Platt Perspective on Business and Technology

Innovation, disruptive innovation and market volatility 15: considering a wider range of stakeholders 1

Posted in macroeconomics by Timothy Platt on August 20, 2015

This is my 15th posting to a series on the economics of innovation, and on how change and innovation can be defined and analyzed in economic and related risk management terms (see Macroeconomics and Business, posting 173 and loosely following for Parts 1-5 and Macroeconomics and Business 2, posting 203 and loosely following for Parts 6-14.)

• Up to here in this series, and certainly in its more recent installments, I have primarily been discussing issues such as standardization and customization, and what they are coming to mean in our emerging 21st century manufacturing and marketplace contexts.
• And in the preceding two installments of that discussion, I have at least touched upon how product customization and product individualization are becoming decoupled from each other,
• Where fully consumer-individualized products, designed and built for specific individual users are now on the verge of becoming commonplace assembly line level production options, and as much so as would be the case when manufacturers offer more strictly custom produced one-off products (see Part 13 and Part 14.)

I stated at the end of Part 14 that I would return back to the beginning of this series now, and to its Part 1 stakeholder-oriented discussion. And my goal for moving forward from here is to at least briefly reconsider the issues that I have delved into in installments since Part 1, but from the perspectives of a wider range of stakeholders than just those of the marketplace and its consumers, and of manufacturers and their leadership – the stakeholders that I have primarily focused upon up to here, and certainly since Part 1.

Let’s begin this portion of this series’ overall discussion by considering what types of participants would qualify as essential stakeholders here. And I begin by noting two key defining qualifications that would go into establishing any potential stakeholder type or category as being relevant for this overall discussion:

• Relevant stakeholders are actors in business and marketplace processes, who by their actions enhance or limit a business in being able to meet marketplace needs, and in ways that market-participating consumers would see as impacting upon the level of value offered to them.
• And coordinately with that, these stakeholders also seek to derive personal value-creating returns on their own investments of time, effort, money and/or risk, in making the first of these two points work.

Who are some of the key, more obvious actors in this?

1. That obviously includes manufacturers and people directly contributing to the manufacturing effort, as a perhaps heterogeneously diverse set of distinct relevant stakeholder types, that further more detailed analysis would split out and characterize more individually.
2. And it obviously includes consumers and members of the marketplace (e.g. active purchasing agents and product end users), who display at least equal diversity to what would be found in the first of these stakeholder groups, above, and particularly when distinguishing and differentiating factors such as innovation diffusion and consumer acceptance of novelty and newness are considered. These two groups, at least when viewed collectively and without consideration of their within-group heterogeneity have been discussed for their impact here, throughout this series up to here.
3. But this also includes investors and owners (as initially touched upon in Part 1),
4. And for publically traded companies, stock market analysts too,
5. As well as consumer-side product reviewers,
6. And journalists who focus in their work on new product offerings and on the businesses that offer them.

This is only a partial list, as the full relevant range of at least potential stakeholders has expanded as businesses more routinely interconnect through supply chain systems and other complex business and marketplace ecosystem constructs. With that wider range of new stakeholder participants in mind, I add:

7. Supply chain partner businesses and their contributions to making manufacturers more effective and in bringing manufacturers and consumers together.
8. And as special case examples there I specifically note wholesale and retail sales and distribution businesses and their participation in this too.
9. These are more secondary peripheral stakeholders at least in the context of this series, insofar as they are themselves separate and distinct business organizations in their own right and they are as such, points of focus for their own constellations of involved internal and external stakeholders too. Though their actions can have significant impact in what to themselves are the external contexts of the manufacturers under direct consideration here.

I am going to start working my way through this stakeholder list and how its participation impacts upon a business as it seeks to be innovative, in my next series installment, and I will continue working my way down that list from there. Then after that I will explicitly turn to consider market volatility, doing so in terms of the product and manufacturing, and the stakeholder issues discussed up to here in this series. And as a foretaste of that I note that in a completely frictionless system where all participating stakeholders have perfect, completely up to date information at all times and where their decisions and actions are always real-time knowable to others involved, there would still be differences in goals, priorities and processes attempted by different stakeholder actors in these systems. But everyone involved would know what course of action would make the most sense for themselves to pursue, given perfect knowledge of what other stakeholder actors would do, and all would know the likely consequences of what their proposed actions would have on others involved too.

Real world business and marketplace systems are in practice, shaped by communication mismatches and by differences in knowledge and understanding, and by delays and uncertainties at all levels and for all participants; real world business and marketplace systems are shaped very significantly by uncertainty and friction. And the most effective strategies pursued are generally the ones in play that most accurately predict what other actors in these systems know and will seek to do. And they most accurately and flexibly accommodate the impact of delays that arise between planning and execution on the part of significantly involved stakeholder actors too.

I will look into this complex of issues in some depth, but after completing my discussion of the overall conceptual framework that it rests upon. Meanwhile, you can find this and related postings at Macroeconomics and Business and its Page 2 continuation.

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