Platt Perspective on Business and Technology

Innovation, disruptive innovation and market volatility 18: considering a wider range of stakeholders 4

Posted in macroeconomics by Timothy Platt on November 4, 2015

This is my 18th 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 6-17.)

I focused in Part 17 on business systems friction. And after offering more general thoughts on how this can systematically arise between different types or categories of stakeholders in an enterprise, I turned to consider a set of three commonly occurring stakeholder groups that can all be found in essentially any business that is organizationally large and complex enough to need a formal table of organization:

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

I began discussing these groups and how they can come to differ for their expectations, goals and priorities. And as a part of that and focusing on non-managerial employees, I discussed how what might at first seem to be a single, more monolithically homogeneous stakeholder group can in fact represent a great deal of diversity and difference, and of a form that is of direct relevance here. I then briefly began discussing the first of these three roughly stated groups: owners and senior managers, and how their assumptions regarding these workers can significantly contribute to friction in their business too, and particularly where they base their goals and priorities, and their assumptions as to how best to reach them on what I refer to as the myth of employee homogeneity and interchangeability.

I stated at the end of Part 17 that I would 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 I at least begin that here. Then after pursuing that topic of discussion, I will turn to at least briefly consider that middle stakeholder category: middle managers and I add lower level managers as well. And I will discuss how their understandings of the business they are in, and their goals and priorities while there, are significantly shaped by their own more personal career planning. But I begin all of this as just stated, at the top of the table of organization and with owners and senior managers.

These stakeholders can hold very different visions and understandings from each other as to what a business should develop towards. And I add that when a single business has more than one owner, they can even very significantly disagree on that. And even when a business holds to a single, essentially unified owner position here, the senior executives who work for them and who lead major functional areas in their business can disagree too, and can base their perspectives on very different understandings as to where their business actually is and where it is headed.

I at least briefly touched on some of the points of difference that can and do arise within these stakeholder groups in my series: What Do C Level Officers Do? (see Guide to Effective Job Search and Career Development – 3, postings 376-396 for its Parts 1-21.)

As one perhaps overly simplistic case in point example, let’s consider a still relatively young business that has successfully reached and passed a point in its development where it is consistently bringing in enough of an ongoing revenue stream to create a flow of profits, net of all expenses and net of any cash reserves-building that prudent due diligence would dictate. And this business: call it the Zayercomm Corporation, has two owners who are both somewhat hands-on at their company but who primarily leave day-to-day and even detailed long-term planning and execution to a team of functional area specialist senior executive officers who work for them.

• These senior executives essentially all are striving to build a long-term sustainable business that can remain competitively successful and even in a rapidly changing industry and marketplace. True, they each see their own overall department and its services as playing a central role in making that possible (and at times at least as holding the central role for that.) So they each see their department as needing and as being worthy of a high priority in accessing necessary resources, and in both developing New in-house, and in gaining access to new and next generation tools and resources through purchases and acquisitions. They compete, and they all focus in that on staying innovatively current and relevant in their own spheres of activity and responsibilities. But they are all following essentially the same playbook in that, and with the same overall goal of developing their areas of this business enterprise for long-term success as a fully functioning independent business.
• This still means differences in how innovation development and acquisition is at the very least prioritized and certainly in day-to-day and business quarter by business quarter prioritization. But their same-held overall vision does create a basis for compromise and accommodation too, and even in the face of what are still limited reserves and new incoming revenue streams. Let’s challenge that when considering those two owners, who I will refer to here as Martha M and Barbara B.
• Both Martha and Barbara want to see their business succeed, but they hold to what have become different and I add very divergent visions as to what that means. Martha wants to pursue a business development approach according to which Zayercomm would become a relatively narrow niche market leader. Barbara, on the other hand, has developed a much more ambitious vision as to what Zayercomm is and what it could realistically become. She envisions their business as one that can capture a leadership position in a much larger and more far-reaching marketplace that encompasses the narrower market space that Martha envisions, but much more as well.
• They also both see Zayercomm as remaining a fully functional, independently run and operated business, but they see it as developing and growing into very different types of independently owned, highly competitive enterprises. Where do these visions lead them when approaching and considering how and where their business would evolve and grow? How does this difference impact upon how they envision and prioritize innovative development? How would any differences here, impact upon and influence the decisions and the opinions of those functional area senior executives, who are responsible for the ongoing operations of this enterprise and for its day-to-day and quarter-to-quarter success? That is sure to get complicated and for all of the issues raised in these questions and for a lot more as well.

I am going to continue this discussion in a next series installment, and after that I will turn to consider middle, and lower and entry-level managers. Meanwhile, you can find this and related postings at Macroeconomics and Business and its Page 2 continuation.

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