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A META MODEL OF ORGANIZATIONAL STRATEGY[footnoteRef:1] [1: You have an enormous number of slides to work with in the SIA module and I don't propose just to read them out to you. That would be a waste of your time; death by PowerPoint. Students can read overheads for themselves. The purpose of a taught sessions is to interact and discuss, clarify difficulties, illustrate concepts with examples, relate the subject matter of the sessions to the students own research and learn from one another. The purpose of my lectures is to cover the same ground as the strategy into action programme, but at the same time to extend the concepts described in the programme to a more advanced level.]

(revised)

Robin Matthews

Professor Emeritus

Kingston University London

Visiting Dean and

J.M. Keynes Professor of Management

Moscow School of Social and Economic Sciences

Academy of National economy

Moscow

http/www.robindcmatthews.com

http://www.tcib.org.uk/about.html

http://kpp-russia.ru

Please do not use without acknowledgement

INTRODUCTION

The meta model of strategy, summarized here, focuses on system states and system dynamics and is a subset of a more general enneagram model, which concerns both system states and processes[endnoteRef:1] and acts as a mandala that activates (perhaps) creative thinking. The enneagram model offers a template for analyzing processes in organizations, public and private, for profit and not for profit small or large, global or domestic in all sectors and other organizations. [1: See Matthews (2007) and other papers the websites http/www.robindcmatthews.com and the centre for international business at http://www.tcib.org.uk/about.html and http://kpp-russia.ru]

The meta as a subset of the enneagram model is a systems dynamic model concerned, like the succession of stills in a movie, with states at time S(t) and so forth S(t), S(t+1), S(t+2), S(t+n) and states prior to S(t), St-1), S(t-2).S(t-n) and so forth. Whereas the meta model is concerned with system states, the enneagram model is also concerned with processes. It is a consultancy tool. It is a tool for deconstructing and analyzing organizations.

Deconstruction means trying to see problems from many sides a polyphonic approach; necessary for creative analysis; trying not to be slaves of a single mind set, when another approach might be more fruitful if we could only see it. The enneagram model is also the basis for forecasting global trends[endnoteRef:2]. [2: See Ageev, Mensch and Matthews (2012).]

The description, strategy, has a militaristic flavor that perhaps should be avoided. But it is widely used[endnoteRef:3]. Really strategy is about decisions. Here we use strategy to refer to the set of decisions that are made in an organization. We define management decisions as being about caring for the resources that decision makers are entrusted with: perhaps this makes strategy sound less militaristic. [3: Textbook strategy has a militaristic flavour. The conventionally held business model based on competitive advantage sees a firm as permanently at war with its rivals, both competitors and partners (suppliers and customers). Not to my mind only is this a failed business model. ]

Organization refers to the wide variety of things that are organized, or structured, or arranged, formally or informally; political and social organizations and institutions, profit and not for profit firms, charities, formal or informal structures, small and large organizations, global or local, or subsets of any of them. We might include households under the heading of organization. Organization takes place at many levels, from the fundamental level, the team for example, to the global level, transnational corporations or institutions. The enneagram model and the meta model apply to all kinds of organization.

The word organization has a deeper meaning. The world consists of inter-dependent, inter-related parts, connected entities, activities and events. The only way we can attempt to understand it is by constructing models that organize them in our minds as separate parts, when in fact they are inseparable. Reality is never experienced directly, only through the media of instruments; first our senses, thinking, feeling, intuitions that are conditioned by our genes and experience, education, habit patterns; second, by instruments that we construct, telescopes, microscopes, microphones, information and communication technologies; third our conceptual models, mental models, scientific models, habits of thought, paradigms. Put in other words, we adopt grammars to help us to understand. And the grammars we adopt determine our understanding. So, the idea of grammar (organizational grammar) is important throughout this course. Perhaps the most important one.

A few aspects of the enneagram and its sub model the meta model are noted here. First, they are interdisciplinary, drawing on insights from physical and biological science. Second, the split between the material and the spiritual, although perhaps necessary in earlier times, has gone too far and the models may include elements of both. Spirituality is a source of creativity, connected to the notion of grammar that we introduce later in the chapter. Third, the models encompass both academic and consulting approaches to business; they focus on solutions as well analysis.

One metaphor to describe organizations is as networks of relationships between assets, functions, processes, projects or activities that produce something sell something, dispose of something, distribute something or consume something. Another metaphor for organizations is a matrix. A matrix is an arrangement of things; row B seat 4 for example on a theatre ticket. Both matrices and networks describe connections between things; synergies (externalities or neighborhood effects, as they are sometimes called) describe linkages that enhance or detract from the value of assets, or businesses. Feedback, contagion, percolation are words that synonymously describe interactions between entities over time, ranging from the spread of political disruption from one nation to another as in the Arab Spring or Glasnost, to the spread of disease, or banking crises, or disruption of entire airline schedules when one plane is delayed.

The matrix is a central metaphor here. Evolution and change take place through the formation and reformation of coalitions (at many levels of organization) on an organization matrix. More of that later.

This chapter introduces four concepts; the meta and Enneagram models, the organization matrix and grammar (organizational grammar). Summarizing; the meta model relates to the state of an organization; the Enneagram to changes in the state; the organization Matrix is the context in which the state and changes in the state take place; and grammar works as an algorithm, an organizing principle or set of formal and informal rules of the game.[endnoteRef:4] [4: Wittgenstein described grammar as rules for use of a word(PG. 1979)]

ORGANIZATIONS

I use the word organisation to include all types of business large and small, profit and not for profit, public and private. It also can include local and central government departments, international institutions such as the IMF, OECD, World Bank, the EU, in other words any institution you can name.

The Oxford dictionary defines organisations as orderly structures designed to fulfil a purpose. The many types of organisation mentioned in the previous sentence fit this description. Organisations are not only orderly structures that systematise the huge number of variables that make up business, economic and physical worlds; they are also structures designed to bring stability, fulfil purposes, and give meaning to systems that otherwise might be completely chaotic.

The word organisation is also associated with grammar organisational grammar. Organisational grammar captures the idea that it is grammar that enables organisations to fulfil their functions. If we think of strategy through the lens of game theory, we can see organisational grammar as describing the rules within which the game of strategy is played, in much the same way grammar was described as the rules for the use of the word.

Organizations as networks

Figure 1: networks[endnoteRef:5] [5: If we think of an organisation as a network and thats a very good way of thinking about it. It consists of a network of relationships between the elements of the value chain all the elements of the business scorecard or the elements of the six Sigma categories now these elements might refer to the notes of a network and these nodes are part of organisational grammar. In formal terms the nodes of the network referred to the morphology of a grammar the parts of speech that is now on is verbs and adjectives prepositions and so on these correspond to the components for example of an organisations value chain or an organisations supply chain. When we think of how these nodes are connected we are referring to a different second aspect of grammar. That is the syntax of grammar were syntax refers to the way in which these nodes are connected. The linkages and synergies between the nodes within an organisation between the nodes within an organisation and the outer environment the relationships with outer dynamics.]

The networks in figure 1 vary in size and connectivity. The common characteristics of each of the networks in figure 1 are nodes (vertices) the dots in the figure, and linkages (edges) the connections between the nodes. This observation introduces another aspect of grammar. Grammar has:

1. Morphology: as in grammar in an ordinary sense which has parts of speech, nouns, verbs, adjectives prepositions and so on corresponding parts of speech in grammar are the nodes or vertices of an organizations network; depending on the level of organization, assets, businesses, corporations.

2. Syntax: the rules for connecting the nodes of grammar correspond to the rules governing connections between different parts of speech in ordinary grammar.

SYSTEM STATES AND PROCESSES

The distinction between states and processes is illustrated in figure 2. A system state exists at a point in time S(T). Processes describe events and actions taking place over time; reading from left the past, rightwards through the present into the future. System is a general word describing entities (family members, firms, nations, and generally linkages (relationships) between nodes (edges) .

We distinguish system states and process as follows.

1. State. The system state describes the state of an organization at a point (or very short interval) time.

2. Process. Transition from one system state to another; growth, stability, decline over time; evolution in time.

3. Process. Speed/size of the transition from one system state to another.

Figure 2[endnoteRef:6] [6: Figure Z borrowed from the UK Ministry of Defence is a quite intelligent framework for looking at the future; intelligent in that it clearly shows that as we look further and further ahead, the range of conceivable and inconceivable outcomes becomes ever larger.

Figure Z]

System States

Since organisations are systems, it is useful to think of the system state of an organisation. A complete description of the system state of an organisation would give a complete picture of all forces acting on it, from inside (inner dynamics) and outside (outer dynamics). And also a complete picture of its purposes, aims and payoffs, that is decisions, strategies, concepts, actions and adaptations that try shape the grammar of organizations; modify the grammar; shift the grammar; transform the rules that govern an organization.

The meta model described below aims to provide a framework for discussion of the system state of an organisation. It is tempting to think of the system state is giving a picture of the forces acting on an organisation at a moment in time. But we have to remember that the idea of a moment in time is a convenient fiction. Moments are impermanent. Time flies, we say, everything is impermanent. The forces acting on organisations are dynamic forces (inner and outer dynamics, payoffs), bringing impermanence to any system state.

Processes

Strategy is a process, happening in time. Processes are sequences of events over time.

Figure 3 describes the stages of strategy (search, choice, implementation and adaptation), thought and action. The diagram is intended to convey the idea that strategy is a continuous process. Intentions and values are rarely realised in action and if they are realised they are only temporarily realised. Adaptation is always necessary. Strategy then is a continuous process.

Figure 3

As a process, strategic decision making consists of the following steps. See figure 3;

1. Conceptual/intentional; search for alternative possibilities, given a set of values, norms and objectives. Using Jungian typology (Myers-Briggs personality types are borrowed, rather carelessly from Jung) decisions are based on his four functions; rationality or on emotion, instinct or intuition, or as is usually the case, on a mixture of functions.

2. Action; choosing an alternative choice and acting on it; implementation. Except in one person businesses and even then, implementation is carried out by people other than the decision maker. Their values, norms and objectives usually differ; giving rise to the principal agent problems, moral hazard, problems of asymmetric information.

3. Adaptation; intentions are rarely if ever fulfilled, for any number of reasons, including those mentioned in the previous paragraph and in discussion of the dynamic forces acting on system states. The dynamics of the situation may render the chosen action, not feasible; or the system state may have been misread in the first place.

The distinction between thought, action and adaptation is a simplification that falsifies. In an organization these stages take place in succession and in parallel. As in parallel computing, organizations even small organizations, contain parallel decisions and strategies. Further, strategy consists of all the stages. The participants in strategy who determine outcomes include all stakeholders, just as the participants in a play consist of the author, the actors, the audience, the reviewers and a host of others ; all of whom determine the outcome, the payoffs, the play.

Processes, transitions and trajectories of system states[footnoteRef:2] [2: See Taleb (2007) and ]

System state refers to the current state of inner dynamics, outer dynamics, payoffs and Grammar. System states change from one moment to another. You may imagine Figure 6 in four dimensions, as in figure 4.

Figure 4 is an attempt to achieve the impossible, that is to illustrate four dimensions in a two dimensional space. Thus you have to use your imagination. It has three dimensions, inner and outer dynamics and payoffs, set in Grammar and a fourth dimension indicated by the arrow which indicates the path of changing system states over time. The arrow points from the past, through a particular moment in time and projects forward into the future[endnoteRef:7]. [7: The system state; is path dependent (a) the current state (where we are now) depends decisions and events from the past and (b) the future is to some extent conditioned by the past (history matters). See Arther (1994).]

Figure 4: transition from one system state to another[endnoteRef:8] [8: Strategic decisions are made now. They are influenced by the past (path dependence) and projected into an unknowable future. We like to attach probabilities to the unknowable future. We design models based on impact analysis; impact being a multiple of the assumed probability of an outcome and its assumed impact on an organization. This is a useful fiction sometimes. Sometimes introducing spurious certainty into a world that is essentially uncertain leads to gross errors of judgement in personal and business life.]

There are many different trajectories or paths from the present into the future. Three possible paths are indicated in the figure. In fact there are a huge numbers of possibilities.

So many variables enter into the system state that it is tempting to treat the trajectory from one system state to another as Brownian motion or a Weiner process[endnoteRef:9] in which movement from one system state to another is a random process. Tolstoy more or less took this view in War and Peace.[endnoteRef:10] Strategy is an attempt to impose order on what might be random processes. [9: In a Weiner process or Brownian motion increments or changes from one system state to another are independent random variables: every increment is normally distributed with a standardized mean of zero and a variance of 1. ] [10: Path dependence refers to two aspects of the system state; (a) the current state (where we are now) depends decisions and events from the past and (b) the future is to some extent conditioned by the past (history matters). See Brian Arthur (1994).]

THE META MODEL

The Meta model which is part of my own work consists of four components;

1. The first is outer dynamics facing an organisation

2. The second is the inner dynamics what happens inside an organisation.

3. The third is the payoffs of an organisation

4. The fourth is organizational grammar; again one of the concepts I have developed.

Figure 2 illustrates the meta model

Outer dynamics

I prefer[endnoteRef:11] to think of outer dynamics and two components; (a) the macro landscape of an organization is cast into and (b) the competitive landscape, made up of rivals and partners; competitors, suppliers, distributors, retailers, final customers all embedded in the macro landscape and ultimately, grammar. [11: Outer dynamics are often described in PESTE analysis.]

Figure 5[endnoteRef:12] [12: Another way of describing the meta model is as an intersection of 3 sets; outer and inner dynamics and payoffs contained in grammar. Priorities lie in the intersection of the three sets.

Figure Y

]

Roughly speaking outer dynamics consists of those forces which affect an organisation but are more or less unaffected by what the organisation does. I'll qualify that later. All organisations affect their environment; all organizations have interdependent relationships with customers, suppliers, distributors, competitors and with nature. Political manipulation, marketing, public relations and gifts to political parties are designed to influence their competitive landscape[endnoteRef:13]. [13: When you look at the strategy into action module overview the overheads there you will see am quite a few overheads going through what UWS profs call the PESTE framework. You will also see that they referred to competitive dynamics through Porters five forces framework. The five forces framework is very well known; so well known that it's become pretty boring. Nonetheless it is useful and like much of Michael Porter's work it's an illustration of the industrial organisational (IO) approach to strategy. Linking inner and outer dynamics, competition within the industry can be via low cost (high productivity and differentiation, Porter describes in more detail in his generic strategy box; cost, focus and differentiation. Ghoshal and Bartlett developed the generic strategy box into an integration responsiveness framework. ]

Outer dynamics includes the state social capital in a society; trust, truth telling, honesty, concern for others and the willingness to live by the norms of society. Social capital (and the lack of it) reduces transactions costs of doing business.

Inner dynamics

Inner dynamics describe the tangible and intangible assets of an organization: roughly speaking they are within its control. Tangible assets include human capital (human resources), physical capital, plant, real estate, and machinery and financial capital; working capital, liquidity and access to sources of finance debt, equity, and overdraft facilities. Intangible assets include corporate reputation, trust and similar to social capital of the competitive landscape, organizations have their own social capital which reduces transactions cost internally[endnoteRef:14]. [14: As in the analysis of outer dynamics, consultants and academic researchers have invented many different models to analyse inner dynamics; including, value and supply chains, production functions. The UWS strategy and business tools module includes overheads on 6 Sigma and Lean methodology and extensive discussion of the Kaplan and Norton balanced business scorecard. ]

Payoffs

It is a commonplace that businesses have many stakeholders; but a commonplace ignored in strategy teaching and business literature for whom the purpose of an organisation is often just to create value for shareholders. Creating value for shareholders is equated explicitly with creating value as if shareholder value were a universal; so obviously so, that it is unquestionable[endnoteRef:15]. [15: Such is the neo-liberal approach and the neo liberal approach has come to constitute conventional business wisdom. Shareholder value is very closely related to the idea of competitive advantage which is defined loosely as creating superior value for shareholders and more precisely as gaining a return that is above average for the sector (or risk class) in which an organization competes. Shareholders are only one member of the stakeholder group. Six Sigma and BBS models extend the stakeholders group to customers, employees and partners. But their extension of the stakeholder group is instrumental; considering the extended group is a path to creating shareholder value.

One of the risks of capitalist growth is that the world faces a sixth major calamity; a sixth extinction. Some writers include the entire global ecosystem as part of the stakeholder group of global business; climate, exhaustible natural resources and the animal kingdom; none of us live far from slaughter-houses that inflict terrible cruelty.]

Since stakeholders have different, often competing values this consideration should extend the scope of organizations beyond narrow goal of competitive advantage or shareholder value. Conflicting stakeholder interests implies that strategy consists of making a compromise between their interests. The word payoff is a borrowed term from game theory. the notion of payoffs reduces diverse shareholder values to a single denominator. Multiple values are reduced to a common value, payoff. This is a simplification, but it draws attention to neglected aspect of strategy; in addition to creating payoffs the task is to divide payoffs among stakeholders.

Grammar[endnoteRef:16] [16: DISCOURSEMore interestingly one aspect of grammar is the way we talk about things the way we talk about organisations the things that we think are important, if you like the conventional wisdom about organisations.

One of the propositions that I think is very important in strategy is that we need to adopt a different grammar when thinking about them. Grammar includes the ethical systems and the norms which exist in society and which exist within an organisation. Grammar includes attitudes to organisations and within organisations. Grammar includes what we choose to value and what we forget to value.

It could be that the survival of the global business system the survival of the global economy or maybe its better to think of global society or the global ecology depend depends upon our ability to change the customary organisational grammar.]

We know we now move on to perhaps the most complex notion in the end the meta model. That is the notion of organisational grammar or grammar. Grammar roughly speaking refers to the rules of the game which an organisation has to play; rules that an organisation has to adhere to or at least bear in mind in designing its strategies.. These rules apply in outer dynamics the rules of the business environment, the macro environment, the competitive environment.

It also applies to the rules within an organisation that is the formal rule the formal rules, the hierarchies this systems the structures that exist in an organisation. Grammar also includes intangible structures or rules that include that include culture values norms that existed in an organisation. Grammar also refers to or includes reward systems, motivation of employees, trust within the organisation and inter-organisational trust that is the extent to which trust exists between the organisational concerned and its suppliers and customers; organizational capital[endnoteRef:17]. Figure 6 is one way of illustrating the dimensions of grammar [17: You will find for example that in the overheads on the balanced business scorecard there is reference to informal and formal grammar within an organisation and interorganisational grammar trust reputation another set of overheads referred to organisational D and a a different metaphor but I think more or less organisational DNA is another way of expressing the idea of organisation culture.]

Figure 6

CONCLUSION

As we noted above, the meta model is a sub set of the more general enneagram. Key concepts related to this note are: system states and processes; hard and soft systems introducing complex adaptive systems and games; and processes networks; tradeoffs. Relationships to core concepts in SIA. Organizational DNA; genotypes and phenotypes; capabilities and performance.

NOTES

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Outer dynamicsInner dynamicsPayoffsCurrent system statePossible future system statesOuter dynamics at time tPayoffs at time tInner dynamicsat time t22http://www.robindcmatthews.comgrammar07/03/2017POSSIBLE TRAJECTORIES (OF SYSTEM STATES) OVER TIME

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Inner dynamicspayoffsOuter dynamicsgrammarPayoffs to stakeholder groupsGlobal macro systemRules, laws, regulations, structures, architectures, routines. Mindsets, culture, norms, values, habits, moods. Intelligence rational and emotional.Formal and Informal, Inner and Outer.Tangible and intangible assetsCompetitors and co-operatorsMETA MODEL

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