1
A META MODEL OF ORGANIZATIONAL STRATEGY1
(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
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.
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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
processesi 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.
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 trendsii.
The description, strategy, has a militaristic flavor that perhaps should be avoided. But it is
widely usediii. 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.
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, interrelated 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,
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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.iv
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.”
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Organizations as networks
e
f
b
B
a
C
A
D
F
E
c
Figure 1: networksv
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.
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Figure 2vi
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.
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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.
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Processes, transitions and trajectories of system states2
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 futurevii.
Payoffs
Current
system state
Possible future
system states
Payoffs at
time t
Inner dynamics
Inner
dynamics
at time t
Outer dynamics at
time t
Outer dynamics
POSSIBLE TRAJECTORIES (OF SYSTEM STATES)
OVER TIME
grammar
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Figure 4: transition from one system state to anotherviii
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 ix in which movement from
one system state to another is a random process. Tolstoy more or less took this view in War
and Peace.x Strategy is an attempt to impose order on what might be random processes.
2
See Taleb (2007) and
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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 preferxi 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.
META MODEL
Payoffs to
stakeholder groups
payoffs
Tangible
and
intangible
assets
Competitors and
co-operators
Outer dynamics
Inner dynamics
Global macro
system
grammar
Rules, laws, regulations, structures, architectures, routines.
Mindsets, culture, norms, values, habits, moods.
Intelligence rational and emotional.
Formal and Informal, Inner and Outer.
Figure 5xii
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
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with customers, suppliers, distributors, competitors and with nature. Political manipulation,
marketing, public relations and gifts to political parties are designed to influence their
competitive landscapexiii.
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 internallyxiv.
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
unquestionablexv.
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.
Grammarxvi
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,
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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
capitalxvii. Figure 6 is one way of illustrating the dimensions of grammar
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.
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NOTES
iSee
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
ii See Ageev, Mensch and Matthews (2012).
iii 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.
iv Wittgenstein described grammar as rules ‘for use of a word’(PG. 1979)
v If we think of an organisation as a network and that’s 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 organisation’s value
chain or an organisation’s 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.
vi
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
vii
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).
viii
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.
ix 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.
x 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).
xi
Outer dynamics are often described in PESTE analysis.
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.
xii
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Figure Y
xiii
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 Porter’s 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 frameworkxiii.
xiv
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.
xv
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.
xvi
DISCOURSE
More 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 it’s better to think of
global society or the global ecology depend depends upon our ability to change the customary organisational grammar.
xvii
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.
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