Reoriented Activity Cycle vs. Standardized Activity Cycle

Systems Economics Lexicon · Activities & Resources: The Grammar

The Reoriented Activity Cycle is defined relative to a specific firm’s own product, with production fixed at 2.2.2. The Standardized Activity Cycle is defined relative to the economy as a whole, and is what the Locus Model actually uses to classify companies.

Internally, every firm’s Activity Cycle is reoriented around its own central activity: whatever the firm produces sits at 2.2.2, and every other activity is defined relative to it. An architecture firm’s central activity (2.2.2) is designing real estate, so its selling activity becomes 3.1.2 and its design-planning activity becomes 2.1.2 — the label “reoriented” comes from the fact that the reference point itself moves depending on which firm you’re describing.

That’s exactly what makes the Reoriented Cycle useless for classification on its own: if every firm’s central activity is labeled 2.2.2 by definition, every firm would get the same classification. So the Locus Model pivots. Instead of asking what a firm’s central activity is, it asks what part of a customer’s Activity Cycle the firm’s product replaces. A firm whose product is cleaning takes over its customer’s 2.2.3; a firm whose product is storage replaces its customer’s 1.3.2 — and those become the classifications, even though neither activity describes what happens inside the firm doing the cleaning or storing.

Even that pivot isn’t quite enough, because the same real-world activity can land in different places depending on whose internal cycle you’re viewing it from — accounting software is a 4.3 activity for most companies, but the central 2.2 activity for an accounting firm itself. To make classifications comparable across the whole economy, the Standardized Activity Cycle fixes each verb’s definition against a single reference point: what a generic manufacturing company would be doing if it performed that activity. That’s the Standardized Activity Cycle’s whole purpose — not describing any one firm’s internal operations, but giving every firm in the economy a common yardstick.

See also: Central Department Cycle · Product, Product Line, and Product Tier

Part of Activities & Resources: The Grammar, course 2 of 7 in the Locus Theory series. For the full term-by-term specification, see the Lexicon.