Platt Perspective on Business and Technology

Business planning from the back of a napkin to a formal and detailed presentation 15

Posted in strategy and planning by Timothy Platt on May 4, 2017

This is my 15th posting to a series on tactical and strategic planning under real world constraints, and executing in the face of real world challenges that are caused by business systems friction and the systems turbulence that it creates (see Business Strategy and Operations – 3 and its Page 4 continuation, postings 578 and loosely following for Parts 1-14.)

I have been systematically addressing a set of issues in this series, starting with its Part 12 that I repeat here for continuity and clarity of discussion:

1. Different functionally focused stakeholders might reach different conclusions as to which processes and subsystems of them are core or peripheral to a business, and as to which might be secondary-peripheral of them – and if so of what type (e.g. necessary but outsourceable, or no longer needed and dispensable.) And it is important to both clarify and discuss those differences, and reach a working consensus that all key stakeholders can come to at least tacit agreement upon, and certainly if a business is to enter into and carry through upon the right transitions for its own needs, and in the right way and with the right timing.
2. Then after that, and in the context of distinguishing between core and peripheral processes, I said that I would turn to consider areas and aspects of the business that can be linearly scaled up, and areas that represent true nonlinearities – places where simply scaling up according to the pattern in place would create inefficiencies.
3. And I added that I would discuss all of this in terms of crucial information availability and communications, and in terms of two types of case study examples: a retail business, and a software development business.

I primarily focused upon and addressed the first of these points in Part 12 and Part 13, and the second of them in Part 14. My goal here is to at least begin to explicitly address the issues and challenges of that list’s Point 3. And I will begin to do so in more general terms and then in terms of the case study examples that I make note of there. And I begin all of that with the fundamentals, and with a set of observations that many if not most readers would find quite familiar.

• Businesses do not find themselves facing need for change because everything in them is running smoothly and efficiently. They find themselves contemplating and planning for change precisely because they cannot claim this.
• And the more profound the types of change they see themselves as of-necessity facing, the more trouble they are likely to already be in and the more likely it is that they see impending exacerbation of that situation.
• Point 3 of my above list is all about information and business intelligence and its development from raw data collected in, its processing into actionable knowledge and its transmission and sharing. It is about communicating and it is about having the right types and levels of actionable information available to communicate, and to the right people and in the right contexts and through the right channels and at the right time and with the right risk management and information security systems and safeguards in place. And when a business drifts into the types of challenges addressed in the first two bullet points of this list, this is generally one of the first functional areas of that business to at least significantly begin to break down.
• Businesses that are in need of change and particularly of more fundamental, transitional change that cannot be achieved by simply linearly scaling up what they have always done, often approach that from having fallen into a vicious cycle of recurringly problems.
• They find themselves facing processes and practices that are not meeting their needs, coupled with communications and information management problems that limit their capacity to both fully map out those problems and plan out possible resolutions to them. And these information and communications challenges lead them to face next round business processes and practices failures for lack of effective knowledge and insight to arrive at corrective remediation to what they have just gone through and the cycle repeats.
• I have been writing in this series and certainly from Part 12 on in it, of how different stakeholders, working in different functional areas of a business might not even agree on what is more core to the business and its business model and strategy and what is more peripheral to it.
• Part of this can stem from different stakeholders seeing their areas of functional expertise and activity as central, and because they directly see what they contribute to the business and every day, if for no other reason. And this can and does include their actively seeking to maintain their and their functional area’s position in the business. No one ever wants to see their area of activity downplayed there, in-house let alone outsourced to some third party provider or simply discontinued. And managers by and large seek to protect and maintain their teams: the members of the overall business staff who they know and work with, and as individuals with faces and identities and histories there.
• But a big part of how different stakeholders can come to disagree over what is and what is not core to the business, and what is peripheral and must be maintained in-house and what is peripheral and can be outsourced or even discontinued, stems from business systems friction and from the communications and information-level challenges that create it, that I write of here.

I have been writing in this blog about understanding and remediating recurring business operations problems, primarily in terms of table of organization change, and in terms of making the business more agile and resilient and more effectively responsive. And I have focused in that on the operational and process side of this and on reframing the organization so as to both enable and facilitate effective change there. See for example, my series:

• Building a Business for Resilience as can be found at Business Strategy and Operations – 3 and its Page 4 continuation, postings 542 and loosely following.

That means pursuing this set of issues from a process and process systems perspective as this would be strategically organized and managed, according to a single overarching vision and set of business-wide goals – here viewing this from the perspective of business owners and overall business management.

My goal in this discussion is to address these issues more from a buy-in and follow-through perspective and in terms of actual implementation, or failure to do so. And with that noted, I turn to consider my first case study example here: a retail business that has been growing and along a more linear, more of the same approach and that has started to feel real “growing pains” from that.

• Change happens, and in both what forces and factors have to be accommodated, and in how they are. And linear, same as usual growth is a common essentially default way to address that challenge and certainly where opportunity for expansion and for possible capture of increased market share seem reasonable.
• I am writing here of moving beyond simply following a less considered default path in this, towards one of building from and deeper awareness of need and risks and opportunities, and according to a clearer and more consistent ongoing-reviewed business development process. And I begin my first case study example with some background on what this business is and on what it has been doing.

Alpha Hardware has made a real name for itself in its community and it has grown a large and reliable repeat business trade in its one bricks and mortar storefront. But it has hit a wall there from this success. It has a fixed and unexpandable space that it can offer its customers for shopping with fixed available shelving and floor space for their customers to find merchandise on. They have already made seemingly every adjustment they can to use this space as efficiently as possible and both to offer the widest range of products their customers want, and space for them to move around in as they shop. So they cannot increase their business potential by more effectively, efficiently using their current space at hand.

And at least as importantly, they have equally limited and immutable, unexpandable storage space for inventory that has arrived and that they have not brought up to their storefront and its shelves yet, that they need to have on-hand in order to keep those shelves replenished and stocked. And the more customers they have, the more pressure they face to limit what they offer them, to those items that fly off of their shelves. They cannot afford to in effect waste shelving or storage space on slow-moving inventory.

They cannot speed up deliveries and shift to a more just in time approach to inventory management and still feel confident that they will not face shortages in key items (to their customers) that they do want to stock and sell. So if they are to keep their customers happy and returning by offering them what they want, and when they want it, something has to give. And expanding to a new, second storefront is the answer that they chose.

This is where this example gets interesting. They decide not to simply open a second storefront location that essentially replicates their current business: a direct clone of their first now-flagship storefront. They decided not to follow a simple templated linear growth model here. That might expand their overall business, but a new storefront in a new and more distant neighborhood would not in and of itself address the growing pains problems that they have come to face in their first storefront. It would just give them, with time, opportunity to face the exact same problems in two locations, or more if they were to expand that way again. Instead, they acquire a second location directly across the street from their first location when real-estate prices are down and certainly for commercial properties, and they divide out what they have offered in their first original store into these now-two locations, with anything more hardware related per se staying in their first location, along with their more gardening center offerings. And everything that would be more home goods oriented is moved over to this new second location and with that opened to the public as Alpha Home Goods. Note: they had found themselves expanding this part of their business prior to this expansion already because more and more of their customers were buying and asking for merchandise that fit into this set of product lines. And they had come to see real growth opportunity there, if they could find a way to meet this expanding area of customer need and of business opportunity.

And even as they do this, they are already thinking ahead in terms of at least looking for opportunity to spread out even further, and with an Alpha Home Garden addition that they would move that part of the business into, as a real possibility. Their second location home goods storefront cannot readily be set up to include that, and they see enough business potential for what they would move there to make this a business-effective growth change in and of itself. So at least initially, they intend to keep their modest but popular garden and house plant supportive offerings in their first storefront. But they do see potential for expansion and growth through location specialization for this too, if they can in fact find the right location at the right price and if their new Alpha Home Goods works out and proves itself – and brings in revenue and capacity to develop increased reserves that they can next-step grow from.

I have just outlined something of the What of this example case study. I am going to continue this narrative in a next series installment where I will reconsider that in terms of the issues raised in my top three to-address list and particularly in terms of its Point 3. And I will back-track a bit in that analysis to consider the decision making processes that went into making this business’ first expansion decision, and how they implemented their strategic planning for it. And then I will consider how this expansion actually developed and played out as their new second storefront went into operation, with a mix of the expected and the unexpected emerging in that. Then, after completing my discussion of that first case study example, I will proceed to outline and discuss my second, software development business example too.

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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