Four types of conversations, four types of commitments

Published in 2008, following an award for the best student paper at the UK Systems Society meeting, four type of commitments were outlined. These were based on four types of conversations.

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4.1 Obligations can be formalized as commitments to deliverables, process, capabilities and/or relationships

In business interactions, commitments are commonly made in (at least) four types of obligations. These are depicted in Figure 4.


Figure 4. Commitments to four types of obligations

The four types of obligations have different orientations towards ends, means, and time horizon:

A commitment to a deliverable obliges the supplier to produce an outcome – as either a tangible or intangible change in the world – at some point of time in the future. The emphasis on an end and a fixed date may include some specifications of quality on the product. The means by which the outcome is produced is generally left to the discretion of the supplier, unless the customer wishes to include some additional conditions of satisfaction. A commitment to a deliverable is common when the end can be well defined, and both parties have aligned expectations on the future state. Most purchases are conveyed through a commitment to produce a deliverable.

A commitment to a process obliges the supplier to follow a specified procedure or method. The sequence of steps is normally clear, although progress through interim states may be contingent on other actors or events. Embarking on a process suggests some alignment on expectations of potential future states, but the final end may be uncertain until the commitment is completed. A commitment to a process is common when parties have a desire to resolve an issue that requires deliberation or learning on the way. A legal proceeding or a binding arbitration requires that parties agree to a commitment to follow a process.

A commitment to a capability obliges the supplier to provide resources on demand, over a period of time. An instance of capability provided may include producing a deliverable and/or following a process. The capability may be invoked many times, once, or not at all. The commitment to provide a capability can be a mitigation of a risky and/or improbable event, against which the customer desires insurance. Conditions of satisfaction may specify levels of quality on deliverables, and/or levels of performance on process. A commitment to provide a capability has a specified start date and end date. Higher uncertainty on the expected need to draw on the capability in the future may be reflected by the supplier setting a shorter duration or higher price for the obligation. Such a commitment may be renewed with different conditions of satisfaction and/or different levels of resources as experience is gained. A function outsourced from a business represents a commitment to provide a capability. Much of the business inside a company involves a sponsor chartering a capability as resources that the internal organization can seamlessly draw upon. Shared services across a business – e.g. procurement, shipping, real estate – are more efficiently operated when centralized, but business unit leaders usually dislike the overhead associated with maintaining such staff.

A commitment to a relationship obliges parties to contribute resources towards mutual benefits over a period of time. The benefits may be jointly attained and then distributed from a pool, or attained by each party asynchronously. The duration of the commitment may be expressed explicitly or implicitly. An explicit duration may specify the benefits, contributions, capabilities, processes and deliverables. An implicit duration may be simply a favoured predisposition based on a shared history. The predisposition can evaporate as one or both parties find less in common or demonstrate a preference for inconsiderate action or alternative partners. A commitment to contribute to a relationship can be enacted by an individual on his or her own behalf, or as an agent of an organization. Actively being a part of a family or a kinship is a commitment to contribute to a relationship. In a business organization, an officer of the company can make a commitment to contribute to a relationship with another business, with the obligation enduring beyond personnel changes.

An offering can contain one or more types of obligations in a bundle. Ownership of a physical product is most naturally transferred as a deliverable. The coproduction of services most naturally follows a process. Access to resources such as infrastructure is most naturally privilege to a capability. The more frequently these preceding types of commitments are repeated or replicated, the more likely an interpersonal relationship between parties is likely to develop. When actors participate jointly in more than one offering, the distinction between a portfolio of uncoupled offers and a system of coupled offerings may require clarification.

Source: David Ing, "Offerings as Commitments and Context: Service Systems from a Language Action Perspective ", Systemist , volume 30, number 2 (Christine Welch and Jennifer M. Wilby, editors), pp. 154-172, presented at the UK Systems Society International Conference, St. Anne’s College, Oxford, September 1, 2008. Cached at http://coevolving.com/commons/2008_Systemist_v30_n2_p154_Ing_Offerings-Language-Action

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In the background, there are four types on conversations:

  • Conversations for orientation
  • Conversations for possibilities
  • Conversations for action
  • Conversations for clarification

These are more fully explicated at " Conversations: for action, for clarification, for possibilities, for orientation" | Dec. 12, 2009 at https://coevolving.com/blogs/index.php/archive/conversations-for-action-for-clarification-for-possibilities-for-orientation/

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Why would we care about the four types of commitments? It’s in the failures that clarity helps.

For individuals dealing in a single transaction, a failure in a commitment to produce a deliverable, or to follow a process, generally triggers an exception condition. The deliverable or process is renegotiated (or maybe the parties go to court). Afterwards, the parties may choose to never deal with each other again.

When there is a series of multiple deliverables, processes and/or capabilities that recur over time, the situation is different. It’s common for a provider to say “sorry, I made a mistake, I’ll do better next time”, and the customer to say “sure, I understand”. They’re willing to overlook a failure in deliverable, process or capability, towards a longer-term interest in relationship.

Some of this thinking came from an earlier publication, “Governance and the Practice of Management in Long-Term Inter-Organizational Relations” | David Ing, David Hawk, Ian Simmonds, and Marianne Kosits | 2003 at http://coevolving.com/commons/2003_ISSS_47th_Ing_Hawk_Simmonds_Kosits . This was later refined and published in 2005, which may or may have changed some of the ideas.

Essentially, the question came from the observation that, in business, many failures of commitment are observed, but it’s only rarely that these problems enter judicial courts. If there’s a failure, why not formally pursue the other party through a legal institution? It’s because there is informal renegotiations that occur as a matter of course.

Transaction cost economics says that sometimes it’s more efficient to just do transaction as independent parties over a market boundary; and sometimes it’s better to form an institution (e.g. company, partnership, etc.) because having trust with a known set of individuals is more efficient. This is one of the foundational ideas in the theory of the firm.

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