Platt Perspective on Business and Technology

Building a business for resilience 7 – growth-emergent bottlenecks and smoothly managing scalability 3

Posted in strategy and planning by Timothy Platt on November 24, 2015

This is my seventh installment to a series on building flexibility and resiliency into a business in its routine day-to-day decisions and follow-through, so it can more adaptively anticipate and respond to an ongoing low-level but with time, significant flow of change and its cumulative consequences, that every business faces in its normal course of operation (see Business Strategy and Operations – 3, postings 542 and loosely following for Parts 1-6.)

To set the stage for this installment, real world businesses operate of necessity in the presence of operational and strategic friction: the consequences of imperfect communications and incomplete information, and the need to make and carry through upon consequential decisions in the presence of such limitations. And as a part of that I have been discussing the alternatives of more ad hoc and one-off, and of more standardized and rules-based decision making processes where:

• The former (ad hoc) might more effectively address the new and unexpected for which standardization is not yet available, and
• The later (systematic standardization) is more effective for creating reliably smoothly operating complex systems, where the people involved are less likely to find themselves facing unpleasant surprises from colleagues making decisions and taking actions that do not connect with or work effectively with what they are doing.

I started discussing an area of operational and strategic activity in Part 6 that essentially every business has to address, and that is certain to undergo significant change with time, as organizations grow past their earliest startup stages and into becoming larger, competitively mature enterprises: purchasing and acquisitions.

I focused there on startups with their minimal headcounts, where everyone who is part of a business is (usually) able to directly communicate with and coordinate with everyone else, and at least fairly directly. And to briefly recap some of the core points made there, startups usually begin without standardized operational systems and have to build them as need for that emerges. So at least initially, much and even most of a new business is carried out more ad hoc, than according to anything like precedent-based rules-defined business processes. That more developed approach arises and is incorporated into the organization from lessons learned from earlier decision making efforts, and as prior experience of the new business’ founders and leaders are incorporated into this new business enterprise and its growing operational and strategic systems.

Let’s move forward here from the initial startup stage and into this new enterprise’s early growth phase as it begins to bring in business and revenue from it, and as pressing need leads to early expansion hiring. At first the initial founders might be able to do essentially everything hands-on themselves that has to be done, but the number of tasks that need to be carried out and on-time and according to tight schedules, can and does grow very quickly. So as a business really starts to take off, bringing in clients and customers and revenue, more hands are needed.

Everyone working there needs the specific resources that they would require in order to do their jobs at this business, including the physical space needed to work in, as well as disposable supplies and more lasting equipment (such as computers and/or tablets, phones and so on.) Basic supporting infrastructure needs begin to come into focus and grow too, and both to support a growing pool of staff and managers, and to support the business’ growing system of operational processes. And these people who come in as employees, rather than founders tend to take a very different view of their employing business than an owning founder would, or a non-owning founder who had helped build this enterprise from the ground up and who is probably in a more senior leadership position there as it grows out.

• Individual employees and individual teams of them as organized under single managers, come to compete within the business and its resource constraints, for the specific resources that they would need in order to carry out their own work and meet their own performance requirements and goals.
• Within-business competition for resources emerge and this means an at least potential diffusion of vision and of priorities for what is to be done, and for what is to be purchased and made available to whom, and with what priorities and according to what timetables.

This, among other things, is one of the core areas where ad hoc and one-off break down and where standardization become necessary and even fundamentally essential – if this business is to have any systematically consistent goals and priorities at all. This standardizing consistency is usually defined and overseen from higher up on the table of organization, with these decisions flowing on down and with context-specific refinements added as needed (exceptions included.)

If you look at business growth and development strictly in terms of the physical resources it accumulates through purchasing and acquisitions processes, from small disposables such as paperclips on up to building space and similar capital investments, then orderly business growth and development can be viewed as the systematic development of consistent process, and of accommodating change and building new contingencies into that system – and to meet the needs of sometimes significantly competing constituencies for resources needed, and needs of the business as a whole.

So far, I have been writing about businesses that are still early enough and small enough in their organization so that it is unlikely that they would have developed silo walls or other internal barriers of any significance. Up until here, I have assumed a single overarching if still significantly forming corporate culture and a single operational and strategic vision and system. I will turn in my next series installment to question all of these assumptions. And I note here in anticipation of that, that this is where it will become explicitly necessary to bring friction into this discussion – where I only touched upon that here where I wrote of competition for resources in a still young and small, but already organizationally diverse organization. I will begin with my next series installment’s discussion there, as a starting point for delving into the issues of a larger and more structurally complex mature business.

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.


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