Platt Perspective on Business and Technology

Don’t invest in ideas, invest in people with ideas 8 – involving the crowd as a source of competitive advantage 3

Posted in HR and personnel, strategy and planning by Timothy Platt on April 12, 2015

This is my eighth installment in a series on cultivating and supporting innovation and its potential in a business, by cultivating and supporting the creative and innovative potential and the innovative drive of your employees and managers, and throughout your organization (see HR and Personnel – 2, postings 215 and loosely following for Parts 1-7.)

I began discussing outwardly facing crowdsourcing as it would impact upon the issues of this series in Part 7, there focusing on the role that customer, and more generally consumer and end-user insight can bring to the product and service innovation effort. And I proposed discussing that complex of issues in that posting, as just possible one scenario for outside crowdsourced business intelligence gathering, with several other possibilities also available and worth detailed discussion too, including:

• More effectively reaching out to supply chain partners, and I add here reaching out to other business-to-business collaborative partners as well, as sources of potentially valuable insight.

And I raised the issue of developing the potential value that crowdsourcing can bring to the hiring process and to employee retention too. I will continue this general discussion with the above bullet pointed issue and will then turn to discuss that point, framing this entire discussion and in fact this entire series in terms of throwing as wide a net as possible when looking for innovative insight so as to capture as wide a range of innovative value as possible.

And after delving into those specific scenarios and their issues and opportunities, I will follow this overall discussion with a balancing discussion of the due diligence and risk remediation issues that crowdsourcing brings up, at least categorically and regardless of source. But I begin this here with the issues and opportunities of the above bullet point.

Reaching out to supply chain partners as sources of potentially valuable insight: My first customer-centric scenario as addressed in Part 7, focused on marketable products and services. Here, my focus is on developing and implementing new and more effective business processes, that can help make a business more agile and cost-effective in carrying out its essential business operations. This means reaching out to a wider and more diverse outside constituency than would be expected in the first scenario, and it means considering sources of actionable insight that are more likely to be taken for granted and overlooked than are purchasing consumers. Businesses that operate actively involved marketing departments and that actively rely on market data analysis and the insight that can bring, often fail to actively consider the insight that they can gain from their partner businesses too.

Throw as wide a net in your consideration there, as the range of businesses and business types that you interact with in carrying out your own business operations. But for purpose of this discussion, I will somewhat arbitrarily select three points of supply chain and business-to-business interaction here:

• Raw materials providers that supply your manufacturing facility with essential supplies,
• Shipping services where those operations are outsourced, and
• Wholesaler purchasers of your more finished goods.

And as points of orientation for this discussion, I note here that:

• An effective, value creating supply chain system offers value and justifies participation in it, if and only if it offers new sources and levels of competitive value and economy of performance to all participating businesses. Any participating business that does not see such gain for itself in its current collaborative arrangements, would in most cases be better off leaving those supply chain partnerships and seeking out new ones that would offer it competitive value.
• And the business-to-business interactions that take place in these systems offer opportunity to critically view and analyze essentially every operational process that a participating business connects to its business partners with, for their current effectiveness and value. They can and should keep track of the efficiencies and inefficiencies that arise that might be coming from a partner business side of these collaborations. They can and should also use these same analytical processes to track and measure their own performance too. And they can and should do both with a goal of updating and evolving their own systems so as to create stronger, faster, more economical business-to-business process hand-offs and interconnects, so as to maximize the value that they can create from their collaborations.

To take this out of the abstract with a specific well known example, the United Parcel Service (UPS) offers itself as a logistics partner for both one-off delivery transactions and for ongoing business-to-business, supply chain support. They may have begun as a more simply delivery company, but they have transformed themselves into a supply chain business solution that can and will effectively work with partner businesses in essentially any industry, any business vertical, or any marketplace where they can offer value. They have rebuilt their core business model and their overall business operations around the principles that I raise in the above two bullet points.

And with that, I turn to my three supply chain step examples as listed above, and begin with raw material suppliers. And to put that in a specific, increasingly relevant context I will do so in the context of their supporting lean inventory, just in time manufacturing and delivery processes and systems as followed by the end-product manufacturers that they work with as supply chain partners. Raw materials suppliers, and I will add suppliers of pre-assembled third-party manufactured parts and subassemblies control what amounts to the life’s blood for these businesses, as their assembly lines and their product output and capacity to generate revenue would grind to a halt if their supplies of these essential resources were to run out. They would either have to reestablish effective purchasing and delivery agreements with their suppliers in place, or find replacements for them and very quickly – and particularly for just in time businesses, as they seek to strategically limit their levels of cash reserves tied up in parts and supplies inventories at any given time, so as to keep their financial resources actively working for them. My two process points from above become very important here, as do the risk remediation and due diligence processes that seek to validate and confirm the effectiveness and reliability of these business-to-business relationships, and on an ongoing basis.

I have in effect already substantially addressed my supply services and logistics supply chain node example in this posting, when citing UPS as an actively widely involved supply chain partner. Effective supply chain partner businesses that want to enter into and profitably remain in business-to-business collaborations need to continually validate their value through their effective, and ideally seamless business-to-business process connections and their service performance.

And wholesale purchasers can provide insight and course corrective business intelligence for developing and implementing new and more effective business processes as noted above in the contexts of parts and raw materials suppliers, and shippers and logistics support partner businesses. But they can and do supply marketplace facing product and service insight too. Throw a wide net in your thinking and your business intelligence gathering when working with any supply chain or other business-to-business partnership relationship. Look for novel and perhaps unexpected sources of insight that these collaborative relationships can provide, as the business that gains wider-ranging insight here, gains what can be uniquely defining and empowering sources of competitive value from that, and certainly until their competition catches on to what they have been missing – if they do.

I am going to continue this discussion in a next series installment, where as I indicated above, I will consider the role that crowdsourcing can play in the hiring process and in employee retention. And in anticipation of that and here addressing the hiring side to that, I note that this means actively gathering information that can be used in determining what types of positions a business should be hiring for as a matter of high priority, what types of candidates they should look for in these hiring decisions, and what backgrounds and credentials their best candidates would most likely need to have. This, in many respects, is going to be a business social media-driven discussion. And as noted above, after looking into that set of issues, I will reframe this entire crowdsourcing discussion, and in fact this entire series in terms of throwing as wide a net as possible when looking for innovative insight so as to capture as wide a range of innovative value as possible. And I will discuss that, at least in part as a due diligence, risk minimizing and benefits maximizing exercise.

Meanwhile, 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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