Where FTF stands
A plane of its own,
inside a larger
conversation
What problem this framework sets out to explain, what space it occupies alongside what already exists, and what it adds.
The Fractal Thinking Framework is in dialogue with a broad tradition of organizational thought: competitive strategy, quality, constraints, alignment, systems, and the evolution of organizations.
Out of that journey comes its question, and with it the plane it claims as its own.
The inspiration began in other questions and in field experience
Porter explained how the structure of an industry conditions competition and what makes a position within it defensible. Goldratt identified the constraint as the point on which to concentrate improvement in order to increase the system's throughput against its goal. Kaplan and Norton developed a way of translating strategy into objectives, measures and relationships that align the organization with its execution.
Deming showed how to understand quality from the variation of the system and the responsibility of those who direct it. Senge made visible the structures of relationships that produce an organization's behavior, and the possibility of learning to recognize them collectively. Laloux described different forms an organization can evolve toward.
Each of those works opened a territory of its own. But something remained unanswered.
An experience that crystallized into a new question
To that tradition was added Ricardo Basulto's experience working with different organizations under a single brief: to improve the productivity of their value chain in order to contribute to greater profitability.
Again and again, the available tools and frameworks made it possible to intervene in specific aspects of performance. The improvements happened. Productivity rose. And again and again, part of those improvements ended up being lost.
Something else, however, was conditioning the organization's ability to sustain them. Something that was not easy to see.
What is it that allows an organization to sustain what it decides to do?
Going one step further back
Answering that question meant going one step further back and dissecting the foundations of management: what sustains an organization's day-to-day operation, where it decides from, how it coordinates, and what makes it possible to turn those decisions into action.
Every organizational action passes, one way or another, through the system an organization manages with. That system, though, is usually observed through its contents —what is decided, implemented or measured— and not through the form it operates from.
That is where the blind spot appears: the form that sustains the content.
Making the form visible
FTF makes the management system observable as an architecture of capabilities and criteria from which the organization decides and acts.
Strategy · Structure · Processes · Results
what is decided about
Functions × levels
where it is decided
Capabilities and criteria
what it is decided from
Maturity · Coherence · Continuity
how the whole behaves
Limit · Evolution
what it can sustain and how it can evolve
How an organization's capabilities are distributed, how they relate to one another, and what performance the whole can sustain.
With that plane defined, FTF's question can be set against some of the works that inspired its development, to make precise what each one observes, where they meet, and what territory FTF occupies alongside them.
Competitive structure and advantage
Michael E. Porter
Competitive structure conditions the potential for profitability. Strategy defines where to compete and how to configure a distinctive system of activities in order to create and capture value.
Competitive advantage does not rest on any one activity, but on a distinctive position and on how a company’s activities fit and reinforce one another.
Where to compete, what position to hold, and how to configure the activities that make an advantage possible?
What organizational condition influences how much of the potential margin can be consistently turned into realized profit?
Porter makes it possible to understand where the economic potential of a competitive position comes from and how its value chain is configured. FTF observes the capabilities and criteria needed to operate that configuration consistently and keep organizational incoherence from eroding the margin that can become profit.
Going deeper into the dialogue with PorterExpand
What Porter makes visible
Porter links profitability to two related problems. First, the competitive structure of an industry conditions the economic potential available: customers, suppliers, substitutes, new entrants and rivalry all affect the ability of firms to create and capture value.
Second, within that environment, strategy consists of building a distinctive position. That position takes concrete form in the activities that make up the value chain and, above all, in the way those activities are configured and reinforce one another.
The distinction between operational effectiveness and strategy completes the argument: doing similar activities better can improve efficiency, but an advantage requires a different configuration of activities.
Where the additional question enters
A company can define its competitive position correctly and configure the activities of its value chain, and then find that the configuration is operated unevenly depending on function and level, eroding the margin that becomes profit. The economic potential comes from competitive analysis; what FTF observes are the capabilities and criteria from which that potential is turned into results, day after day.
What this framework does not say
FTF does not explain where the potential margin comes from, does not replace competitive analysis, and presupposes a viable value proposition and a market. Competitive dynamics, the logic of advantage and the value chain remain in Porter’s domain.
Sources consulted
Constraint and the goal of the system
Eliyahu M. Goldratt
In every system there is a constraint that conditions the throughput it can generate against its goal. Improving the system requires identifying it and acting on it.
Improving the system’s flow requires identifying its constraint and concentrating effort there. Improving each part in isolation is not the same as improving the whole.
What is the system’s constraint, and how should one intervene on it to improve flow against the goal?
What management architecture and capabilities does the organization need in order to sustain the performance reached after acting on that constraint?
Goldratt points improvement at the constraint that conditions the system’s flow against its goal. FTF points intervention at the architecture of management capabilities that conditions what the organization can sustain. Both perspectives act on different phenomena that can limit the system’s result.
Going deeper into the dialogue with GoldrattExpand
The five focusing steps
The Theory of Constraints orders the improvement of flow in five steps: identify the system’s constraint; decide how to exploit it; subordinate everything else to that decision; elevate it; and, when it is no longer the constraint, go back to the first step, taking care that inertia does not create a new one.
Physical constraints, policy constraints and assumptions
The original formulation rested on physical constraints —a machine, a capacity, a resource— and the later tradition extended the analysis to policy constraints: rules, measures, practices and assumptions that limit the system’s flow more often than any piece of equipment does. Reducing the theory to a hunt for physical bottlenecks impoverishes its reach.
Two phenomena that are not the same
The constraint belongs to Goldratt’s vocabulary: it is whatever, at any given moment, conditions the throughput the system generates against its goal; it manifests in operations and moves as it is elevated. The structural limit belongs to FTF’s vocabulary: it names how far an organization can sustain a given performance given the state of its capabilities and criteria, and it shows up in the form it decides from. Moving a constraint and developing the architecture that sustains a new level of performance are different interventions. When both conditions limit the system, both are needed.
Sources consulted
Translating and aligning strategy
Robert S. Kaplan and David P. Norton
Strategy needs to be translated into terms that make it possible to orient action and observe its execution. Financial results show the outcome of a chain that began earlier.
That the financial result is a consequence of earlier decisions, and that making that chain explicit allows the organization to be aligned.
How to translate strategy into measurable objectives and act coherently with them?
How are strategy, structure, processes and results deployed together across the organization?
Kaplan and Norton make visible the translation of strategy into objectives, causal relationships and measures that align its execution. FTF widens that view to the joint deployment of strategy, structure, processes and results across functions and levels.
Going deeper into the dialogue with Kaplan and NortonExpand
What the alignment framework makes visible
Financial performance is not a starting point but the result of an earlier chain. The Balanced Scorecard made explicit the need to complement financial measures with other perspectives on performance, and to connect strategy with objectives and measures that make execution possible to steer and follow. Its later evolution into strategy maps deepened that logic of relationships and alignment.
Where the Balanced Scorecard starts from
The 1992 article that introduced the Balanced Scorecard starts from a simple idea: what gets measured directs attention and action. Kaplan and Norton proposed complementing financial measures —which show the results of actions already taken— with measures able to observe the drivers of future financial performance.
Where the additional question enters
An organization can build a strategy map and deploy objectives and measures across its units, and still keep misalignments in the structure those objectives are executed from, in the processes that articulate them, or in the results each function uses to steer its decisions. FTF widens the alignment problem: it asks not only how strategy is deployed, but how Strategy, Structure, Processes and Results relate to one another across functions and levels.
Sources consulted
- The Balanced Scorecard: Measures That Drive Performance. Harvard Business Review, 1992.
- Robert S. Kaplan, Conceptual Foundations of the Balanced Scorecard. Harvard Business School, working paper 10-074, 2010.
- Strategy Maps: Converting Intangible Assets into Tangible Outcomes. Harvard Business School Publishing, 2004.
Paradigms and organizational evolution
Frederic Laloux
Organizations can evolve toward successive paradigms, each associated with different ways of understanding authority, coordination and purpose.
That evolution can be described in stages, and that there are real organizations operating from configurations the dominant theory did not account for.
What forms of organization can a company evolve toward?
What capabilities does the organization need to develop across its functions and levels for that evolution to show up in decisions that transform it?
Laloux describes evolution from organizational paradigms; FTF observes it from the structural capabilities that make it possible to locate and accompany that evolution across functions and levels.
Going deeper into the dialogue with LalouxExpand
The paradigms and the three breakthroughs
Laloux describes a sequence of organizational paradigms, represented by colors, that express different ways of understanding and organizing work: Red, associated with the direct exercise of power; Amber, with hierarchy, rules and stability; Orange, with achievement, innovation and meritocracy; Green, with participation, values and empowerment; and Teal, with an evolutionary form of organization.
In Teal organizations he identifies three characteristic breakthroughs: self-management, wholeness and evolutionary purpose. He does not present them simply as isolated practices, but as expressions of a different way of conceiving and operating the organization.
Where the additional question enters
An organization can declare itself evolutionary, participatory or self-managed and still carry structural incoherences that limit its performance. FTF does not evaluate narratives or stages of consciousness: it makes observable the structural configuration from which the organization decides and acts. An evolutionary aspiration can then be set against the capabilities actually deployed across the organization.
Sources consulted
Other influences and points of contact
Two authors, a production system and a normative reference, different in kind from one another, complete the conversation.
W. Edwards Deming
Quality has to be understood systemically. Variation has common causes, belonging to the system, and special causes, outside it, and telling them apart changes the intervention entirely.
Variation and profound knowledgeExpand
Common causes belong to the system, stay within predictable limits, and reducing them requires acting on the system itself; special causes are outside it and appear in identifiable ways. Treating one as the other leads to acting where one should not, and usually makes the result worse.
Deming’s System of Profound Knowledge proposes a way of understanding and managing an organization through four related components: appreciation for a system, knowledge about variation, theory of knowledge, and psychology. Management requires understanding those relationships and acting on the system, not only on its results.
Where they meet
Deming approaches quality as a systemic problem: understanding variation, acting on the system, and developing a way of managing that is able to improve its results. FTF widens the object toward sustainable performance: the achievement of objectives an organization can sustain from its management system. To do so, it studies the interdependence between Strategy, Structure, Processes and Results, and how the capabilities and criteria needed to manage them are deployed across functions and levels. That configuration makes it possible to observe the maturity, coherence and continuity of the system, the limit of performance it can sustain, and its capacity to evolve.
Sources consulted
Peter M. Senge
An organization’s behavior comes from the structure of relationships that constitutes it, and a collective can learn to see it.
The five disciplinesExpand
The Fifth Discipline articulates five practices that develop together: personal mastery, mental models, shared vision, team learning and systems thinking, the one that gives the book its title.
Its contribution is a way of looking: learning to see the structure of relationships and interdependencies that produces observable behavior, instead of attributing it to the isolated events in which it shows up.
Where they meet
Senge develops a systemic understanding of the organization from the relationships and interdependencies that produce its behavior. FTF shares that view and takes it into the management system: it studies the interrelations and interdependencies between Strategy, Structure, Processes and Results, across functions and levels. Its fractal approach makes it possible to locate that architecture of capabilities and criteria and to analyze its maturity, coherence, continuity, limit and evolution.
Sources consulted
Toyota Production System · Lean
An integrated production system whose principles have traveled beyond Toyota and are part of contemporary improvement practice: create flow, eliminate waste, solve problems at their source, stabilize and standardize the work, and improve continuously by developing people.
A system, not a set of techniquesExpand
The Toyota production system, built and refined over decades, seeks to have work flow without interruptions or accumulations, waste eliminated systematically, problems stopped and solved at the point where they appear, work stabilized and standardized as the basis of any improvement, and that improvement continuous and in the hands of those who do the work.
Where they meet
Many of the principles TPS made visible —flow, solving problems at the source, standardization, continuous improvement and the development of people— express capabilities needed to operate consistently, and for that reason they are present in FTF as well. The contrast lies in the object and in its deployment: FTF observes those capabilities inside the Processes dimension, studies their interdependence with Strategy, Structure and Results, and analyzes how they are deployed across the organization’s different functions and levels. From that configuration it observes the coherence, the continuity and the capacity to evolve of the management system.
Sources consulted
ISO 9000 · ISO 9001
Principles, requirements and formalized practices that establish verifiable conditions for a quality management system.
Principles, requirements and conformityExpand
ISO 9000 sets out the fundamentals and vocabulary, and includes the seven quality management principles: customer focus, leadership, engagement of people, process approach, improvement, evidence-based decision making, and relationship management. ISO 9001 sets out the requirements of a quality management system, and certification attests conformity with them; it is issued by external certification bodies.
That body of standards was built and refined over decades to make certain conditions of quality management verifiable, and it offers a common, auditable language for attesting them.
Where they meet
ISO formalizes principles, requirements and practices for establishing and verifying a quality management system. FTF goes one level further back and observes management from the decisions that produce action and, ultimately, its results. Its object is the architecture of capabilities and criteria an organization decides from: what is decided —out of the interdependence between Strategy, Structure, Processes and Results—, from which criteria and with which capabilities, and how that quality of deciding is deployed across functions and levels. Its maturity, coherence and continuity make it possible to observe what performance the system can sustain and how it can evolve.
Sources consulted
The contrast makes it possible to delimit FTF's territory. The next step is to observe what place that architecture occupies inside a specific question: how an organization turns its economic potential into results.
Where this framework enters the explanation of profitability
FTF makes visible and models the structural condition that helps explain an organization's ability to generate economic profit: the coherence of the management system conditions the productivity of the value chain and how much of its economic potential can be consistently turned into realized profit.
Economic potential —where it comes from and how large it is— belongs to competitive analysis. FTF presupposes a viable value proposition and a market, and looks at what happens afterwards: the organization's ability to realize that potential through its operation.
Making FTF's place precise also means delimiting its reach: which phenomena are part of its object, and which —while relevant to the organization— belong to other domains.
A framework is also defined by its boundaries
FTF has a defined domain of application. Its boundaries make it possible to tell apart the problems it can help understand from those that call for other frameworks, disciplines or forms of intervention.
FTF does not design the business model
It does not determine the value proposition, the market or the economic logic. It presupposes a viable business model.
FTF does not replace specialized methodologies
It models the form from which the decisions those methodologies produce will have to be sustained.
FTF is not a human development model
It is not coaching, nor an interpersonal skills program. It recognizes leadership and culture as relevant phenomena. Its reach remains within the structural configuration —strategy, structure, processes and results— from which the organization decides and acts.
FTF is not a primary instrument for immediate survival
It presupposes a minimum of financial stability and that the immediate continuity of the business is not at risk.
What each boundary impliesExpand
When the dominant problem sits outside the organizational architecture
A disruption that makes the value proposition obsolete, a contracting market, a regulatory change that alters the rules, or a technological transformation that forces the model to be redefined all move the problem toward the fundamental content of the business: what to offer the market, how to compete, and from which economic logic. That process belongs to another domain.
Each methodology keeps its object
The framework operates on a plane prior to that of competitive strategy, the theory of constraints, alignment systems, normative frameworks and operational improvement: the form that determines whether what those tools produce comes to be sustained.
What influences the structure without being its direct object
Leadership, culture and interpersonal dynamics influence the way an organization decides and acts, and their effects can show up in its structural configuration. FTF recognizes that relation but does not model those phenomena directly. Its object is the capabilities and criteria that manifest in decisions, responsibilities, coordination and results, distributed across functions and levels.
When immediate continuity is at risk
With a real risk of disappearing, critical liquidity, or basic operational continuity at stake, tactical urgency takes the foreground. FTF is an instrument of structural evolution: it holds when the business model is viable and there is a minimum of financial stability to work from.
A place of its own, inside a larger conversation.
This framework is in dialogue with competitive strategy, quality, constraints, alignment, learning, organizational evolution and traditions of practice. Each of them answered with rigour the question it set itself.
FTF proposes as its explicit object the architecture of the system an organization manages from: the capabilities and criteria it decides and acts with, deployed across functions and levels. That is the plane it claims as its own.