Platt Perspective on Business and Technology

Business planning from the back of a napkin to a formal and detailed presentation 6

Posted in strategy and planning by Timothy Platt on April 28, 2016

This is my sixth 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 1-5.)

I briefly and very selectively discussed in Part 5 of this series, one aspect of how IBM, Inc. as a company has reinvented itself and repeatedly. Then at the end of that installment, I added that I would follow up on it here by considering more general processes and principles that would go into that type of “business revolution, evolution and repeat” pattern. I stated that I would specifically and explicitly discuss growth and scalability as noted at the start of Part 5, in this context. And I will do that and in terms of overall business vision and strategy, and how they can change and evolve. But I begin this list of to-address issues here, by raising and at least starting to address three basic questions. And the first of this set is probably fairly obvious:

• As a business leader, how can you better know when the enterprise that you run is heading in the direction of genuine need for fundamental change?

This is a matter of knowing when simply pursuing a current course is not going to suffice, and either through same-business model process improvement, or staff training and improvement, or some combination, and knowing when a fundamental rethinking of and redesign of the basic business model itself would be required.

And the second and third questions that I would raise here, that directly follow from that first one, and fit into any realistic response to it are:

• If you do in fact see need for fundamental change, how can you best determine what you should shift your basic underlying business model to?
• And how should you best plan out and execute an effective transformation process that will lead your business to that goal?

I begin with the first of these questions and the issues and challenges of knowing when you have to make more fundamental change. And I do so by raising a progression of more subsidiary questions, the answers to which collectively form your answer to that core question:

• How is your business doing now, and how is its performance tracking over time?

Timeframes are important here. You cannot develop a meaningful answer to that question, or gain meaningful insight from addressing it if you look strictly in terms of timeframes that are so short that any actual trends would be lost in systems static – the ebb and tide of short term and essentially random up and down sales and performance fluctuations that mark essentially all real world business activity. (Note: I intentionally discount predictable seasonal and other cyclical shifts in levels of business opportunity here, and intentionally so.) But on the other hand, you do not want to pursue timeframes that are so long, that more recent significantly trending factors and their consequences would be lost in them.

• What are the internal to the company, and the more externally driven factors that come to mind at least initially, that would seem likely to drive significant performance trends?
• What is your starting point for carrying out this analysis that you would build from as you begin to more systematically organize and think through the raw data and more processes information available?

If you are competing in a relatively technologically stable industry and serving the needs of a marketplace that is satisfied with the largely stable product and service lines offered, external change coming from your competitors and their products are not automatically going to be likely sources of pressure that could drive trending market share changes. That particularly applies when the customers of a market show significant and widespread brand loyalty, not that any business should even simply come to take its customers for granted.

But to set up a working example here, of an external to the business change that would drive a trending shift in competitive strength, let’s assume that one of your traditionally more minor competitors were to come up with a markedly innovative improvement that would compete directly with your major revenue generating hallmark product. At first, this is primarily purchased and used by more early-adaptor members of your overall marketplace community, to the extent that the competitor offering it sells outside of its usual customer reach. And it is only over time that viral marketing from these early new product customers and from next-wave buyers starts to really expand the market share that this new product captures.

The traditional brand loyalty of this marketplace enters in here, slowing down wider market penetration of this new product offering there. But over a period of quarters and even years, a trend begins to take hold where the once, more minor competitor in this once stable marketplace that offers this innovation, starts to capture a larger and larger share of this marketplace as a whole.

If this is a product that the average consumer in this market would definitely want and need, but one that they would only purchase once every several years (e.g. a durable good such as a new car or a new major appliance), this shift could take place slowly, but still take place inexorably – until that marketplace hit a tipping point for acceptance of this innovation, at which point the market as a whole would seemingly switch over to both accepting and demanding this new innovation. And I just said “but over a period of quarters and even years” in describing this process, but after an initial latency, and certainly by the time that middle adaptors are buying into this innovation, that tipping point could arrive at essentially any time, eliminating the presumed “safe time cushion” that I just proffered.

That was an externally sourced example. Now let’s consider the more internally developing one, of a business that has become way too reliant on tried and true, and market-accepted legacy technology. But it is legacy technology and fewer and fewer younger potential employees are learning it and even just for its more rudimentary details. And your expert workforce in it is aging out and fewer and fewer employees you have are willing to devote their training opportunities offered towards maintaining those old systems, that they could never market themselves professionally for holding, anywhere else.

Once again, I have set up a slow trend downwards in competitive strength and effectiveness, and one that could hit a tipping point and suddenly shift from only being a slow deflation, into becoming a more catastrophic rupture. But in either case, or as a consequence of whatever other challenge: internal or external in origin that your business might face, let’s assume that you have what could be identified as a still-slow trending shift downwards in business strength.

• Does your basic business model and its strategic and operational implementation framework,
• Offer the flexibility that would be needed from within your current overall system that would be required to course correct out of this predicament, and without fundamental business model change?
• Or would any realistic, viable change needed for getting out of this corner, call for more fundamental business-wide change?

I began this line of discussion with a first of three, basic question:

• As a business leader, how can you better know when the enterprise that you run is heading in the direction of genuine need for fundamental change?

And I addressed it by raising a series of second-level, follow-up questions, and by offering thoughts as to how they might be answered that would suggest a need for that fundamental change – making it necessary to address the second and third basic questions offered with it too. I am going to pick up on this narrative in a next series installment where I will turn to consider those next two core questions. And as noted above, I will do so in terms of business scalability and growth and 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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