Platt Perspective on Business and Technology

Technology as the tide that raises all boats 4 – but often unevenly 1

Posted in outsourcing and globalization, strategy and planning by Timothy Platt on October 30, 2016

Approximately four and a half years ago, I wrote and posted a brief essay to this blog titled: Technology as the Tide that Raises All Boats – and the narrowing of the competitive edge. I wrote there of the impact of proportionality in innovative change, and how the progressive development of new and better changes the fundamental nature of standard and routinely expected, as essentially all of the innovation that arises in an industry and its businesses diffuses out across and is taken up by essentially all businesses there and their consuming markets. What can routinely be done advances, and so does what is routinely expected – and even when discounting the demand for new and different per se that characterizes markets served by rapidly advancing innovation-driven businesses and industries. (Note: “new and different per se” can in also include demand for primarily cosmetic change too, which I do not specifically address here.)

I cited a multi-generational dairy farm as a working example in my earlier posting, and how its succeeding generations of owner managers have seen lower and lower real income coming from their effort, and even as their productivity and efficiency in running this business, and their effectiveness at producing very high quality product have continued to rise.

• I cited an arbitrary and intentionally artificial innovative scale there, by way of simplifying example, where for one generation of such a business, a score of business effectiveness and competitive value offered that was as high as 10 would represent an industry norm, and an innovative increase in value offered that brought a business’ rating up to 11 or 12 might be very significant and even game changing.
• But the progressive accumulation of effectively mainstreamed innovations in this industry, in time shifts its norm to a score of 100. Now a new innovation that is achieved by one of the competing businesses there, that would shift the needle up by 1 or 2 points is not going to even register as significant, as its impact is lost in the more random fluctuation of production and market performance that routinely occur as background noise in any production, marketing and sales systems (i.e. as those systems’ non-trending random change.)
• Now and when starting from this higher performance baseline, change or improvement might have to increase overall value creating efficiency and effectiveness achieved by any given business by a full 10 or even 20 points for that to actually arise above the level of the routinely offered and expected, and enough to qualify as a meaningful innovation per se at all.

And I wrote my above cited April, 2012 posting on this, and offered its case study example with a massively significant alternative dairy operation in mind, that I considered as an at least briefly discussed counter-example: New Zealand butter – sold in packets by the seemingly endless millions and in countries all over the world. I have been to quite a few countries where New Zealand butter is widely available and routinely consumed, and on several continents. New Zealand butter, and I add several other dairy products that come from there, seem to dominate local markets in many countries and their communities – raising the specter of this market presence squeezing out local producers who cannot compete for the price points that their markets have come to demand, and that these foreign producers can offer. I raised the complication of economy of scale there, as an at least situationally significant factor in rescaling the value creation (and cost per unit of value received) performance scale too, that businesses have to operate at just to be competitive, let alone innovative.

I am not returning to that posting to refute it; I am returning to it to reconsider it in light of some increasingly globally significant additional factors and forces that also enter in here. I am, in effect returning to the issues of that earlier posting to complicate it and hopefully make it more useful for its here-and-now relevance. And in this, I will consider the level versus uneven playing field considerations of restricted trade, open trade and free trade, and of regulatory oversight as it arises and plays out nationally and internationally. And to reconsider my closing notes to my April 2012 posting on this, I also plan on addressing all of these issues at least in part in terms of economy of scale differences, where capacity for economy of scale efficiencies, in and of themselves are innovation driven and certainly in how competing businesses function and are run.

As a side note in closing this posting, I cited my April 12, 2012 posting here as a first of a series posting, and identify this 2016 follow-up to it as that series’ Part 4. I have written and posted as intervening installments, Part 2: the challenge of securing an infrastructure technology advantage and Part 3: long term and short term value and sustainability. And I will come back to reconsider points made in them, that pursue a more internal to the business perspective in upcoming series postings here. But I have chosen to begin again from this series’ Part 1 as its de facto urtext for now, and I will continue in that vein in my upcoming Part 5.

I am going to begin addressing all of these issues in a next installment to this series. 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 I also include this in Outsourcing and Globalization – and see that for related material too.


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