Platt Perspective on Business and Technology

Rethinking exit and entrance strategies 18: keeping an effective innovative focus while approaching and going through significant business transitions 8

Posted in strategy and planning by Timothy Platt on May 2, 2017

This is my 18th 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 1-17.)

I focused in Part 17 of this series, on the first two points of a three point to-address list of issues:

1. It can be vitally important to make explicit strategic effort to more deeply understand where your business is now and where that business is headed if it seeks to simply follow a straight-forward more predictively linear path, rather than making a more profound shift and going through a genuine transition.
2. And it is equally important to be aware of the possibilities, at the very least of what types of transitions could be possible, and their implications and consequences.
3. This leads me to the question of what would be planned for in a strategically considered, intentionally entered into business transition, and how such a transition plays out.

And in the course of writing and offering Part 17, I at least briefly touched upon the third point to this list as well as addressing the first two of these points. My goal for this installment is to more fully address that third point on the list, while adding in at least a few extra details that are more related to the first two, as they would offer clarification here.

Let’s start this with an explicit listing of some of the assumptions that I would build from in this posting, and for how the first two points of the above list might have been addressed in the particular:

• First and perhaps most importantly, I assume that a business under consideration in this type of context, actually, actively, systematically and recurringly carries out strategic planning reviews and assessments and that its senior executives, working with other stakeholders as needed, actively and recurringly plan ahead based on the findings of those reviews and assessments. They do not simply take a more reactive and catch-up, ad hoc approach to leading and running their company.
• And I assume that they follow at least relatively standard processes and practices in this, and certainly for including a range of alternative possibilities when planning forward (e.g. with best case, worst case and normative scenarios considered for a basic three scenario approach.) The scenarios decided upon would be selected and customized to meet the needs and expectations of the specific organization. So for example, a business that sells directly to consumers and through bricks and mortar outlets and that is considering expansion into new territory, might develop and consider a scenario that assumes faster than expected next-step growth from this expansion in the numbers of retail outlets supported, with that scenario coupled with one for slower return on investments and profitability growth from that scaling up, and with a more moderate, normative middle-ground scenario possibility included too.
• Note: three scenario approaches per se are common for this type of analysis, but three per se is not sacrosanct and should not always be considered to be the one and only gold standard here. Be sure that you include enough distinctively meaningful scenarios to address reasonable contingencies and outcomes that realistically might arise, while keeping that number manageable and easy enough (small enough) for you to be able to make meaningful comparisons between them possible. And remember the limitations here: these scenarios do not and fundamentally cannot anticipate the truly disruptively unexpected, and primarily offer value in a more linear, predictable change context. So allow for the wild card unexpected in this too, as at least a possibility where you can.
• I assume that all (three?) of the predictive models arrived at, would be both developed and actively considered and not just drafted and set aside. I have seen otherwise smart and savvy executives in effect toss out the possibilities models that they would not like to see realized, only to focus on or actually consider the ones, or the one that best matches their preconceptions and preferences. And then they complain that the strategic planning that they had gone through and paid for has failed them and that the predictive models were no good. I assume that this analytical exercise is going to be carried out and that it is going to be done right: fully and without blinders or avoidable preconceptions and bias.

With these points of assumption offered, let’s at least briefly reconsider the first two numbered points from above. Point 1 of the above list is in fact the easiest of the three to actually carry out and particularly if the assumptions that I have just listed here hold true (e.g. the first of them) and are adhered to. A business and its executive leadership does, or at least should know what their enterprise is doing, and how and by whom and with what levels of efficiency and in the face of what challenges that would need addressing. If they do not know this directly, they should be able to find out from others in positions of authority and leadership along their table of organization – who carry responsibility to know the answers to these matters and certainly for their own areas of responsibility there.

What happens if you simply grow and expand and further develop the business by scaling it up along established templated patterns? The key issues to look for in any answers arrived at for that question, are ones of where a linear growth in scale might yield to a lesser growth in returns and in profitability or in business process efficiency – that with time would translate into reduced profitability too. And as a second area in which red warning flags should be noted, also consider the possibility that simple linear growth and without incorporation of additional more novel support, might create greater business system fragility: more opportunities for unexpected systems breakdown or at least slow-down, and increased risk where that is a cost too.

Now let’s at least briefly reconsider Point 2, and in terms of the add-on note just offered in continuation of my discussion of Point 1. Plan out and develop the three, or if need be more scenarios developed from the Point 1 step to this process, in accordance with the basic assumptions list of above, with a capacity to help you identify and think through possible red flag issues and challenges that might arise – and proactively. Frame this analytical step in terms of processes and practices followed and considered, and in terms of the predictable and likely possible outcomes that you would see from them, given the external factors and other assumptions build into these at least initially still-linear expansion scenarios under consideration. And think through where linear growth in scale would likely lead to linear, or even to synergistically accelerated, faster than linear growth in performance and benefits, net of current and additional costs faced, and positive value. And at least as importantly look for places in your systems where you might face concern of possible less than linear growth – or even possible breakdown, or at least increased risk for that. And look for patterns in all of that, positive and negative, and for underlying causality patterns where they might be ascertainable.

And focusing here on the contexts where new and novel might offer greater apparent value in this, that means spotting and understanding developing bottleneck and blockage challenges, starting with ones that might already be in their early stages of emerging in your business already. Think in terms of your basic business performance metrics here, and evaluate accordingly. Your maps of where linear growth might break down for you, and according to your standard performance evaluation standards in place – and of where that might have already started to do so, can show you both where novel approaches might be needed, and what such new solutions would have to accomplish to offer defining value to the business where they might be tried.

If you know where you need such change and what it is specifically supposed to address and accomplish, that can orient you in how you would design and develop and prototype test, and implement there too. It certainly offers a basis for how you would evaluate the effectiveness of a new and more disruptive possible change to system processes in place, and the effectiveness of entirely new areas of business system processes that might be developed and included in this too. And this would help you to refine them and bring these change elements to greater efficiently, and both as the people who would carry them out become more used to them, and as stakeholders affected by them get used to their being part of the business and its overall systems too. Add development of communicated buy-in that involves real opportunity for offering real feedback that is really listened to, to this and this paragraph at least briefly outlines what at least should become a cyclical development and redevelopment process for the business as a whole, as it seeks to stay as effective and as resilient and as agile – and as relevant and valuable to its markets as possible and in the face of both internal and external change.

And with that, I have offered at least a first cut response to Point 3 of the above list too.

I am going to continue this discussion in a next series installment, where I will focus on and further elaborate on that Point 3 and on questions that it raises. 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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