Platt Perspective on Business and Technology

Some thoughts concerning a general theory of business 10: considering first steps toward developing a general theory of business 2

Posted in blogs and marketing, reexamining the fundamentals by Timothy Platt on October 8, 2016

This is my tenth installment to a series on general theories of business, and on what general theory means as a matter of underlying principle and in this specific context (see Reexamining the Fundamentals directory, Section VI for Parts 1-9.)

I began this series with a narrative concerning general theories per se. Then I offered a first business-oriented example of how that line of discussion might be applied in a more specific general theory of business context, in Part 8 of this series, in the context of discussing the role of interpretations in general theories. And I offered a second such example in Part 9, when beginning to build a foundation for a specific general theory of business, on a foundation of individual and group behavior and descriptive and predictive theory that might be developed for that.

Then at the end of Part 9, I stated that I would “at least begin to explore business and economic transaction assumptions, as they would enter into this,” here in this installment. I do so from a behavioral perspective.

• People behave both altruistically and cooperatively: in support of individual others and of groups that they see themselves as belonging to, and selfishly and competitively, and often in combinations and at the same time (e.g. when members of a business’ workforce work together collaboratively and cooperatively as a group when competing against other same-industry businesses and their workforces, while still competing with each other within-group for status and position.)
• Any effective theory of business has to centrally acknowledge this, and the sometimes conflicting dynamics between individual drives and behavior, and group behavior.

I begin fleshing out these assertions with a basic axiomatic assumption regarding individual decision making as it shapes ongoing individual behavior, and as that collectively shapes group behavior:

• Individuals conduct at least roughly outlined due diligence analyses of costs and expenditures that they would commit to if taking an action, where overall costs include risk as well as effort taken and monetary and other resource expenditure, and the expected benefits that they would derive from this can include combinations of differing types of perceived gain.
• This analysis can as one extreme be entirely analytical and overtly thought through, for pertinent details and contingencies.
• It can, as an opposite extreme be essentially entirely emotional and non-analytical in nature. And as a group-think example of that, consider “follow the crowd” fad-driven behavior where initial participants might or might not have thought out their actions analytically to at least a degree but where subsequent bandwagon participants more often simply follow along.
• But however this due diligence is carried out and both for form and for completeness, individuals always seek to achieve outcome results from actions taken that at least match and that preferably exceed costs and risks expended – from their perspective and according to their criteria. Here, simply matching and achieving break-even might be an acceptable outcome, but the desired outcome is essentially always one of gain.
• And this brings me to a fundamentally crucial detail: gain, and benefit in general does not necessarily have to be either monetary or monetizable for it to represent real value and even in overtly economic systems. It is not even necessary that its presumed value be readily quantifiable either: only that it be deemed significant and sufficient on the part of the individual who makes a decision to act, and who follows through on that action.
• To take that out of the abstract, for-profit businesses might trade entirely in quantifiable monetary and monetizable sources of value (e.g. transferable liquid assets: cash, and monetizable but not directly monetary business intelligence and related information.) But any general theory of business also has to account for nonprofits that are mission driven in support of societally significant goals, where participants in them find real and even overriding value in seeing their vision of those missions advanced.

An effective theory of business has to be able to allow for, and describe and explain complex and at times seemingly contradictory drives and actions and across the entire range of observed decision making and activity pursued. And an effective theory of business has to be able to accommodate at the very least individual behavioral decision making and the motivators and reasoning that drive it, and group and organizational behavior.

Group and organizational behavior per se, include in them emergent properties that do not significantly arise in individual decision making and behavior, as well as being grounded in individual member behavior. But I start with the individual and build out from there, adding group behavior complications to the model at the appropriate organizational level.

I am going to continue this discussion with behavioral strategies:

• Both individuals, and groups and organizations follow behavioral strategies.
• Behavioral strategies are assembled out of series of specific decisions and actions, and serve as organizers of them, as well as determiners of what actions will be taken, and with what contingencies allowed for (and expected) – and at all organizational levels from that of the individual on up.

I will discuss individual behavioral strategies in both the business place and marketplace, in this context. Then after that, I will discuss group and organizational behavior, and for both businesses as organizations and interacting groups of them, and in their marketplaces. And I will discuss change, and in both its smooth evolutionary forms and in its suddenly emergent disruptive forms. Meanwhile, you can find this and related material about what I am attempting to do here at About this Blog and at Blogs and Marketing. And I include this series in my Reexamining the Fundamentals directory, as topics section VI there, where I offer related material regarding theory-based systems.

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