Platt Perspective on Business and Technology

Rethinking vertical integration for the 21st century context 2

Posted in business and convergent technologies, strategy and planning by Timothy Platt on November 28, 2015

This is my second installment to a series on what goes into an effectively organized and run, lean and agile business, and how that is changing in the increasingly ubiquitously connected context that all businesses, and that all individuals operate in (see Part 1.) And to be more specific here, my goal for this series is to build a foundation for explicitly discussing vertical integration and specialization in this context, and to then delve into the details of these sometimes competing goals and how they would best be decided between and built toward.

I began this series by offering a two part conceptual model of how a business is organized for its more routine ongoing operations,

• With a value creation footprint, that represents what a business actively directly does and functionally is, and is immediately prepared to do operationally,
• And with an infrastructure footprint that represents its accumulated resource base that it would carry this out with.

This model in and of itself does not necessarily imply lean and agile or anything like it. So for completeness I add that a business’ combined overall footprint that includes both of these elements can include operational contingencies that never actually become implemented, and resources that are held but never used – and even if paid for on an ongoing basis (e.g. ongoing licensing fees for software that does not connect into anything else in the overall information technology system in place and that is not used, but that a business’ bookkeepers still keep paying for because no one ever tells them to stop.) And I add as a side note here, that I did not make up that software licensing example; I had to clean up a fairly large mess of that type once, as just one of my remediative responsibilities while working as an interim Chief Information Officer at a large retail establishment, when I found that it was hemorrhaging funds from an accumulation of such waste. So the organizational abstractions that I raise here are grounded in solidly empirical reality.

That real world example, I have to add, only addresses the dysfunctional bloat side to deviation from “pure and clean” lean and agile that can arise and accumulate. But I also have to add at least brief acknowledgment here of the development and maintenance of capacity for change and for growth in new directions, and for effectively responding to the unexpected and crisis; this also means building and maintaining capacity that is at the very least not fully used in a current and ongoing routine day-to-day work flow too, as a perhaps carefully considered risk remediation and limitation asset. And that means developing and maintaining a here-and-now “excess” beyond a simple lean and agile, for both the value creation footprint and its supporting infrastructure footprint.

And as a further point of clarification here, this model focuses entirely on the standardized and the at least in-principle routine, and on basic underlying business processes and the resources that support all of that. So this very explicitly does not include or address project work or related endeavors, and certainly not ones that would be entered into in order to course correct for problems arising when executing a “standard and routine.” See my series: Projects, Project Management and Careers (at Guide to Effective Job Search and Career Development – 2, postings 250-266 for its Parts 1-17), to cite just one resource that I have developed here that addresses the projects and project management side to business organization, strategy, and operational function.

Stepping back from the abstract dichotomy that I have been developing up to here, to consider overall and long-term consequences, this conceptual approach to thinking about and understanding a business’ more routine operations leads me to a very important question:

• How can you best objectively distinguish between bloat and its negative excess, and more positive “prudent excess” in operational processes and supporting infrastructure in place, that is not routinely used and that might never fully be but that genuinely needs to be there and maintained for business-supportive reasons?

I will be addressing that too, in this series, and will come back to it further along in its discussion. But for now, and as noted at the end of Part 1 of this series:

• I am going to expand upon what the value creation footprint is, and will then turn to consider how this defines what would go into an effectively optimized infrastructure footprint.

I will at least begin that progression of discussion here. And I begin that by outlining a basic, fundamental approach that enters in one form or other into essentially any business organizing and its planning: the basic cycle of organizing questions:

1. What do you want to accomplish in and through your business?

When a prospective startup is first being planned for, this generally means “what are your overall vision and mission goals and statements for this proposed new enterprise?” This is more high level strategic than it is operational in practice, and certainly as initially posed. But as soon as you begin to build and implement and take the first step towards realizing those highest level goals, you begin to split your founding question and its perhaps seemingly monolithic answer into operational and lower level strategic goals and perspectives and into a collection of more focused, more specific due diligence-driven questions. And building and running a business, moving forward from this, is in large part a matter of progressively refining and updating the collection of interconnected issues and questions that you need to address in planning for and building these two interrelated footprints, and in sufficient fineness of detail to meet current and predictable needs – plus a measure of flexibility to allow for the unplanned and the unpredictable and to allow for room for creative growth (project-based development definitely included where project work, if successful, generally feeds into and further expands the routine and ongoing.) And that brings me directly to the second question that I would pose here, in pursuit of this overall business planning and development process:

2. What resources do you need to have in place, and in development in order to accomplish all of this?

The simpler and more detail-free your answer to Question 1 is, the simpler your answer to Question 2 is likely to be; the fewer and the simpler the processes that you need to carry out in order to maintain your basic organization, the less resource infrastructure you would need to do that.

• And as your business develops an operational system with its flow of processes and requirements and expectations, the more complex your system of routine processes and procedures become,
• As need to deal with more complex arrays of contingencies and goals arise,
• And the more complex the requisite inventory of required resources will become, that you would need in order to address all of that – and mapping out this need is where and how you address the second question that I raise here, as just listed above.

That Question 2 response, of course, includes assets and resources of all types including personnel and an employee and management staff headcount that can fulfill the workload requirements of Question 1, as well as durable equipment, disposables, physical space and facilities, and everything else that would go into building and maintaining this business.

3. Now what are you going to need next as you plan for and move this business enterprise forward, in the face of change and both within the organization and in its competitive and marketplace contexts?

Basically, Question 3 is intended to keep you considering and reconsidering Questions 1 and 2 and on an ongoing basis, so you keep your business dynamically functioning and responsive and to both new and emerging challenges and to new and emerging opportunities. But this cycle begins with Question 1, and with planning for and developing and maintaining the right operational processes and systems, as supported I add here, by more one-off initiatives such as project work that would add long-term value to the business (and that for a significant proportion of businesses, and certainly in rapidly evolving industries, can be central to their becoming and remaining competitive in their markets.)

I am going to continue this discussion in a next installment where I will focus on what lean and agile mean and are coming to mean, and particularly in our still rapidly emerging ubiquitously connected, information-rich business and marketplace context. And that will, of necessity, mean addressing the issues of vertical integration and specialization and of what should and should not go into the two footprints and why, and both to remain lean and agile and to meet ongoing and evolving due diligence and risk remediation concerns. Meanwhile, you can find this and related postings at Business Strategy and Operations – 3, and at Page 1 and Page 2 of that directory. And see also Ubiquitous Computing and Communications – everywhere all the time and its Page 2 continuation.


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