The framework
The system decisions
are made with
It exists even when no one has designed it, and it conditions the results the organization can sustain.
An organization does not decide from a single place. It decides from many points in its structure, through people with different capabilities for interpreting a situation, exercising judgment and acting on it.
The management system is the architecture that articulates those capabilities and determines how the organization decides as a whole. It exists even when no one has deliberately designed it, and it conditions the results the organization can sustain.
What an organization does, and what lets it sustain that
Content
What the organization brings in, changes or puts into practice: strategy, processes, methodologies, initiatives, targets. It changes relatively fast, and it is what you see.
Form
The capabilities and criteria from which it interprets, decides, acts and sustains that content. It changes slowly, is rarely made explicit, and is almost never managed.
Improvement is usually pursued by changing the content alone, on the assumption that a change in execution will produce a better result.
Often it does — but inside a configuration that has not changed. While the form stays intact, the improvement does not stabilize.
Content always takes the shape of its container.
Form conditions what content can come to sustain.
Recognizing this takes nothing away from execution, from strategy or from methodology: they remain the means by which value is created and captured.
What changes is their role. They stop being independent levers and become content operating inside an organizational form: the one configured by the capabilities and criteria from which the organization interprets, decides and acts.
The four irreducible dimensions of the management system
Capability to decide about what?
Managing means deciding continuously about four dimensions: strategy, structure, processes and results. FTF considers them irreducible because each answers a different question of the management system.
Strategy
From what criterion is direction set?
- Logic of value creation and capture
- Objectives that order decisions
- Strategy as criterion, not as plan
- Accountability
- Risk management
Structure
How is the organization configured to sustain it?
- The organization as a system, not as an org chart
- Functions and roles
- Compensation system
- Evaluation and adjustment of the structure itself
Processes
How is the work that creates value coordinated?
- The process as delivery of the promise
- Stability and standardization
- Flow and synchronization with demand
- Detecting and containing defects at the source
- Improvement as a habit
Results
What is observed in order to decide again?
- Reading from the value chain
- From operations to the economic result
- Measuring in order to decide
- Reliability of information
- Projection from real capacity
Each dimension, its question, and the capabilities that constitute it.
Orienting produces strategy; configuring, structure; coordinating, processes; observing, results. And observing returns to orienting.
That strategy, structure, processes and results formally exist is not enough: what sustains performance is the system's capability to articulate them with one another.
The scale changes. The logic stays.
A director and a manager in the same function decide about the same substance —strategy, structure, processes and results— but with different scope, different granularity and a different horizon. Across different functions the domain decided about changes as well; what does not change is the logic decisions are made with.
Invariance: when the same logic stays recognizable as the scale changes. A structure recognized as the same across successive scales is a fractal structure, and that is where the framework's name comes from — Fractal Thinking Framework.
If the logic is the same at every point, the system can be read at every point with the same criterion.
Where an organization decides
Functions group decisions by domain; levels differentiate them by scope and responsibility: the executive level defines objectives, criteria and resources.
The managerial level coordinates and follows through; the operational level executes and responds to variation. The crossing of functions and levels produces the function–level grid.
Four functions by three levels: twelve domains the organization needs to exercise judgment over.
The functions shown are illustrative of a typical organization: they are not an exhaustive or prescribed catalog.
Who exercises judgment in each domain
Every crossing in the grid is a domain the organization needs to exercise judgment over. For that to happen regularly, the domain has to be placed in the charge of a role or a position: the framework calls that assignment attribution.
Where there is attribution, one can observe which capabilities judgment is exercised from. Where a necessary domain has none, a structural void appears.
With what quality decisions are made
Attribution says who is to exercise the domain. Maturity describes from which capabilities they exercise it. It does not measure the person, their tenure, the size of the organization or its apparent sophistication. It is cumulative: each level rests on capabilities developed earlier.
The tone of each cell expresses the level reached, from A to E. The dotted cell marks a domain without attribution.
The same architecture, read from the development of the capabilities present at each point. A domain without attribution is recorded as a void.
This architecture is not graded by impression. Reading it integrates multiple perspectives on how the organization works, and corroborated evidence, in order to determine the development of its capabilities and the relations among them. The grid represents the result of a professional diagnosis, not an arbitrary assessment.
Structural void
When a decision domain has no attribution
A domain can be necessary to the running of the organization even when it has not been formally attributed. In that case someone else may take it on informally, it may be split among several people, or it may be settled differently each time.
FTF calls that absence of attribution a structural void.
More on the structural voidExpand
You recognize it in situations like these.
The void is not necessarily the problem. The problem appears when it stops being recognized as an exception and the informal workarounds that compensate for it become the normal way of working.
Maturity describes the points. Coherence describes how the whole behaves.
Coherence is the compatibility between the criteria decisions are made with at related points. An architecture can be coherent with different levels of maturity: coherence is not uniformity.
Where it can break
Vertical
Between levels of the same function. What the top decides is interpreted below through a logic that is not compatible with it.
Horizontal
Between functions at the same level. Each area decides with criteria that do not fit those of the area next to it, and every point of contact ends up requiring an implicit negotiation.
What moving from less to greater coherence means
Organizations tend to perceive these discontinuities as coordination problems, though they rarely name them as problems of structural coherence.
When the criteria decisions are made with are compatible enough between related points, the system gains stability; when they are not, friction and compensatory interventions appear.
The same decision points, before and after a progression. Evolution is refinement, not perfection. Not every cell changes, nor reaches the same level; even so, the system operates more coherently.
Not every weak point weighs the same
A gap in the level of maturity located at a point of low incidence can hold for years without compromising the whole.
The same gap, sitting at a point whose decisions condition the work or the decisions of other areas, becomes a limit: same gap, different position, different effect on the whole.
Center of gravity
The place in the organization where decisions especially relevant to producing and sustaining its result converge. It is not necessarily the «most important» area, and it is not universal: it depends on how the organization creates value. By way of example, in a manufacturer it may sit in Operations; in a distributor, in Commercial; in a services company, in the function from which the service is produced and delivered.
Structural limit
An insufficiently developed capability which, because of the point it occupies and the decisions it conditions, restricts what the whole can sustain. It is not necessarily the cell with the lowest maturity.
The dotted box marks the center of gravity; the solid box, the structural limit.
The sustainable performance of the whole is conditioned by the capabilities involved in its critical decisions. Developing other capabilities can produce improvements, but it does not move that limit while those remain as they are.
Structural limit and constraint in the Theory of ConstraintsExpand
The constraint
In the Theory of Constraints, formulated by Eliyahu Goldratt, the constraint is the resource, process or activity whose capacity limits the overall flow of the operation.
They do not describe the same phenomenon. The constraint conditions the flow the system can produce; the structural limit conditions what the organization can sustain from the capabilities it decides with.
Intervening on one does not necessarily mean having intervened on the other.
Structural evolution
Improving
Intervenes in performance within the limit: it adjusts the operation, corrects deviations, raises the yield of what already exists. It can raise performance, but it does not make it possible to sustain results above what the system's present capabilities allow.
Evolving
Intervenes in the architecture: it develops the criteria needed and attributes decisions to the positions that should exercise them, raising the level from which the system decides, coordinates and learns. Only this moves the limit.
Each box marks what changes at that step with respect to the one before. Values that are not highlighted stay identical.
The order is not dictated by operational urgency but by the effect on the limit: each step enables the next.
Developing a capability does not guarantee it will be exercised. To change how the system behaves, that capability has to be effectively taken into the way a situation is interpreted, judgment is exercised, decisions are made and action is taken. While it exists only as knowledge or possibility, the architecture can stay as it is and produce no new or better results.
To evolve is to move the limit and reach the coherence required to sustain a greater result.
An organization does not evolve through what it does, but by changing the way it decides.
That is the shift FTF makes it possible to understand and to design: to intervene in the way the organization decides, not merely to accumulate new initiatives.
Evolution happens through an ordered progression in the development of the capabilities that condition the whole and that restore the coherence needed to sustain greater performance.
Taking the framework into an organization
Helement is the consulting firm that takes the Fractal Thinking Framework into the organizational field. It works on the management system to develop the capabilities from which an organization decides and sustains its performance.