Platt Perspective on Business and Technology

On the importance of disintermediating real, 2-way communications in business organizations 3

Posted in social networking and business, strategy and planning by Timothy Platt on August 12, 2017

This is my third installment to a brief series on coordinating information sharing and communications needs, and information access filtering and gate keeping requirements (see Part 1 and Part 2.)

I began addressing disruptively novel change in an organization and in what it brings to market, and what it has to be able to bring to market if it is to remain competitive there, in Part 2. And I focused in that installment on that array of issues, from a within-business perspective and in terms of its internal systems and their needs and capabilities. My goal here is to flip orientations from that, to consider the business’ outside contexts and how they impact upon and help to shape and prioritize the decisions and actions that I addressed in Part 2, within the organization. And I begin this by at least briefly categorically listing a few of the key players that would enter into any analysis of, or discussion of a market-facing business and its more meaningful outside world. In anticipation of this posting, I cited four of these stakeholder types at the end of Part 2 and I re-list them here with a fifth such entry added in too. Note that while the order that I offer these stakeholder categories in, might seem arbitrary, I chose it with a specific narrative flow in mind for using it. And I add that their order is probably unimportant in general, as any of them can hold greater or lesser importance for their level of direct impact, depending on the business in question and its circumstance:

1. Any business equity holding outside shareholders where this category applies,
2. Change and its pressures as arise in their general customer base and marketplace,
3. And from a business’ individually dominant clients as a special case where an enterprise has them, and both from when a single major client accounts for a large percentage of the work activity and the incoming revenue generated, and from when a significant number of a business’ perhaps individually smaller clients all start demanding change, and when they speak with a single voice and as if one on that.
4. And from among a business’ competition,
5. And from outside regulatory organizations.

Let me begin here by at least briefly clarifying Point 1 of this list. Equity holding outside shareholders can mean stockholders for a publically traded company, and certainly in this context if that company is failing to make changes that a significant percentage of their shareholders would see as necessary, and who are dissatisfied with the business for its financial or other (e.g. environmental impact) performance because of that. I have seen stockholder revolts and they do need to be taken seriously and even if major shareholders from within the business can quash any proposed action from outsiders in shareholder meetings and proxy votes. And this can also mean dissatisfaction and even pressures to influence and even control, coming from major outside investors such as venture capitalists, or from funds managers who individually manage and make ownership decisions that involve large numbers of that business’ outstanding shares as a percentage of shares traded. Think of this as the influence of many smaller voices speaking out as one, and that of individual very large voices as they speak out, respectively. Both can mean significant pressure on a business and its planning and execution, and certainly for what have come to be contentious actions or positions taken.

Now let’s consider Point 2 and Point 3:

• Point 2’s market participants individually make their decisions as to what to purchase if anything, and when and where, as individuals and for the most part as individual product end users. This need not involve concerted organized action in any particular way, though fad purchasing can lead to what amounts to that, as can viral marketing and its capacity to at least transiently enlist what can become large numbers of same-minded purchase decision making participants who are otherwise unrelated.
• Point 3 addresses larger single voices and decision makers, and does represent concerted, longer-term organized voices.
• Think of Point 2 and Point 3 here as marketplace counterparts to the two categorical equity holder types noted here regarding Point 1 stakeholders.

Point 3 stakeholders include, among others, single dominating client businesses in business-to-business arenas. And it just as significantly includes major wholesalers that might take on a large percentage of what a business offers in more of a business-to-consumer context. And it includes in that vein, single large retails that might do the same, or even buy out all of what some business produces. Let me take that out of the abstract by citing two examples. Globally, Walmart sells more than one million US dollars worth of toilet paper every single day for overall gross sales. And that number is old now by several years. Their gross annual sales for this one product type is probably at or above half a billion dollars per year now. That type of purchasing power influences suppliers and original manufacturers of all types. And to turn to a smaller but still significantly sized second retail business, for a second such example, consider Trader Joe’s: the supermarket chain. Their approach where possible and realistic, is to only sell products branded to their own name. And they go to small producers and buy out everything they produce for some product type, to exclusively sell in this way, as carrying their brand and as having been vetted for meeting their quality standards. This can, for example, mean buying out an entire vintage year from a small wine producer, or entire production runs and essentially everything that a small pasta or similar manufacturer makes for sale over a contractually agreed to period of time.

Switching categories again in my above-cited categorical list of stakeholders, large numbers of irate stockholders and the news stories their anger and frustration can and do create, can have a very significant collective impact on a business, as can single larger voices for Point 1 and its participants. The collective impact of smaller individual marketplace participants, as by analogy addressed in Point 2, or of single larger ones as per Point 3 can have massive impact too. And for the former, consider the marketing disaster of a business facing a consumer boycott that is heralded and followed as an unfolding news story in the press and on television and online. That can kill a business if it cannot effectively respond and resolve matters. And the loss or threat of loss of some single balance sheet shaping, major purchasing customer can have an equally significant impact too.

I have already at least begun tying this posting’s line of discussion, to this series and its main topic in the above paragraph where I cite the crucial importance of communications here, and of open and as necessary, transparent communications and certainly with all involved parties included there. And that leads me back to the above list of five stakeholder categories and the two groups I have skipped over up to here: Point 4 (a business’ competition) and Point 5 (outside regulatory organizations.)

Let’s start with Point 4. Few people start out thinking of a business’ competitors as holding a stakeholder position to them, but that in fact can be a valid way to view them insofar as a business and its primary competitors in particular, as so strongly influenced by each other. Businesses have a stake in how their competitors do, even in more zero-sum game theory contexts where they thrive to the extent that their competition does not. But in the real world, competitive relationships are not always so simple and do not always take on a strictly win-lose position. As a case in point, a larger, market dominating business might absolutely need the cover of having viable competitors in order to avoid the costly and even all but devastating challenge of antitrust action. Remember, courts have been known to go so far as to force the break-up of companies deemed to be monopolistic and irretrievably so as currently organized. A business that was facing that type of possible action, after for example being warned of it through prior court action, would probably see it as disastrous for them if one of their larger and more presentable competitors looked like it might go under!

Businesses, and certainly in countries such as the United States, are legally barred from colluding with each other as that can be seen as violating antitrust and antimonopoly laws for constituting market manipulation of one form or other. But there are in fact a relatively wide range of contexts where selective and allowed collaborations, and their game strategies that go beyond simple win-lose, would offer greater value and safety and for all businesses concerned.

And this brings me to the above list’s Point 5 and outside regulatory organizations. I am going to address that stakeholder category in my next series installment and will continue from there to more fully discuss all of these categorical stakeholder types in terms of communications and in terms of simplified, disintermediated communications. In anticipation of that, and as a simple example, many legal systems have strong and strongly enforced antimonopoly laws in place that directly impact upon and limit how competing businesses can communicate with each other. But even then, there are carved out exceptions and complexities, as apply for example where businesses that create and sell competing antivirus and anti-malware software products are allowed to work together for example, for sharing updates on new and emerging threat vectors. And a great deal of regulatory law that essentially all businesses have to work within, involves sensitive personally identifiable information and how that can and cannot be communicated and between whom and under what conditions.

There is an old saying to the effect that the devil is in the details. That certainly applies when the issues of this series are considered in more specific contexts. I will at least begin delving into the communications details of all of this in my next installment, having focused on who would do this communicating here.

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 also see Social Networking and Business 2 and that directory’s Page 1 for related material.

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