The Conceptual Age Organization – Value Creation

Value creation in business far too often is discussed in terms of “mechanics”, i.e., process, systems, practices. And, yes, those things do create value but the value created bends toward efficiency aspects and certainly doesn’t explore the far reaches of value possibilities and potential.

To be clear. All business needs some replicable aspects. They offer some lily pads of behavioral consistency/certainty as well as tap into efficiencies which create a foundation in value offered. They create the underpinnings to the cost structure. That said. The key word in that thought is ‘replicable.’ No matter how good a business is on this aspect, 99% of it can be replicated (copied) by someone else. A best practice is simply a practice anyone can do and, if it is truly best, it is malpractice for a business to not implement it.

** note: a best practice in this sense is “common methodologies which prove to create some efficiencies” because ‘best practices’, when institutionalized, lose the truly ‘best aspects’ (the parts tied to a specific context) and simply become, well, practices.

All that said. I do believe an organization can actually be structured revolving around value creation wherein everything would be subservient to value creation and leaders are simply guides of value creation.

Now. While business naturally leans toward a desire for structure and predictability, unfortunately, I believe the pandemic will make business think even more about how to design structure to “enhance cohesiveness/culture” missing out on an opportunity to distribute decisonmaking, and value creation, for fear of ‘losing culture.’

That said. Art, in business, resides in the mental conflict business has between predictive & emergent so the battle to be fought shouldn’t be over whether art is important to business, but rather how a business should embrace emergent aspects and pattern recognition – which demand imagination, flexibility and, well, artistic like thinking. What that really means is the real value creation potential resides not in the science, but in people. And I don’t mean skunkworks or innovation initiatives or even mindfulness exercises, but rather simply having people think conceptually, have some good sensemaking ability and apply some effective choice making.

Science of business is restrictive.

Art of business is expansive.

Science of business is even.

Art of business is uneven.

It is within conceptual thinking that these conflicts of interest, including the self-interest of business itself, must be faced.

Which leads me to

People value creation

We have a propensity to not discuss value creation in terms of people. It is more typically done through the magical ‘system’/organizational lens in which the system, machine-like, churns out created value <if people run the system properly>. And when we do turn the lens toward people we have a nasty habit of either assessing an individual, based on ‘their hired skill’ or maybe a department or, well, if they properly run the system. The reality is that the highest ‘people value creation’ possibilities reside in the informal team constructs, i.e., when a small group of likeminded people with relevant skills coalesce together with a quest in mind. In fact, Niels Pflaeging offered some thoughts with regard to this in a recent article to explain the people aspect organizationally.

Value Creation Structure: The Realm of Reputation

Neither success nor performance can be produced in the formal structure or informal structure, because these are just carriers of the compliance dimension and the social dimension of the organization. For actual work, all organizations possess a third structure: the value creation structure. It is the one structure in which actual work can get done, and from which competitiveness, performance, innovation and success can arise.

From the value creation structure, a particular third kind of power arises that is neither hierarchical nor influence: we call this power reputation: It is attached to those with mastery, or meaningful and unique expertise. Reputational power is sought after when people who have a work problem turn to someone else and ask, “Who really knows about this?” or “Who is the expert on this particular matter?” They are looking for people with mastery, meaning an individual capable of solving a complex, potentially new problem by generating ideas.

In the value creation structure we see the value of consistent and coherent decentralization of decision-making power from the center of an organization to its periphery.

The value creation structure is inevitably networked, as is the informal structure. All value creation flows from the inside out: from teams in the center, to teams in the periphery, to market (see Organize for Complexity³). Value creation structures can be mapped as networks of cells, which contain functionally integrated teams and which are interrelated by value flow, pay and communication relationships. In this structure, any cell either creates value for other network cells (in case of the center) or for the outside market (in case of the periphery). The value creation structure and its workings make it clear that individual performance, or individual value creation, actually does not exist in organizations; actual performance emerges not from individuals, but in the space between individuals, or cells, through collaboration.

Relationships are everything particularly when discussing value creation. This may sound odd, contextually speaking as I am proposing a business model with technology and people so inextricably connected, but as I noted when discussing how technology should augment humans, as Mary Parker Follett suggested: “we can never wholly separate the human from the mechanical side .. you all see every day that the study of human relations in business and the study of operating are bound up together” (Mary Parker Follett, Dynamic Administration).

That said. I would be remiss if I didn’t point out that Niels and Silke Hermann have consistently brought to life Mary Parker Follet’s 1920’s thinking in particular tying the concept of collective responsibility to value creation:

“Collective responsibility. Collective responsibility is not something you get by adding up one by one all the different responsibilities. Collective responsibility is not a matter of adding but of interweaving, a matter of reciprocal modification brought about by the interweaving. It is not a matter of aggregation but of integration.”

 Mary Parker Follett

Anyway. While I have different thoughts about how to actually facilitate an organization that values this informal construct in an organization <see Niels & Silke Hermann’s fine little book OpenSpace Beta to see some excellent thoughts on how to get started>, the truth is maximizing/optimizing value creation does not come from structural scientific process systems, it comes from people working together imaginatively and pragmatically navigating emergence & predictability.

** note: see my thoughts –

• • • • Molecular Structure

      • Conceptual Age Organizations (published soon)

      • Conceptual Age

Working imaginatively and pragmatically has two basic aspects:

• Skills aligned to collectively maximize the potential demands of the moment
• Speed associated with learning demands of the moment

Niels clearly outlines the former so let me discuss the latter – layers of speed associated with learning and change.

It is here I must credit Tim Kastelle for sharing The Clock of the Long Now. And the idea of Pace Layering.

In recent years a few scientists (such as R. V. O’Neill and C. S. Holling) have been probing the same issue in ecological systems: how do they manage change, how do they absorb and incorporate shocks?  The answer appears to lie in the relationship between components in a system that have different change-rates and different scales of size.  Instead of breaking under stress like something brittle, these systems yield as if they were soft.  Some parts respond quickly to the shock, allowing slower parts to ignore the shock and maintain their steady duties of system continuity.

Stewart Brand, Pace Layering: How Complex Systems Learn and Keep Learning

Enduring businesses, or organizations, establish a flow of the business itself. It is dynamic in that it is connected to what sustains it (customers or how it makes money) and yet it will establish its own pace of “the business of doing business.” But the point of Pace Layering is that the organization pace is simply different levels of pace, different systems within the system, each working at their own pace to the benefit of the business. The slower pace levels (most often find in the less dynamic portions or the replicable aspects) operate in coherence to the faster levels (most likely the truly opportunistic emergent aspects). Each pace layer either invigorates or enables the other layers to thrive, i.e., the organization encourages different paces and in doing so an equilibrium is established. There is a firm aspect (the predictability necessary for some consistency) and a dynamic aspect (the change, reflective/iterative/explorative/conceptual necessary for progress).

** note: one of the best Tedtalks I have watched was ‘How can Poetry Benefit the Future of Work?’ by Fateme Banishoeib. I see it as a discussion of pacing, rhythm and art of business.

We do not discuss it often enough, but ‘flow’ does not mean ‘one pace or one speed’, in fact, it is more likely to be the alignment of multiple pacing of multiple things. We focus on ‘slowing down’ or the intangible ‘flow’, but maybe we should be speaking of, and thinking of, pace layering and how lockstep in organizations isn’t even, but comfortable with unevenness of different people’s speed. That said.  The truly dynamic aspect of a Conceptual Age organization, embracing conceptual thinking as the ultimate value creation engine, is accepting teams of people coalescing, at different paces, with the best skills to address the opportunity/issue at hand. It permits conceptual thinking on the replicable/predictive aspects (continuous improvement) as well as at the higher pace opportunistic aspects. Resources gain alignment and the organization itself becomes inherently antifragile adapting as progress is achieved.

** note: an outcome from this type of organization is a reduction in what I call Institutional Debt, i.e., the amount of thoughts, thinking, process, system stuff, a business accumulates over time.

Which leads me to

Art of business

The inherent unevenness, in a positive way with regard to a conceptual thinking, emergent focused, business & people, demands a certain type of attitude as well as skill use. It is here that I divert a bit from my past thinking because it was Dr. Steve Marshall who reminded me that this value creation thinking is actually a discussion about art. In my words, how does one facilitate the art of business? And in Steve’s eyes it can actually literally be art. Well. Actually what he says is “that value creation and first mover advantage in business is about detecting emerging trends and patterns – this is what I suggest the function of art is ‘to make meaning of emergence’.” And he is correct. The means to an artistic end is found in whatever stimulus is needed to prompt the imagination and the artistic within everyone as well as the ability to see the emergent patterns.

** note: conceptual thinking actually places art and data side by side. As noted in the past, conceptual thinking’s enemy is over-fitting data. Over-fitting is, generally speaking, eliminating imagination, creativity and art from thinking (usually driven by fear of risk). It is when a business places art on the same importance level as data that conceptual thinking can thrive.

What I would argue is that before you can effectively incorporate art, itself, philosophically the organization has to value coherence and emergence over consistency and predictability because that creates the environment in which art, in whatever form, can thrive in its acceptability.

I agree with Steve Marshall that ‘art’ has been ignored for far too long in having a role in business and I believe we should be positioning “art” as within the framing of value potential more often.

This is where it gets tricky. Tricky in that most of us sell value of something by showing what it adds. In this case ‘art’ adds value based on emergent thinking, which is contextual, and is quite difficult to explain in a simplistic cause & effect way. Therefore, to me, the way to position it is discussing it as “in the absence of any art, what do you have?”. Without artistic components you then only have scientific/machine components. Without art thinking, you simply have data. As noted earlier, they are “limiting” components. They offer value, but within constraints (an engine can only go so fast for so long and has a range of user potential). If a business wants to maximize its value potential it needs art & science, i.e., accessing both emergent and replicable components, but business, for the most part, only knows how to maximize the science aspects and set up misguided “emergent/art” aspects.

The stark truth is that the ability of people to perform conceptual thinking is important to survival or extinction of aspects of business. Conceptual thinking is inherently iterative, sequential and cumulative which not only creates the basis for creating concepts but also to meet emergent needs evolving from a dynamic marketplace.

Conceptual thinking allows a creature to formulate strategies, i.e. patterns of behaviour derived from already existing multiple potentials for behaviour. These strategies may be learned by one generation from its parents and passed down to succeeding generations. Conceptual thinking frees creatures from behaviour dictated wholly by genetically determined responses. Man’s ability for conceptual thinking has led to strategies some of which are useful for survival and others which might cause his extinction as a species.

While pragmatism and survival in business walk hand in hand, the future demands the ability to view dimensions of a complex present in terms of possibilities, not constraints. Unfortunately, business tends to seek one rationalized conclusion at the expense of others. This closes opportunities, rather than opens them.

At its core this is a conflict, and lack of resolution, between art and science (and science has been winning). I believe one of the issues we have is that the ‘art proponents’ sometimes struggle to bridge the pragmatic aspects of art to business. In fact, I believe anyone who attempts to insert intangible thinking skills into a highly rational ’cause & effect’ business world struggles. The truth is that while art does have an instinctual feel which sidelines many of the mechanical structural aspects business holds onto with ragged claws. That instinctual sense is grounded in pattern recognition and the shaping of emergent aspects.

Steve Marshall Photography: Manifesto

“I’m seeing art as, primarily, an embodied sensing, noticing into our environment – attempting to work at the point of emergent concept, trying to notice (as Bateson might say), ’news of difference.’  So pragmatically, my own art process is to wonder with my camera, dropping as much as I can all preconceptions of what photography should do or look like as I find ways to tune into the wider (socio)ecology. As my intuitive, imaginal senses are piqued, I raise the camera, trying to work with what is rather than my concepts and snap away … In the edit, more aesthetic considerations arise, but by then the work is largely done, the data is sensed and knowing gathered, the image is the artefact of the process – not the point of the exercise.”

Dr. Steve Marshall

What I like about how Steve discusses art is, from my view, conceptual thinking. It’s the ability to view things as they exist, appreciate them for what it is, see the patterns and capture them. In other writings he also discusses time just like Pace Layering, but without the Pace Layering burden. He sees nature, and things, as timeless and yet changing. Often his words have a nice ability to capture the liminalness of whatever he captures on film – that which does not change and that which does.

Interestingly, Steve also, without explicitly saying it, captures sensemaking and choice making. Art, or artistic thinking, well done is making sense of something and the art itself (the embodiment) is a reflection of some choice made with regard to what you sensed/evaluation of sense. As for value creation. Art, of course, offers value in not only making people feel, but offering some people a way to make sense of things (even if they don’t understand the cognitive rigor of doing so). Pragmatically, art offers value in that composition is always in recognizing unseen/unobvious patterns and capturing them in a way that someone creates a concept in their own mind. By the way. That is conceptual thinking which envisions value offered.

I would be remiss if I didn’t point out all the things I just wrote tie the intangible value of art to the tangible needs of a business. I would also be remiss if I didn’t point out that I, a more pragmatic business person who loves art, the art of business and how art actually contributes to better conceptual thinking, sense making and choice making, was translating an artist’s thoughts into basic pragmatic business terms. I do not say any of that to diminish Steve’s thoughts just to point out art is incredibly important to the future of business and value creation and, yet, it is often incredibly difficult to effectively link its importance to the business world.

Conceptual thinking and value creation

At the core of my business belief is that the future of business resides in those who can think conceptually. By thinking conceptually, they will be able to envision ways to navigate an increasingly complex business world to solve things in the present as well as meet opportunities arising in the future. In order to be an effective conceptual thinker, one has to be able to (1) see patterns or coalesce fragments of things that are often vague if not obvious & (b) envision things beyond the boundaries of existing constraints/bias/systems. I would be remiss if I didn’t note that art, or thinking artistically, meets both those criteria. We often speak of imagination and maybe we should speak more about art. Why? Great art exists within constraints (frames) as well as without constraints (anything not within a frame). Art exists within what can be seen and what cannot be seen (in business terms, data and data patterns). Therefore, art checks both the predictive and emergent boxes. It can be effective within the constraints of what exists as well as in the possibilities of what happens when you think beyond the constraints. That may be the best articulation of the value of art, and artistic thinking, that I can think of.

Humans being human and value creation

Business has always missed the opportunity to embrace humans being humans. Taylorism bent business toward rational productivity, caging humans, restricting them, believing freedom cost a business rather than profited a business. Therefore, while businesses did succeed, did profit and did grow, it did so within a restricted view of its greater potential – human potential to create value creation that only human freedom can create.

We appear to be reaching a point in which the business world, or at least that Taylorism-based grander narrative, is collapsing bringing into focus an inner meaning of work that has been misplaced. The discontent and disasters of business are now being noticed even by the unreflective people and even has affected the processes of the way things are being done. The impersonal grinding of the business machine is no longer seen as the mastering of simplistically empowering business, but rather the stripping of effectiveness and meaning.

Value creation, from a personal perspective, is forcing this generation of work in this generation type of business to seek landmarks, bearing and quests in a terrain for which the maps have yet to be drawn.

Business swings back & forth in response to this narrative collapse in between specific tasks/#’s objectives (believing they offer lighthouses in an uncertain world) or ‘innovation’ (the crashing narrative offers creative opportunities for those who create something new).

Both paths are flawed and ignore the larger quest at hand.

I will note that the natural code of behavior, the desire for some predictability & routine as well as new & exploration, is important because they can give meaning to business life that otherwise could seem to have no meaning or justification. The modern business world, which seems to have abandoned some significant aspects of humanity and how humans thrive, can realize a the more idealized version of meaning in a characteristically human effort of engaging in ways that they embrace where technology is not a crutch, but rather a constant infection of energy (through knowledge). To me, conceptual thinking offers the ‘optimal newness’ path navigating both art, & artistic thinking, and science (most often found in data & interpreting the overwhelming amount of data available to us) on a quest for business success not absent of meaning.

Which leads me to

Meaningful value creation

In How to Lead a Quest Dr Jason Fox offered the concept of “meaningful progress.” While a fabulous concept it often struggles in its nebulousness. That said. The idea of an emergent Conceptual Age organization offers us a pathway to a definition. Meaningful progress, to me, is inextricably linked to value creation, i.e., an individual contributes something of value to a community which, collectively, creates & offers something of value to someone who recognizes its value and pays for it or uses it. From an individual perspective, meaningful progress, to me, is an alignment of financial, achievements and intrinsic.

Yes, I included financial. Progress should be leading to business success and success should be rewarded as part of the recognition of the progress (not always immediate or it starts falling into a gamification downward spiral).

** note: ignoring the fact that people are financially motivated is silly. It becomes even sillier when a business is making progress and an individual doesn’t share in that financial progress. Business value creation has, well, value. If some is part of the value creation a part of that value should be compensated.

Yes. I included achievement. This isn’t milestones, sprints or races (finite things) but it does include overt recognition of movement or make tangible “where are we going” feelings. I include this because progress can come in all sizes and sometimes progress can be small – and small for weeks on end – so giving some indications of progress feeds into, well, the intrinsic aspect.

** note: people always desire an indication of ‘forward progress’ (albeit progress can actually be achieved in any direction including backwards). Achievements is an indicator. Should it be the ‘be all, end all’? no. but at some point a business cannot assume people will recognize meaningfulness or progress and part of a business responsibility is to, in a genuine way not a simplistic reporting way, tell people – or directly to an individual in a ‘personalized way’ – that meaningful progress is being achieved and the person is contributing to it.

Yes. I included intrinsic. There are many extremely well qualified people than I who have discussed individual meaning and intrinsic motivation. Instead I will point out that emergence is inherently intrinsically rewarding. Constant learning, engaging with optimal newness (some new without completely discarding some old), evolution intrinsically feeds into a feeling of “better today than I was yesterday and better tomorrow than I was today.” Without digging into some deep psychological aspects this alone feeds into meaningful progress in an intrinsic way.

** note: art, or artistic thinking, contributes to adding ‘meaning’ to progress. As Hugh McLeod suggested “everyone is born with a box of crayons.” Over time creativity gets beat out of us, but once business reengages individual’s creativity through conceptual thinking – which ensures art is contributing to the business – the progress taps into something more within a person, therefore, taps into something more intrinsic. This, alone, could be my argument that business needs more art.

I actually believe my idea, a Conceptual Age Organization, actually created the organizational environment for what Dr Jason Fox asked us to do – go on a quest. But that is his idea, not mine. Value creation, at its optimal level, is people working with people, using all their potential, learning & thinking conceptually, applying conceptual thinking to create value, being paid for it, receiving some acknowledgement of the progress and tapping into a feeling that the work they are doing has some meaning. And, yes, circling back to the role of technology in a Conceptual Age Organization, Information Based Software (IBS) is integral to meaning and meaningful progress. While human interaction is possibly the highest order to dialogue/information transfer, technology offers an opportunity beyond the limitations of human time. Not only does my idea of IBS continuously prompt conceptual thinking (learning) with steady doses of personalized knowledge inputs it also offers an opportunity for personalized ‘progress’ information. Therefore, in a Conceptual Age Organization technology amplifies human outputs at a scale in which human time does not permit. It does not replace humans or human interaction but rather fills in the gaps of the natural order of time constraints.