Design for Emergence: A Theory of Social System Change

Social systems challenges require social systems solutions. But because our heads explode at the thought of transforming an entire dynamic social system we keep developing point solutions in the hope that our magic bullet of choice (new law, technology, product, service, or even more money), dropped into today’s social systems, is the one right lever to nudge the system to its transformational tipping point. It rarely works. There’s just no controlling for all the independent variables in any complex adaptive system. This explains why ‘evidence-based’ point solutions almost always disappoint when the goal is social systems change. We can’t analyze our way to social system transformation, it’s a generative act. We have to design for its emergence.

We know from our lived experience within today’s social systems that there is no shortage of pain points urgently needing design attention. Designing new solutions and workarounds for any one of them in isolation is like squeezing a toothpaste tube in one place only to have new pain points pop up somewhere else in the system. New social systems don’t start at scale, they’re complex adaptive systems that evolve generatively. We live in a world screaming for systems transformation and the best we seem capable of is tweaks.

“What if we can design for the emergence of new social systems to equitably empower people, improve lives and sustain the planet?”

Waiting for top-down point solutions to catalyze social system change or for existing enterprises, vested in today’s systems, to disrupt themselves is leaving too many people behind, causing too much pain and putting our planet at risk. Today’s social systems are unsustainable. What if an alternative path to reaching the tipping point for social system transformation starts by creating the conditions for the emergence of new social systems and deploying the point solutions that enable them to scale? If we want to transform our important social systems including healthcare, education and just about every other public service you can think of, we need a new theory of change.

“What if we designed for emergence?”

Designing for the emergence of new social systems follows a similar hierarchical pathway to achieving self-actualization at the pinnacle of Maslow’s Hierarchy of Needs. You can’t personally reach self-actualization in Maslow’s Hierarchy without first fulfilling the lower levels of physiological, safety, belonging, and esteem needs.

A similar hierarchical pathway also applies to social system transformation, requiring fulfillment of the lower level needs of capabilities, next practices, and new business models before reaching the top of the pyramid. We call it the BIF Hierarchy of Transformation. As much as we want to think we can shortcut the process and skip levels in both hierarchies to transform faster it doesn’t work. Whether the goal is self-actualization or social system transformation you have to fulfill each lower level before moving up.

Moving Up the Transformation Hierarchy

From Capabilities to Next Practices

“Capabilities are the amino acids of a business model.”

Capabilities are the building blocks necessary for any enterprise to create, deliver and capture value. A capability is the power to do something. Every person, organization and community either possesses or sources a portfolio of capabilities. Capabilities integrate people, process and technology for a specific purpose.

I often refer to capabilities as superpowers, our essential value-creating skills. Through the years whenever I ask enterprise leaders to tell me about their core capabilities they always start by handing me an organization chart. Org charts tell us very little about an organization’s superpowers. Staying relevant in a rapidly changing world requires a capability mindset, faster integration of new superpowers and the capacity to explore and adopt new ways to create, deliver and capture value.

“I’m still surprised by how few enterprises have a shared value-creating superpower story.”

A next practice is a step-change improvement in a capability. The most important next practices transform customer experience and outcomes, they go to the core of value-creation. A market-tested next practice can either be integrated into the existing business model or it can be leveraged independently as a core capability in an entire new business model. It’s a design choice. The more transformative the next practice the more it disrupts an enterprise’s core, including its culture.

Next practices can be a catalyst for business model transformation but far too often the development of next practices is narrowed to designs that can easily fit within the constraints of today’s business models and leveraged as incremental innovations. There’s nothing wrong with sustaining innovation but if disruption is at the doorstep and transformation is the goal, designing bolder next practices is a must-have superpower.

The pace of next practice development is breathtaking as new superpowers become accessible in the cloud without requiring large capital outlays and long development cycles. To appreciate the full breadth of possibility created by emerging technologies today is to feel like a kid in a candy store, overflowing with brain-exploding and exciting new technologies including genomics, robotics, internet-of-things, big data, machine learning, artificial intelligence, drones, and 3D printing to name just a few.

Any one or combination of these emerging technologies has the potential to become a transformational superpower. Whether they will or not, and at what pace, depends on our ability to turn emerging technologies into value-creating next practices and new business models. If next practices are constrained by the straightjacket of today’s business models, they will deliver incremental change at best.

From Next Practices to New Business Models:

When most people hear the words business model, they think about a financial model. Who pays the bill and how much money will we make? While capturing value is an important component of any business model it isn’t the only one and it isn’t why business models exist. Business models exist (or should exist) to create and deliver value, first for customers and then for stakeholders. Of course business models also have to capture enough value to scale in order to deliver value to more customers and to be sustainable. A successful business model integrates value creation, delivery and capture.

“Business models are straightjackets by design.”

In order to scale efficiently, business models are straightjackets by design. A business model clarifies stakeholder roles, so everyone sticks with the script, and constrains capabilities and next practices throughout the enterprise. This is why business models are so hard to change, they make it difficult to add new superpowers and to reconfigure capabilities to deliver transformational value-creating customer experiences. Transformation requires creating the conditions to unbundle an organization’s capabilities and next practices in order to play with the parts while continuing to pedal the bicycle of the existing business model. Easier said than done! Transformation is different than incrementally improving a business model. It requires the emergence of entire new business models.

“The unit of analysis is the business model.”

Alex Osterwalder, creator of the Business Model Canvas

If the goal is social system transformation it’s also important to note that business models aren’t just for businesses. Every organization has a business model, a design to create, deliver and capture value. Yes, including schools, hospitals, libraries and even government agencies!

From Keystone Business Models to Social System Transformation

If the ultimate objective is social system transformation we have to design for the emergence of new system-changing business models. Keystone business models are designed with systems change in mind. Just as next practices have the potential to transform business models, keystone business models have the potential to transform social systems but far too often the development of new business models is narrowed to designs that can easily fit within the constraints of today’s social systems and leveraged as incremental improvements. The more transformative the business model the more it creates a possible pathway to social system transformation. A system-changing business model scales organically, attracting new customers with its clearly differentiated value proposition and tight customer-business model fit.

“A keystone change encapsulates the value of the mission. It is concrete and tangible, unites the efforts of multiple stakeholders, and paves the way for greater change.”

Greg Satell, author of Cascades

Keystone business models don’t work the same way as today’s predominant business models. A system-changing business model introduced into any social system operates differently than incumbent models. For example a keystone business model for a higher-ed system-changing new college doesn’t operate the same way most U.S. colleges have operated since Harvard opened its doors in 1636. Check out Western Governors University, Southern New Hampshire University and College Unbound.

A keystone business model designs-in the contextual conditions for it to emerge in the real world first at a small scale. It’s not hard to imagine new keystone business models, it’s hard to get transformational business model concepts off the whiteboard into the real world. Keystone business model design requires prototyping a real-world working model of how the system change you imagine operates at a small scale. It starts in the market with a low-fidelity prototype with lots of workarounds and then as it delivers value to a small number of customers it can begin to scale iteratively while increasing the model’s fidelity and decreasing the number of workarounds. Think minimum viable business model (MVBM), not just minimum viable product (MVP).

“Social system-changing business models blur industry lines by design.”

A social system consists of multiple business models that have figured out how to coexist together. The more transformative a keystone business model design the less likely it is to be welcomed into the industry club with open arms! Social system-changing business models blur industry lines and don’t map well to traditional industry definitions. Keystone business models have to design-in the conditions to emerge in the real world, first at a small scale to demonstrate a minimum viable business model and then at successive levels of scale as more customers want in. If we can imagine it, we can model it.

“System-changing business model design is comparable to the ‘world building’ superpower of a video game designer, only in the real world.”

Keystone business models have the potential to catalyze the emergence of new social systems. The initial focus is on creating the conditions for the system to thrive at a small scale with a very clear and specific use case and not to get bogged down early, worrying about how the system will work at orders of magnitude greater levels of scale. Keystone business models often introduce entirely new roles, ways of working, new trusted data models and technology architected to empower the customer. I’ve yet to work on a system-changing new business model that didn’t require a new and improved culture.

Obsessing over how a new business model works at a social system-wide scale, before the model even sees the light of day, is unproductive, preventing most transformational concepts from ever making it off of the whiteboard. Developing imaginary spreadsheets, forecasts and change management strategies as if we can predict how a new system will play out at scale doesn’t help. We can’t analyze our way to the social systems we want. We have to explore our way there. We can’t predict how a new social system will scale. Start with a keystone business model concept and create the conditions in the real world to enable it’s emergence. At a small scale, modeling culture change seems less daunting. System transformation is a generative act.

Transforming social systems requires the introduction of new keystone business models that integrate next practices at their core to transform an industry’s value equation. As an example, the healthcare industry has multiple sub sectors each with its own predominant business model organized around enterprises. (hospitals, insurers, provider groups, drug stores, pharmaceutical companies etc.) If you think of healthcare as a social system organized around people, more than patients, you can more easily see the pain points of dealing with a siloed industry and begin to imagine how a new social system might emerge if we design new business models with system change in mind. One of the biggest challenges we face in society is that today’s social systems operate too much like industry silos, organized around enterprises, and not enough like social systems organized around people.

Case Study: LunaYou, A Keystone Business Model to Address The U.S. Maternal Health Crisis

Learning that women in the U.S. are more likely to die in childbirth than in any other high income nation made us angry and drove us to take action, we mobilized our BIF business model design superpowers to create a new woman-centered model to address this heart-wrenching and unacceptable crisis.

Our anger became an obsession as we discovered that Black and Latina women in the U.S. face a 3X greater risk of experiencing a life-threatening complication or even death. We asked ourselves, How can that be? As we dug even deeper into the research we learned that the racial disparity in maternal health outcomes is a preventable problem. Established science tells us that by enabling self-empowerment, social support, and personal wellbeing we can reduce the risk of poor maternal health outcomes in America. Today’s healthcare system isn’t designed for it. Pregnancy isn’t a disease and shouldn’t be treated like one.

LunaYou is a personalized wellbeing platform empowering women to improve their own maternal health outcomes with access to a wellbeing coach, and to the information, skills and social connections needed to improve her wellbeing, all by remote access. We started prototyping LunaYou in the real world with 25 women on Medicaid in our home state of Rhode Island. We were inspired by the high level of interest, enthusiastic engagement and the successful outcomes of early LunaYou Mamas. Early success gave us the confidence to begin scaling LunaYou, increasing the fidelity of the initial prototype and developing scalable software for the platform. In addition, we’ve partnered with a local Medicaid insurance provider, to provide the LunaYou platform to 400 women over the next two years. We’re also planning for a possible national rollout of LunaYou in 2022.

Our keystone business model has been designed with system change in mind. The core of LunaYou is woman-focused and empowerment driven. LunaYou enables women to curate her own trusted circle of support throughout pregnancy and to visualize her own personal wellbeing progress on a dashboard that only she sees. LunaYou is designed to demonstrate causality between personalized wellbeing and improved clinical and economic maternal healthcare outcomes as it scales. It’s not hard to imagine this same empowerment model unleashing significant value more broadly both in healthcare and across our most important social systems. Self-organized purposeful networks can change systems outcomes. That’s a system-changing value proposition we can proudly take to the market.

Call to Action

What if the fastest path to social system transformation is to design for the emergence of new keystone business models? I used to think that technology is the biggest force for change. I now think that tech is the catalyst and enabler but the biggest force for change is the proliferation of self-organized purposeful networks. What if together, we can catalyze the emergence of system-changing business models designed to equitably empower people, improve lives and sustain the planet? What if we design for emergence?

@TheBIF Founder & Chief Catalyst. Author, The Business Model Innovation Factory

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