Platt Perspective on Business and Technology

Innovation, disruptive innovation and market volatility 28: innovative development at the business-to-marketplace collaboration level 6

Posted in macroeconomics by Timothy Platt on October 6, 2016

This is my 28th 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 6-27.)

I have been discussing visualization tools and approaches that would be used to strategically analyze and plan for a business and its operational systems (see Part 25, Part 26 and Part 27 of this series.) And at the end of Part 27, I stated that I will turn here to specifically consider business scalability as it would be planned for, carried out and performance reviewed using better visualization tools and approaches.

• Scalability is often viewed in terms of capturing larger market share and increasing business profits. And for many owners and managers, this is the only perspective taken. A smaller-scale business cannot accomplish as large a transaction volume as a larger business can or the same levels of revenue flow that that a larger business can,
• When aside from scale differences per se, the two are equivalent for overall operational effectiveness and efficiency. Think of this as an operational view of scalability (net of hoped-for economies of scale), and as an outwardly facing view of it.
• Scalability per se can also be viewed for its role in resolving business inefficiencies, where for example operational systems and the resource bases that support them are expanded out to resolve resource and performance bottlenecks, and to reduce risk from potential choke points that could erupt into single point of failure vulnerabilities. This means both building larger and building to greater operational complexity where alternative performance pathways are developed, increasing business flexibility and resiliency. Think of this as a more strictly strategic, business management and development view of scalability, and as an inwardly facing view of it. (And ultimately, this is where economies of scale enter this narrative.)
• My characterization there is somewhat arbitrary as both outwardly and inwardly oriented business scalability decisions and actions call for a balanced operational execution and strategic overall planning approach. I take a combined approach where more inwardly-facing and outwardly facing goals and the approaches for achieving them, have to smoothly mesh and support each other if either is to work, and certainly long-term.

Let me take that at least somewhat out of the abstract. I have occasionally written here in this blog of a consulting assignment that I took on once as interim Chief Information Officer for a large retail group, where they had recently set up a new call center – and after I was brought on-board I was told that only about half of the phones worked: whichever half people picked up on first. This business was scaled up with an entirely outwardly facing, sales and profits vision and approach. And as a consequence, its leadership built without coordinately planning for and carrying out the inwardly facing infrastructure systems expansion that they would need to make that work. A big part of my job there was to play the catch-up of planning out and managing the infrastructure expansions and improvements that their growth called for. And that was not easy, because the owner and his senior management staff in place, were reluctant at best, to expend the resources needed to make this work, resisting cutting into their short-term profitability that would be needed if they were to address longer-term needs.

I hold this up as a cartoon outline example of where causal linkage mapping analysis of the type that I have been discussing here would apply, and more proactively than evidenced in that briefly sketched out case study:

• In highlighting already-critical and emergent resource bottlenecks,
• In planning out necessary infrastructure and related growth to address those risk management, due diligence challenges,
• And to identify gaps, and both in what is being done, and in how business activities are managed and performance reviewed.

In my retail business example of above, the owner of the business was not told in a short-term, timely manner what the underlying problem was. Outgoing calls could not reliably go out and call center personnel simply kept trying until they could get a live line – reducing the numbers of calls they could place per hour. But incoming calls to this well-advertised marketing and sales phone number could not reliably get in either. If a customer call cannot get through and that potential buyer only gets busy signals and hangs up and gives up, no one hears that. This problem only reached overt visibility after a big enough gap had arisen between actual levels of calls and business accomplished, and levels expected so as to raise red flags. The exact nature of the phone system failures in place from unplanned for growth, first became apparent when I was being interviewed for hire. And even then, that was primarily if not entirely noted on the outgoing call side only.

And with that, I note one more use for the type of business visualization approach that I have been writing about here:

• More readily identifying symptoms and underlying causes, and which is which.

A full causal linkage map of essentially any business of any significant scale and operational and management complexity, would best be displayed in three dimensions. Contrived subsets of this larger whole, selected out to address specific operational and strategic business analysis and planning questions could in many cases be developed and visually presented as two dimensional slices through the three dimensional whole. All of this complexity creates real challenges for making this visualization approach work, as it is going to be necessary to at least be able to visualize the whole in three dimensions, in order to carve out those correctly formed and inclusive slices.

Static, basic, traditional tree-model table of organization representations are fundamentally limited and essentially useless for many if not most business analysis and planning purposes. But they are at least easy to draw out and print as two dimensional images. And as static representations that follow one-size-fits-all, essentially stereotypical design they are easy to draft and to follow when tracing broad brushstroke representations of organizations.

How can the details and the dynamism of an approach to business visualization as offered in causal linkage maps, be made as easy to draft and use, as a standard tree model representation? I am going to turn to that, in my next series installment, and in anticipation of that, note that this is where virtual reality imaging tools and their data representations come into their own, and it is the type of application of that technology where at least for business analysis and planning purposes, virtual reality imaging might find its killer app.

You can find this and related postings at Macroeconomics and Business and its Page 2 continuation.

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