Platt Perspective on Business and Technology

Business planning from the back of a napkin to a formal and detailed presentation 17

Posted in strategy and planning by Timothy Platt on August 8, 2017

This is my 17th 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 1-16.)

I began working my way through a three point list of to-address topic points in Part 12, that I repeat here for continuity 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 to 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.

And I at least began taking that narrative out of the abstract in Part 15 with an analysis of this set of issues, framed in terms of the retail store case study example promised in Point 3. I continued that case study discussion in Part 16, completing an analysis of that business in Point 1 and 2 terms, and I will finish it here, now focusing in on the communications issues and challenges of Point 3. After taking that step forward in this narrative, I will turn to consider the software development business, case study example, as also promised in Point 3.

But as noted above, I begin this with my retail store example: a hardware store, Alpha Hardware, that chose to make a more disruptively route to business expansion by splitting their store as a business that was located in a limited space that they could not expand upon in one location, into two separate more specialized storefronts: Alpha Hardware (in their original location) and Alpha Home Goods (in their new second location.) Simply seeking to develop a second location clone of the original store in a new location would have represented a more linear path forward following of their business model in place and would have been much less dramatic a change. They instead close a much more disruptively novel transition approach here.

Everyone working at the original single location Alpha Hardware knew that the store was way too cramped for space and both for the volume of business conducted and for the range and diversity of products and of individual stock keeping units (SKUs), or separately ordered and sold product variations and versions carried and sold, that they had to find room for in their showroom. The dynamics of this are simple and essentially immutable:

• When a store has fixed and limited shelf space available for offering its products to its customers, and/or a limited in-house inventory storage space so they can have the short-term required reserves for keeping their shelves replenished,
• And the number of customers seeking to buy from them increases, this creates real and in time undeniable pressure to limit what is offered and sold, to the items that fly off the shelf through completed sales the fastest. Items that only sell slowly, take up room and keep doing so, robbing the store of opportunity to do business and make sales for items that would move more quickly – and leaving customers looking for them frustrated because the store cannot keep enough of those faster moving items in stock.

Everyone at Alpha Hardware knew this, and both for the more traditional hardware side of this store and for the newer and expanding household goods side of it. They saw the impact of this, as customers came in asking for items that they no longer stocked because not enough of them sold for them to make sense to carry, given their space limitations. They saw this when they did run out of items that they did actively carry. And they saw this as they saw genuine opportunity and value to the store to carry a more diverse selection of goods, if they could only find a way to do so. And with all of these people working in the same relatively small space, they did talk about all of this as well as about more socially connecting issues that helped to bring them together as a small community and as a workplace team.

When Alpha Hardware as a storefront, split off its household goods side to their second location, they were fortunate enough to be able to find and secure a spot for that directly across the street from their original store. This meant communications stayed easy and strong. I have already made note of the importance of that, at least in passing, and consider it in more detail and with a more direct focus of attention here. Consider what happens when communications are poor or even essentially nonexistent between work areas in a business and even in a single location, and for a perhaps extreme case situation when employees and their managers find themselves competing for limited resources – that all involved sides feel entitled to, and that all see themselves worthy of claiming highest priority for.

Effective business planning, as a core requirement, has to be able to identify where such impasses might arise and has to be able to proactively where possible, address and limit these challenges. And effective business planning, as a course correction measure has to be based on the data and insight that would identify where resource bottleneck and other challenges might already have led to conflict and to dysfunctional competition within the business, where an enterprise can in effect find itself at war with itself, or at the very least a low level version of that.

• I am writing here about within-business friction, and about the rigidity and loss of agility and resiliency that communications breakdowns can lead to, where it cannot be possible to more effectively share limited resources if the involved parties requiring them cannot in some way communicate with each other effectively enough to do so.

If a business is not organized clearly enough and with sufficiently effective communications systems in place and working, to be able to at least nominally address these and similar challenges, it is not going to be in a position to even know if it is facing simple linear path forward short-term problems, or more systematic and longer term ones. And it is not going to be in a position to know if it is facing need for a true disruptively novel path forward change and a true transition, or a need for simpler problem remediation and a continuation of business as usual.

I am going to turn to my second, software producer case study example in my next series installment, but in anticipation of that introduce it here as the e-Maverick Group: an e-commerce software developer and provider that seeks to offer cutting edge and next generation software solutions to their business clients. And in orienting anticipation of that next installment to come, I repeat here a briefly stated detail about this type of business that I first offered here in this series in Part 16:

• While new products and even new types of products do arise and appear on the shelves of hardware stores, and home goods stores too, a great deal of what is offered is fairly standard and stable in function and in basic form.
• That situation is not going to hold true in my software business example where even seemingly consistent product types can fundamentally change in both what they offer and how and at a steady, rapid pace.

The e-Maverick Group is change and even disruptively novel change driven, in ways that a business like Alpha Hardware would never be and that has implications when considering the types of issues under discussion here. And I add with that in mind that fundamental, disruptively novel change in what a business offers, as noted in the above two bullet points, often means at least a need for equally fundamentally New in how they do so 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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