Platt Perspective on Business and Technology

Rethinking exit and entrance strategies 21: keeping an effective innovative focus while approaching and going through significant business transitions 11

Posted in strategy and planning by Timothy Platt on September 17, 2017

This is my 21st 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 1-20.)

I repeated a How oriented list of considerations in Part 20 that would enter into a determination of when a business would be best off pursuing a simple linear development course, basically continuing doing what it has been, and when a true disruptive change-based transition would make the most sense:

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 I at least began addressing those same issues from more of a Why perspective there. And at the end of that installment, I stated that I would continue its line of discussion here,

• “Where I will consider accommodating response considerations to this, such as the development of urgency scales, and timeframe compression and extension responses.”

And I added that I will discuss this in costs terms that include but can go beyond the strictly financial. And I will turn this narrative back to more explicitly addressing business transitions while doing so, where I have addressed change and the competition between needs and goals here, in more general terms.

I begin addressing all of that from a linear evolutionary, primarily same as usual, and a true business transition perspective and with the fundamentals there.

• Businesses tend to pursue patterns of change and accommodation that have proven to work for them, until they cease too, and more disruptive change has to be resorted to and with all of the unknowns and all of the uncertainty that this can involve.
• And then they tend to pursue known disruptive change: patterns of change that might be new and novel to them but that have been successfully pursued and implemented by other businesses and often in at least relatively standardized ways (e.g. taking an initial public offering (IPO) route to raise working capital in order to accelerate business growth and resolve current growing pains issues.) Then, the new and unpredictably unexpected that they have to face will be more constrained and limited, even if it is very real as they take a simplified and even stereotypic “transition template” and seek to apply it in the specific details of their particular needs and contexts. There is a saying that I at least periodically find myself using, that comes to mind in this context: “the devil is in the details.” Angels can be in those details too – and positive opportunity and value. But at least potential challenge and risk are there too.
• When no such “transition template” is available, as would be the case for young businesses that decide to pursue an IPO route, or a venture capital financing route (to add a second more standardized financing-oriented possibility here), and they have to find and even define a more unique path forward, this might create greater potential positive opportunity for them, but it also carries greater risk as well, for a lack of basic track record guidance on how best to proceed and on how best to track performance for what is being done.
• Any genuine business transition carries greater risk, or at least apparent short-term risk, and greater uncertainty in that than simply seeking to hew to an already established linear path forward, tried and true. And any stakeholders who are adverse to change, will be quick to remind you of that. But there is an in-principle at least, simple test for determining when a true transition would be best and even if that would mean a more unique one rather than a more commonly pursued one:
• It is going to be better, long-term to stick with the tried and true if that means lower overall risk and costs long-term. And it is going to be better to enter into true disruptive change and a genuine business transition if that would lead to lower overall costs and risk, long-term. And the only real exceptions to this selection criterion would be expected if a business were in effect forced to take a disruptive change route in order to avert a sudden existence-threatening crisis.
• Setting that short-term possibility aside from consideration, at least for now, transitions build for viable futures where more familiar and less disruptively different might lead more towards long-term failure, or at least long-term avoidable weakness and business fragility.
• And the devil, as noted above, is in the details and for all of this, and with all of the uncertainty and discomforts that that can imply, and regardless of what basic type of path forward is pursued.

The issues and approaches that I said that I would address next, towards the end of Part 20 are all oriented towards making the risks and possibilities faced here, all more manageable and consistently so. And this brings me to the specific tools that I at least alluded to there: “accommodating response considerations such as the development of urgency scales, and timeframe compression and extension responses.”

I begin this with urgency scales and by bringing that term out of the unfocused realm of colloquial expression with a more formal definition:

• And urgency scale is a consensus-based understanding of the relative levels of priority that competing needs offer.

Urgency scales are always relative value scales, so any given need faced, might be afforded a higher or lower value depending on what other needs it is pitted against at any given time. And a high priority, high urgency scale need might suddenly be downgraded for priority if a new and emergent need arises that would supplant it. Sudden single points of failure come immediately to mind there, where they can and usually do push aside any and all longer term goals and priorities for their sudden and immediate urgency.

I am going to continue this discussion in a next series installment, and in anticipation of that, and to keep this narrative closely aligned with the issues of change and business transitions, I add that:

• It is impossible to make a valid choice between business change options, unless and until you have at least a basic understanding of the needs requirements faced that would drive that change – and for their details and for their costs and risks and for their relative priorities.

I am going to delve into a few of the approaches that can be applied in managing those details in the next installment to this series. And as part of that, I will consider how relative priorities change, and how possible attainable value and risk change as a consequence to that, and how that type of determination can tip the balance toward pursuing same-as-usual or toward pursuing a true business transition.

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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