What Kind of Change Do We Need?
“Seeing a problem is not the same as knowing what must change.”
Uncertain Future
When I graduated with my bachelor's degree in agriculture in 1994, the invited speaker was Zvi Yanai, a philosopher and science intellectual who was then director-general of Israel's Ministry of Science. His position put him at the center of the question of how Israel should prepare for its scientific and technological future, yet the message from his speech that stayed with me was how little we could know about that future. As I remember it, he explained that earlier attempts to predict where the next important innovations would emerge and to concentrate investment accordingly had repeatedly failed, so the Ministry no longer favored one field as the likely source of the next breakthrough. Innovation remained essential for advancement and prosperity, but no one knew where the next major development would come from. Israeli agriculture already embodied that dilemma: it was known for continuous innovation and change; we knew where we were, but had no clue where we were heading.
More than three decades later, as a manager, I live with that same uncertainty. Technologies, markets, regulations, customers, and competition keep changing around me. I know my organization must keep adapting, even though I cannot predict exactly what the future will look like. So when a gap opens between what my organization can do now and what it must become capable of doing, my first question should not be, “How do we improve?” but, “What kind of problem are we actually facing?”
The diagnosis is particularly difficult when my organization is still successful. I may have good people, strong management, advanced technology, satisfied customers, and improving results, while still facing the possibility that the Structure that created that success may make the next Capability harder to develop. That is when the question becomes hardest: should I keep improving what already works, or is the problem deeper?
If my organization is already falling behind, I face the same problem in reverse. Poor performance makes the gap visible, but it does not explain why the gap exists or what will close it. A successful organization tries to recognize the problem before its consequences become obvious; a struggling organization tries to diagnose a problem whose consequences are already visible. In both cases, before deciding what to improve, reorganize, or preserve, I first need to understand what kind of problem I am facing.
Not a Diagnosis
Asking, “What is the deeper problem I am facing?” took me back to when I began working in India. Biofeed had addressed one of the most damaging problems in mango production, fruit fly infestation, and the intervention worked: infestation dropped dramatically, more fruit reached the market, pesticide use declined, and farmers earned more. Yet when I compared their results with those of advanced mango growers elsewhere, the larger gap was still there in yields, productivity, and income. We had solved an important technical problem that could destroy 30% to 80% of the crop, and the improvement was real, but most of the performance gap remained.
My response was simple: if controlling fruit flies wasn't enough, something else must still be missing. I kept looking for the next explanation, whether irrigation, varieties, knowledge, finance, or other usual suspects. I thought perhaps India was unique, but when Biofeed later expanded across Africa, the same pattern repeated: real technical and operational improvements, yet much of the larger performance gap remained.
Looking back, the remaining gap was not yet a diagnosis. Low productivity or low income tells us what is happening, but not why. The cause may lie in corruption, knowledge, finance, market access, coordination, infrastructure, or elsewhere in the system. What we see as the problem may therefore be only a symptom, while its cause lies elsewhere.
Goldratt's Theory of Constraints takes us one step further. Improving what appears weak does not necessarily improve the whole system, because progress depends on what is actually constraining it. But identifying the constraint is still not enough; we also need to understand why it exists. For example, if market access is the constraint, the cause may lie in quality, volume, logistics, finance, coordination, or something else entirely, and each cause may require a different response. Training, finance, technology, new relationships, or other interventions are therefore not diagnoses; they are responses based on a diagnosis.
Yet even after we identify today's constraint and understand its cause, one question remains: will removing it unlock more potential in the Structure we already have, or does the Capability we need depend on relationships the current Structure does not provide? Diagnosing what limits performance today is necessary, but it still does not tell us how far the existing Structure can take us. In the language of the previous column, should we keep improving the horse, or move to a different form of transportation?
Beyond the Constraint
That is the manager's dilemma. I may understand what constrains performance today yet still not know whether the Structure I already have can develop the Capability we will need tomorrow. I can see our Current Performance and define the Required Capability based on our Direction and changing conditions, but I cannot see how much potential remains within the existing Structure. The question is therefore not simply whether we can keep improving, but whether improving what we already have can take us far enough, or whether the Capability we need depends on relationships that do not yet exist.
Smallholder farmers make this distinction clearer. A farmer may become much better at producing mangoes yet still be unable, alone, to deliver what a premium market requires. Reliable weekly supply, traceability, quality control, logistics, and a dependable relationship with the buyer may need to be maintained across a wider value chain, not within any one farm. Improving the farmer can therefore strengthen an essential part of the system without creating the Capability required of the whole.
If I am responsible for improving that system, the question is no longer only how much better each farmer can become, but where the missing Capability must actually exist. If it can be created at the farm level, improving individual farms may be enough. But if it depends on functions that must be coordinated across many farms, improving the farms alone will not create it. This does not mean the family farm must disappear. Independent farms can remain distinct while becoming part of a larger arrangement that provides capabilities at another organizational level. As we saw in the previous column, higher-level Integration can create new collective capabilities without eliminating the lower-level Structures that participate in it.
A persistent gap, however, does not prove that the Structure is wrong. Poor execution may still leave substantial potential unrealized, while external conditions such as infrastructure, finance, regulation, or market demand may prevent progress even when the organization itself is appropriate. The diagnostic challenge is therefore to keep the structural explanation open without allowing it to become the default explanation for every difficult problem.
The same uncertainty can confront a highly successful company. Kodak is useful because its problem was not simply that it failed to see digital photography coming. Kodak built the first digital camera in 1975, introduced a professional digital camera system in 1991, and launched a consumer digital camera in 1995. For our investigation, the harder question is whether the organization that had become extraordinarily successful around film could also develop the capabilities required as photography moved toward digital. A company may therefore see the change coming and still face the same dilemma: should it keep developing the Structure that made it successful, or does the new environment require capabilities that depend on different relationships?
The farmer and Kodak are clearly very different, yet the decision-maker faces similar uncertainty. The farmer may become better at producing mangoes, while the missing Capability exists at the value-chain level. Kodak could continue developing digital technology while still asking whether the organization built around film could adapt to a changing photographic environment. In both cases, the real question is not whether improvement is possible, but whether improving the existing Structure can produce the Capability the future requires.
Choosing incorrectly carries costs in both directions. If I keep improving the existing Structure when the Capability I need depends on different relationships, I may waste valuable time strengthening an arrangement that cannot take me where I need to go. But if I reorganize too early, while substantial potential still remains within the Structure I already have, I may damage relationships, knowledge, routines, and capabilities that took years to build. Poor performance therefore does not prove a structural mismatch, just as strong performance does not prove structural fit. As a decision-maker, what I need next is evidence that helps me answer a more precise question: at what level of organization must change occur for the required Capability to emerge?
Three Types of Change
As a manager, I need to be clear about what I am trying to achieve before deciding how deeply the organization must change. Clayton Christensen and his colleagues distinguish among efficiency innovations, which help us do more with fewer resources; sustaining innovations, which improve existing products or services; and market-creating innovations, which make products or services accessible to people who could not previously consume them. These distinctions clarify what the innovation is meant to achieve, but they do not tell me what must change in the organization to achieve it. Do I need to improve the existing components, change the relationships among them, or create a higher level of Integration? That is a different question: how deeply must my organization change to create the Capability I need?
Ford makes that distinction clear. When the moving assembly line began operating at Highland Park in 1913, it transformed the efficiency of Model T production. The breakthrough did not come simply from making workers or tools better. Ford changed how workers, tasks, materials, and the car itself moved through the production process. The goal was greater efficiency, but much of the new Capability came from changing the relationships among the components of the system. Ford therefore helps separate two questions: what result am I trying to achieve, and what must change in the organization to achieve it?
The kibbutz illustrates change at another organizational level. Instead of organizing agricultural production mainly around separate household farms, it organized key productive functions through a larger communal economic unit. This allowed investment, specialization, resources, and coordination to operate at the community level. The point is not that Structure alone explains the kibbutz's economic results, or that people, knowledge, technology, and resources did not matter. The important question is where the new Capability could exist. Ford created new Capability by reorganizing relationships within an existing company; the kibbutz enabled capabilities that individual household farms could not provide on their own to emerge at the level of a larger organized whole.
These examples suggest three possible types of organizational change. In Type 1, I strengthen the components themselves by improving their people, knowledge, technology, management, equipment, or resources while leaving the basic relationships among them largely unchanged. In Type 2, I change the relationships among those components by reorganizing roles, workflows, coordination, or decision-making within the same organization. In Type 3, I integrate previously more independent units into a larger organized whole, allowing some capabilities to emerge at that higher level rather than within any single component. These forms of change can overlap and need not occur in sequence. The important distinction is where the decisive new Capability is created.
Once these possibilities are visible, the managerial problem becomes more concrete. If strengthening the components moves the organization toward the Required Capability, continued improvement at that level makes sense. If strong components are still insufficient, we need to examine the relationships among them. If the Required Capability depends on functions no individual component can provide, the missing Capability may need to be created at a larger organizational level. The purpose is not to move mechanically through three stages, but to use evidence to identify where the missing Capability must be created.
In practice, I may not know in advance how deeply the organization needs to change, so diagnosis must also include testing. A limited change in a workflow, decision rule, partnership, organizational unit, or form of Integration can provide evidence about whether the missing Capability begins to emerge at that level. A successful test does not prove the whole diagnosis, and a failed test may reflect poor execution, insufficient resources, or weak leadership rather than the wrong level of change. What I gain is not certainty about the right Structure, but better evidence about where the required Capability can be created and which changes merit further development.
Diagnosis Without Certainty
Diagnosis therefore cannot give me certainty about the right Structure. What it can give me is better evidence about where the required Capability may emerge and what kind of change deserves further testing. This matters because development builds on what has already accumulated: knowledge, relationships, routines, specialization, and other capabilities developed over time can become the foundation for further progress. But they can also become limiting if we assume that what made us successful must remain unchanged. The challenge is therefore not simply to preserve what works or replace it, but to understand what should continue to develop and what may need to be reorganized so that new Capability can emerge.
The uncertainty Yanai described has not disappeared. We still cannot reliably predict where the next important technological, economic, or social change will come from or exactly what it will demand of our organizations. What we can improve is how we respond once change begins to matter. Instead of moving directly from a visible gap to a preferred solution, we can ask which Capability is now required, what is preventing it from emerging, and where in the organization change needs to occur. We may still be wrong, but our decisions are then grounded in explanations that evidence can support, challenge, and refine.
The investigation therefore leaves us with a provisional hypothesis: new Capability may emerge at different levels of organization. Sometimes the decisive change comes from (1) strengthening the components themselves; sometimes from (2) altering the relationships among them within the existing whole; and sometimes from (3) integrating more independent units into a larger organized whole, where new capabilities can emerge. Many routine improvement activities in organizations exemplify the first type; Ford illustrated the second possibility, while the kibbutz illustrated the third. This does not mean that every organizational problem follows one of these paths, but it gives us a more precise way to ask where change may need to occur when improvement alone is not enough.
Before taking this hypothesis any further, it is worth applying it to two very different human challenges. The first is the persistent poverty of smallholder farmers, who represent much of global agriculture. The second is the challenge facing organizations that prosper today but must keep adapting to prosper tomorrow.
For smallholders, the hard question is this: if poverty persists despite years of improvement, can the missing Capability be created by further improving the farmers and their farms (Type 1), or does it require changing the relationships among them or integrating them into a larger organized whole (Types 2 or 3)? We should ask the same question about organizations that are successful today: can the Structure that created our present Capability and is responsible for our present success also develop the Capability we will need to prosper tomorrow?
Neither question tells us in advance what to change, but both can help us avoid changing the wrong thing.
We reached this provisional hypothesis by examining human organizations and the problems they face. But if the Universal Law of Increasing Complexity captures something deeper about how organized systems develop, the same basic pattern should not be limited to management. Human organizations emerged very late in the history of complexity, so the next step is to look earlier and ask whether the same possibilities appear in physics, chemistry, and biology. When new Capability emerges, does it arise from changes in the components themselves, changed relationships among them, higher-level Integration, or some combination of these?
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* I strive to stay true to the facts and the reality they reveal. If you find an error or see a need for clarification, your insights are welcome.
See you soon,
Nimrod
Dr. Nimrod Israely writes on the structural foundations of prosperity and human systems, and is the CEO and Founder of Dream Valley and Biofeed.
P.S. If your organization has the people, resources, and motivation but still struggles to move forward, message me and we can set up an introductory call.
P.P.S. Previous column: “Is Improvement Enough?”
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