Talbot
West
Doctrine

01The premise

Enterprises must improve.

Competition, technology, customer expectations, regulation, capital constraints, and internal ambition continually change what is possible and what counts as good enough.

Every enterprise is therefore trying, explicitly or implicitly, to move from its current state toward some better state.

What do we mean by better?

Better can mean more revenue, lower cost, higher margin, greater throughput, better quality, lower risk, stronger resilience, faster movement, better customer outcomes, new capability, greater strategic freedom, or some combination of them.

The relevant definition is contextual. Enterprises continually seek more desirable states.

02Enterprise movement

Enterprises become better by making moves.

Companies improve by making decisions, acting on those decisions, and learning. A company must perceive possibilities, form judgments, commit resources, configure people and systems, act, observe what happens, learn, and revise.

We call that entire arc, from initial decision through acting and learning from the process, a “move.” At enterprise scale, a single move can be massively complex and entangled. That’s before you consider portfolios of moves interacting with one another.

03

Movement requires representation.

In order to make any movement, companies need to create a model of current reality, desired reality, and the path from here to there.

Models are necessarily partial slices of something very complex. They succeed when the partiality captures the relevant aspects of reality to enable successful movement. They fail when it does not accurately represent the salient dynamics and aspects.

Let’s use Google Maps as an example. It models the reality of traveling from “here” to “there”; we don’t expect it to capture the current wind speed, number of cars on the road, or the mood of other people in our vehicle.

We do expect it to represent an effective travel route. If it recommends a road and that road is closed to construction, we view its representation as failed because it was wrong in the ways we needed and expected it to be right.

Go deeper into representation↗
What makes a representation useful?

A useful representation begins with purpose.

What slice of reality does it need to expose?

How faithfully does it represent that slice?

How rich does it need to be for the purpose at hand?

Which other representations expose materially interacting parts of reality that also need to enter the picture?

A representation is successful if it captures enough of reality to enable effective movement.

04

Systemicity increases difficulty.

Systemicity describes the interacting forms of complexity that make enterprise moves harder to represent, compose, and realize.

Think of systemicity as a combination of “complexity,” “entanglement,” “interdependency,” and “emergence.”

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Higher systemicity creates more surfaces on which incoherence can manifest.

05

Incoherence is slippage.

Incoherence is economically material slippage anywhere in the chain by which an enterprise encounters reality, understands it, represents it, decides, acts, observes, learns, and revises.

An enterprise can misrepresent reality, fail to perceive a valuable possibility, choose poorly, translate a sound decision badly, execute well against a subpar objective, lose important relationships during implementation, fail to absorb feedback, or learn the wrong lesson.

Incoherence is inevitable in high-systemicity environments. The severity and quantity of it can be managed. A coherent response minimizes incoherence. See “Coherence” below.

The more systemic the situation, the more places economically material slippage can enter.

Go deeper into incoherence↗
06Continues from 05

Incoherence leaks value.

Some value leakage is visible

A chosen path underperforms, costs more, takes longer, produces inferior results, or fails.

Some is much harder to see

A better possibility is never perceived.

An important interaction is omitted.

A superior sequence is never constructed.

A portfolio effect goes unseen.

A future option is closed before anyone recognizes its value.

A result arrives, but the enterprise learns the wrong thing from it.

Value leakage is the reasonably attainable enterprise value that fails to become realized because enterprise movement was less coherent than it could have been.

Representation and judgment are especially leveraged because they sit near the beginning of the chain. A poor representation or bad judgment can contaminate everything downstream.

But value can leak anywhere through action, realization, observation, learning, and revision.

Go deeper into value leakage↗
07

Coherence is leverage on reality.

It is the enterprise’s ability to bring its understanding, representations, possibilities, judgments, commitments, actions, observations, learning, and revision into maximally effective relationship with the reality it is trying to navigate and change.

What it means in practice

Preserving what materially matters, at the right level of richness and connection, so the enterprise can make and realize better moves.

What it makes possible

Greater coherence expands what the enterprise can see, construct, reach, learn from, and capture.

Go deeper into coherence↗
Why isn’t coherence just coordination?

Coordination is one sub-mechanism within coherence. A perfectly coordinated enterprise can still coordinate around a bad representation, an inferior possibility, the wrong economic boundary, a stale assumption, a poor decision, or a badly designed action.

Coherence concerns the quality of the enterprise’s relationship to reality and its movement through that reality. It starts with representation and continues through decision, execution, learning, and revision.

08AI, the forcing case

AI is the forcing function.

Automatic systemicity increase

AI increases systemicity.

It moves the capability frontier, changes relative economics, creates new complements and substitutions, alters workflows and roles, changes architecture and provider choices, shifts competitive conditions, expands the set of possible system configurations, enlarges the set of possible enterprise moves, and expands systemicity in a whole lot of other ways.

In most enterprises, the systemic burden outruns the capacity to capture upside and mitigate incoherence.

Potential coherence extension

AI can extend the machinery of coherence.

Memory, sensing, search, representation, synthesis, comparison, simulation, observability, learning, and revision can all be extended.

Those capabilities can dramatically expand an enterprise’s capability to install and manage coherence.

AI increases coherence capacity only as part of a larger human-organizational-machine system engineered with coherence as its purpose and the enterprise itself as the object of optimization.

Piecemeal AI adoption expands enterprise incoherence while adding localized benefit.

AI installed coherently can increase the enterprise’s ability to navigate systemic reality effectively and capture value.

Systemicity increases automatically. Coherence increases through disciplined engineering.

Go deeper into AI↗
09The implication

Coherence can become a first-class enterprise discipline.

Enterprises already contain extraordinary coherence-producing machinery. Strategy, finance, operations, engineering, architecture, management, organizational design, analytics, decision science, and many other disciplines have each advanced important responses to incoherence and systemicity.

Much of that machinery developed discipline by discipline, object by object, and problem by problem. Because these adaptations developed adaptively and piecemeal, they don’t capture the current possibility frontier.

Human judgment, organizational architecture, information, systems design, and machine intelligence can now compose into systems that improve the coherence of the enterprise itself.

When coherence is practiced as a discipline in its own right, it provides a much more effective answer to systemicity than prior approaches.

When the discipline of coherence targets the enterprise as its object of optimization, it provides extraordinary economic leverage.

The governing object should be the enterprise’s ability to navigate reality effectively for the greatest advantage.