Platt Perspective on Business and Technology

Rethinking vertical integration for the 21st century context 6

Posted in business and convergent technologies, strategy and planning by Timothy Platt on April 14, 2016

This is my sixth installment to a series on what goes into an effectively organized and run, lean and agile business, and how that is changing in the increasingly ubiquitously connected context that all businesses, and that all individuals operate in (see Business Strategy and Operations – 3 and its Page 4 continuation, postings 577 and loosely following for Parts 1-5.)

In a fundamental sense, I started to directly address the core issue of this entire series in its Part 5, after building up to it in Parts 1-4. To be more specific:

• I briefly discussed lean and agile businesses per se and their value creating focus,
• And businesses that pursue a vertical integration strategy and their wider ranging efforts at product ownership and market control in Parts 1-4.
• And then in Part 5 I offered a brief and highly selective discussion of our emerging capacity for anywhere-to-anywhere, computer and artificial intelligence-enhanced communications, and the transformative impact that this globally reaching system is having on businesses, and on marketplaces and consumers. (See Ubiquitous Computing and Communications – everywhere all the time and its Page 2 continuation for a fuller and more wide-ranging discussion of that complex of issues.)
• And in that context I just as briefly and selectively discussed Apple, Inc. and how it has both less-than-successfully, and then highly successfully pursued a highly vertically integrated business model and strategy.

And I ended that installment by raising a fundamental point of conjecture, which I repeat here:

• Apple failed to break out of niche status in its early desktop computer years because the positive value that it sought to capture from pursuing an in-house vertical integration approach was overwhelmed by the down-side consequences of business systems friction and from failure to maintain a sufficiently lean and agile approach in its operations, as became inevitable from its lack of organizing focus in what it did.
• But it succeeded in breaking out of its niche limitations the second time, with its wirelessly connected smart phones and tablets and more, because of the wider reach of online marketing and of interactive online connectivity to its markets that it was now able to enter into.

My goal for this posting is to set up a series of discussion points that I will successively address, in order to more systematically analyze this shift in outcomes where one business, pursuing essentially the exact same business model and strategy, with more or less equivalently innovative products and services, did in fact achieve very different results when pursuing that approach twice and in immediate succession. And I begin setting up this progression of thought with a brief set of questions:

1. What makes global online interactive connectivity so powerful an enabler, in making a more vertical integration system work?
2. How does this compel a rethinking and a redefining of what “lean and agile” means?
3. And how will that affect and even redefine business-to-business collaborations, as individual enterprises determine what they should do themselves in-house and what they would more effectively outsource, for example to supply chain partners?

I am going to begin discussing these questions and their possible resolutions with the fundamentals, starting with the question one. And that: addressing the emerging role of global online interactive connectivity, means starting with at least a brief discussion of:

• Information flow and accessibility, and
• How new and emerging communications and shared computing frameworks are reshaping business systems friction,
• And through that, the range of what can be made operationally functional and cost-effective.

I am going to continue this discussion in a next series installment, with information flow and accessibility. In anticipation of that, I will specifically address in that context the issues and challenges of:

• Single and multiple sourced information and information validation, and
• Noisy systems and their impact on friction levels faced.
• And uncertainty – and how systems noise here, and friction and uncertainty are related.

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. And see also Ubiquitous Computing and Communications – everywhere all the time and its Page 2 continuation.

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