The presentation discusses the nature of the complexity that makes this way of thinking about the relationships between suppliers and customers ‘non-classical’. Thus entanglement means moving from a one-sided to a multi-sided understanding of markets, which changes the unit of analysis from the supplier to the ecosystem with which the supplier is interacting. Analysing market behaviours in a way that is driven by a tempo of demand organised by customers’ value deficits means that there are many different local environments within which market behaviours are expected to be aligned. A quantum metaphor is used to cast light on what makes this way of thinking ‘non-classical’. The varieties of simultaneous behaviours which the business platform must be able to support are a superposed set of states. Each customer’s local environment collapses a singular local state from this platform that need not be correlated with states experienced in other customers’ environments. This collapse takes place through the local coherence created by alignment processes organised by shared meaning established within the customer’s local environment. Two implications are drawn from this way of thinking: first, how are agile platforms to be engineered if they are to support this level of variety in simultaneous complex behaviours; and second, how are the forms of agency to be developed within an organisation through which many forms of simultaneous local coherence may be created and sustained cost-effectively at its edges.

1. Competing within Ecosystems:
sustaining ways of creating indirect value
Philip Boxer BSc MBA PhD
An invited talk given at
The School of Systems & Enterprises
Stevens Institute of Technology
December 5th 2012

2. Background Experience:
focusing on indirect value
Project Direct Multi-sided Indirect Potential
Customers platform Customers Indirect Value
40% saving on operational
MoD surface MoD C4ISTAR Mission
costs, 15% from reduced
capability acquisition platform Commanders variation
Quantifying
Indirect Swiss e- Federal Search engine Respondents to 80% saving, 50% from
Government Chancellery platform citizens reduced variation
Value
Uninhabited Royal UAS Mission 40% saving, 30% from
Aerial Systems Artillery platform Commanders reduced variation
BT customer Area Customer Phone 70% of errors from failures to
service management services platform user align properly
Identifying Network Enabled MoD Collaborative Mission Unable to assess impact of
Capability acquisition SoS Commanders mission thread variability
Risks
Architecture restricting
AWACS NATO Mission systems Mission
adaptation to new types of
capability acquisition of systems commanders mission
Wildland Federal Collaboration Fire Needed focus on variation in
Fire Agencies support fighters forms of collaboration
Mitigating Supercomputing Research Research Needed focus on variation in
XSEDE
Risks centers SoS collaborations forms of collaboration
NHS Healthcare Clinician support Managing treatment through-
Patients
Orthotics Trusts platform life means $1 now = $4 saved
Copyright © Philip Boxer 2012 December 5th 2012
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3. Outline
• Introduction This metaphor provides a
way of understanding the
nature of the ‘disconnect’
• A closer look at the problem between individual behaviors
and organized complexity
• The quantum metaphor
• Modeling risk and indirect value
• Implications
Boxer, P.J. (2012) Evaluating platform architectures within ecosystems:
modeling the relation to indirect value within ecosystems.
Lambert, ISBN: 978-3-659-25536-6
Copyright © Philip Boxer 2012 December 5th 2012
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4. Why this interest I am going to use
healthcare as my
Why it matters running example
Major challenges
Main themes
INTRODUCTION
Copyright © Philip Boxer 2012 December 5th 2012
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5. Why this interest?
What kind of organizational challenge is presented by the tempo at which a
clinic’s patients expect care pathways particular to their condition?
Copyright © Philip Boxer 2012 December 5th 2012
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6. Why does it matter?
• Competitive organizations must achieve new levels of value for
Patients always want
their customers continuously if they are to survive in the long run. ‘more’.
– As this pursuit of value moves them further and further away from
products towards services, Their conditions are
• value becomes increasingly specific to the customer’s context-of-use, and increasingly chronic
and difficult to
dependent on the organization’s capacity to learn from those contexts. diagnose.
– The complexity involved in delivering this value must to some extent
be organized, Their treatment
demands increasingly
• not just emergent from amongst the interactions within an ecosystem of complex collaborations
multiple organizations and stakeholders. between specialists.
– Organizing this complexity presents unprecedented challenges to the
forms of conversation demanded between the actors within these
ecosystems, Managing outcomes
challenges existing
• not only in defining relevant relationships between socio-technical ways of organizing care
systems and their environments, but also in defining the supporting pathways
system-of-system architectures
Copyright © Philip Boxer 2012 December 5th 2012
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7. Major challenges
• Comparing Healthcare with Manufacturing suppliers*
– ‘the expectations of customers’. The unknowable aspects of customers’ needs in ‘Value Deficit’
healthcare emerge as new forms of demand at a much faster tempo. drives demand.
– ‘their knowledge of the (near-term) future’. The closer to the patient’s condition,
the more unpredictable the demand.
– ‘the variability in their work processes’. Variability is driven by the need to align
processes to patients’ particular conditions.
– ‘the traceability between performance and the result for the customer’. Run-time
The effects of a particular treatment on patient outcome depends on the context. generation of
– ‘duration of production process’. The availability of treatments has to be timely. outcomes and
design-time
– ‘the ability to buffer the production process against variability in levels of diagnosis are
demand’. Treatment protocols have to be applied on a just-in-time basis. ‘entangled’
– ‘the costs of production’. The complexity of the alignment process is itself a major
driver of outcome costs.
– ‘the connection between cost of production and revenue from the customer’.
There is no direct link between patient outcome and cost recovery.
* Rouse, W. B., L. F. McGinnis, et al. (2009). Models of Complex Enterprise Networks.
Copyright © Philip Boxer 2012 Second International Symposium on Engineering Systems, MIT Cambridge, Massachusetts. December 5th 2012
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8. Main themes…
• What approach to creating value does this imply?
Managing the through-life cost of the
– An approach that creates indirect value driven by the patient’s condition to the patient as
individual customer’s value deficit. well as to the insurance company.
• What forms of collaboration does this demand
between the actors within these ecosystems?
– Collaboration within an approach to governance that Governance aimed at scaling learning
about alignment of care pathways as
assumes run-time and design-time conversations are much as at scaling efficiencies.
necessarily entangled.
• How is the resultant complexity to be supported?
System-of-systems platforms
– System-of-system platforms agile enough to support a supporting multiple forms of
variety of multi-sided demands. alignment by those collaborating
Copyright © Philip Boxer 2012 December 5th 2012
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9. Multi-sided Demand
Indirect Value
Managing Multi-sidedness
A CLOSER LOOK AT THE PROBLEM
Copyright © Philip Boxer 2012 December 5th 2012
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10. Multi-sided Demand:
counting the value of indirect customers
• Multi-sided demand supported by a platform is demand for
which:
direct provision of treatment of a
– There is direct value in the platform’s direct ‘one-sided’ patient’s condition
relationship with a participant the patient-in-their-life needing
– The customer of a collaboration between ecosystem participants a collaboration between
specialists responding to their
is an indirect customer condition
– With multi-sided demand, there is indirect value in the ‘multi- the way a hospital provides
sided’ relationships the platform supports between collaborating support to collaboration
ecosystem participants between its clinicians
2 4
Indirect value of a ‘multi-
Ecosystem 1 sided’ relationship
participants … n
3
Direct value of a
Evans, D. S., Hagiu, A., & Schmalensee, R. ‘one-sided’
(2006). Invisible Engines: How Software relationship
Platforms Drive Innovation and Transform
Industries. Cambridge: MIT. Platform Supplier
Copyright © Philip Boxer 2012 December 5th 2012
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11. Indirect Value:
the value is in supporting the collaborations
Orthotics Clinics e-Government UAS iPhone
Supplier Orthotics supplier IT Department Thales Apple
Platform Orthotics clinic Research engine UAS iPhone+Cloud
Clinicians, Orthotics Departmental & Royal Service Providers, App
Direct Customers Agency users Artillery developers etc
Manufacturers etc
Between Force
Collaboration Between clinicians’ Between Departments Between users and
Elements and
supported by Platform episodes of care and external Agencies their apps
Mission Command
The phone user
Indirect Customer The patient managing The citizen with a Interdicting
arranging to meet
Situation their diabetic condition question fleeting targets
a blind date
Costs to the patient and Costs to the citizen Costs of aligning more Costs to the user of
Indirect Value to be
insurer of failing to and Government of expensive capabilities having to use less direct
captured manage their condition responding mistakenly by other means methods of organizing
Demand tempo for the
Month-by-month Week-by-week Hour-by-hour Minute-by-minute
Supplier
Copyright © Philip Boxer 2012 December 5th 2012
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12. Managing Multi-sidedness
• Capturing indirect value at demand tempo
– The supplier has to consider their relationship to indirect The clinic has to understand
the variety of clinical
forms of demand, and the organizational processes by collaborations needed in
which their own products and services can be aligned with responding to the variety of
those of others to support multi-sided demands. conditions they are meeting
• Defining the economics at the level of the ecosystem
It becomes critical to analyze
– The value lies in reducing the costs that fall ultimately on the cost to the patient of their
the indirect customer of aligning suppliers’ products and condition over its life, and
what are its drivers
services to multi-sided demands.
• Developing the platform architecture capable of
capturing indirect value The agility of the platform is
– The architecture has to be ‘agile’ in the sense that it can defined by the variety of care
support a sufficient variety of forms of multi-sided demand. pathways that it can support
Copyright © Philip Boxer 2012 December 5th 2012
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13. Each collaboration defines a Quantum State
‘Classical’ versus ‘Quantum State’ Organization
Platforms supporting multi-sidedness
THE QUANTUM METAPHOR
Copyright © Philip Boxer 2012 December 5th 2012
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14. The Quantum Metaphor:
each collaboration defines a quantum state
• It is the actors participating in a particular collaboration who will define
the way they want their collaboration to be supported by the platform.
• The form of the collaboration will be determined by the conversations
through which the actors understand the multi-sided demand.
• The actors in a collaboration can be spread across multiple organizations
within an ecosystem. The clinic has to be able to manage many
different things at the same time
Simultaneous
A Collaboration between Actors
care pathways
Supporting Platform Support
Superposition of
Quantum States
Source: Fig 2-1 on the Management Challenge: Systems Engineering
Guide for Systems of Systems, OSD, Version 1.0 August 2008.
Copyright © Philip Boxer 2012 December 5th 2012
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15. ‘Classical’ organization:
design-time conversations separated from run-time conversations
‘We treat necrosis’
Markets Hierarchical
Governance
Opportunity to
Planned Establishing a one-
capture value
behaviors sided relationship
(constrained by to Demand
architecture) (the value defined
a priori)
Operations Management
Accountability
Hierarchies
(defining quality
attributes)
Run-time Design-time
Copyright © Philip Boxer 2012 December 5th 2012
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16. ‘Quantum State’ organization:
design-time conversations entangled with run-time conversations
Each collaboration has to be
able to collapse out a ‘We enable our patients to
different Quantum State manage their diabetes’
It is all going on
at run-time for Demand-in-its-context Simultaneous
each demand (describes the variety of indirect care pathways
demands)
Cohesion of the
Modularity of
response to multi-
Support
behaviors
(constrained by sided Demands
technical (the experience of the
architecture) value provided)
Operations Management
(the multi-sidedness Accountability (organizes the
which the supporting Hierarchies alignment processes)
platforms are capable of (defining quality
supporting at a given attributes)
tempo)
Copyright © Philip Boxer 2012 December 5th 2012
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17. Platforms supporting multi-sidedness:
the platform has to be able to support superposition
Simultaneous
care pathways
Demand-in-its-
context
Cohesion of the Support
Modularity of
response to multi-
behaviors functional value
coupling propositions sided Demands
accountability
Operations Management
Accountability
Hierarchies
The platform has to ‘Our clinic has to support our
clinicians learning about
support the superposition
effective care pathways’
of these Quantum States
Copyright © Philip Boxer 2012 December 5th 2012
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18. Triple Articulation
Conceptual Modeling
Structure Analysis and Monte Carlo simulation
MODELING RISK AND INDIRECT
VALUE
Copyright © Philip Boxer 2012 December 5th 2012
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19. Triple Articulation:
the articulation of constraints
What are the available treatments What variety of care pathways can
and how do they interact?
How can pathways be aligned be aligned to patients’ conditions?
Constraints on to the contexts-of-use?
Demand-side
functional granularity Constraints on
& coupling Functional Paths generating
cohesion
Coupling paths value propositions
aligned
behaviors
How do these supply-side
What will the
constraints over-determine
cohesion costs* be?
behaviors?
Hierarchical paths of
accountability
* Cohesion cost =
Constraints on costs of use of particular components +
costs of alignment to situation.
non-functional
characteristics
Who is accountable for cost/quality trade-
Copyright © Philip Boxer 2012 offs and securing funding? December 5th 2012
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20. Conceptual Modeling:
modeling the relationships between three types of model
Physical structure & behavior Synchronization across
The processes by which The Organization of
Accountability Hierarchies
clinicians keep care Demand
Dynamic configuration Socio-technical
of physical structure
pathways aligned
Synchronization
Problem
Domain
Physical The way Digital Synchronization/ Data Fusion
Structure
treatments Demand
Physical are executed Situation
Functional Paths generating
Event for and by
Coupling paths value propositions Customer
the clinic Situation
Physical
Process aligned
Demand
Outcome from complex The socio- behaviours Driver
chains of events technical The organizations
systems and processes doing
System structure & behavior generating The value
the aligning
Dynamic configuration the implicit in
of system structure constituent indirect
Hierarchical paths of
System products and customers’
structure accountability
services demands
Accountability Hierarchy
Digital Trace
The way
Unit of The different kinds of
information Accountability The institutional
Digital circumstance in which
Process is organized context in which the patients present with
for the clinic clinic operates their conditions
Copyright © Philip Boxer 2012 December 5th 2012
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21. Eliciting relational knowledge:
these models emerge from actors within the ecosystem
AWACS
It is a process that
carefully
re-constructs a
picture of the
‘elephant’ by
combining the
different blind
persons’ partial
experiences
Copyright © Philip Boxer 2012 December 5th 2012
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22. Structure Analysis:
identifying structural gaps creating risks to dynamic alignment
Ecosystem alignment to Distinguishing the Defining alignment
Indirect Demands different kinds of path processes across strata
Functional Value
Coupling Propositions
Accountability
Hierarchies
Analysis of Modularity within strata
Identifying Structural Gaps
within the different strata
AWACS
Mitigation
Strategies
Source: Anderson, Boxer & Browsword (2006) An Examination of a Structural Modeling Risk Probe Technique,
Special Report, Software Engineering Institute, Carnegie Mellon University, CMU/SEI-2006-SR-017.
Copyright © Philip Boxer 2012 December 5th 2012
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23. Monte Carlo Simulation:
The impact of variation in Indirect Demand on Cohesion Costs
Ecosystem alignment to Defining alignment Costing Cohesion of Value
Indirect Demands processes across strata Propositions
traceventindividual_in_afghan-pakistan_border
c_sitnindividual_in_afghan-pakistan_border
unitorderborder_reaper_strike_cell
traceventborder_male_on_station
channelborder_reaper_strike_cell
traceventborder_hale_on_station
unitorderborder_caoc_atc_sync
traceventborder_male_outputs
traceventborder_sf_on_station
unitorderafghan_border_strike
traceventborder_male_strike
unitorderborder_male_bm
unitorderborder_hale_bm
channelborder_male_bm
channelborder_hale_bm
unitorderborder_isr_cell
traceventafghan_report
unitorderborder_sf_cell
channelborder_isr_cell
channelborder_sf_cell
5-6col1 x 5
orchnafghan_border_strike 1 1 1 1 1 1 1 1 1 1 1
outcomeborder_hale_on_station 1 1 1 1 1 1
outcomeborder_male_on_station 1 1 1 1 1 1
outcomeborder_male_strike 1 1 1 1 1 1
outcomeborder_sf_on_station 1 1 1 1
khowborder_sf 1 1 1 1 1 1
khowborder_male_strike 1 1 1 1 1 1 1
khowborder_hale_global_hawk 1 1 1
designborder_hale_global_hawk 1 1
designborder_male_operator 1 1 1 1 1 1 1
capyborder_hale_global_hawk 1 1
capyborder_male_reaper 1 1 1 1 1
capyborder_sf 1 1 1 1 1
systemborder_hale_global_hawk 1 1
systemborder_male_reaper 1 1 1 1 1 1
systemborder_sf 1 1
processborder_hale_global_hawk 1 1
processborder_male_reaper 1 1 1 1 1
processborder_sf 1 1 1 1 1
dprocessborder_hale_global_hawk 1
dprocessborder_male_reaper 1 1 1 1
Monte Carlo Simulation of impact of Variations in Real Option Valuation of impact of UAS
Indirect Demand on cohesion cost range investment on cohesion cost range
Large Scale
0.45
Increased
Scenario 1 Small Scale enduring
Medium Scale enduring
0.4
0.35
Agility
Defence Expenditure
Alternative
Scenario 2 Small Scale enduring 0.3
0.25
=
Small Scale one-off
Medium Scale enduring
0.2
0.15
Reduced
Scenario 3 Small Scale limited 0.1
0.05
Cohesion
Small Scale one-off
0
Costs
0
5
0
5
0
5
0
5
0
5
0
5
50
25
00
75
50
25
0
75
15
22
30
37
45
52
60
67
75
82
90
97
10
11
12
12
13
14
Scaled Cost1 Scaled Cost2 Scaled Difference
Boxer, P.J. (2009) What Price Agility? Managing Through-Life Purchaser-Provider Relationships on the Basis of the Ability to Price Agility,
Special Report, Software Engineering Institute, Carnegie Mellon University, CMU/SEI-2009-SR-031.
Copyright © Philip Boxer 2012 December 5th 2012
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24. Managing entangled conversations
Supporting superposition
IMPLICATIONS
Copyright © Philip Boxer 2012 December 5th 2012
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25. Implications:
doing more with the same resources
• Responding to multi-sided demands at demand tempo means
dynamically aligning many value propositions to many different
local environments. This means
– Managing entangled conversations
• Dynamic alignment entangles design-time and run-time conversations,
changing the supplier’s unit of analysis from one-sided markets to the The Quantum Metaphor
multi-sided contexts with which the supplier is interacting. helps us to understand
• There has to be conversation with each local environment through which the challenge these
local coherence can align pathways. environments present to
• Each conversation must collapse out a singular local pathway that need not Leadership
be correlated with pathways demanded in other local environments.
– Supporting superposition
Shifting the focus to
• Platforms have to be engineered that are agile enough to support dynamic
alignment to the variety of local environments encountered. managing cohesion cost
• This variety of simultaneous pathways supported at demand tempo are a across the variety of
superposed set of states. indirect demands led to
• Engineering such platforms involves identifying risks to agility and 30-50% reductions in
quantifying the value of increases in agility. operating costs
Copyright © Philip Boxer 2012 December 5th 2012
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26. Contact details:
Philip J. Boxer BSc MBA PhD
+1 908 458 6588
Philip.Boxer@brl.com
http://www.linkedin.com/in/philboxer
THANK YOU
Copyright © Philip Boxer 2012 December 5th 2012
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