Structural Transition

Every system moves through phases.

In the theory, this is called the R-process — the process of systemic realization. It has three stages:

Formation. The system forms from available resources. Elements come together, interactions begin, structure emerges. This is the startup phase, the early growth, the period when everything is new and the energy is high.

Stability. The system reaches a state of relative closedness — its internal structure is working, the reactor is running, value is being produced. This is the mature phase, the period of reliable output.

Saturation. The system approaches the limits of its current structure. The resources that built it are mostly consumed. Internal processes become repetitive. The rate at which the system turns resources into value plateaus or begins to decline. The system has done everything its current form allows.

Between stability and what comes next, there’s a particular transitional state. Malyuta called it Zone Z — the zone of crisis, the zone of maximum uncertainty.

In Zone Z, two outcomes are equally probable: the system restructures to the next level of complexity, or it begins to decay. There’s no third option. You don’t get to stay in the comfortable middle indefinitely. The system has consumed the resources that supported its current form. Either it transforms, or it falls apart. The outcome depends on whether the system manages to adapt to new conditions. You can delay this moment, but not avoid it.

What Zone Z looks like in a company

You’ve seen it. Maybe you’re in it right now.

The company grew fast. The team structures that worked at 50 people still exist at 200, but they’re creaking. The departments that used to coordinate over lunch now need formal processes that nobody follows. The CEO who used to talk to everyone is now five layers removed from the people doing the work.

The energy that drove the early phase — the startup intensity, the shared mission, the “we’re all in this together” feeling — has been replaced by something harder to name. Not dysfunction exactly. More like friction that wasn’t there before. More effort for less output. More meetings that produce less clarity. Bureaucracy, in a word.

This is Zone Z. The current structure has reached its limits. It can’t turn resources into value at the rate the company needs. And the longer you stay in Zone Z without restructuring, the more likely the decay path becomes.

The bureaucracy trap

One common response to Zone Z is to add control: more processes, more approvals, more documentation, more management layers. This feels like a solution because it addresses the visible symptoms — coordination failures, miscommunication, duplicated work.

But in systems terms, it’s exactly the wrong move. Adding layers of control increases the system’s internal consumption without producing any more value at the output. More resources go into maintaining the system itself. Less goes into producing value. The company becomes a machine that primarily serves its own bureaucracy.

The theory explains why: when a system approaches saturation and you increase its internal complexity without changing its structure, you accelerate the decay. You’re adding weight to a structure that’s already at its load limit.

Managers add control because it’s what they know. What’s actually needed is a structural change.

When there are enough resources, the system will keep functioning even at a lower level of efficiency. But when resources are scarce — or when you’re thinking strategically — it’s better to change the structure.

The restructuring that works

What does a successful transition through Zone Z look like?

The key is to begin building the next level of structure before the current one reaches crisis — in the overlap zone, where the old structure still functions and the new one is already forming. He calls this crisis-free development: instead of a sudden rupture, a gradual transition where multiple viable paths coexist simultaneously.

The practical translation: cross-functional working groups.

Instead of reorganizing the entire company — which is traumatic, expensive, and often fails — you create small, purpose-built teams that span the existing boundaries. These groups form around specific business challenges, draw members from different departments, and operate as transformation reactors: resources in, value out, with clear goals and measurable impact.

They don’t replace the existing structure. They overlay it. The departments stay. The org chart stays. But the cross-functional groups create new pathways for value to flow — across the borders that have been blocking it.

Over time, the most effective patterns become the new structure. The transition happens organically, from the bottom up, tested by reality before it becomes policy.

The wartime lesson

I live in Ukraine. I’ve watched this principle play out under conditions where organizational failure isn’t abstract — it’s a question of the state’s existence and people’s lives.

Early in the full-scale war, the military wanted to adopt new drone technologies fast. The existing process was sequential and bureaucratic: a producer develops a device, submits it for testing, a separate body evaluates it, another certifies it, another contracts it. The full cycle took months. Context was lost at every step. By the time a drone was approved, the situation on the battlefield had already changed.

The system was in Zone Z. The old structure couldn’t turn resources into value at the rate the situation demanded.

Here’s what happened. The solution that emerged wasn’t a process improvement. It was a structural change. Producers, military end-users, and government certification officials started meeting together in the field. They tested devices together. They discussed requirements, limitations, and capabilities face to face. And they made decisions together — with all the necessary spectrums present simultaneously.

Think about what happened in systems terms. The old process was a chain — each link seeing only its own piece, interacting only with the links adjacent to it. The new structure was a gyrator — all the necessary qualities (production capability, battlefield need, regulatory authority) present in one place, interacting directly, producing a decision that none of them could produce alone.

What used to take months now takes weeks. Not because the people changed. Not because someone worked harder. Because the structure changed.

This is the principle. It works under extreme pressure not because it requires heroics, but because it’s structurally sound. And if it works when the stakes are life and death, it can work when the stakes are market share and product delivery.

When hierarchy becomes the bottleneck

The drone story is about interaction between organizations. But there’s another kind of complex interaction, no less important — the vertical one. Hierarchy.

Let me start with this: hierarchy is not the problem. It’s the fundamental principle of nestedness, without which no complex system exists. A cell is nested in an organ, an organ in an organism, an organism in an ecosystem. A team is nested in a department, a department in a company, a company in an industry. At each level there are qualities that simply don’t exist at the level below. And each level carries the regularity we already mentioned in chapter 2: two systems at the same level interact through the level that contains them. That’s correct. That’s what makes a system coherent.

The problem is not hierarchy. The problem is in situations where the hierarchical path becomes a bottleneck — when more communication needs to pass through the level that contains both systems than it can physically handle. Or when the up-and-down detour takes many times longer than the speed of the problem itself allows.

A junior developer sees a critical integration problem with another department. The correct path is to escalate to their manager, who escalates to the department head, who goes across to the other department head, who sends it back down to their developer. Four links, each with context loss, waiting, reformulation. By the time this plays out, the integration issue has become a production incident. The hierarchy hasn’t broken — it just can’t keep up.

Similarly, a department head who has an insight about another team’s approach doesn’t cross the border — “not their domain.” Formally correct. But the insight is lost.

What these people need is not to break the hierarchy. They need a parallel channel that exists over the hierarchy, not instead of it, and only for the duration of the specific challenge. A gyrator group is exactly that channel.

Inside the group, vertical distance temporarily disappears. A developer and a department head are equals — not in general, but with respect to this specific challenge. The group’s formalism — mandate, recognition, the participants’ agreement — creates a legitimate space where spectrum matters more than position in the org chart. Outside this space, the hierarchy works as always: the developer reports to their manager, the head carries their responsibilities.

This doesn’t abolish hierarchy. It adds to it an orthogonal cross-section for the duration of the challenge. Two circuits exist in parallel. The vertical one — permanent, hierarchical, for ongoing work. The horizontal one — temporary, gyrator, for specific challenges that don’t fit within a single level.

The question for your company

Every company that’s growing fast, every company that’s stagnated, every company adapting to the AI era — all of them are somewhere in the R-process. All of them are either approaching Zone Z, in it, or have passed through it (or failed to).

The question isn’t whether your company will face Zone Z. It will. The question is whether you’ll have the structural readiness to pass through it — or whether you’ll add more bureaucracy, hoping that control can substitute for the real work of turning resources into value.

Cross-functional working groups — gyrator teams — are how you build that readiness. Not by reorganizing. Not by adding process. By creating small, complete, balanced teams that can turn resources into value across the boundaries that your current structure can’t cross.

What follows is how to actually do this.