• ValueWeb Communities • VaueWeb Mechanics

Building ValueWebs

Creating the 21st Century Organization
part 1 of 2


We ask you to consider this critical shift in thinking - the shift to seeing the company itself as the ultimate creation... It means spending less of your time thinking about specific product lines and market strategies, and spending more of your time thinking about organizational design...

“We don’t men to imply the the visionary companies never had superb products or good ideas. They certainly did, and... most of them view their products and services as making useful and important contributions to customers’ lives. Indeed, these companies don’t exist just to ‘be a company;’ they exist to do something useful. But we suggest that the continual stream of great products and services from highly visionary companies stems from their being outstanding organizations, not the other way around. Keep in mind that all products, services, and great ideas, no matter how visionary, eventually become obsolete. But a visionary company does not necessarily become obsolete, not if it has the organizational ability to continually change and evolve beyond existing product life cycles.”

James C, Collins and Jerry I. Porras

BUILT TO LAST: Successful Habits of Visionary Companies

I want to extend the idea of this quote to the scale of ValueWeb and argue that building the most effective ValueWeb possible is the key organizational task - for any enterprise - of the 21st. Century organization.


There are two aspects to this task. First to build a viable ValueWeb ENTERPRISE; secondly, to be a fit organization within that Web.


Of course, most individuals and organizations will be part of many ValueWebs and play different roles in within each. It should be understood that co-opitition, as well as co-operation is a necessary aspect of any complex ValueWeb system.


...History of the Concept


The formal “Business of Enterprise” Model was develop by me in 1985. Its roots (the network organization) go back to the origin of our enterprise and even before it. From our beginning MG Taylor work, the network concept slowly evolved into the ValueWeb model which was matured by use, in the mid 90s, with the Air Force. Complex ValueWeb structures are co-dependent on the PatchWorks process concept; conceived in 1997 and now developing into a standard practice. In 2001, the ValueWeb model was developed into an Operating System (OS). It is now a system and method, in patent pending, as an extension of our original Patent. The ValueWeb concept, then, can be employed as a notional idea (model) or as a formal system (method).


It was not until 10 years after the model was first articulated that the ValueWeb meme started to gain the attention our various clients and partners. The first client team who made productive use of it was the F-15 in 1995. This means that there was a 20 year incubation period from the creation of the “ad-hoc” organic model of the mid-70’s to a real, if partial, ValueWeb, functioning as such, in a complex environment. This may seem like a long time; but perhaps not for such a radical departure in organizational theory and practice. Tracking the “acceptance curve” of an idea is one aspect of Weak Signal Research and necessary for understanding when it ready to go to scale in a market. Most of the technology that NASA used to go to the moon, for example, was developed in the 1920s and 1930s. And technology, generally, matures faster than organization and learning methods.


Most of what has passed for organization change has been, in fact, improvement of methods and processes associated with a default in-place organizational model that remains fundamentally unchallenged. This kind of work is important but provides limited leverage. In organizations beyond startup scale, the hierarchical model remains dominate. This is about to change as complexity continues to overwhelm existing organizational architectures.


Between 1985 and 1995, I presented the model many, many times and it provoked little dialog, less passion and no action - it was seen an “interesting” distinction but not something that solved a burning question. It has only been in the last 7 years that increasing organizational failures - made more so by mergers and joint ventures - has surfaced a number of “burning” meta-organizational issues that conventional “inside the skin” organizational theories do not address.


Today, the term ValueWeb is becoming ubiquitous. There are white papers appearing up all over the Internet. Most of these, however, are extensions of supply-chain theory - they do not bring the investor, producer and customer into a true PEER relationship. This is understandable. When investor, producer and customer (user) are brought into this kind of relationship (if only temporarily as in an DesignShop experience), the results are stunning. This is “disruptive technology.” It has to be treated as such. Most so-called value-webs concepts are an attempt to put the WEB back into the organizational box. In the end, this will not be successful. ValueWebs have to be understood and practiced as true emergent network architectures.


In addition, to external pressures on organization, the growth of people’s general awareness and language of concepts, related to the network economy, has been the principle driver of change. This is due to the publication of books on complexity, chaos, emergent systems and the like. Many who are in organizations can now see problems they did know existed before; they now have the words (concepts) to better describe their experience. Suddenly, long existing, often informal, ValueWebs are visible; suddenly, complexity is appreciated. Management is changing how it thinks, talks about and operates organization; and, not too soon. In the general marketplace, however, the tools to support such awareness, and bring it to practical terms, remain inadequate. The are many books and metaphors but few practiced means and methods. I do not mean the ValueWeb concept to be taken metaphorically. I mean it to be employed the same as hardware and software is in a computer system.


The ValueWeb concept is a key strategy for building both viable organizational networks and legal (by present rules) organizational nodes within them. It incorporates and expands upon the work which has been done in supply chain management. A supply chain, in a ValueWeb - which, acknowledged or not all supply chain are in complex webs - is a “string” of nodes (from a customer through multiple producers) that make a specific product or service. The ValueWeb concept expands on the work done with the quality movement and various customer service initiatives. It brings the investors of an enterprise into a much closer and responsible role than it typical for that community today. In fact, it realigns all the stakeholders of an enterprise and fundamentally changes their mutual rules-of-engagement.


The most effective way to design and govern ValueWebs is by employing NavCenters and by using PatchWorks Designs methods. Together, the ValueWeb Model, the environment and the methodology combine to make a powerful response to a common set of conditions that are now overwhelming many existing organizations.


Now (2002), at the beginning of the 21st Century, we are beginning to test ValueWeb theory in new ways. There are NavCenters being designed on the premise that their main task is the creation and facilitation of the organization’s ValueWeb - this is something new. We are building software to help in the administration and tooling of such organizations (as well as, using the the many tools provided on the Internet). And, we are forming (at last!) our own Enterprise into a real ValueWeb - something that we have been working on for some time. Together, these efforts make a vigorous experiment and yield a great deal of learning about the practical aspect of “installing” the ValueWeb OS in existing organizations of various sizes and complexities. This is a bootstrap operation employing Rapid Prototyping methods.


...A Critique of Organization

TS Eliot wrote a criticism of criticism - “The Use of Poetry and the Use of Criticism” - London 1933). In it, he said that four steps have to be taken to conduct a valid criticism process. First, The Ideal or Good has to be stated. What is the measure by which the subject will be judged? Second, examples from history must be cited. For example, in Literature, there are works that have stood the test of time and are considered to be masterpieces. How do these illustrate the Ideal stated in the first step? Third, the work being judged has to be analyzed in relationship to both the Ideal and examples from history. Where does it exceed, meet or fail to meet the criteria? Criticism, to Elliot, must employ both positive and negative judgments. Fourth, the criticism must answer how the work in question can be improved to better meet the Ideal criteri


Not to do all four steps, to Elliot, is to take a “cheap shot”(my words) at the work and to add little value to human discourse


In The House of Intellect, Jaque Barzon said that only the very best examples of a type should be criticized because to focus on the truly incompetent and dumb is a waste of time. To Barzon, only basically good works are worthy of criticism. This is certainly a true insight - occasionally, however, I fall from grace when moving from hotel to airport to city to hotel and I have to resolve the experience with the concept transportation system.


In addition, when critiquing organizations, we should remember that what today we find to be stifling, and not nearly adaptive enough for modern conditions, would be considered by our forebears as ideally liberal environments. The architecture of our present organizations was created as a response to many conditions - most of which are no longer with us. We have to remember that it was an invention and great hack in it’s day. The purpose of what follows is to lay the basis of an organizational theory and practice that does meet the realities we now face


Taken together, Elliot and Barzon bring a different view - than the typical modern practice - to the act of criticism and impose a discipline not often seen in contemporary discourse. It is in this spirit that the following critique is offered.


The organizational theory and practice in place today is a marvelous invention and has been developed over a well documented 3,000 year period. The industrial revolution, the development of liberal democracies, the Nation State and Capitalism are radical innovations that have been built over the top of the older hierarchy organizational model. They have, in fact, extended this model and given it, in wave of creative iterations, a new lease on life. Modern computer, multimedia and communications technology have also helped extend this life-cycle by providing greater information throughput. However, these very dynamics now conspire to destroy the very system they are built on and rely on. This is both good and bad news. The good news is that new forms of organization will be less imposing on the individual, more adaptable, far less prone to abuse, far more economical and a great deal more human-friendly. The “bad” news is that this is not an easy transition. These two organizational models are hostile to one another. The existing order does not naturally evolve into the new. This is a circumstance where transition management [link] is critical and a careful implementation strategy - which will be unique to every organization - is critical for success.


So what is the ideal? Notice today when you meet someone and they ask what you do that most likely you say who you work for. Then you state your functional role and your status within that organization. Ownership, utility, status. Ideally, we should think of our organizations as means of augmenting our unique capabilities and integrating them with the capabilities of others. Organization as a tool. In this context, organizations work for us. We would think of them much in the same way as a stockholder does (but with a greater sense of responsibility than the typical modern stockholder seems to.)


This organization would be far more flexible and adaptable than we have today and far less prone to wild fluctuations in value and market fitness. They would be the result of system and less what they are as a happenstance of inspired leadership and heroic effort. This is not to say that leadership is not important - it is. Leadership, however, in this new reality, would be distributed throughout the entire structure of the enterprise its very architecture will insure this. It would be inspired and inspiring. It would reflect the genius and dedication of the many members of the enterprise. There would be, from time to time, heroic effort. This would come as an organic response to challenge and opportunity and spontaneously swell up when and where needed. The organization would not be directed and driven - it would be self-organizing and emergent [link].


This new organization will be much more equable than it’s predecessor. The distribution of value and wealth among the stakeholders will be a truer reflection of real value contributed and less prone to manipulation my a few to accomplish their self interest at the expense of others. Internally, the organization will behave like a market and these determinations will take place smoothly and without the overhead of crushing time, cost and distractions. The fixed overhead of this organization - at any operating unit - would be a fraction of what it is today.

There are systemically-driven 12 points of failure of the traditional hierarchy that the ValueWeb architectures can address. Actually, there are far more than 12 but this list will do for our purposes here. They are:


The hierarchy does not work for knowledge-work and knowledge workers.


The hierarchy structure/process, today, cannot process information, exercise “communication, command and control” (C3) revise policy and exercise decision making at the scale rate and complexity demanded by it’s environment. This is the requisite variety problem that Beer made a center issue in his application of cybernetics to organizational design. This does not make existing organizations “bad” - although they increasingly look that way - it makes them structurally incompetent.


In a hierarchy of large scale, the distance between brain and actuators is too great - time lags and lack of “fine grain” information defeats the ability to lead effectively. “95% of a circle is still a flat tire.”


In the traditional environment and work-system, the language of management does not describe the technical, systemic elements of the organization. What is happening cannot be “seen,” communicated and shared by the communities-of-work responsible for governance.


With hierarchy dominate, the relationship between the (legal entity, “OEM”) organization and it’s other enterprise components (producers, customers, investors) is passive-aggressive and innately competitive - it is a game of dominance and a constant struggles to see who can get the majority of the profit. Someone is (or feels they are) always getting screwed.


In the traditional environment and work-system, the way that wealth is accounted fragments understanding and drives sub-optimal economic behavior and the wrong kind of competition among the enterprise components. This happens on multiple levels of recursion.

7 By definition, the hierarchy cannot have REQUESITE variety with it’s enterprise/market/economy/ecology.

The structure/process of control and intervention prevents emergence.


The hierarchical model does not scale infinitely. Growth distorts the structure (surface to volume ratios). Overhead increases - an inward focus. Internal complexity increases exponentially while the external reality of the enterprise radically grows in complexity.


The hierarchy is an energy sink. It requires constant investment by leadership. They are, essentially, unfair in how they reward performance. They have to be continually be remade, realigned, “inspired,” and so on, through all levels of it’s organizational recursion.


The hierarchy is extraordinary efficient and effective when in a situation it is designed for. This very feature makes them less adaptable in situations of rapid, turbulent change. This structure tends to become a “universal” solution with little “local” variation.


Hierarchies breed dichotomies: enterprise/ecology; art, values/economics; us/them; management/labor; organization/market... and so on.


The stories and examples recited below, in this part and part 2 - each in different ways, address each of these 12 characteristics of our existing organizational theory and practice. They show that there exists a tested, yet only a partially applied alternative to traditional organization.

It is important to understand that I do not advocate the complete removal of hierarchical structures. This would be disaster. Hierarchy will be part of any viable complex system. The problem is not hierarchy, itself, it is the dominance of the model (and the world view that goes with it) and the fact that hierarchy is not seen as a MODE that functions along with many other modes. It takes many mental and work modalities to match the variety of demands of the modern workplace let alone the organizations we charge with governance on regional and global scales.

Modern management theory is aware of the “hierarchy as mode” issue. This is not my point. My point is that it matters little how you understand the liabilities of the the present dominate organizational architecture. No matter the effort applied and the well-meaning expended, the structure will win in the end. Sustainable success will require a different structure not fixes and workarounds of the existing way of working. Naturally management should pay attention and do what they can to attenuate negative consequences of existing structures. However, “the center will not hold.” It is time to design a new organization/process structure from scratch.


Good management, performing products and services, the ability to “replace” obsolete elements, economic and market fitness are concerns in any organizational schema. ValueWeb architecture does not make them and other similar issues go away. In this section I am not talking about these constants. They will play out differently in a ValueWeb architecture but that is not the point. Just as a reciprocating engine will leave half of it’s efficiency “on the table” even if it is operating at “perfection,” the hierarchy has inherent, systemic limits - the “John Von N Bottle Neck.” People’s performance is always an issue - again, not (directly) the focus here. People - individuals and (more importantly) teams - (outside of non-sustainable “heroic effort”) can reach only a certain level of accomplishment in the traditional architecture. In a distributed network, properly bound and structured, people’s performance is, universally, a quantum level higher than what we have come to accept “as normal.”How do we know this? from 1000 DesignShops which are temporary ValueWebs for a concentrated period of time. How do we make this happen? By creating the “Zone of Emergence” and holding the integrity of that space. How do we know “the system” remembers? By building strong memory into every experience. How do we know that ValueWebs can be incubated? by watching what happens in NavCenters. How do we know that corporate transformation can be accomplished on a pay-as-you-go basis? By applying the ValueWeb tool kit to specific projects for concrete gain while using these experiences as the medium from which a new organizational architecture is built.

ValueWeb architecture addresses many dysfunctions systemic in the present theory and practice of organization. Organizational design is related to but different from organizational management. The management issues remain but are seen and dealt with in a new context. Mature ValueWebs promise far greater stability in dynamic and chaotic environments. However, ValueWebs are disruptive technology and are brought about by distributive technology. As such, the introduction of ValueWeb architecture to an existing structure has to be carefully facilitated.

...Stories From Our Experience


There are several experiences that have provided us valuable learning in regards what a ValueWeb is, how it operates, how one is built (grown and evolved, more accurately) and how a ValueWeb is maintained.

They are captured in the following stories:

“The Swimming Pool Story ” (1960s). “How NASA Went To the Moon” (1960s). The “Story of The Learning Exchange” from the (1970s). “The Acacia Plan” (1980s). “FAA Delays” (1980s). “Agency Group Restructuring” (1980s). “AEDC and the 777” (1990s). “Flying the F-15 Another 15 years” (1990s). “CGEY Transfer and Going To Scale” (1990s). The Big E - Evolving the MGTaylor ValueWeb (1979 - 2002).

Each of these stories tell us something valuable about ValueWebs and their potential. None tell it all. ValueWebs are an emerging idea. Our thinking, designing and experience related to network organizations goes back over 40 years. The intense work started in the mid 1970s. It was not until the 80s and 90s that the concept and methods were “put to test” with projects of sufficient scale and complexity to see if the theory would hold up - it did. It was not until our Patent filings of 1997 through 2002 that a formal system and method was defined and comprehensively documented. While we have been transferring the theory and practice of many support “processes, tools and environments” since 1982, it was not until late 2001 that we started to “teach” the underlying theory in depth. To date, “proto-” ValueWebs have been employed for great profit. No organization has yet built a full-featured, at critical mass, ValueWeb as their permanent ORGANIZATION - including MG Taylor. Doing this is the next step. As I write this paragraph (February 2002), a handful of corporations are looking at this prospect; one (as of mid 2003, is planning a network of NavCenters that will, naturally, form a ValueWeb architecture [link].

These stories, then, INFORM but they cannot tell it all. The accumulated experienced does overwhelmingly argue the veracity of theValueWeb concept and the system and method that supports it. The financial case is clear: great returns can be had on the path to becoming a ValueWeb architecture. It is a pay-as-you-go process. No one knows what the real upside potential is but I suspect it is the kind of wealth-building that the dot.com period promised but failed to deliver.

...NavCenters: A Tool For Building ValueWebs

A network of NavCenters with a central “mother-ship” NavCenter “hub” is an essential tool for building and supporting ValueWebs. I do not believe that fully functional ValueWebs can be accomplished without this capability. ValueWebs need a “commissioner of Baseball” - a facility that provides a neutral space where members can come together and do everything from clear the air to expand the enterprise. For years we have been building centers mostly “one-off.” There exist, now, nearly thirty “NavCenters” of various kinds with different missions. We have enjoyed periods of high networking between Centers and periods (like 1998 to to 2009) of relative isolation and inward focus. navCenters which focus inward tend to have short lives and does their ValueWeb.

There are plans afoot (as of 2009) that will result in more than doubling the number of these Centers and there is a growing awareness that, for all of us, to succeed we have to employ this tool both individually and as a COMMONS sourcing all of us. The increase in the number of these “nodes” and an increase in their interaction may well provide the critical mass required to take the system to the next level. Not too soon given the events of recent years.


...The MG Taylor ValueWeb


At the moment, we call our ValueWeb the “BigE.” We have been building this Web for over 23 years. It has been through several cycles of the “Stages of an Enterprise” Model.

Now, our ValueWeb is undergoing undergoing a rapid growth in membership and levels of activity. I think it is about to get to the critical mass necessary for a true web to function and be viable. We shall see.


Critical mass is necessary for a ValueWeb to function as a true Web. The web has to meet the definition of what Jane Jacobs calls a replacement city. There must be enough diversity within the web to recreate itself when necessary. This is why a ValueWeb acts like - and has to be “governed” like - part society and part ecology.

Today, the MG Taylor ValueWeb is about 7 companies and 100 people on the first clam shell; 25 companies and about 700 on the second; and, somewhere around 5,000 players, on the outer most clam shell. None of the “members,” at present, are informed enough, involved enough, or active enough for this ValueWeb to be successful. My sense is that, given what we want to do, this is one order of magnitude too small for critical mass. The growth of a ValueWeb cannot be forced. It is not a matter selling or recruitment. These activities make, at best, a network - useful but a different phenomenon.


The ValueWeb has to grown as a web of transaction-potential nodes (or agents) based on affinity and interest. The relationships inside it are governed by a specific set of rules understood and accepted by the members of the web. These rules constitute the web’s terms of engagement and they are far more fine grained than the rules general to the society that surrounds it.

(More coming)

In our case, we are just learning what those rules are and how our web must be evolved and governed. This is not easy. The common response to an issue is to make an organizational adjustment. This is almost always wrong. Structure is important but organizational command and control actions in a ValueWeb rarely work. This is not to say that decision and action are not important to a web. It is that these are done on a much more cellular level and distributed manner than the way a typical organization functions. This is of course the basis of a ValueWeb’s resiliency and ability to adapt.


On the level of the ValueWeb, itself a decision in the common sense of the term is rarely - if ever - made. What happens is emergence. This is the same phenomena that happens in a DesignShop event. This implies that a ValueWeb has to be facilitated - not managed - in much the same way. However, there is a completely different circumstance in the area of legitimacy.

(more coming)

....The Process of ValueWeb Creation


ValueWebs have to be grown - they cannot be built in the mechanical sense. This is why most mergers and acquisitions fail. It is too complex a task to force the pieces together. There must be a process in place to facilitate the building of an organic web - something new has to be created from the pieces of the old enterprises. The task is to grow a prairie not make a manicured garden. Usually, the variety and complexity inherent in the pieces are not matched by the variety capability provided by the organizational architecture. This is an important and technical point. The architecture of any organization can accommodate a certain amount of variety according to it’s own structure. The mismatch between the variety often intrinsic to a situation and the capacity of the organizational structure selected is often orders of magnitude. This results in organizations that literally cannot deal with themselves let alone the environment they find themselves in. Introducing any organizational change to any organization up the variety equation and creates a double whammy. More complexity while there is distraction an temporary diminishment in the organization that has to deal with it. This is why closing the gap between real projects and organizational change is so important. It cannot be either/or. It cannot be competitive. It must be a “twofer.

(More coming)

...Webs in Progress

A true mature, sustainable Valueweb is yet to happen. This is not a negative nor a failure. It is a statement of where we are in our development.
(More coming)

...How Organizations Can Work in the 21st Century


...ValueWeb and Recursion


The ValueWeb Model cannot be understood and actualized without understanding recursion.

(More coming)

Go to Part 2 of 2

Matt Taylor
Borges NavCenter
June 22, 1999


SolutionBox voice of this document:



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• ValueWeb Communities • VaueWeb Mechanics

posted June 22, 1999

revised December 17, 2009

• 19991111.184888.mt • 19991204.531142.mt •
• 20001110.126581.mt • 20010328.768884.mt •
• 20010621.198734.mt • 20091216.848451.mt •

• 2009 1217.812091.mt •

 note: this document is about 70% finished

Copyright© Matt Taylor 1999, 2000, 2001, 2002, 2009


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