Topsight: A Guide to Studying, Diagnosing, and Fixing Information Flow in Organizations

Topsight: A Guide to Studying, Diagnosing, and Fixing Information Flow in Organizations

Now available in print and Kindle editions!

Topsight—the overall understanding of the big picture—is hard to achieve in organizations. There’s too much going on, too many moving pieces. But without topsight, we have a hard time figuring out how information circulates, where it gets stuck, and how we can get it unstuck.

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Reading :: The Tree of Knowledge

Posted by: on Nov 20, 2014 | No Comments

Tree of Knowledge
By Humbert R. Maturana and Francisco J. Varela

Jeff Susna recommended this book to me on Twitter, and later pointed me to this talk, in which he applies the book’s concepts to cybernetics. That talk is more valuable than this review will be, I suspect, so definitely take a look.

Are you back? Okay. As the subtitle suggests, this book is about “the biological roots of human understanding.” The authors, who are both biologists, seek to provide a discussion of thought and perception that is rooted in biology. But the book is no dry biology textbook—it’s full of accessible illustrations, sidebars, and metaphors that help us to grasp tricky concepts.

The central concept is that of autopoietic organization: for instance, in cell dynamics, a “cell metabolism produces components which make up the network of transformations that produced them” (p.44). This network of transformations is limited by a boundary—a membrane. So the two aspects of this unitary phenomenon are Dynamics (metabolism) and Boundary (membrane), each of which produces conditions for the other (p.46). “The most striking feature of an autopoietic system is that it pulls itself up by its own bootstraps and becomes distinct from its environment through its own dynamics, in such a way that both things are inseparable” (pp.46-47). And they add: “Living beings are characterized by their autopoietic organization. They differ from each other in their structure, but they are alike in their organization” (p.47).

What’s the difference between organization and structure? In a sidebar, the authors explain that “Organization denotes those relations that must exist among the components of a system in order for it to be a member of a specific class. Structure denotes the components and relations that actually constitute a particular unity and make its organization real” (p.47).

Speaking of structure—in the sense the authors are using the term—the book’s structure takes us from the cell level to the level of human knowledge. Since I’m not planning to recapitulate the entire book, I’ll skip the next chapter (on history, reproduction, and heredity) and get to the chapter on multicellulars, which describes the phenomenon of structural coupling (p.75). In this phenomenon, two or more autopoietic unities are placed in interaction, becoming the source of each others’ interactions: “This means that two (or more) autopoietic unities can undergo coupled ontogenies when their actions take on a recurrent or more stable nature,” including “reciprocal perturbations.” And “The result will be a history of mutual congruent structural changes as long as the autopoietic unity and its containing environment do not disintegrate: there will be a structural coupling” (p.75). (Side note: I can see the clear influence of autopoiesis on John Boyd’s OODA loop.)

Speaking of disturbances, the authors go on to argue that “the changes that result from the interaction between the living being and its environment are brought about by the disturbing agent but determined by the structure of the disturbed system” (p.96). By analogy, they point out that “breakdowns in man-made machines reveal more about their effective operation than our descriptions of them when they operate normally” (cf. Latour on black-boxing here).

Let’s skip a lot of good stuff in the interest of the review. By Ch.8, the authors have worked their way up the ladder to social phenomena—although they’re still dealing with insects and birds. “We call social phenomena those phenomena associated with the participation of organisms in constituting third-order entities” (i.e., structural coupling across organisms rather than across cells), and “As observers we designate as communicative those behaviors which occur in social coupling, and as communication that behavioral coordination which we observe as a result of it” (p.195). Given what they know about structural coupling, they conclude (as most of us in rhetoric have) that “there is no ‘transmitted information’ in communication” (p.196)—that is, the abstraction of information is not a thing to be transported. “The phenomenon of communication depends on not what is transmitted, but on what happens to the person who receives it” (p.196). (Again, cf. Latour on the difference between the diffusion model and the translation model.)

The authors also discuss another thing in this chapter: “By cultural behavior we mean the transgenerational stability of behavioral patterns ontogenetically acquired in the communicative dynamics of a social environment” (p.201).

Eventually, we get to the chapter on linguistic domains and human consciousness. Here, although the insights are based on those of the previous chapters, we don’t get many surprises from a contemporary rhetorical standpoint. “Language is an ongoing process that only exists as languaging, not as isolated items of behavior” (p.201)—yes. “What we say—unless we are lying—reflects what we live, not what happens from the perspective of an independent observer” (p.231)—sure. “[W]e maintain an ongoing descriptive recursion which we call the ‘I.’ It enables us to conserve our linguistic operational coherence and our adaption in the domain of language” (p.231)—okay. (Side note: My interest piqued, I googled “Deleuze Maturana” and sure enough, Deleuze & Guattari’s A Thousand Plateaus is in dialogue with these ideas.)

Finally, we get to the last chapter, “The Tree of Knowledge.” See Jeff Sussna’s video (link above) for the implications. The chapter is on the ethics that the authors say emerge from this world view. A few sentences: “we have only the world that we bring forth with others, and only love helps us bring it forth” (p.248); “We affirm that at the core of all the troubles we face today is our very ignorance of knowing” (p.248). And “The knowledge of knowledge compels. It compels us to adopt an attitude of permanent vigilance against the temptation of certainty” (p.245).

And here, to be blunt, I have trouble following the argument. Yes, one could take the previous chapter’s lessons as leading to mutual understanding, to rejecting dogmatism in favor of recognizing and honoring each other’s viewpoints, and as (I guess) seeing love as the animating feature that brings the world forth. But one could also absorb this insight into the knowledge of knowledge, then use it to compete more effectively, to better understand one’s enemy in order to cut him off from his knowledge of his environment, to confuse and disorient him in order to cause his alliances and will to disintegrate. This use seems just as applicable, and certainly seems to have precedent in some of the examples used across chapters (cells, organisms). As I noted earlier, this use was the one that John Boyd applied, and through his work, it has become a highly effective component of military strategy as well as business strategy.

In any case, the book was highly interesting and useful. As you can tell, between the time I read it and now, I’ve read other books, and these other ideas are overlaid over my second reading. My sense is that it’ll become even more interesting on subsequent readings. Definitely pick it up.

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Reading :: Innovation Prowess

Posted by: on Nov 20, 2014 | No Comments

Innovation Prowess: Leadership Strategies for Accelerating Growth
By George S. Day

When I began reading this slim (107pp) book, I was initially unimpressed. The book is about how to accelerate your firm’s organic growth rate, specifically by increasing the “innovation prowess” in your firm. But as I read the rest of the book, I realized how much valuable thinking was packed into this slim little volume.

Innovation prowess is gained by combining strategic discipline in growth-seeking activities with an organizational ability to achieve the aspirations and intentions of the growth strategy,” Day explains. Together, these allow a firm to grow faster and sustain growth more successfully. And they are sustained by three reinforcing elements:

  1. An innovation culture that encourages risk taking and exploration;
  2. The capabilities exercised through innovation processes for acquiring deep market insights, mastering the supporting technologies, and carrying out innovation activities better than their rivals; and
  3. A configuration of the organization and incentives that support and encourage growth-seeking behavior. (p.7)
Day depicts innovation prowess as a process that involves 1. setting the growth strategy, 2. expanding the search for growth opportunities, and 3. converging on the best opportunities—each of which involves feedback loops (p.11). 
To achieve innovation prowess, he says, “the management team has to agree on their beliefs and assumptions” (p.17) and avoid letting “small-i” innovation replace “BIG-I” Innovation in their firm (p.18). He provides several figures to help us conceptualize the feedback loops involved. For instance, figure 1-5 suggests how to integrate inside-out and outside-in thinking to ideate based on changing constraints (p.26). Figure 1-6 illustrates a continuum between inorganic growth (“buy”) and organic growth (“build”) (p.29), mapping growth mechanisms such as closed innovation, open innovation, internal incubators, external ventures, and mergers & acquisitions. Figure 2-1 illustrates 14 growth pathways, categorized as related to the value proposition (customers, offerings, value profile) or the business model (value-creating systems, value-capturing systems) (p.39). Figure 2-3 illustrates customer experience mapping (p.48)—perhaps the most useful illustration in the book. Figure 4-1 describes three organizational elements of innovation ability: capabilities, configuration, and culture (p.81). 
In each of these figures, Day helps us to conceptualize and categorize aspects of the firm that can lead to an innovation culture. The result is a well-developed, well-explained overview with great practical value. If you’re interested in innovations, innovation culture, or value propositions, take a look.
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Reading :: Crossing the Chasm

Posted by: on Nov 20, 2014 | No Comments

Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers
By Geoffrey A. Moore

“Prior to entering the world of high tech,” Moore writes in the Acknowledgements of this book, “I was an English professor” (p.xix). I emailed this quote to one of my PhD students, who is thinking about taking a nonacademic career path, noting that there is indeed hope of success and fulfillment outside the halls of academia.

Certainly Moore has achieved a lot: the book, originally published in 1991, was a Businessweek bestseller and has at least three editions. The one I read was the 2002 revised edition, and it’s still full of examples from the late 1980s, but it’s still useful for all that. Essentially, Moore argues that in the technology adoption lifecycle, there’s a big gap between early adopters and mainstream adopters. The gap—the “chasm” of the title—is tricky to negotiate because it’s very difficult to transition to mainstream customers while still holding onto the early adopters, who are key evangelists.

Moore’s basic approach is to carefully segment the market so that your product is the only one serving that segment—to be the big (or only) fish in the small pond, to be a de facto monopoly (p.108). To do this, he provides a few different conceptual tools.

The first is the Whole Product Model (p.109), a set of concentric circles that represent perceptions of the product. These are labeled (from interior to exterior): generic product, expected product, augmented product, potential product (p.109). The circles represent a progression from the early adopters to the later ones.

The second is the Simplified Whole Product Model (p.113), in which the generic product is surrounded by segments labeled: standards and procedures, additional software, additional hardware, system integration, installation and debugging, cables, training and support.

As a side note, I was uncomfortable with Moore’s metaphors in this chapter, entitled “Assemble the Invasion Force.” He describes the task of entering a competitive market as “trying to invade Normandy from England, and the installed market leader is playing the role of the Nazi forces” (p.117). Entering a market without competition is “as if one had landed on a new continent and decided to set up shop selling wares to the natives” (p.117).

Let’s get to the third model, the Competitive-Positioning Compass (p.135). It’s basically a matrix in which the x-axis is generalist v. specialist and the y-axis is supporters v skeptics. The resulting quadrants are: technology enthusiasts (specialist/skeptics), visionaries (specialist/supporters), pragmatist (generalist/skeptics), and conservative (generalist/supporters). You traverse the matrix in that order, and when you cross from specialist to generalist, you are crossing the chasm, “a transition from product-based to market-based values” (p.135). Moore provides a table contrasting the two sets of values (p.137).

Perhaps because of his background as an English professor, Moore describes the positioning of the product in terms of claims and evidence (p.152). He argues that your claim must pass the elevator test—that is, if you can’t articulate it in an elevator pitch, it’s not ready (pp.152-153). So he provides a good template for formulating this kind of claim:

For (target customers—beachhead segment only) 

Who are dissatisfied with (the current market alternative

Our product is a (new product category) 

That provides (key problem-solving capability). 

Unlike (the product alternative

We have assembled (key whole-product features for your specific application) (p.154)

And the claim must be backed by evidence, so he provides a beautiful little matrix on how to assemble it (p.157). This evidence is laid over the Competitive-Positioning Compass, with quadrants now labeled by types of evidence: technology (specialist/skeptics), product (specialist/supporters), market (generalist/skeptics), and company (generalist/supporters).

And here’s where I think the real value of the book comes in. At its heart, Crossing the Chasm is a rhetoric handbook for articulating a value proposition. At this point in the book, Moore is helping people to articulate their claim in a specific format and provide different types of evidence for it. If you’re interested in entrepreneurial communication, writing, and argumentation, it’s at this point that the book is clearly worth the price of admission.

In Blog

Reading :: Value Migration

Posted by: on Nov 20, 2014 | No Comments

Value Migration: How to Think Several Moves Ahead of the Competition
By Adrian J. Slywotzky

Suppose you’re an entrepreneur who has just come up with The Next Big Thing. Maybe you have followed blue ocean strategy and discovered a new market to exploit, one that has no competition. Nice work! It’s as if you’re printing money.

But over time, others see that you have a good thing, and they start competing in the same space. Competition means that your margins become thinner and you have to work harder for each customer. More than that, others are innovating too, because your “new” business model has become established. “Value migrates from outmoded business designs to new ones that are better able to satisfy customers’ most important priorities” (p.4).

What do you do?

In this 1996 book, the author discusses value migration. “A business design can exist in only one of three states with respect to Value Migration: value inflow, stability, or value outflow” (p.6). This progression has existed for a while, but “Sometime in the 1980s, the game changed, the pace quickened” (p.8). The “new game of business,” Slywotzky says, is founded on a different set of assumptions: not revenue but profit; not share of market but share of market value; not product power but customer power; not technology but business design (p.11). So the new task is to locate value and predict where it will move—toward new activities, skills, and business designs (p.12).

To help you locate value and predict where it will move, Slywotzky provides four heuristics aimed at helping you to map changing customer priorities; identify new business designs; compare business designs; and build new business designs to capture value growth (p.84). Much of the book focuses on how to work through these heuristics, and it illustrates the heuristics with 1996-era case studies.

But it also points out other changes. For instance, Slywotzky argues that “in the age of manufacturing, the sales force was the dominant go-to-market mechanism”; if you wanted to sell something, you would rely on a large, disciplined sales force (p.208). But “in the age of distribution, value has shifted to low-cost distribution and high-end solutions” (p.208): the traditional sales force is bypassed, and enterprises either go to low-cost distribution models (Dell’s direct-to-customer model as well as bulk sales such as Costco) or high-end solutions (EDS’ and Hewlett-Packard’s senior-level selling).

Slywotzky closes by arguing that the relative power of customers influences the direction in which value will flow: a unique product gives the balance of power to the supplier, while a pure commodity gives it to the customer (p.253).

In all, I found this to be an illuminating book. The examples are now almost two decades out of date, but the fundamentals are solid and we can easily apply the lessons to modern cases. If you’re interested in business model design or value, take a look.

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Reading :: Entrepreneur’s Toolkit

Posted by: on Nov 20, 2014 | No Comments

Entrepreneur’s Toolkit: Tools and Techniques to Launch and Grow Your New BusinessBy Harvard Business EssentialsI picked up this book as a tool for better understanding entrepreneurship. It does a serviceable job of this, although it’s less heuristic-dr…