Platt Perspective on Business and Technology

Rethinking vertical integration for the 21st century context 9

Posted in business and convergent technologies, strategy and planning by Timothy Platt on July 26, 2016

This is my ninth 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 1-8.)

I proposed and began preparing to discuss a set of four fundamental questions in Part 6 of this series, preparing in large part for that by successively developing an illustrative case study example of how the issues raised in them, play out. I cited Apple, Inc. as my working example for this, and I concluded Part 8, stating that I would directly address the first of those questions here. And to clarify this opening note, I repeat those questions here too:

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?

And I added that I would address these questions and the emerging role of global online interactive connectivity that they seek to address, 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.
• And the perhaps more technical issues 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.

I have reconsidered how best to proceed in addressing all of that and will delve into that bullet pointed set of issues as I consider the three above-repeated questions, rather than considering those more abstract issues first. And as just noted above, I begin here with question one.

I begin that with consideration of alignment, and on more effectively and more real-time aligning the systems and processes of a business with each other, and with their market space and its customer-members. And I will begin that by posing an intentionally inflammatory viewpoint that I will at least attempt to justify as holding a measure of merit:

• The first time that Apple, Inc. attempted to capture dominating leadership in an information technology industry and marketplace, with their early user-friendly, graphical user interface desktop computers they failed to move beyond niche market status overall, because they persistently failed to understand or align with the actual marketplace and its demographics that they needed to enter into and sell to, for the types of products that they offered. They did not know or understand who they needed to more successfully market to, and sell to if they were to rise above niche market status, so they did not know what types of argument and reasoning would work in convincingly reaching that larger audience. (This is “inflammatory” as it directly challenges the received corporate wisdom that Apple Inc. promulgates about itself and its founding leader, Steve Jobs, by challenging their tacit assumption of his always holding visionary wisdom. He got some key details very right, but he got a few of them very wrong too.)

Aligning with the outside marketplace begins with understanding the buyers who actively comprise it. And Apple’s “we are disruptively new and different” marketing approach might have effectively and even compellingly drawn in a buying and using community of pioneer and early adaptors who were essentially all new to computers per se. But it was not exactly geared towards addressing the needs or concerns of business managers or corporate purchasing department decision makers, who by their very nature tend to be more risk management-driven and conservative there, waiting to see from the experience of other business professionals whether a dramatically “new and different” represents more of a cutting edge technical breakthrough, or more of a bleeding edge one for them.

Twenty-twenty hindsight is easy, given the benefit that it offers of knowing the actual consequences of what at the time would still be unpredictable outcomes for decisions yet to be fully made, for actions not yet taken. Segmented marketing, with a business-oriented side that was oriented towards addressing the potential positives for larger audiences to adapt their new technology (of the type that I briefly outlined in Part 8) might have helped. And that would have been carried out in conjunction with a parallel, “new and excitingly different” campaign aimed at the academics and artists and others who they did capture the interest of as their loyal niche market anyway. And these campaigns would have been carried out in marketing channels – publications and other forums that would be particularly notable to each of the market segments that they wished to reach.

So question one, above, is predicated on an explicit assumption that ubiquitous interactive online makes this type of market share capturing marketing and sales easier and more widely effective. But I have to add that if Apple had thought through their markets and their marketing in terms of segmentation that would address different audiences, and different audiences that more comfortably fit very differently along an innovation acceptance curve (from earliest to late and last adaptors), they might have succeeded in making their vertical integration, one business does everything approach more fully successful that first time too.

But let’s consider how the interactive online and ubiquitously inclusive communications experience make this type of success easier. And I begin by noting a very fundamental point:

• Effective alignment, and the more effective use of resources available in addressing the more clearly understood goals that it helps identify requires information, and feedback as a crucial element of that.

The more through and gap-free the information flow and the feedback flow in keeping the business effective focused for its goals and priorities, the easier and more cost-effectively it can stay competitive. And the more complex the business, the more important this distinction becomes, with highly vertically integrated businesses that seek to do essentially everything for themselves, in-house, complex enterprises and essentially by definition.

More effective two-way communications within the business can help it to find and maintain a more unified focus with more effective utilization of resources at hand – and this becomes crucially important as the diversity of table of organization lines and subsystems, that you find in a complex vertically integrated business have to be able to work together. I have written at least occasionally about this in the context of developing and using a version 2.0 interactive intranet (see for example, Connecting an Organization Together, Version 2.0 for an early orienting discussion of that set of issues.)

More effective two-way communications between a business and its markets and with its customers and potential customers, makes it possible to more effectively identify potential target demographics. And at least as importantly this also makes it possible to enter into more audience-specific communications with these people where outwardly flowing marketing and inwardly flowing comments and feedback combine into real conversations (at least potentially.)

I am going to continue this discussion in a next series installment where I will more specifically focus on Apple’s second effort at becoming a market dominating vertically integrated business with its iPhones, iPads and more on the hardware and proprietary software side. And as part of this I will discuss its move into content with its Apple App Store, and its iTunes and iBooks and more, where they seek to become a leading content/format gateway too. And this will bring me to a key detail that I have only noted in passing and without comment up to here. Apple has moved from seeking to do everything that is in any way important to their business in-house, to taking on a business model position in which they seek to do almost everything in-house. Their “almost” is crucially important there, for understanding where Apple is now and where they seek to go as a business. And I will at least begin to explicitly discuss the points of my above-repeated information systems bullet point list too.

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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