Platt Perspective on Business and Technology

Rethinking exit and entrance strategies 13: keeping an effective innovative focus while approaching and going through significant business transitions 3

Posted in strategy and planning by Timothy Platt on September 10, 2016

This is my 13th installment to a series that offers a general discussion of business transitions, where an organization exits one developmental stage or period of relative strategic and operational stability, to enter a fundamentally different next one (see Business Strategy and Operations – 3 and its Page 4 continuation, postings 559 and loosely following for Parts 1-12.)

I focused in Part 12 on the knowable and the readily anticipated, in how innovation impacts upon and shapes change and transitions in businesses. And I note here that this means thinking through and organizationally adjusting to stay effective and competitive in the face of ongoing evolutionary change. And it means becoming and staying flexible and adaptive in the face of ongoing occurrence of more disruptively novel change too, and certainly in industries and marketplaces where disruptively novel innovations are recurringly arising and where consumers expect and even demand that. But the cumulative impact of small, evolutionary changes can and do build up, in the face of understandable resistance on the part of businesses to change what does not seem to be broken in their ongoing business-as-usual practices, as most businesses develop them. “Overtly broken”, and “stressed and challenged” are two very different outcome conditions that are both important here – particularly as the later can suddenly devolve into the former, and as what at first glance might seem to be a suddenly emergent single point of failure, or as what might appear to be a more general and systemic breakdown.

I focused on the knowable and on the readily anticipatable in Part 12, and that is an important baseline approach if nothing else, in risk management and related due diligence considerations. But at the same time, I have to acknowledge the unknown and the unexpected too. And I at least begin more explicitly addressing those contingencies here, at least as they arise in the context of this discussion. And to be more precise in that, I ended Part 12 by stating that:

• I have written that posting essentially entirely in terms of what is knowable – and either because change and its sources of need can be anticipated, or because change has already significantly happened and has to be responded to. I am going to continue this discussion in a next posting (n.b. here) where I will more explicitly discuss certainty and uncertainty, and what is and is not knowable. And I will discuss these issues in terms of individual businesses and in terms of the contexts that they exist and function within. Then after that, I will delve into the issues of business transitions as a risk and benefits exercise.

My goal here is to at least begin addressing all of that. And I begin that with the fundamentals, and with a well known set of distinctions. Circumstances and their next-step facilitating or impeding, likely causal consequences can be:

1. Knowable and consciously, overtly known. (Qualifying as the known known.)
2. Knowable but effectively not known – and even if all of the information that would be required to analytically understand and be aware of some event or circumstance is there, so it should be consciously known about. (Think of this as the in-detail knowable unknown and as a categorical description of things that would blindside you.)
3. Unknown in detail, but predictable and at least for the likelihood of the disruptively novel arising. (Think of this as the categorically knowable and even well know, but the in-detail unknown and even unknowable, at least a priori to its overt emergence.)
4. Unknown and unpredictable for arising: the “out of thin air” unknown that of necessity catches everyone by surprise. (Think of this as the truly unknowable unknown, and both in detail and in categorical outline, at least a priori to its overt emergence in specific instances.)

I focused in Part 12 of this series, for the most part, on developments that fit into circumstances 1 and 3 of this listing: the known and known to be known, and the unknown in more specific detail but predictable for recurringly arising and having to be addressed for general type. I turn here to more directly consider circumstances 2 and 4 of that list, and the truly unknown and the effectively unknown.

Let me reframe circumstances 2 and 4 in terms of business friction.

• Circumstance 2 of this list represents situations where gaps and failures in actionable knowledge, that should be avoidable from data already available in-house, and gaps and failures in effectively communicating what is known, turn what should have been a circumstance 1 opportunity into an information void problem.
• And circumstance 4 arises when insufficient essential information is available in a timely manner to even be able to categorically predict that a type of disruptive change event might arise – indicating greater friction in the business systems in place than would be found in a circumstance 3 situation.

Circumstance 1 represents a lowest level of business systems friction, baseline here. Circumstance 4 represents a highest level of business systems friction, alternative extreme case. And circumstances 2 and 3 fall in the middle, and with significant potential for overlap as to how much information development and communications gaps-driven friction might be in play in the particular instance. And with that in mind, let’s more explicitly consider circumstances 2 and 4 here.

I would argue that at least in principle, circumstance 2 should never arise in a well run business, and certainly for developments and circumstances that are of real consequence as impacting upon that business’ effectiveness and as at least nominally addressed in its business model and planning. Circumstance 2 represents the ultimate consequence of in-house business systems friction, where essential information does not and cannot reach the people who need it, when and where they need it. Consequentially they cannot make optimal decisions or take the most effective possible actions, and with those disconnects and performance inefficiencies simply increasing the likelihood of next-step friction and its consequences as business proceeds.

Circumstance 3 represents situations and scenarios in which friction significantly enters business processes, and decisions and actions taken. But this also represents situations in which very genuine effort is made to develop and effectively use what information can be available in advance, to at least remain prepared for the possibility of disruptive unknowns and disruptive change.

Circumstance 4 is more like being struck by lightning out of a clear blue sky. Circumstance 2 can be and should be avoided and effective strategic and operational planning serves to increase the chances of its not arising. True instances of circumstance 4 simply happen, and ultimately the best a business can do to prepare for them is to have systems in place that would help facilitate as smooth and efficient a reactive recovery as possible.

I write this in terms of adverse developments – as viewed from the perspective of the business organization under consideration here. That might mean general and even very widespread adversity that affects an entire industry or sector in one, or it might mean a strengthening of the competitive position of a direct competitor as they arrive at a disruptive improvement for themselves, meaning a relative decrease or loss of strength and capability for the business under consideration here as it faces need to catch up, and a likely reduction of market share from that and at least until they do.

I am going to continue this discussion in a next series installment, where I will turn to consider business transitions as a risk and benefits analysis and follow-through exercise. 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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