Platt Perspective on Business and Technology

Innovation, disruptive innovation and market volatility 19: considering a wider range of stakeholders 5

Posted in macroeconomics by Timothy Platt on November 30, 2015

This is my 19th 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 6-18.)

I began discussing business systems friction in Part 17 and Part 18, and what it is, and in terms of how it arises within and between three broadly characterized internal stakeholder categories and their members:

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

I focused on non-managerial employees in Part 17, and then began addressing the issues raised by the above repeated owner and senior manager composite category in Part 18. And my goal for this posting is to further address that group. Then after that I will turn to the middle of those categories: middle managers and I add lower level managers as well. And in anticipation of that discussion, I will discuss how individual employee and manager career planning shapes both understanding and action, and for essentially everyone working in a business.

Ultimately, as an important side note for here, the issues that I have been successively discussing throughout my Guide to Effective Job Search and Career Development in this blog, all deal with issues that need to be both understood and accounted for in any realistic long-term business planning and execution (see its Page 1, Page 2 and Page 3).

• If a business seeks to operate in ways that would systematically conflict with their employees’ and/or managers’ jobs and career needs and goals, and long term, that business runs a significant and avoidable risk of loss of effectiveness and even of failure
• If it does not change, addressing that blind spot in its planning and execution.

I began discussing this complex of issues from the friction creation perspective in Part 17 in a non-managerial employee context, and will expand upon that beginning later on in this series.

But to return to the issues of what I will address here in this posting, I will at least begin it by continuing my discussion of owners and executive leaders as begun in Part 18 of this series. And I begin by at least briefly making note of the issues that I raised in Part 18:

• I noted, in passing if nothing more, how C level executives can and all too often do come to compete for resources and for higher priority in what they and the people in their functional areas of a business do, and are responsible for. And to clarify this point, I add that this type of within-business competition both promotes development of silo walls between major lines of a table of organization and facilitates their becoming dysfunctional barriers within that organization, reducing organizational agility and resiliency. And this type of competition is most likely to arise as resources available – and ultimately liquidity resources, are exceeded by organizational needs as perceived by these C level executives and their teams, and for what they variously see as meeting high priority needs.
• And from a business owner’s perspective, for a wholly owned privately held business, I briefly outlined a type of scenario that I have seen play out in a number of ways, where a business has two (or more) owners who each hold significant equity shares. And they come to fundamentally disagree on where their business is, on where it should be developed from there, and on the operational goals and priorities that would be met to accomplish this, or on at least some combination of these potential friction points. (I developed this scenario in terms of a made-up name corporation: Zayercomm, though the issues I raised there are very real.)

My goal here is to at least begin to address the questions and issues of how to identify and clarify these types of problems, and resolve them. And I begin that with my first scenario type above, and competing executive officers. And I begin that by making a point that I would at least hope would be fairly obvious and certainly if explicitly stated:

• The first of these two scenario types can arise from executives competing for larger shares of a limited overall resource base. And one route out of that might be to grow out that pool of resources to more comfortably meet a wider range of needs and for a greater number of these internal constituents. But this can be very difficult to actually accomplish and certainly from strictly within the business and from its production and sales performance alone. As a business grows to meet growing consumer demand, and ramps up its production and sales systems to do so, within-business needs expand and for essentially all lines on the table of organization. And it can be very difficult to grow available liquidity and other essential resource base components at a faster rate than that of overall business growth itself, in order to reduce this perceived and perhaps very real need for within-company competition.
• There are two basic ways around this seeming impasse. One is the development of greater business systems efficiency with the weeding out and if necessary outsourcing of non-core supporting services, and the streamlining and improvement in the efficiencies of core business capabilities that must be maintained and in-house.
• And the other is where outside funding is brought in, and by infusion of venture capital, by going public with the sale of stock shares, or by some comparable means.
• Both of these approaches pose very real challenges, with both calling for genuine and even across the board rethinking of what a business is and of how it operates, and with real change in how the business is run.

I wrote a 21 part series on what C level officers do, with the challenges of executives working together to meet shared mutually understood goals rather than competing with each other as a default option, as one of my core issues of concern there (see Guide to Effective Job Search and Career Development – 3, postings 376-396.) I raise this point and cite that series here, in this context because effective communications and information sharing – and the reduction wherever possible of avoidable business systems friction is essential if the divisive and efficiency wasting competitiveness that I write of here is to be limited and controlled, making expansion of the overall resource pool relative to the scale of perceived needs possible. That noted, I add a third option for growing a business’ resource base, liquidity included, out of the seeming resource starvation that leads to significant and widespread within-business competition for a larger share, and at the expense of the business as a whole:

• Improving communications and information sharing. And I have in fact been writing about this throughout this blog, and whether discussing technology-based approaches such as development of an information commons and an interactive intranet and information architecture, or improving interpersonal communications and business communications skills. See for example: Creating the In-House Information Commons – creating the networking resource mix that supports your needs , and my series: Communicating More Effectively as a Job and Career Skill Set (at Guide to Effective Job Search and Career Development – 3, postings 342-358.)

I am going to continue this discussion in a next series installment where I will turn to consider the type of disagreements and differences in understanding that I raised in my Zayercomm example, from Part 18 and as briefly noted above here. Then, as promised above, I will turn to consider middle and lower level managers, and the role that individuals’ jobs and career plans collectively play in shaping a business and its ongoing competitive effectiveness. Meanwhile, you can find this and related postings at Macroeconomics and Business and its Page 2 continuation.

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