Platt Perspective on Business and Technology

Innovation, disruptive innovation and market volatility 25: innovative development at the business-to-marketplace collaboration level 3

Posted in macroeconomics by Timothy Platt on June 18, 2016

This is my 25th 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 6-24.)

I began discussing supply chain and other business-to-business collaborations and how they connect to their member business’ markets in Part 23 and Part 24 of this series. And as a part of that potentially larger and more comprehensive narrative, I began more specifically discussing how:

• Interactive online connectivity, and inexpensive and all but universally available wireless telephony
• Have impacted upon what it means for businesses and for collaborative systems of them (such as supply chain systems) to be successful, and innovatively so.

I focused there on communications and information sharing, and in a business systems friction-reduction context, and as a basis for in effect re thinking and redefining business activity. And in the course of that I began raising a fundamentally important point: all business processes are in essence and in day-to-day practice, information management in nature.

My goal for Part 24 was to at least briefly lay out a collection of starting points for use in this series installment and beyond. And the issues that I addressed there are in fact, crucial starting points that I will build this installment’s discussion around, and expand upon as I do so. But to begin at the beginning here, I ended Part 24 by stating that I would continue from it by:

• Focusing on business-to-business collaborations, and their impact upon specific business-to-market processes and their efficiencies. And that I would discuss that 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 those systems.

My immediate goal here in this posting is to lay a foundation for more detailed discussion of that set of larger issues. And to clarify what I have already made note of leading up to there, I have been discussing within-business processes that collectively define individual enterprises for what they are, operationally. And I have been discussing between-business processes that collectively define business-to-business collaborations such as supply chain systems, at an operational level. But I have glossed over a great many pertinent structural issues, and at both the single, and multiple business levels. My overall goal here is to begin with a more detailed discussion of business processes per se, so I can move on from there to more fully consider how businesses, and collaborative systems of them are structured – and how a clearer, process-based understanding of business organization and structure can be used in better understanding business innovation and at both the individual enterprise and the business-to-business collaboration levels. My goal is to more specifically look into the above listed set of still to-address points from there.

And I start preparing for that here with a more detailed consideration of overall operational processes per se. And I begin addressing that by making what at first glance might seem to be a somewhat arbitrary distinction, dividing what amounts to the universal set of all operational processes that go into and comprise a business, into two distinct categorical types:

Operational processes (as business processes) are information processes, as previously stated. But more than that, they are command, control and communications (C3) in nature, and they manage and help to maintain C3 capability in a business. In this they act upon and manage the selection and the carrying out of technical processes (which will be discussed next), and other operational processes, and directly on a per-process basis in realizing the goals that those specific business processes are designed to achieve, in the larger business systems that they are carried out in.
• And the overall effectiveness of a business process in place, can best be measured in terms of how effectively it captures input from business processes that feed into it (upstream processes), process that information in carrying out its own defining tasks, and hand its information output in to any next in line business processes (downstream processes) that might follow from it, or any technical processes that it manages. And to stress that point, this holds true even when the direct intended functional outcome from specific business processes being followed is that material and other non-informational resources in place would be selected or filtered, moved, processed, stored, requisitioned or otherwise moved for ownership control, or otherwise affected. (See command and control (management).)
Technical processes, as just noted in passing, are processes that directly act upon resources that do not specify how a business functions, but rather on what it does. And these processes are prioritized, selected for implementation, initiated, carried through upon and terminated in any given specific instance, under the C3 guidance of controlling operational business processes.
• To clarify what these processes act upon this includes both material resources and informational resources, when those resources are product and/or service in nature, and not explicitly business management or operations in nature.
• Put somewhat differently, business processes directly manage business functionality and how businesses operate, and technical processes manage material and information resources that are more outwardly, and market-facing in nature (or that are waste byproduct and related in nature, to include business production and resource utilization inefficiencies here too.) And markets, when considered in this context include both those that a business would sell to or through and those that it would buy from or through too.

With these basic definitions in place let’s turn to consider organizational structure, starting with the individual business. The basic, standard model in use for describing and organizing a business structurally, is the table of organization with its functional branches, and with its teams and other functionally distinct groups associated with those branches, organized along them. And height of position along the branches of that (here assumed) tree structure denote level of managerial and supervisory authority in the business as a system, with the chief executive officer and their immediate support staff positioned at the apex ( and generally at the top of the chart) and with progressively lower organizational, authority-based levels positioned progressively farther from that apex. This is a basic model that is in fact violated out of necessity on a regular basis as real world tables of organization are laid out diagrammatically. So for example, shared resources that are in some way managed and overseen in ways that cut across this basic tree outline, call for dotted line connections and cross-over connections that are not very tree-like. And this basic representational model really begins to fall apart when matrix management and similar nonlinear, pattern of supervision systems are in place in a business, and particularly when they are widely and even pervasively utilized there. But this representational model is widely used and that is a big part of why I keep referring to it and using it here in this blog too (that, plus the simple fact that most of what I write of when I do cite tables of organization does not in any way require that they assume a tree form.)

But let’s approach a business from a somewhat different perspective here, and at least for purposes of this discussion. And I begin this non-treelike reappraisal and reimaging with those two process types: business processes, and technical processes, and with information flow and related issues that enter into them.

• Operational business processes categorically constitute the operational structure of a business, as encapsulated in its basic business model, and technical processes are everything else there that those operational processes directly or indirectly manage and control. To repeat a stereotypical, but still useful representation of this that I just offered above, and only assuming basic business efficiency here, business processes represent how a business does what it does, and certainly at a management and oversight level and technical processes are all about what it does in fulfilling its value creating mission and vision.
• And resources: the resources that technical processes directly act upon include raw materials and parts, subassemblies where they enter into a business and its activities, finished products, and waste as it is generated anywhere in the execution of those processes. And it includes information directly relevant to all of that, and equipment of all sorts, from small disposables up through and including major capital investments (e.g. major durable goods and equipment, building space and so on.) And it includes information as specific, direct product or service. And it includes cash and cash flow and business liquidity insofar as they are managed and overseen through direct activity. And it includes personnel here, as much as I argue that employees – that people in general should never be viewed as resources per se and dehumanized as if objects through that. I include personnel here, to more cleanly and directly include Human Resources and personnel policy and practice into this business modeling approach, with their employee-facing and impacting technical processes and their overarching business processes that manage them accounted for too.

And now to the organizational modeling approach that I would offer as an alternative to the traditional tree-format table of organization:

• Non-managerial employees primarily, directly carry out technical processes in most businesses and organizations. And at the other end of the hierarchical system that constitutes most businesses, senior executives primarily if not exclusively work essentially entirely with operational business processes and the information that they develop and manage. This, at least applies for most any business that has reached a scale of size and organizational complexity to have become stratified into non-management and management spheres, and particularly when it has grown in complexity to include lower and middle management, and senior and executive management, or similar systems. And to continue with those larger and more complex businesses for now, as a source of working examples where the entire representational model that I am discussing here would apply:
• Lower level managers carry out lower level operational processes that are closer to and even directly connected to the technical processes that are carried out by the people who report to them. They might find themselves doing hands-on technical process work on occasion too, but as managers their primary focus of attention and activity, at least on their own part should be management and fulfilling operational business process tasks that collectively constitute that.
• Middle managers focus primarily on what might be called second level operational processes: business processes that direct and manage the activities of the lower level managers who report to them, and that are one level higher, removed from directly acting upon the technical processes and their performance, that fall within their area of the business.
• Senior managers, to continue with my terminology from immediately above, primarily focus on tertiary operational business processes as these mangers supervise and manage middle managers. And just as lower managers sometimes have to step in and carry out technical process tasks directly, middle managers have to at least occasionally carry out lower level operational processes, and more senior managers have to at least occasionally step in to carry out managerial tasks that would at least nominally more likely fall to a middle manager to carry out.
• And senior executives: the chief executive officer and members of their C level team, expend essentially all of their workplace effort focusing on higher level operational business processes and their execution and performance, and are the most removed in that business from its day-to-day technical processes – unless a disruptive event, positive or negative in nature, pushes direct awareness of lower level activities into their schedule and their attention.

This vertically stratifies the representational model that I am presenting here from non-managerial, hands-on employees on up, to the executive suite, to squeeze this representation model into more familiar tree-format terms. Next comes what for a table of organization tree model, would be lateral grouping, when labeled that way.

I am going to turn to that, in my next series installment, and in anticipation of that note that I will be referring explicitly to the causal linkage mapping approach that I have been developing in my series: Intentional Management (see Business Strategy and Operations – 3, postings 472 and following, and its Page 4 continuation, and particularly see its Part 30, Part 31 and Part 32 where I explicitly present causal linkage analysis as a business-analytical approach.) And I will be discussing business organizations in terms of more flexibly network-like adaptive linkage maps, rather than more functionally limited tree-diagram maps. Then, as noted above I will expand the range of application of this approach to address business-to-business collaboration systems, in those same basic terms: an area of organizational analysis that standard tree-form tables of organization cannot readily accommodate or include. And with that laid, I will add dynamism into what up to here has been a more static business representation, and expand out this business modeling approach in terms of change and innovation – as they play out in both operational and technical processes and in the areas of a business where they variously apply.

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

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