Platt Perspective on Business and Technology

Business planning from the back of a napkin to a formal and detailed presentation 5

Posted in book recommendations, strategy and planning by Timothy Platt on March 27, 2016

This is my fifth posting to a series on tactical and strategic planning under real world constraints, and executing in the face of real world challenges that are caused by business systems friction and the systems turbulence that it creates (see Business Strategy and Operations – 3 and its Page 4 continuation, postings 578 and loosely following for Parts 1-4.)

I focused in Part 4 of this series on business analysis and performance review processes, and on a set of points that would be included in them. To be more specific, I couched that discussion in large part in terms of businesses that are relatively stable, at least as far as their overall scale and market reach are concerned, and that are basically satisfied with that. That set of constraints is both applicable and reasonably so, for most businesses as they seek to remain competitively effective and profitable in meeting the needs of a stable marketplace and their customer base within it. But it is not sufficient to capture all businesses in general, and certainly those that seek to actively grow and competitively evolve.

I stated at the end of Part 4 that my goal for this series installment is to consider business growth and the scalability that enables it. And I turn from the stable and established of Part 4 to address growth and fundamental change here, and how these drivers impact upon business performance reviews and analysis.

I begin this by at least briefly considering long-term structural change per se, and both as it is envisioned by a business’ leadership and as it is realized. I have addressed this complex of issues from a number of starting points in other series in this blog and from other perspectives. I do so here, from the perspective of business process analyses and performance reviews. And I begin that by considering the perhaps more extreme case of businesses that seek to reinvent themselves, into new technologies and new markets and into holding new visions of what they are and what they can be.

Many businesses have gone through this type of change, so the range of possible case study examples that could be cited here is very wide. One of my favorites for this is IBM. When people think of IBM as it is now, as of this writing, they think in terms of computer hardware, software and middleware. But more than that, they think of consulting and expert solutions providing, and at all levels from that of large scale infrastructure implementations, down to process and systems improvement within single services in single small businesses. And many add in IBM’s increasing presence in cloud-based hosting services, nanotechnology and a variety of other new and emerging fields as well. None of this existed when the company that we now know as IBM was first formed. This is a company that has fundamentally reinvented itself and many, many times.

What we now know as the International Business Machine Corporation, or IBM began in 1911, as the Computing-Tabulating-Recording Company ( or CTR). And it was created as a holding company as the result of a merger of four older and already established new and emerging technology-oriented businesses. The technologies and products that formed the core business of these now-merged enterprises and this new larger umbrella organization all focused on workplace and business efficiency, and included offerings such as their employee time clock for recording arrivals to and departures from work on punch tape. Much of this was of specific use in implementing the then modern new theories of industrial efficiency and management consulting (see, for example Frederick Winslow Taylor and his seminal book: The Principles of Scientific Management.)

CTR was always looking for the next new cutting edge invention or innovation that it could build and offer in its products. And it began to actively grow and expand to capture the value that these new business opportunities could bring. In 1924, Thomas J. Watson, Sr., their president and CEO from 1914 to 1956, oversaw CTR’s transition into becoming the International Business Machine Corporation, and with that new name. None of the business lines, and certainly none of the product types that this newly renamed business offered at that time can be found in the IBM of today. So this pattern of redefining and reimagining the basic business has continued from its earliest days as CTR until today.

I could at this time take a digression into the story of IBM’s famed Selectric typewriter, or their IBM System/360 series computers: the first standardized production line business computer systems offered to businesses in general. I could delve into the story of how IBM entered the desktop and personal computer business – as a complete and even radical departure from the mindset and approach that made that company a global leader in “big iron” mainframe computing. And I could discuss how and why they moved out of these arenas, selling significant parts of this development and production work to a China based company, Lenovo. And these are only a few possibilities for inclusion in a much larger and more far-ranging story of the business lines that this company has entered or created, developed and then moved out of. But my point of focus here and my reason for even mentioning all of this are somewhat different. My goal here is to discuss IBM quite specifically as a business that has recurringly repeatedly reinvented itself, and something of what that entails at the business process and business strategy levels.

I begin this by noting that businesses do not generally drift into fundamental change when they face and embrace it. They do not enter into this as a matter of day-to-day business as usual, process execution. Businesses that undergo profound change, and certainly change of the type that I have been writing about in my IBM example, do so for compelling reasons that would bring them to break away from their old standard, even rote routines.

• This can mean a business actively entering into profound change in order to capture new and emerging opportunity, and even when their current systems, processes and goals are succeeding and their product and services offerings are generating significant revenue for them.
• But even in a long-term, overall successful business, this can mean breaking out of a rut or even out of a business and marketplace dead end. Ultimately, that can even mean embracing fundamental change as a path forward towards longer term business survival.

IBM is a business giant with a long, complex storied history. And it has embraced and pursued change and even profoundly fundamental change for both of these basic reasons and according to both of these patterns. It has grown to global market dominance in areas that it has developed into, and it has gone through the business equivalence of near death experiences too, to in effect be reborn through change. And to round out this posting, I briefly note one of the later of these incidents in their overall history.

I made note of Thomas J. Watson, Sr., the first CEO of IBM as such. I turn here to consider Louis V. Gerstner Jr., their seventh CEO. Lou Gerstner was IBM’s first executive leader who was not an IBM lifer. He did not rise through the ranks there and did not learn the IBM way as his basic set of unexamined business assumptions. Before moving to IBM as their CEO he was CEO for RJR Nabisco for four years, and before that he worked for eleven years as president of American Express, and CEO and board chair of their largest subsidiary: American Express Travel Related Services. And if you are to look for the business where he first really learned from hands-on experience what a business is, and how they can be more effectively run, he worked at and became a director at McKinsey & Co., the globally reaching business consulting firm.

Why did IBM break with the pattern of tradition of recruiting their top corporate executive leadership from within their own ranks, after pursuing this course through their first six CEO’s? They were in trouble, pursuing stagnant and even shrinking markets and with a focus on products and services that could not lead them forward into a more positive future. Lou Gerstner arrived with a fresh set of eyes and new ideas and a new understanding of what IBM could be. And he organized the people there from the executive suite on down to change. I noted two fundamentally distinct drivers: two fundamental motivators for change in my above two bullet points. The executives and board at IBM saw a genuine need to change, and according to that second pattern as noted above, and they brought in an outsider, which in itself represented fundamental change, to lead the company forward.

I am going to continue this discussion in a next series installment where I will look past the case study example of this posting to consider more general processes and principles. I will more specifically and explicitly discuss growth and scalability as noted above at the start of this posting, and will do so in terms of overall business vision and strategy, and how they can change and evolve. 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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