

The collaborative approach depends on there being a service infrastructure agile enough to be under-determining of the way the customer’s demands can be responded to. Put another way, the supplying business needs to find its edge where it can be structure-determining in how it responds to the customer, rather than being structure-determined by its infrastructure. At this edge, it is in a position to offer cKP services that can be responsive to the customer’s context-of-use. But how is it to work collaboratively with the customer in agreeing the nature of those cKP services?

The example below comes from working with a computing services business with banking customers. The customer was operating in a problem domain in which the fundamental concern with managing risk required them to manage two kinds of problem - looking for market inefficiencies that could create investment opportunities for the bank, and managing the ‘value at risk’ associated with existing investments:

At the bottom of the diagram is ‘data warehousing’, understood to be a generic service that can be provided in a way that does not require knowledge of the specific bank’s situation, and ‘c-level‘ (it is always rising) is the level above which the bank’s specific context-of-use can no longer be ignored. In between c-level and the problem domain is a knowledge domain, in which knowledge about the bank’s context-of-use enables cKP-type services to be offered. The situations within this knowledge domain then identify opportunities for the supplier to provide services that cumulatively build on each other to meet their larger need in the problem domain.

This is an effects ladder, and it provided the bank customer and the computing services supplier with a framework within which to build a shared picture of the bank’s context-of-use. In the diagram below you see this generalised, with the relationship of rcKP services to the ladder.

Governance-at-the-edge requires that a double challenge be met which balances internal changes with external opportunities. The effects ladder provides the means of agreeing what this means for both customer and supplier where the customer’s demands are necessarily asymmetric.

by Philip Boxer

The blog on the health service distinguished between three levels of involvement with the patient moving from (1) being centred on providing specific treatments, to (2) being centred on episodes of care, to (3) being centred on the patient’s experience of care over time. These are levels originally separated out by the paper by Prahalad and Ramaswamy on The New Frontier of Experience Innovation. They made the more general distinction between competing in a product space, a solution space and an experience space.

The point they were making was that the third of these required a fundamentally different approach to the relationship to the customer, which I have described in terms of rcKP and the third asymmetry.

The blog gave an account of this difference in terms of changes in level of governance architecture - from the relatively internal concerns of the first two levels with the governance of care provision and of clinical referral pathways, to the through-the-life-of-the-condition concern with the patient’s care at the third level. It then concluded that this third form of governance:

“… in turn requires forms of support and transparency that can enable such change to happen, by providing funding for the transition, by providing support for this way of working out how to effect change, and by ensuring that the changes made can be sustained in a way that is accountable.”

Putting this together into a 3 x 3 creates a value stairs - establishing where you are and where you need to be on this value stairs, given the competitive asymmetries in force, is fundamental to deciding how to exploit the three potential asymmetries. Working with another client gave another perspective on the challenges involved - a telecommunications service provider whose role it was to provide just such forms of support and transparency.

In this case the levels in the value stairs were expressed in terms of the contractual framework within which the relationship with the customer unfolded over time. What characterised the resultant space as a whole was that the bottom-left three squares were very efficiently occupied by the enterprise on the basis of commodity services, while the top-right three were provided on a cottage industry basis by a high value-adding consultancy and bespoke services to relatively small numbers of large enterprises.

Given that competitive forces were driving the enterprise up the value stairs, the challenge had become the hole-in-the-middle. This was too expensive to satisfy by using the bespoke approach used top-right, and the variety of demands too complex to be satisfied using the bottom-left commoditised basis. In terms of what we need to learn about complex systems, the challenge was to find ways of operating in the collaborative quadrant below:

What was the answer? To start with, the whole business infrastructure had to be digitised so that it could be offered on a service-oriented basis. Then to leverage this capability, different ways of managing the relationship with the customer had to be found - the enterprise had to develop an approach to managing this infrastructure that could be dynamically customised from the edge of the business. This they are still in the process of doing.

by Philip Boxer

Larry Hirschhorn and his co-authors raise an interesting question in their paper on sociotechnical systems in an age of mass customisation. They consider what happens in a pilot plant whose sole object is to learn new ways of organising production processes. What they discover is that in the place of worker autonomy as a goal, the meaning of the work becomes pre-eminent, and creating task boundaries becomes a dynamic collaborative process in a way that dissolves the old worker-manager distinction. This focus on meaning goes beyond the old focus on improving the quality of life in stable production environments:

“… When socio-technical systems theory (STS) first emerged as a discipline its moral roots in a worker’s right to competence and its political roots in industrial democracy enabled its practitioners to reach beyond the narrow issue of industrial efficiency, but the era of mass customisation has so up-ended the occupational structure - the distinction between working and managing is slipping away - that STS, a creature of the era of mass production, may slip into history.”

So in what ways must our understanding of socio-technical systems be extended to build on their rich legacy? Two points emerge as being key:

• the dynamic nature of the relationship that is needed with the context for the work of the pilot plant in terms of what the customer wants, and

• the meaning of the work within the larger context of the enterprise and its goals.

The first of these reflects the shifting of power over service design to the edge, arising from having to address the third asymmetry. The second raises the larger question of how that ‘edge’ is defined in the interests of the enterprise when demand becomes asymmetric - the what, how, who/m and why all have to be made responsive to demand.

So what does this require of the kinds of modelling we use? Two kinds of innovation are needed.

Firstly, we need to use an approach that can model the structure-determining processes as well as those that are structure-determined.

Secondly, we need to add to the models of task, information and sentient systems the related models of the organisation of task and information systems, and of the contexts out of which demands are arising. This gives us five distinct perspectives on the enterprise:

(1) the task systems, (2) the information systems, (3) the vertical (hierarchical) and (4) horizontal (collaborative) organisation of those task and information systems, and (5) the organisation of demand within its customer context.

Putting all of these together as a composite model of the ways these systems are or are not consistent with each other is itself an expression of the ‘I’ of the modeller(s). And this is a way in which to collaborate in the construction of shared meaning.

by Philip Boxer

Health Care Reform presents governments everywhere with a challenge. Richard Veryard raises the question here of whether the latest round of changes in the UK will be any different. Between 2002 and 2004 I was involved with colleagues in pathfinder projects, aiming to address these issues in the UK, the report on which can be found here. What follows is a summary of the nature of this challenge as we came to understand it.

The pathfinder projects were aiming to generate three kinds of benefit in order to deliver step-change improvements in the orthotics service across the UK’s NHS as a whole:

• Type I - defining current demand and realigning product/service protocols to it.

• Type II - re-organising referral protocols and configuration of clinics to improve delivered health care within existing catchments.

• Type III - extending the organisation of the clinical service to include re-organisation of the catchments within the Primary Care Trusts.

The pathfinders established that the scale of Type II benefits were significantly greater than Type I benefits because of the role of the clinic within the larger Primary, Acute and Long Term Care contexts. It was expected that this would even more true for Type III benefits.

But how could these different levels of benefit be achieved across the NHS as a whole? To answer this question we need to understand the role of Architecture.

We discussed here a way of thinking about ‘Architecture’. When applied to the context of Health Care, we want to understand the way the different kinds of Trust determine the way that care is provided in response to patients’ demands.

The traditional approach to improving patient care is to focus on the patient journey through a succession of care pathways relating to the patient’s need for treatment. For well-defined patient conditions, this means optimising and aligning the process steps along the care pathway. These improvements affect the care pathway architecture within which treatments can be offered. Type I benefits were achieved by changing the care pathway architecture of the Orthotics Clinics, through such things as implementing clinical delegation and treatment protocols.

The pathfinder projects made a fundamental separation between care pathways and referral pathways. Care pathways define the way treatments are provided, while referral pathways define the way patients are enabled to find the treatments that they need for their particular condition. The referral pathway architecture is affected both by the way care is funded – affecting the way the funding of clinics relates to the way patients need to be treated, and also by the way clinicians themselves are able to make use of each others’ specialisms in how they diagnose a patient’s treatment needs. Type II benefits were achieved by changing the referral pathway architecture governing the way patients reached the Orthotics Clinics, including such things as direct referral and universal review processes.

Finally, some of the conditions experienced by patients can be reduced in their effects if their emergence is anticipated. Thus (for example) the screening of diabetic patients or of children with special needs can reduce the risk of later conditions arising. The health risk governance architecture created by the different Trusts collaborating in the provision of care governs the way these risks can be anticipated.

Each of these architectures depends on the excellence of the architecture at the level below it. Thus without improvements in care pathways, improvements in referral pathways cannot be supported. Equally, without greater precision in the way referral pathways respond to patients, they cannot support more proactive approaches to managing health risk. In other words, the levels of benefit progressively build on each other as the architectures are progressively developed. In these terms we can distinguish three different kinds of approach to the provision of services to patients, each one of which delivers a different type of benefit:

• being treatment-centric requires excellence in the care pathways

• being episode-centric requires clinical teaming built on mutual respect for treatment excellence; and

• being care-centric requires innovation in the way care is delivered through time within the context of patients’ lives that must be supported by a patient-centric approach to treatment.

So how is architecture to be intervened on in such a way as to achieve these benefits?

The conclusion we reached was that a proactive, demand-driven East-West dominant approach was needed to achieving step-change; and that a North-South dominant approach, based on encouraging Trusts to make step-changes through implementing published best practice guidelines, would not work. Understood in terms of the following diagram, moving ‘across’ to the right involves responding increasingly to the particular needs of the individual patient, while moving ‘up’ involves changing the organisation of the architectures within which this responsiveness can be made affordable and practicable on a sustainable basis.

• In a North-South dominant approach, new architectures are designed by top management, and then ‘implemented’ through imposing step-changes on the way clinicians can use them to respond to patients. This is the ‘command-and-control’ approach to change, which, to be successful has to be successful at anticipating the full complexity of behaviours involved in responding to patients. This is never possible in practice.

• In contrast, an East-West dominant approach rests on the clinicians developing greater responsiveness in the way they meet their patients’ needs, and provides them with the means of altering the architectures within which these changes can be made sustainable. This is approach to change can be successful because it is able to work with the full complexity of the situation ‘at the edge’.

So what makes this East-West dominant approach to change difficult for National Governments to implement?

There has of course to be sponsorship for the changes needed, both at the Trust level and at the National level, in order to create a context within which change can take place. But even given this, the demand-led focus on the need for change then has to be driven from the ‘edge’ by the specific needs of the patients. This in turn requires forms of support and transparency that can enable such change to happen, by providing funding for the transition, by providing support for this way of working out how to effect change, and by ensuring that the changes made can be sustained in a way that is accountable.

This means being able to sustain power at the edge, and this is a 21st Century Challenge that Governments have not yet learnt how to meet.

by Philip Boxer

How are we to think about the services offered by a business taking power to the edge? One way is in terms of the three asymmetries.

As pointed out here, the economies associated with the first two asymmetries can be secured under conditions of North-South dominance. This means that their profit potential is defensible because the knowledge associated with creating them is asymmetric on the side of the business: the business has something that both its competitors and customers do not.

In contrast, the third asymmetry requires East-West dominance capable of delivering an appropriate degree of intensity in the relation the business has to the customer’s value deficit, defined in terms of the customer’s effects ladder. This intensity reflects the degree to which the business is engaging with the asymmetric nature of the customer’s demand. From this we can derive four kinds of service, the first of which assumes no relation to the customer’s value deficit:

• r-type: The presumption is that demand is symmetric, and therefore the service is to replicate the offering in as many variants and forms as can be profitably sustained, based on its economies of scale and/or scope. (e.g. pharmaceutical products, telecoms equipment)

The other three services all have varying degrees of involvement with the customer’s context-of-use:

• c-type: The business offers a capability that can be dynamically customised in relation to the customer’s particular use(s) of it. (e.g. providing injections, or telecoms connections).

• K-type: the business offers the know-how needed to collaborate with the customer in solving some part of a larger problem that the customer is experiencing. (e.g. managing an episode of care, or the connectivities available to a business).

• P-type: the business offers the ability to work with the customer on some area of pain that they are suffering, in order to find a way of making it tractable. (e.g. diagnosing what kind of treatment is needed, or defining what kinds of connectivities a business needs).

We can combine these into a diagram that shows the different types of service as a cycle which may or may not end up in the r-type zone:

In each cycle, there is an initial (P-type) service that develops with the customer a way of addressing its need (red circle). As the customer learns this way for itself, this may become a (K-type) service managing how those needs are being addressed (yellow diamond), if there is some aspect of the service that is also defensible. This may become a (c-type) service that the customer includes as part of how it manages its own needs (green triangle). Or the service may end up becoming commoditised and defined independently of the customer’s context-of-use, becoming an (r-type) service (blue square).

The precise dynamics of these cycles, and the mix of rcKP services offered by a business, will depend on the particular demand and competitive conditions encountered. What I have described, however, are the different kinds of service needed depending on the way in which a customer is choosing to internalise or externalise learning as it responds to some aspect of its own particular value deficit.

It follows that if a business is to be able to sustain power at its edge, then the services it offers will involve some mix of c-type, K-type and P-type services. The interesting thing about this mix is that its dynamic and collaborative nature makes the services necessarily relational, creating (at least) two-sided markets in the relationships a business has with its customers.