Platt Perspective on Business and Technology

Business planning from the back of a napkin to a formal and detailed presentation 2

Posted in strategy and planning by Timothy Platt on December 12, 2015

This is my second posting to a series on tactical and strategic planning under real world constraints, and executing in the face of the real world challenges of:

• Time limitations for how long you can have available to decide and act when you do,
• Timing limitations for when you have to carry this out,
• Information limitations in what you can know that would be needed for effectively planning and executing upon this business decision, and what you can know of the accuracy, timeliness and completeness of the information that you have for that,
• Communications limitations and both for sharing crucial information with others and for securing buy-in for decisions made and actions taken,
• And other gaps or barriers in opportunity to bring all necessary parties into these processes and to everyone’s satisfaction. (See Part 1.)

In economics terms I am writing here about planning and execution in the face of friction. And my goal for this posting is to more fully establish and discuss as a baseline, what is probably an unrealizable ideal of completely frictionless decision making and business process execution. I have been actively discussing business systems friction at an economic systems level in a separate series: Open Markets, Captive Markets and the Assumptions of Supply and Demand Dynamics (see Macroeconomics and Business 2, postings 230 and loosely following.) And I begin discussing frictionless systems here by repeating a defining point that I offered in Part 5 of that series, where I laid out a set of requirements that would have to be met in order to achieve a truly frictionless business system:

• An economic system transitions into being frictionless when all of the business operations and other monetizable value transferring processes that collectively comprise it essentially all take place at a slow enough rate in comparison to the rate of transfer of information concerning those processes, so as to eliminate differences in actionable knowledge, and the uncertainties that that creates, and across the spectrum of involved stakeholders and actors in those systems.

Rephrased, that means if everyone involved in an economic-driven system such as a business can know everything that they need to know, and with consistent accurate clarity so as to make optimized informed decisions, and before they have to make those decisions, that system can be viewed as having become essentially frictionless.

Let’s reconsider the five point list of what I would address here, as offered at the top of this posting. According to this formulation of business system and economic friction, the first, second and fifth of those bullet points represent effects, and the third and fourth represent causes. And friction and its occurrence create complications and challenges that increase the likelihood of further communication and information availability challenges which means increased likelihood of next business step friction too. In keeping with the physical systems terminology of friction as employed by economists and here, think of this as business systems turbulence, and as a further referral to physical systems as a source of descriptive and explanatory analogy. Friction creates turbulence in fluid systems and turbulence and its impact on flow in turn shape next-step friction and its precise manifestation. It is not, I add here, a coincidence that words such as friction and turbulence would be used here, where available monetary, and readily monetizable resources are routinely referred to as liquidity.

• Information is intrinsically monetizable, and capacity to communicate it and use it in a timely manner is essential in defining its monetizable value.

(See Monetizing and Setting Valuations on Information – the crucial question, Business Intelligence as a Qualitative Distinction – a requirement for effective rules of monetization, and my series: Business Intelligence as a Quantitative Distinction (at Macroeconomics and Business as references on the economics of information and of business intelligence with further, related postings offered at that directory page and at its Page 2 continuation.)

And with that I return to the issues of causation. I just noted that information and communications limitations causally create friction in business systems and that timing problems and “other gaps or barriers in opportunity” are results of that, and I add expressions of this friction. These results comprise and create turbulence and that leads to further friction. So they are results in cause-effect systems but they are also next-round causes too. And to clarify that, let me clarify at least part of what I mean by “other gaps or barriers” here, by way of working examples. Friction creates inefficiencies and challenges to work performance and to reaching performance goals. And that creates resentment on the part of stakeholders left out of crucial decisions or adversely impacted upon by the less than optimal results that friction helps cause. This response in and of itself can create or at least exacerbate next-round communications problems, and when repeatedly recurring can be a leading cause in the development of silo walls within an organization, and the “us versus them” that that challenge can come to create – and not just in large and geographically dispersed organizations.

I will have more to say on the default model as touched upon here, and on how it breaks down in practice as I continue this series. But my focus from here on in this series will be on constraints that lead to friction and on addressing them so as to control and reduce its occurrence. And as part of that, my focus will be on reducing turbulence when significant levels of friction do arise in process execution or in its planning.

I will begin adding in those constraints to the baseline model, and examining their impact and on both what is immediately being done and on resultant follow-through coming from it. And as a part of that I will discuss after-the-fact, post hoc review and learning curve issues and processes for moving forward, and particularly where it has proven necessary to make one-off and ad hoc decisions and then deal with any unexpected consequences that result from them.

Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 3, and also see Page 1 and Page 2 of that directory.

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