Black holes and the Cosmos
Less than a week ago, scientists released the first image of a black hole. The world viewed what we had formerly thought was un-seeable. We had proof: black holes exist! This conclusion, while understandable, is only partially true. First, the image was not a photograph, but a computer-generated visualization of radio waves detected by multiple telescopes. Second, scientists had long been convinced of the black hole’s existence, albeit based on indirect evidence aligned with theoretical predictions.
In 1905, Albert Einstein’s theory of special relativity appeared in a published paper; it described the structure of spacetime. Ten years later, his theory of general relativity was published; it posited the curvature of spacetime. In 1946, he published his insight e = mc2. The famous equation states the general principle of mass-energy equivalence, i.e. that matter can be converted to energy at a constant rate.
Scientists had already used the theory of relativity to predict black holes. The mass-energy principle made those predictions even stronger. Instruments were later developed with sufficient power and sensitivity to provide indirect evidence of a black hole. (They detected the “bending” of electromagnetic radiation, shifts in wavelengths, by black hole gravitational forces). We have only recently had sufficient computing power to perform the required mathematical calculations to “translate” radio waves into a visualization of an actual black hole.
How we know what we know
In an earlier article, I described epistemology, i.e. the philosophical analysis of the nature of knowledge, justification and belief. This branch of philosophy studies whether scientific “truths” exists, how we might “know” them, and whether we can believe them. Epistemologists answer questions such as “Do alternative facts exist?” and “Can we prove climate change?” The existence of black holes was one such an epistemic question. At what point did we “know” and could we justify “belief” in black holes?
The answer to those two questions depends upon the questioner. Scientists had long “known” of the existence of black holes. Scientists predicted them based on Einstein’s theories; instruments later provided evidence indirectly confirming those predictions. Science hadn’t released any visual “proof” for public consumption until this past week.
The image, however, is a visual representation, not a photograph. It simulates how the black hole would look if we could see radio waves with our eyes. We can’t of course. (And black holes absorb all light anyway!) Everyone — except the abject denialist — can now say they have “seen” a black hole, can confidently believe in its presence, and can therefore reasonably “know” that black holes exist. All of these statements are based on the scientific method. For the same reason, I am confident the earth is round, that the sun will rise tomorrow, and that the planet is warming. I know these statements are true based on the scientific method.
Value Gaps – Black holes in business
In a second article, I stated that value is the energy of the business cosmos. Just as energy appears in various wavelengths (radio waves, light, etc.), so value appears in different forms (customer preference, utility, cost, market price, etc.) It follows from Einstein’s principle of mass-energy equivalence that the two forms of value — mass (assets) or energy (activities) – are convertible. And just as cosmic black holes devour matter (stars) and energy (light), so business black holes devour a company’s matter (assets) and energy (activities). My PhD thesis labels these business black holes “value gaps.”
In a third article, I define the “value gap.” Whenever value is misinterpreted / mistranslated between stakeholders and whenever stakeholders’ ensuing activities are misaligned across the value chain, value is wasted. Lean thinking posits seven types of waste – wasted assets (inventory, over-production, defects) and wasted activities (transportation, motion, waiting, over-processing). Matter as wasted assets; energy as wasted activities. The seven types of waste do not provide any value for the end-customer. Since they do not provide value, he or she would not willingly pay for them. In other words, they destroy value (in the eyes of the ultimate customer) even if the company wrongly perceives these assets / activities to be value-adding.
Integrated Value Process (IVP) Framework
In An Empirical Framework for Evaluating, Implementing and Managing a Value-based Supply Chain Strategy (PhD thesis accepted by the University of Bath School of Management —ProQuest publication number 3121355), I present the Integrated Value Process (IVP) framework. IVP consists of (1) a ‘meta’ definition of value, (2) a conceptual framework illustrating the value management process based on that ‘meta’ definition, (3) five value gaps (mapping to the framework), and (4) a set of ‘first principles’ driving the value management process.
Value gaps are the black holes of business. They devour your company’s matter (assets). They drain your company’s energy (activities). They destroy value for your customers. They are sinkholes filled with non-value-adding waste. Business black holes are the graveyards of business value. (See previous post).
“Where’s the proof?” you may ask. Recall that scientists used Einstein’s theory of special relativity to predict black holes a century ago. The IVP framework similarly predicts value gaps — business black holes. Initially, scientific instruments provided evidence indirectly confirming the existence of black holes. My PhD research of UK and US value chains documented empirical evidence demonstrating the existence of value gaps – company value sinkholes. Just as we now see a visual representation of a black hole, so now you may see your company’s value gaps. Just look at your wasted assets (undifferentiated value propositions, asset write-offs, needless inventories, etc.) and your wasted activities (disconnected efforts, miscommunication / mistranslation, unproductive time, etc.) There is a profundity of confirmatory evidence in most companies’ value chains … even those considered value-driven or value-based.
Don’t feed and grow business black holes! Eliminate value gaps with an Integrative Value Management approach. Use the IVP framework to conceptualize, configure and implement your value strategy across your organization and value chain. Don’t let value die in a business graveyard!
Andrew Swan, PhD is a multidisciplinary and cross-functional integrator of strategy, processes, and information technology. His focus and expertise center on helping executives increase value creation and optimize value flows in business. Dr. Swan holds four degrees in Management, Accounting & Finance, Information & Knowledge Strategy, and Computer Science from the University of Chicago Booth School of Business, the University of Bath School of Management, and Columbia University.
He frequently publishes articles on value chains, value streams / flows, and Integrative Value Management on his website www.andrewjswan.com. Dr. Swan created the Integrated Value Process (IVP) Framework to help companies optimize the flow of goods & services, funds, and information across their respective value chains for multiple stakeholders. He can be reached at email@example.com or at +1.773.633.7186. He lives in Chicago.