Platt Perspective on Business and Technology

Innovation, disruptive innovation and market volatility 20: considering a wider range of stakeholders 6

Posted in macroeconomics by Timothy Platt on January 3, 2016

This is my 20th 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 6-19.)

I have recently been discussing business systems friction and its impact on the organization in this series, focusing on specific categorical types of stakeholder participant in this:

• Hands-on, non-managerial employees (in Part 17) and
• Owners and senior managers (in Part 18 and Part 19.)

I turn here to consider a third composite category:

• Middle managers, and I add lower level managers as well.

And I will discuss this group of actor participants in a business, from the perspective of how their job and career goals and priorities can align with or differ from those of other stakeholder groups there, and with the strategic vision and goals of the organization as a whole.

Much of what I will have to say in that regard applies to the first two stakeholder categories as well, but I focus on this set of issues here because as a general rule, lower and mid-level managers are almost always at least considering the possibilities of further career advancement, while many and even most non-managerial employees do not seek advancement up a table of organization into management, and many and even most senior managers and executives, and owners see themselves as having already reached their basic career advancement goals, at least as far as having reached their desired level of position and responsibility in a table of organization per se. But before delving into that, I am going to turn back to reconsider a few details of the Zayercomm case study example that I initially began developing here in Part 18.

I initially presented Zayercomm from a business owner’s perspective, where two owners with comparable equity stakes in that venture have come to hold very different understandings as to where their business is and where it should go, and both for longer-term strategic goals and priorities and for overall operational development and practice in the here-and-now.

I initially discussed how Martha M and Barbara B view their shared ownership venture in Part 18 with a focus on how owners can disagree, and on how that can impact upon the business organization as a whole. I turn here to consider how that can and does radiate down to affect everyone else at a business like this, and both in how they prioritize and perform there and in how they make their own jobs and careers plans and set their next steps for pursuing them.

• The key issue that a conflict of judgment of the Martha versus Barbara type raises, is uncertainty. And this is true whether the conflict in play is being carried out between owners of a business, or executive officers there – or between stakeholders of any level that is above that of the people under consideration for being affected.
• And if a significant conflict is taking place lower down on the table of organization below you, and in ways that raise potential for disrupting the team performance that you are responsible for, that would hold uncertainty and risk-raising potential too.
• Uncertainty here creates risk, and both are driven by communications gaps and by differences in knowledge and judgment that are not effectively shared as competing stakeholders hold at least some information that is relevant, as competitively valuable resources in promoting their own plans and perspectives.

And with that noted I turn to consider lower level and middle managers, starting that phase of this overall discussion by putting their situation in context in the organizations that they work at:

• There are in essentially any business, at least some non-managerial employees who seek opportunity to advance and even into more senior managerial and leadership positions – though most in fact continue on in non-managerial roles and prefer to advance into more senior non-managerial positions as more expertly experienced employees, insofar as they seek advancement at all.
• Executives might wish, at least long-term to advance their careers too and either by moving into more senior executive positions (e.g. a Chief Financial Officer or a Chief Operating Officer wishing to move into a Chief Executive Officer position), or by advancing into essentially the same type of position they are in now but in a larger and more market-dominant business than the one they work for now.)
• Lower level and middle managers actively seek opportunity to advance up, and entirely outside of the basic entry level manager and mid-level career demographics that they are in now. There are exceptions to this, but at least in my experience, lower level managers want to be advanced into middle manager positions, and most middle managers would like to become senior managers.
• And this drive towards upward mobility in the middle of a table of organization, impacts on how these employee/managers both contribute to and respond to friction. And it significantly impacts upon how they approach and embrace change.

I acknowledge up-front to what I would say here next, that I am offering a perhaps cartoonish image of a more complex reality. But lower and middle managers who in fact do want to stay essentially exactly where they are in their business rather than advancing higher in it, tend to resist change. This is true whether they want to stay in place for reasons more internal to their career planning and because they see themselves as happiest where they are now, or because outside constraints box considerations in their lives create barriers to their seeking or accepting advancement. As a clarifying example of the later, consider a lower level or middle manager who would find it very difficult as a work/life balance issue to have to start business traveling on a steady ongoing basis and who would be resistant for personal, family reasons to relocating, and who would have to accept these changes if they were to advance to that next level up on the table of organization where they work.

Most employees who move into lower, entry level management positions do so because they wish to advance into more senior positions of responsibility and authority, and for most of them this drive continues on as they begin to advance up – and whether or not they actually have opportunity to do so at any given time, where they are now. Information can be an effective tool for them there, and both where that involves their own jobs and career plans and as their holding special insight can make them more valuable to the organization and a better candidate for advancement. And acceptance of and promotion of change is a key to this too. A lower or mid-level manager who can present themselves as an enabler of change that would in some way advance the business they work for, is going to be better positioned and either for advancing there or for moving on to a next level position up, elsewhere.

Conflicts and the potential for conflict of the type that I raise here are less likely and they tend to be more limited in impact when they do occur, in the presence of a full and complete sharing of unequivocal information and when that level of open communication can be maintained. But that stated, these conflicts also tend to create and strengthen barriers to fully effective communications and information sharing, and particularly when the people involved in them come to see preservation of their own work positions and their own opportunities for advancement as being challenged. So these conflicts can and do create and increase friction in the business systems that they impact upon.

I have been discussing friction and upward mobility in a business here, and how they can and do play out very differently in different stakeholder groups within an organization. And as a part of that I at least began discussing acceptance of and resistance to change. I am going to more explicitly discuss change and innovation in my next series installment, focusing on innovative development within the organization and in how it operates. Meanwhile, you can find this and related postings at Macroeconomics and Business and its Page 2 continuation.

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