Platt Perspective on Business and Technology

Putting change in perspective 8 – adding in the positive or negative valence of change 2

Posted in business and convergent technologies, strategy and planning by Timothy Platt on October 1, 2013

This is my eighth installment in a series on recognizing change and on evaluating its potential significance as it develops, so as to enable a more rapid and effective, and even a more proactive response (see Business Strategy and Operations – 3, postings 417 and loosely following for Parts 1-7.)

I began discussing the positive or negative consequential value of change: the valence of change in Part 7 of this series, there taking a broader strategic perspective and considering whether a business and its leaders and managers operate from an assumption of:

Zero-sum,
Win-win or
• More mixed or hybrid negotiation and outcomes assumptions.

I focused on the business and on the basic assumptions that it would start from when approaching any business transaction or relationship possibility, and either with other businesses that it might work with or with end-user consumers or when dealing with change within its own organization. My goal here for this posting is to reexamine what are essentially these same fundamental issues, but this time from the perspective of specific business processes and activities as they might be so evaluated. And I begin that with a basic working-example situation and a fundamental question that it brings forth:

• A business develops what might be a basis for building a new market changing, disruptively original innovation.
• Does this change opportunity carry with it a positive or a negative valance or a more neutral one? Of if you prefer, does it offer more of a positive benefit, a negative downside, or something more towards a perhaps indeterminate middle ground?

I would argue that the correct answer in general, absent any further information, is the last of these three possibilities, and my goal for what follows is to more explicitly explain how and why.

• The first reason for this, as already discussed in this series, is that an innovation might not succeed in the marketplace, and even if the product or service does offer everything promised and more.
• A business might not accurately gauge where or who its best potential customers are, and this type of marketplace disconnect is more likely to occur, the more disruptively novel an innovation or change actually is.
• For change that does not specifically go into defining a new product or service, this business might not even know how to gauge how it will impact on its customers, or with what overall impact on business performance. And once again, the more disruptively novel the change, the less preparatory knowledge this business will have for predicting or early-stage evaluating this impact.

Considering here a proposed innovative change that would affect the quality, cost of production or nature of a product or service to be offered: timing can control the valance, positive or negative of this change too. Consider two businesses, A and B that face what are essentially identical innovative opportunities:

• Business A has developed an effective mechanism for cultivating innovation research and development and for moving possibilities into production and into the consumer-facing side of the business as they realistically prove out for positive potential value. (See my series: Keeping Innovation Fresh at Business strategy and operations – 2, postings 241 and loosely following for Parts 1-16 for a more detailed discussion of an approach for accomplishing this.) And two of the primary goals of their system in place are to quickly identify where they can develop new sources of competitive value, and to bring these value-creating opportunities to market early so as to capture any first-mover advantage and brand loyalty for the pioneer and early adaptors who would buy into it. If they succeed, then their innovation becomes a very significant plus and source of gain, and even a springboard for creating value for subsequent innovations too.
• Business B follows a very different path, and one I add that way too many otherwise successful businesses follow. They may have innovative and inventive people on-staff and they might even give them opportunity to exercise their creative skills as part of their regular work, or under contractual terms where they as a business would own this work outright, or at the very least have first rights to its development and under very favorable terms. But they approach any innovations developed in-house or by members of their staff on their own, from a very ad hoc approach. They see the costs of development and of bringing this innovation into production, or at least they see enough of them to know they would be significant. They do not know how to evaluate how this innovation might fit into their business or how it might fare in a real-world marketplace. So they sit upon it until another business has independently developed what is at the very least a very close-match alternative. And any positive gain that would have been possible from prompter and more active development on their part erodes, and can even turn into a negative with development costs exceeding returns achieved. This becomes particularly possible for innovations that would sell briskly but primarily as fads, where consumer interest would peak rapidly then drop off just as fast.

I added in the issue of market duration for a possible innovation there, and note that this can be the value valence-defining criterion and particularly when it is coordinately considered in terms of business agility and its timing capabilities for bringing New to market.

• The valence of change really is at least as much about timing and other context issues as it is about the specific nature of the change itself.
• Effective risk management is in a fundamental sense, an analysis of events and of their possible contexts as they would shape this.

I am going to conclude this series, at least for now, at this point though I expect to return to issues that I have been discussing here in further postings and series too. Meanwhile, you can find this and related postings at Ubiquitous Computing and Communications – everywhere all the time 2 and at the first page to that directory. And you can also find this and related material at Business Strategy and Operations – 3 and at Page 1 and Page 2 of that directory.

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