Platt Perspective on Business and Technology

Building a business for resilience 10 – open systems, closed systems and selectively porous ones 2

Posted in strategy and planning by Timothy Platt on March 3, 2016

This is my tenth 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 1-9.)

• I discussed simple, minimally structured business organizations with open lines of communication, and both along and across the table of organization in Part 8,
• With a focus on how that organizational approach can limit communications disconnects and miscommunications, and their impact on the effective sharing of essential business information,
• Thereby reducing business systems friction.
• I then offered a briefly stated list of three working examples of where intentionally assembled, selectively, strategically maintained silo walls can provide essential value in a business. And I at least briefly looked into the first of them and how its approach could serve as productive, positive exception to that simpler baseline model.

See Part 9 for that discussion, where I briefly outlined how a larger company might allow a highly innovative newly acquired smaller business to continue to operate according to the basic operational patterns and corporate culture that it was built around when still an independent business, so as to preserve its defining value that prompted its acquisition in the first place.

I turn here to consider the second exception to organizational simplicity that I initially offered in Part 9:

• The value of walling off in-house developed research and development facilities from open-ended and unfettered communications, and both where this could lead to process interference from other parts of that business that would limit performance of the research and development effort, and where it might compromise necessary confidentiality and loss of control of proprietary information.

And I start out doing so by comparing and contrasting this scenario and the business acquisitions one, from Part 9.

• The larger acquiring company of my Part 9 example: the Magnakoure Corporation, bought out and acquired the smaller Technodynamek, LLC for its strategic value,
• After Technodynamek developed and proved its own business systems and its products and services by offering genuine validated worth to its end-user community.
• And while Technodynamek achieved that in part by developing what for it would qualify as a complete and well-rounded research and development capability, as is the case for most such acquisitions, it was brought into the Magnakoure system to help that company address specific and specialized gaps in what it can do, and how, and with what proprietary ownership control.
• When, in contrast, a business builds its own in-house research and development facility: its own in-house innovation and invention factory, this resource grows there in that business’ context, and it develops and grows more organically there – as opposed to being brought in as-is, and with features that might not all smoothly mesh with their counterparts in the acquiring business.

(Nota bene: The above scenario description is only one possibility here, even if it is the most common one for when a larger business seeks out and acquires a small highly innovative business as a strategic move. I have also, for example, heard of and seen situations where a larger and more staid business acquires a smaller more innovative one for it to become, in effect an in-house innovation factory to help it break out of a pattern of non-innovating inertia. For purposes of this discussion, I will simply assume the commoner pattern as laid out in the above bullet points.)

I write this posting while thinking of a very specific company that began as an innovative startup, that became more rigidly fixed in its ways as it grew and expanded out. It lost its innovative edge and its innovative mindset, and certainly in its senior management and executive suite. This business still had and still at least financially supported an in-house research and development facility that had grown organically, to use the term of my fourth bullet point from above, out of this once agile business’ more innovative beginnings.

• And what began as strategically considered porous silo walls there, protecting proprietary knowledge under development within this facility,
• Became dysfunctional barriers, as the company’s overall decision makers came to view change coming from this facility, with its separate corporate culture and its separate ways with suspicion at best.
• Its research and development facility continued to create and develop new approaches to both old and new problems, and new innovative and even disruptively innovative product ideas, and even early stage prototype implementations for much of this. But the only fruits of all of their effort that were allowed out of this innovation facility, and into production were small evolutionary changes to what the business was already offering. Their more disruptively innovative offerings were never picked up upon or developed, or allowed to prove themselves for their potential marketable value and profitability.

And with this I return to a point that I made in Part 9 where I wrote of strategically considered and planned out information access barriers and silo walls, and ad hoc barriers and silos that form independently of any overall strategic need or consideration and even contrary to them:

• “The silo walls and local fiefdoms that I wrote of there become problematical because they arise independently of and even contrary to any overarching strategic vision for the business as a whole. And they remain problems because they are maintained in that manner too and regardless of overall ongoing consequences.”

My goal for addressing this specific exception-case scenario is very simple: to highlight how silo walls and related communications and information sharing barriers can become toxic and limiting, even if they start out strategically considered and functionally necessary. And I add, that change can take place very gradually, so no one involved can point to any single point in time when a corner was turned and predominantly functional drifted in predominantly dysfunctional. In the example that I just briefly sketched out, it can only be noted that that point was reached and passed, and a long time ago as measured in terms of the overall life of this company.

• Ad hoc and dysfunctionally arbitrary, friction creating barriers can be assembled out of what starts as strategically planned and selectively porous barriers that are put in place for specific strategic reasons and to achieve specific risk management and due diligence goals.
• Intentionally controlling information access and the overall conversation in a business has to be seen as a dynamic process, that needs ongoing updating and reconsideration as the business and its context change.

I am going to continue this discussion in a next series installment where I will look into the third exceptions scenario that I first listed in Part 9:

• The need to wall off the collection and management and use of customer or employee personally identifiable information, to those who would need access to this for legally approved use and away from alternative use.
• And I will also address the issue of confidential and proprietary information that might be obtained from supply chain and other business-to-business collaboration partners, under circumstances where maintaining confidentiality is required.

And after that I will switch my orientation here from a consideration of problems and potential problems, to one of solutions to them. In anticipation of that, I add that this means I will discuss “intentionally controlling information access and the overall conversation in a business has to be seen as a dynamic process,” to express this in terms of this posting’s discussion. And I will at least briefly discuss information technology options and how they can be used to facilitate that.

Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 4, and also at Page 1, Page 2 and Page 3 of that directory.

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