Platt Perspective on Business and Technology

Innovation, disruptive innovation and market volatility 23: innovative development at the business-to-marketplace collaboration level 1

Posted in macroeconomics by Timothy Platt on April 16, 2016

This is my 23rd 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 6-22.)

I began venturing outside of the walls of the specific individual business and its level of organization and action, in this series in Part 22. My goal there was to offer an at least initial step discussion of supply chain systems and business-to-business collaborations, as these higher-level organizational structures would offer innovative opportunity and value, and both to those collaboration systems as a whole and to individual participating member businesses that function within them. Then at the end of that installment, I stated that I would turn here to consider:

• Market-facing and market-supportive business processes and practices, and how they can facilitate the marketing and sale of product and service innovation.

And I added in that context that I would consider both individual standalone businesses and business-to-business collaborative systems, and how they connect into and meet the needs of markets and end-user consumers. I am going to at least begin that overall line of discussion in this installment, and in keeping with the basic pattern of this series up to here, I will start by considering the single standalone business and its efforts to reach out to and connect with its marketplace and its customers. But before doing so, I will address a basic reality-check question:

• Why would I look into issues of that type here, with a discussion of marketplace-connecting outside interactions and outside-sourced processes, in a context of discussing business process innovation, and with these more frankly outside considerations posited as holding significant sway within the business?

My answer to that is simple. Prior to the advent of and widespread public acceptance of the interactive internet and prior to the emergence of our always on and always connected, anywhere to anywhere communications systems, I would simply roll marketing and related processes with their external market-facing connections into internal, within-business operations, and posit a business’ market and customer base as more passive participant actors that follows more ad hoc purchasing decision processes.

Yes, I intentionally over-simplify there. But according to that perhaps cartoonish understanding, businesses produce products and services that they bring to what they have identified as their best possible, most positively responsive markets and consumer demographics. Then those consumers either buy or they chose not to. But all of the active business processes involved in making that happen, reside entirely within the offering business, at least as far as systematically organized overarching processes per se are concerned.

Even under those circumstances, word of mouth advertising, pro and con about offering businesses, and their products and services did take place. And this pre-internet and pre-smart phone form of viral marketing is still there and it is still important. But the range and complexity of consumer-to-consumer and market-to-market communications, and the influence conveyed through them have changed dramatically and they continue to do so, and in ways that cannot simply be represented as the cumulative impact of separate ad hoc decisions.

Let me take that out of the abstract with a specific working example:

• Now it is so standard and so basic as to be taken for granted, for would-be consumers of specific products and services, to check online and through social media for crowd sourced reviews, and from both familiar individual sources and more widely from the larger community – and even the global community.

To take that further out of the abstract, if you want to travel to a distant city and you have never been there before yourself, it is increasingly likely that you would look online to find possible hotels, bed and breakfasts and other places to stay at while there. And you would look online for resources for booking lodging at the selections that you find the most appealing. And one of the primary sources of information that you would most likely turn to in selecting where to stay as being most appealing to you, would be the flood of customer (and other) reviews that is available online and increasingly about essentially anything that might be purchased. And at least in principle each such review that is shared online this way, represents some individual’s specific experience there as a snapshot view of one of the, in this case lodging sites that you are taking under consideration. And I note in this context my use of the words “and other”, as part of your due diligence has to include at least an awareness of the fact that some businesses actively solicit positive reviews and even offer rewards for them from their customers, skewing what is visible online about them. And people associated with these businesses, and employed there sometimes post false positive reviews as if they were customers there. And competing businesses and others associated with them have been known at times to act as trolls, posting false negative reviews to add to this mix too. And sometimes individuals post negatively as trolls too, and entirely on their own initiatives and for their own reasons (see for example, Trolls and Other Antisocial, Disruptive and Divisive Social Networkers – Part 1 and its Part 2 continuation for further information on this.)

• Individual consumers have to actively use best practices processes for making sense of the flood of reviews that are available, weighing them in their minds for accuracy and relevance. And this generally means using social media and other online sources.
• And web sites that offer reviews and options for posting them have to develop and follow what for them are best practices in identifying and flagging or deleting possibly false reviews too, both pro and con.
• All of this due diligence is increasingly coming to be best practices process based, and if not explicitly formally so, at least as a pursuit of better heuristic rules-based decision making processes.

I just pick up here on one context where a need for more extensive process on the marketplace side is increasingly coming to hold true. But the marketplace has come to be process and systems driven in many ways, where the purchasing decision was once much more of an individual consumer level phenomenon, with individual consumers making their decisions essentially entirely ad hoc the first time, and on the basis of their own experience when considering repeat business. And the only exceptions to that, at least traditionally have been the more hit or miss, and ad hoc sharing of consumer information from immediate family, and from immediate friends and acquaintances.

• Business processes, in managing production and what is to be offered, and marketing and sales and how and where it is offered, and customer support and follow-through for after it is offered and sold, increasingly have to connect into marketplace processes and their growing complexities.
• And with my line of discussion of Part 22 in mind as I write this, where I considered supply chain and other business-to-business collaboration partnerships: the relationships and the transactions carried out here and the processes that organize them from the business side to the marketplace, have to bring value to all sides concerned too, and with reliable consistency and as the usual outcome even if it is not going to always be possible to leave absolutely every customer fully happy and completely satisfied with their every purchase.
• I wrote in Part 22 of business-to-business collaborations per se, being constructed as systems of connecting business-to-business processes. Doing business with the interactively connected marketplace is also increasingly about developing and innovatively improving business-to-marketplace and marketplace-to-business collaborative processes too, and with participating businesses willing to take the lead in both developing these processes and accommodating the needs of their intended marketplace and customers too.
• In the example of social media-driven and interactive website-supported online reviews that I have been referring to here, this means businesses increasingly having to be actively and proactively involved in the online conversation – but without taking actions there that would lead the marketplace and their prospective customers to question whether positive reviews about them have come from those businesses themselves or from real customers. Best practices here mean businesses communicating with the marketplace and with their customers, listening at least as much as speaking out themselves. And that means rethinking and innovatively reframing their basic marketing processes and systems.

There are in fact significant parallels between businesses working with other businesses collaboratively, and businesses working collaboratively with their marketplaces and customers. And this basic fact is only going to become more important and more apparent as we move further into this 21st century.

I am going to continue this discussion in a next installment where I will delve more specifically into the issues and opportunities of innovation, in this business-to-marketplace context. And I will also, as noted above, consider these issues in a business-to-business collaboration, supply chain and related system-to-marketplace context as well as in an individual business to marketplace context. And I will couch this at least in part in terms of business systems and economic friction. Meanwhile, you can find this and related postings at Macroeconomics and Business and its Page 2 continuation.

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