Creating Value through Interaction Management

The ability to define, visualize and manage the interactions associated with any product or systems is growing in importance.  Mastering Interaction Management tools such as the N-Squared Diagram can create new value for your organization.  But where should you apply the N-Squared Diagram?  What types of interactions are worth capturing in this form? What kind of value is created by each application of this technique?

Architecture Interactions

When most folks think of an N-Squared Diagram, they are probably remembering a matrix that defined the interfaces between the components of a physical product or electro-mechanical system.  I saw my first N-Squared Diagram about 25 years ago when visiting our prime contractor on a defense-related project.  They had large plotter-drawn wall-charts with various subsystems shown down the diagonal of the diagram.  In the off-diagonal cells, they displayed all the subsystem-to-subsystem interactions.  Each wall-chart was focused on one type of interaction (e.g. electrical, mechanical, thermal, hydraulic, data or control, etc.).  If the charts had been transparent, you could have layered them into a stack and peered through them to see the total set of interfaces for each subsystem.

Some Assembly Required

In this context, the N-Squared Diagram is a design tool that captures the definition of the product so that none of the connections between the parts is overlooked.  Without such a definition, the likelihood of successful product assembly and operation is very low.  Every parent with a “Some Assembly Required” toy story understands this.

But the N-Squared Diagram can also capture behavioral interactions between the functions that make up the logical architecture of a system.  By defining how one function enables or limits another, designers can evaluate technology combinations well before embarking on the physical design.  A logical architecture that is only a functional decomposition “tree” is by definition incomplete; the function-to-function interactions are essential to understanding the planned behavior of the entire system.

A behavioral N-Squared Diagram may also help in use case design to visualize the flow of actions and hopefully simplify the end user’s experience.

Decision Interactions:

As a source of the real-world solution architecture/design, decisions give birth to all physical interactions between the parts of a system.  A decision is an abstraction of the thinking process that conceives, evaluates and commits to a solution, so its interactions with other decisions are also “implicit” or “logical” rather than “explicit” and “physical”.

Three types of decision-to-decision interactions are helpful to understand when designing a product:

  • Decision cross-constraints:  Derived requirements from one decision (consequences of the alternative selected) create requirements that eventually drive criteria in other decisions.  Alternatives matter; selecting a different solution could lead to radically different ripple effects that constrain a different set of decisions.  Visualizing the interactions created by these linkages can help Systems Engineers understand where to perform a multiple-decision trade-off analysis.
  • Shared budget interactions: The alternatives in product design decisions compete for precious shared resources (size/space, weight, power, memory, bandwidth, time, etc.).  This competition creates an implicit interaction between decisions involved in such “squeeze the balloon” trade-offs.  Visualizing these constraints in the N-Squared Diagram can help a team identify opportunities for reallocating budgets between decisions/subsystems.
  • Alternative dependencies: When the alternative in one decision enables (or is part of) the alternative in another, these alternative-to-alternative dependencies create an implicit interaction between their decision parents.  Visualizing these dependencies in the N-Squared Diagram can help identify gaps in the solution set; particularly if the N-Squared Diagram is used to roadmap the next release/version of a product.


Requirement Interactions:

As an abstract expression of what customers, users or stakeholders value, there is a sense that requirements can’t interact with other requirements.  Interactions occur in the real world comprised of physical things, the “solution space” that is driven by the laws of nature.

But as soon as you implement a specific solution (mix of technologies or components wired together as a solution architecture), you create indirect interactions between the requirements.   We usually think of these as push-pull trade-offs (e.g. cost vs. quality, weight vs. speed, range vs. accuracy) between requirement pairs.  It’s useful to quantify these interactions by capturing both the strength (weak, moderate, strong) and direction (positive/negative) of the correlation between each pair.  In this application, the N-Squared Diagram visualizes the same data as the roof/top of a House of Quality.

There is a lot of value in understanding the tension between these requirements as long as you remember that they are entirely driven by the solution “platform” that you have in mind.  Change the technology mix (e.g. electrified vs. IC vehicles or glue vs. screw fasteners) and the correlation matrix can change dramatically.

State Transitions

An N-Squared Diagram provides a very compact format for communicating how the states of a system (e.g. Transport, Configuration, Startup, Operations, Training, Maintenance, etc.) interact.  The events that trigger a state change are captured as off-diagonal interactions.

You can also use a state-focused N-Squared to visualize a Failure Modes and Effects Analysis (FMEA).  Failure modes begin as unplanned and undesirable states of a subsystem/component.  In order to propagate to other parts of the system they need to follow some interaction “path”.  Each step in a cascading failure represents this domino effect.

Business Architecture/Model

A business ecosystem can be captured in N-Squared format.  In this application, the various business roles that comprise the value chain are displayed down the diagonal.  The value passed between them in the form of material, knowledge or services are captured as off-diagonal interaction cells.  Add the exchange of money at various transaction points and the N-Squared Diagram becomes a complete illustration of the business model.

Application to your world

I encourage you to start small and focus your initial Interaction Management efforts on just one of N-Squared applications mentioned above.  If you would like to experiment with a web-based N-Squared tool, we’re happy to set up a “sandbox” trial for your team in our Decision Driven® Solutions Framework guest site.  Please contact us at

About decisiondriven

Innovator in Decision Management, Systems Thinking and System Engineering methods and tools
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