Platt Perspective on Business and Technology

Intentional management 8: looking beyond simply managing personnel 4

Posted in HR and personnel, strategy and planning by Timothy Platt on June 8, 2014

This is my 8th installment in a series in which I discuss how management activity and responsibilities can be parsed and distributed through a business organization, so as to better meet operational and strategic goals and as a planned intentional process (see Business Strategy and Operations – 3, postings 472 and loosely following for Parts 1-7.)

I focused in large part in Part 7 on a case study example of how a business can develop and evolve its basic underlying business plan with a goal of becoming the most competitively successful supply chain business participant in its industry and market space, and one that other businesses would compete to partner with in profitable business to business collaborations. And after sketching out this case study, and with references that expand upon it, I finished that series installment by raising a complex of issues for next-step discussion, leaving that for this next installment. The issues that I raised there are:

• Different functional areas and their functionally focused management can work together strategically within a collaboratively active business to make it more agile and effective as a business-to-business collaboration partner, and more competitive in its own marketplaces and for its own good as a result.

I begin addressing that here by posing a seemingly simple question:

• What is the most important and value-creating functional area or service in a business for its successful participation in supply chain or other business to business collaborations?

An initial take on that question might suggest that every functional area in a business is fundamentally important there. Further thought might, however, suggest more specific possible answers.

• If a collaborative business to business relationship depends functionally on completing material transfers of parts, subassemblies or finished goods then more focused response to this question might involve inventory control and management.
• More generally, as every link in essentially any business to business collaboration is information and communications dependent, Information Technology might be considered the most important. And I admit that some of my writings on supply chain linkages and how they are managed would probably suggest that this would be my answer.
• But this is a situation where I would suggest that that first take on this question is in fact more accurate and certainly in general, than any answer that selected out any one functional area or service, or any one limited set of them.
• The most important functional area or service in any particular business to business collaboration is whichever one that shows itself to be a weakest link, for effectively actively and proactively facilitating the businesses involved in being able to work together to their mutual benefit.

That last bullet pointed observation is perhaps particularly important here, and I add that it summarizes a great many distinct points within it. And I at least begin noting them with the last one touched upon, with those words “mutual benefit.” If two businesses enter into a collaborative agreement while remaining fundamentally separate business enterprises, you can generally assume that two conditions apply:

• They collaborate together on some very specific and contractually laid out set of types of business to business transactions, and connect and work together to achieve some equally explicitly stated sets of task results and goals, and according to mutually agreed to schedules and performance criteria.
• And they each seek to develop a level of value from this arrangement that exceeds any combination of indirect costs (e.g. risk) plus more direct costs to them, that participating here would create for them. In this, the baseline for quantification of risk and benefits would be found in an analysis of consequences if they did not enter into a collaborative business to business partnership.

If one of these two businesses sees the other business in this arrangement as realizing a disproportionately large amount of the benefits from their collaboration they are likely to question the wisdom of their staying in this business to business relationship at all – and certainly if they also see themselves as taking on a disproportionately large amount of the risks too. Perceived equality of risk and of benefits faced, or at the very least perceived equality of their overall sum is vital for any such collaboration to remain stable and viable long term, and for participating businesses to become known as good businesses to collaboratively partner with. I add in “overall sum” there because it can be stably agreed to that a partner business that accepts greater risks can expect correspondingly, proportionately greater rewards in exchange. So this is all about arriving at mutually agreed to, overall equitable terms so that no partner business finds itself in any way cheated.

The next point that I would raise here, going back to that above bullet point, involves those words functional area or service “weakest link.” And I will at least begin discussing that in my next series installment. And in anticipation of that posting, I will at least begin its discussion with Information Technology as that functional area plays a key role in creating and facilitating any business to business collaborative links of essentially any type. I will then go on to more fully consider what individual businesses contribute to the particular collaborations that they enter into as that is where potential weak links that they contribute to creating, would be expected to emerge. And this is where supply and inventory management, production, finance and a range of other functional area possibilities enter this narrative. But I will wait until the next installment to delve into that. Meanwhile, you can you can find this and related postings at Business Strategy and Operations – 3 and also at Page 1 and Page 2 of that directory. Also see HR and Personnel and HR and Personnel – 2.

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