“What Needs To Change?” How Value is the Key

• Part 1: “Why Don’t They Change?” Because They Aren’t (Yet) Able To
• Part 2: “What Needs To Change?” How Value is the Key
• Part 3: “What Does Change Look Like?” Clean Contracts and Prototypes

The gap between today’s challenges and the ability to respond to them effectively continues to widen. Why? What’s going on? What’s needed to break out of this pattern? And how can we make the necessary changes understandable, natural, and achievable?

These aren’t new questions, and we’ve already written extensively about them throughout our site. But we do have a new way of presenting the answers, and that’s what we’ll be looking at in this series.

Last time, I introduced you to a simple but powerful new quadrant model we’ve developed. 

It maps today’s commercial terrain on two axes, leading to four distinct organizational operating models, or centers of gravity:

I also explained the deeper structure here of Q1 = Methods/How, Q1 = Results/What, Q3 = People/Who and Q4 = Purpose/Why.

I showed how our center of gravity needs to be predominantly in Q4 – responding in new agile, purpose-led ways to the obvious and undeniable uncertainty and turbulence that Complexity leads to – but that:

• Our current operating reality is mostly in Q3: feeling the bite of people-driven Complexity in tension with familiar rigid structures and approaches.
• Even worse, our operating model remains largely in Q1: fixed practices and tools – the focus being on “methods” – that reflect persistent assumptions of predictability and control that no longer hold.

In other words, where we are and where we need to be are diametrically opposed.

Worse still, we saw how a combination of Q1’s gravitational pull and “fault lines” around Q1 trap us there:

But the good news is that this quadrant model doesn’t just describe the problem.

It also helps us to see what’s involved in overcoming it. 

We need a pattern breaker

Most organizations recognize that business as usual isn’t working, and that change is needed.

Indeed, change initiatives abound: you can barely move for training in new skills, enhanced best practice, new standards, and – especially – the rush to embrace and exploit AI.

But the problem is that these initiatives start from within Q1, and reflect Q1 assumptions, so all they’re really doing is what we call “doubling down”: applying existing approaches more rigorously.

On the surface, things might sound different and seem to depart from traditional Q1 practice: standards are framed as just a “necessary foundation”; it’s new capabilities that are in focus, such as adaptability (which uses the “adaptation” language of Q4); in particular, AI is new and innovative.

But ultimately, the Q1 focus on what we do and how remains untouched – “if we get ourselves in order, results will follow” – and the Q1 goal of control dominates.

For example, I recently heard a leading figure in the commercial world say this when asked how to cope with the new operating reality of volatility:

I think that we do need to design contracts and contracting for certainty… we can get the contract to a point of 70-80% certainty… Put mechanisms in to deal with the uncertainty…

Note the perfect example of Q1 approaches and mindset: the continuing use of existing artefacts (contracts); how we’re to maximize control (predictability); how uncertainty is a problem to “deal with”, and by using “mechanisms”.

Indeed, AI is often just such a mechanism, with the focus almost always on gaining new insights from data, “catching up” to change, and freeing up headroom… all to right the Q1 ship, “tame” Complexity and (re-)assert control.

And so the investments in training and technology continue and accelerate. And so does the escalating pattern of failure:

And so whilst organizations may say they’re aiming for transformational agility and adaptation – Q4 in our terms – they’re unable to overcome either the gravitational pull of Q1, or its “fault lines”, and remain trapped within it:

Worse still, the underlying reliance on “Methods” and “How” in Q1 works against the “Purpose” and “Why” we need to re-center on in Q4 – indeed, the current reliance on AI as the way to achieve the “agile adaptation” of Q4 actively reduces the human discernment that is really what’s needed.

Effective engagement with AI is not just about crafting prompts or avoiding hallucinations; it is about recognizing when AI-generated responses contribute meaningful value – when they advance understanding, decision-making, or creativity in substantive ways.

Navigating Complexity is not about adding more analytical structure; it requires the ability to combine analytical precision with pattern recognition, contextual awareness, intuition, and systems thinking – discernment in action.

And so the current reliance on AI is diminishing the very human capacities required to thrive in an increasingly Complex world.

On every level, therefore, we see that it’s simply not possible to “iterate” or “branch” out of Q1 to other quadrants; the system only reinforces itself.

Indeed, as two quotes (probably mis-)attributed to Einstein put it: “We cannot solve our problems with the same thinking we used when we created them” and “Insanity is doing the same thing over and over again and expecting different results”.

This is why so many well-intentioned operating-model reforms become dangerous mimics: they diagnose the need for fundamental change correctly, and even use some new-sounding language – so they sound like real champions of something new – but they ultimately just reproduce Q1 logic in more sophisticated forms (and therefore more dangerous and seductive ones).

It’s why everything outside Q1 further atrophies.

And it’s why we need a pattern breaker.

But before I reveal what that pattern breaker is, I need to introduce you to the underlying dynamic of our 2×2 matrix: power.

Power: the underlying dynamic

Because our model isn’t just a map of the commercial terrain in terms of uncertainty and adaptability; it is also a map of organizational power.

First, though, what do I mean by “power”?

Well, at its most abstract, power is the capacity to shape what happens – through any combination of authority, agency, control, knowledge, ability or influence – but we can immediately ground power in the fact it only exists in relation to something.

And in organizational terms, power ultimately exists in relation to just two “somethings” – the context in which the organization operates, and how the organization operates.

These are of course then the axes in our model: the organization’s context is one defined by levels of uncertainty (x-axis); how the organization operates is the degree of structural adaptiveness (y-axis).

To date, the answer to how power plays out on these axes has been the same in both directions – “power-over”:

Flowing out from the origin of both axes in Q1, and gradually decreasing:

• “Power-over” the external environment on the x-axis, by assuming it is predictable, that it can be controlled, and uncertainty insulated-against, or even tamed, through rigour, best practice, risk management, data and technology.
• “Power-over” how things operate on the y-axis, through exerting top-down control within the organization and beyond: fixed structures and roles, hierarchical accountability, standardized contracts, benchmarks and KPIs.

“Power-over” is therefore concentrated in Q1; exponentially self-reinforcing – with the emphasis on “how” and “methods” – it’s the force behind Q1’s gravitational pull.

And when the only form of power that organizations know is “power-over” – certainty and control – not only is everything outside Q1 unfamiliar; it’s also threatening:

• If increasing uncertainty is acknowledged on the x-axis, it feels like being cast adrift, at the mercy of unknown forces
• If structures were to loosen on the y-axis, it feels like reckless abandonment of control, consistency and authority

And so when all you can see beyond Q1 is a loss of power, that instinctive response of “doubling down” that we just saw – those frantic attempts to regain “power-over” – indeed seem entirely rational.

But, despite historic assumptions, “power-over” isn’t the only form of power, and power doesn’t just disappear beyond Q1.

Instead, as “power-over” decreases, other power dynamics come to the fore:

• Along the x-axis, power becomes increasingly “power-in” the external environment: the capacity to recognize and work with the inherent forces of a Complex world, rather than futilely trying to dominate them.
• Along the y-axis, power becomes increasingly “power-to” how people and organizations work: the capacity to recognize and enable their unique capacity to act with agency, judgement and responsibility, rather than being controlled and regulated.

The underlying challenge in escaping Q1 is therefore how organizations can recognize, understand and embrace these wider understandings of power – both conceptually, and in practice.

And this is where Value comes in as the pattern breaker we need – because Value is what makes both “power-in” and “power-to” intelligible, possible and safe.

Value as the pattern breaker

Now, “value” is one of those words that everyone thinks they know what they mean by it.  And it’s certainly talked about everywhere.

But Value is also almost completely misunderstood.

As one of my colleagues has written about more fully, Value has become perceived as:

• Primarily objective, and largely synonymous with cost or efficiency (especially “value for money”)
• A noun: a static and quantifiable “thing” that we “create” and “deliver” (or even “extract”, which sounds worryingly dental…!)
• The inevitable result of improving capability, processes, tools, technology and so on.

This is the Q1 version of “Value” – VINO: Value In Name Only – and we see it in:

• Standards that talk about the need to “define the value”.
• Procurement practices to “optimize for value”.
• Pursuit of “added value”.
• AI tools to help “extract value”.
• And so on.

The word “value” appears, and there may even be the intent of calling for something new, but it’s ultimately been grafted on and absorbed by the familiar Q1 logic of “improve the internal machinery and value will follow“.

So, in a similar way to how we need to invert our current operating center of gravity to where that center of gravity needs to be (see Part 1), our understanding of Value needs to be wholly inverted to see what it really is:

• NOT primarily objective, but primarily subjective and contextual: perceived, defined, and experienced (by the end customer), and living in the dynamic tension between a current state and a desired future state, in a specific context
• NOT a noun, but a verb: a fluid, changing and Complex phenomenon and process; emergent and often unpredictable
• NOT the inevitable result of what we do, but what our capabilities, processes, tools and technology should all be in service of

With this correct understanding, we’re now ready to see how Value starts to break the chains of “power-over” and of Q1.

How Value breaks the “power-over” dynamic

Value moves us from “power-over” firstly along the x-axis: to “power-in”.

Value, when properly understood, is the opposite of Q1’s inward and self-referential focus.

So it’s not that there isn’t Value in Q1 – Value cuts across all four quadrants (you may remember the wheel of underlying values from last time).

It’s rather that Value is far bigger than Q1 and it begins outside Q1, with people – with subjective experience.

Outward-looking, Value therefore takes us immediately across the x-axis “fault line”, and straight into the fundamentally Complex external world of relationships and outcomes (beginning with what customers actually experience and need):

External relationships are, by definition, where “power-over” is most strained, because they involve other organizations that are beyond direct control.

Next, remember that Q3, in underlying structural terms is centered on people, and it is with people that Value begins.

In other words, Value is the way we start to accept the need to let go of “power-over” and how we start to embrace the extraordinary “power-in” our people-centered Complex world.

Value is where Complexity-led changes are first perceived and felt. 

It is the motivation for, and reward for, all we do.  It is what attracts focus, energy, attention and resources – guiding and realigning activity; prioritizing and driving decision-making.   

And so Value channels, harnesses and exploits all the “power-in” dynamics of Complexity to maximum effect:

• The data and information flows that underpin Complexity gain focus and power when they are “about” Value
• The interconnectivity innate to Complexity gains focus and purpose when it has Value to (self-)organize around, enabling organic and motivated collaboration
• Complexity’s dynamic of emergence becomes a source not of chaos, but of innovation, agility and adaptability

Customer-led Value becomes the new lens through which everything is seen; the foundation of a new operating model. 

Capability, standards and systems still all play their part – they’re often necessary – but the tail no longer wags the dog.

Because power has begun to shift: “power-over” to “power-in”.

And then, after Value leads to “power-in” on the x-axis, it naturally leads people and structures to follow on the y-axis – the second shift from “power-over”, to “power-to”; from Q3 to Q4:

With a clear Value-led purpose to provide the only effective “north star” for navigating Complexity – and remember that, in our deeper underlying structure, Q4 is all about “Purpose” and “Why” – the disruptive tension of Q3 resolves into the agile adaptation of Q4:

• Hierarchies and fixed roles give way to fluid, networked teams
• Authority moves to where experience, knowledge and discernment exist
• Decisions are made faster and closer to reality
• Expertise is activated rather than constrained
• AI becomes an effective servant, rather than an existential threat

Most of all, true accountability and responsibility take the place of top-down control and micromanagement.

The focus is now on what matters most, defining what good looks like, and giving those closest to where Value is realized the authority, accountability and responsibility to decide how to do so.

And with it come true agility, resilience and adaptability.

So whilst the goal in Q4 remains being able to discern those opportunities to spread and scale in Q2 – to capitalize on all the hard work done in Q3 and Q4, and to then appropriately reinforce those opportunities with Q1 optimization of methods – success in Q4 means that organizations won’t get locked-in to those business streams, as they will constantly be preparing for change.

In conclusion

We’ve seen how our quadrant model reveals the need for a pattern breaker to escape Q1.

We’ve seen how that need is made even more acute when we understand the dynamics of power underlying the matrix.

We’ve seen how Q1 can absorb new tools, new capability, and even new technology.

We’ve seen how Q1 can even absorb the word “value”, draining it of all its power and turning it into VINO: Value In Name Only.

And we’ve seen that what Q1 can’t absorb is when a true Value focus unlocks the chains of “power over”.

This is the true pattern breaker.

But what does this all look like in practice? What are we aiming for when we start the journey from Q1 to Q4?

And as this journey involves inverting the assumptions and practices of Q1 – threatening a sense of security at best, and vested interests at worst – there are some other big questions:

• How can all this happen when our organizations are built almost entirely around Q1 assumptions and practices that actively work against it?
• How do we avoid the VINO trap?
• What are the safe and achievable steps we can take to get going? And where do we start?

These are the questions we’ll be looking at next time…!