Platt Perspective on Business and Technology

Innovation, disruptive innovation and market volatility 24: innovative development at the business-to-marketplace collaboration level 2

Posted in macroeconomics by Timothy Platt on May 14, 2016

This is my 24th 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 6-23.)

I began to explicitly examine business-to-marketplace interactions and collaborations in Part 23, focusing there on the individual business, and even more so on the marketplace side to these transaction possibilities. And much of that discussion was centered on information and opinion as it is generated and shared, and through an increasingly globally interconnected online community. Then at the end of that posting, I said that I would continue its line of discussion here:

• Where I will delve more specifically into the issues and opportunities of innovation, in this business-to-marketplace context. And I added that I would also consider those 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 stated that I would couch this at least in part in terms of business systems and economic friction. That last detail, I add here, is probably inevitable as business systems friction, like economic friction arises as a consequence of less than perfect communications and from failure to effectively share necessary and even essential business intelligence among involved stakeholders on a sufficiently timely basis – when they actually need it.

The basic starting point that I would begin this line of discussion with is one that should be completely familiar to anyone in Marketing, and from before the advent of the internet, as well as since then and up to now.

• The more you know about your marketplace and the target demographics and individual consumers who you would reach out to in it, the better your business can competitively perform in bringing its products and services to market and selling them there.

The advent of the internet per se, and particularly the emergence of the generation 2.0 interactive internet have added to the complexity of what has to be known and responded to there, and the pace at which market knowledge and insight become stale and out of date. And the emergence of this real-time, anywhere-to-anywhere communications capability has made it more and more important that businesses be more and more proactive in reaching out to and connecting to their markets and customers too, and not simply through more traditional central broadcasting model Marketing and Communications channels, and in meeting corresponding traditional Marketing and Communications goals.

• This communications capability also impacts upon and shapes more agile and effective programs for product design and development, that is more in tune with marketplace and consumer needs and preferences.
• And it impacts just as significantly for prioritizing what to work on and at what levels of development and production investment, in meeting both seasonal and non-seasonal trends and fads.
• This capability impacts upon and at least potentially influences every point at which a business connects in any way with its markets and with its potential customers and long-term – and not just leading up to a given immediate point of sale.

And this also impacts upon that business’ internal operations and its dealings with partner businesses in supply chain and other collaborative business-to-business systems. And ultimately, increased efficiency there translates directly into improved capacity to meet market needs and with greater profitability from doing so and for all partner businesses in these collaborative systems.

I begin to directly address the main point of discussion of this posting with that, and with a dual focus on innovation and on the collaborative business-to-business processes that explicitly, collectively form supply chain and related business-to-business systems. And after setting a foundation for a discussion of how business process improvement per se, shapes and enables greater business-to-market efficiencies, I will turn to discuss at least some of the underlying details here, beginning with the fundamentals:

• Even when business processes explicitly serve to design, produce, warehouse or access or move physical resources, those processes themselves are information processes. The underlying business processes that make a business work, and that collectively functionally define that business are all built in terms of information creation, processing and filtering, validation, transmission and use.
• Business systems friction creates inefficiencies and disconnects in those systems because it interfered with, slows down and degrades both the quality and the availability of this information, impacting adversely on everything that those processes would manage and control.
• This is, and essentially always will be at least something of a challenge for any real-world business, and particularly as no organization can completely control or even completely qualify and validate all of the information that it needs, gathers in and uses from the outside. If that business has any real organizational complexity it is going to be an unattainable goal to perfectly manage and vet absolutely all of the information generated in-house too, and certainly when that would have to be carried out real-time in making decisions and taking actions.
• From this perspective, business process innovation is all about improving the quality and availability of essential information, making it possible to manage physical assets as well as further information itself, more effectively – and in a manner that is less burdened by friction.
• And this brings me to those business-to-business collaborations where the essential defining business processes involved are not going to be entirely owned by or managed and overseen by stakeholder participants from any one partner business. When friction arises there, and its consequences begin to manifest themselves on a business process instance, by business process instance basis there, it is going to be that much harder for any given stakeholder involved to track down and unequivocally identify the precise source of any breakdown that occurs, and whether it is single point of failure in nature or otherwise caused.
• And this means that one of the most critically important areas in which innovation can bring competitive strength, increasing value to a supply chain or related multi-business system is in finding new ways to improve due diligence and risk management systems that can be co-owned by, and shared for responsibility by all involved partner businesses, and where each of them can more easily and quickly see their contributions to any emerging problems and early so they can correct them.
• Innovation in this context is largely about transparency across shared processes, and the resulting reduction of friction and the inefficiencies that it causes.

I am going to continue this discussion in a next series installment where I will focus on business-to-business collaborations, and their impact upon specific business-to-market processes and their efficiencies. And in anticipation of that, I note here that I will discuss this set of issues in terms of organizational levels, and how command and control, and business friction play out in these higher-level business systems – and how this impacts upon the individual partner businesses in these systems.

Meanwhile, you can find this and related postings at Macroeconomics and Business and its Page 2 continuation.

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