Platt Perspective on Business and Technology

Some thoughts concerning a general theory of business 15: considering first steps toward developing a general theory of business 7

Posted in blogs and marketing, reexamining the fundamentals by Timothy Platt on June 13, 2017

This is my 15th 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 1-14.)

I began addressing business strategy and operations from a game theory perspective in Part 12 and Part 13 and continued that in Part 14, successively examining win-win, win-lose and mixed strategies and how they arise as best perceived approaches in business contexts. And my primary focus there was at the level of the complete business enterprise, as a more monolithic entity that would follow a single, if mutable strategy and game theory approach. I have at least touched on how different areas of a single business can pursue differing game theory-based approaches to meet their specific needs, and in support of a single overarching business strategy. But I have mostly focused on businesses as a whole there.

1. I am going to more explicitly consider how different areas of a single business can pursue differing game theory approaches, and even in support of a single shared business mission and vision and a single overarching strategy and business plan. And I will at least begin doing so here in this installment.
2. After that I will consider the basic issues raised and considered in this series, from the perspective of the individual employee, whether hands-on and non-managerial or managerial, or executive or owner. I add here that a still wider range of stakeholders has to be considered here so I will throw a wider net when delving into this set of issues, than would be included within the boundaries of any one organization.
3. And then I will expand the scale of consideration outward from that of the single complete business enterprise to consider supply chain and related value chain systems and I add, business and marketplace ecosystems. If Point 1 here addresses a baseline middle ground level of consideration, Point 2 focuses in to a deeper, finer grained level that underlies it and this Point 3 telescopes outward to consider the wider context that Point 2 issues take place in.

But I begin this at the organizational level of functional areas and separate offices and related facilities within a single business entity as they might pursue different mixes in an overall mixed game strategy approach.

I begin this with the fundamentals, as initially laid out in a complete business-as-single-unit context in Part 14, where I repeated how and why a business would pursue a win-win approach, and why it would preferentially find greater value and reduced risk from pursuing a win-lose approach:

• Win-win makes the most sense, offering higher overall value and reduced risk, long term when a business, or in the context of this posting, a unit or functionally distinct element of that business, faces long-term stability, and with reciprocity for value offered where it is shared. I couched this in supply chain and similar business-to-business collaborative contexts in earlier series installments as listed above, and in terms of business-to-market and business-to-customer dealings where positive value shared and offered lead to increased business and increased revenue and profits generated.
• This same basic paradigmatic model applies essentially entirely as-is, within businesses too and certainly when a functional unit or area under consideration is viewed as working with other areas of their own overall business as if in a supply chain system with them, and when they are viewed as serving the needs of a marketplace, and even if that means in-house clients and customers.
• Win-lose on the other hand, applies and both for entire businesses and for functionally separable units of them, when they enter into value creating transactional processes with other areas of a business that would only be expected to continue for a limited duration,
• Or that would be carried out under conditions of greater perceived risk and uncertainty as to how value would be exchanged (where that, for example can mean either uncertainty as to payout, or limitations to the overall pool of value that could be paid out that would not necessarily cover all value owed),
• Or for some combination of these win-lose oriented strategy-shaping constraints.

Win-win would probably seem fairly obvious as an approach within a business, and certainly when the success of any given unit or functional element in an enterprise is tightly linked to the success of the business it is part of as a whole, and to the success of all other areas of that larger entity. Where would you expect to see a more win-lose game strategy apply here? I have in fact discussed businesses and business contexts where win-lose is the only approach that would make sense within a business, on a number of occasions in assembling this blog. And I begin addressing this general area of consideration by citing a few of those relevant contexts here, at least in general terms:

• Consider the perhaps all too familiar situation in which a business has at most a limited level of some critical resource that would have to be shared by multiple employees and even by multiple here-competing teams or other units within a business (e.g. a single very expensive and costly to maintain piece of equipment that has become a functional bottleneck for the business as a whole, but that it cannot readily afford to buy more copies of.) Now consider what happens when the various business units and their managers and staffs compete for access to this one crucial resource and with all involved facing very tight completion deadlines for their work that calls for it, and with intense pressures from higher up on the table of organization for everyone to meet their performance goals and on time if not before then.
• Even if the business as a whole seeks to pursue a more purely win-win approach with other collaborating businesses, circumstances that would be difficult to fully control can bring units within it into more win-lose competition. And there, one of the goals of the leadership of such an enterprise would be to limit this, and to find a way to resolve the resource bottlenecks in place in their systems that engender it.
• As a second, in effect intentionally staged example of within-business win-lose competition, I cite an approach to business leadership that I have seen play out. Some business owners and executive leaders intentionally create competitive conflict between the people and the teams of employees and managers that work for them. And this can literally take the form of assigning the same exact goals to more than one individual or team and under terms where everyone involved knows that the winner of these races will be rewarded and the losers punished. Yes, this is toxic; some managers are toxic in how they lead and manage and through setting up win-lose conflicts that are at best only mildly damaging and certainly to morale and to achieving employee buy-in.

I offer that last example for a variety of reasons. First of all, I do so because it does in fact represent a real world within-business win-lose scenario that I have seen play out and even in businesses that by all outward appearance seem to be quite successful. And when other workplace factors are added in that would influence stay or go decision making on the part of employees caught up in these conflicts, this type of competition might not in and of itself lead to a real increase in key employee turnover either. So I am not necessarily citing this as a reason for change management becoming necessary: I am simply citing it as a challenging workplace environment where win-lose competition can become relatively commonplace and certainly on high priority projects.

Beyond that, I also cite this to note a point that should be obvious but that is often overlooked in discussion of business and management practices and processes: a truly general theory of business should address bad and questionable processes and practices and as thoroughly as good and best ones, and how they related to each other and how they would be distinguished from each other.

I am going to continue this discussion and addressing those issues in a next series installment, where I will turn to consider the second numbered point of my above repeated to-address list, and the individual employee, manager, executive or owner and their issues.

In anticipation of that and as a closing comment to my perhaps toxic seeming second win-lose competition example from above, I briefly recount an in-house competition that I have seen and participated in, in a differently run business, which for purposes of this narrative, I identify as an up and coming high tech firm: Alweron Inc.

• Alweron took on a major project as the successful bidder in a competition held by a national government agency. And the initial project proposal that they offered did in fact fit entirely within their current technology and technical solutions comfort zone, which is why they were able to bid to complete at the cost and within the timeframe that they offered.
• Then, as sometimes happens and certainly in a cutting edge technology context, the lead project manager and their team assigned to this work, ran into a roadblock, where they came to realize that a key element of their solution could not be made to work, at least with what for them was their currently available off the shelf technology.
• They got creative and in effect held an in-house stretch-goals contest, coming out of a company-wide brainstorming session that all employees and managers could participate in, as they sought to arrive at a best approach for resolving this impasse. And three teams came together, each attempting to solve this problem with a different, novel innovative solution that they had initially sketched out in principle in that brainstorming session. The winner of this contest would be rewarded with extra vacation days that year and with a cash bonus, upon delivery of their working solution, and with the first to cross this finish line with a cost-effective problem resolution declared to be the winner. Early delivery, ahead of the designated and agreed to deadline for completion, would mean a larger bonus too, as this would help the business as a whole to complete the overall project ahead of schedule and achieve an early completion bonus from the agency that was paying for this project to be done in the first place.

This was as much a win-lose scenario situation, as is presented in the above outlined more toxically presented in-house competition scenario. But rather than being set up to pit employees and teams against each other, to keep everyone a bit scared of possible failure to perform and succeed, this win-lose contest was organized and run to encourage out of the box creativity, and with bonus and longer-term career enhancement potential. The overall orientation of this was positive, rather than negative and affirming rather than threatening.

I am going to discuss business processes and practices from the perspective of the individuals involved, with a focus on assumptions made and the contexts that decisions and their follow-through are made in. Here, to note a point of difference between these two in-house competitions, both of them were set up as competitions between employees and groups of them that would see themselves as opponents to each other. But the second of them was not set up in such a way as to make this a basic workplace norm. And it was not set up with a goal of bringing employees and managers there to see each other as opponents, and even at least potentially as enemies in a drive to meet senior executive and owner expectations. A general theory of business has to include and both descriptively and predictively explain that too.

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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