Platt Perspective on Business and Technology

Innovation, disruptive innovation and market volatility 17: considering a wider range of stakeholders 3

Posted in macroeconomics by Timothy Platt on October 7, 2015

This is my 17th 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 6-16.)

I began looking in detail into how different stakeholders can have different goals and priorities in Part 15 and Part 16 of this series, noting for both clarification and continuity of discussion, that in this context:

• 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.

Then at the end of Part 16 I noted that “stakeholder actors in these systems can take actions that are at odds with each other and even when they at least nominally hold to the same basic goals and priorities, and I add even when they do not significantly disagree as to investment parameters such as timing.” And when they do so, this is generally a consequence of the fact that essentially any real world business and its systems have to operate in the presence of friction.

What is friction in this context? I addressed that towards the end of Part 15, where I stated that:

• 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 all of these factors and considerations that collectively comprise business systems 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.

My goal for this posting is to at least start to more fully explore business systems friction, and in terms of a specific collection of in-house stakeholders of a set of categorical types that are all found in essentially any business of sufficient organizational complexity so as to need a formal table of organization:

• Owners and senior managers
• Middle managers, and
• Hands-on, non-managerial employees.

And I will consider the issues of acceptance of and resistance to change as they coordinately play out in the context of what can be different understandings as to where a business’ value can be found – and both for the business and for those individual stakeholder types who work there.

I begin with hands-on, non-managerial employees and by noting a point that should already be obvious. These members of a business’ overall team are not homogeneously similar for how they view or respond to change, and certainly as it would impact upon their work activities and responsibilities, and on their positions with the business.

• Consider two employees who at least nominally work at the same table of organization level and in the same functional area of a same business.
• One of them is an early adaptor for the new and different, and very comfortable with trying out and learning new technology. They see this as their best path forward to advancing in their jobs and careers.
• The other is by their basic nature, much more of a late adaptor who is much more strongly driven by concern of an at least transient loss of productivity in what they do at work, when facing anything new that they would have to learn how to use in their work.
• This concern can be quite legitimate if they work for a direct supervisor who insists that the members of their team take the time and expend the effort to go through the learning curves needed to use new tools and technologies productively, but without allowing even the slightest, briefest drop in productive output while doing so. But justifications and rationalizations aside as to why different employees take different approaches to innovation in the workplace, these two do differ here. And they each consistently and for well considered reasons come to hold very different approaches to thinking about and viewing new work productivity tools, and different attitudes toward innovation and change in the workplace.

What lessons can be learned from them and their experience and approaches? A first and already noted one is that what might initially be presented as a single stakeholder type can in fact represent a great deal of diversity. And I add here as a general rule of thumb principle that I have generally found to reliably hold true, that:

• The larger and more structurally complex an organization and the larger its overall headcount for in-house stakeholders of all sorts, the more likely that any given stakeholder category or type, will in fact represent a diversity of differences and of all types – and even for those participant/worker categories that would seem to be more stereotypically similar and interchangeable.

This is important here because it can be all too easy for the senior management at a business to all but automatically view “employee types” as if consistently, reliably homogeneously the same when planning – meaning that friction that arises from their employee-to-employee differences cannot be accounted for.

A second lesson might be that some employees are better directed towards career paths that allow for opportunity to try out and work with the new and different, and some would be better off staying with what for them are their tried and true, and they should be supported for pursuing that and certainly as long as their tried and true offers meaningful value to the business as a whole. But in practice all of this plays out in the context of that business’ overall strategic and operational policies and practices, and in the context of the expectations that they create and sustain.

I am going to more explicitly delve into the issues of owners and senior managers in my next series installment as they would variously view and consider innovation and change. And after that I will turn to at least briefly consider that middle stakeholder category: middle managers. Meanwhile, you can find this and related postings at Macroeconomics and Business and its Page 2 continuation.

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