Platt Perspective on Business and Technology

Intentional management 45: elaborating on the basic model for adding people and their management into the equation 6

Posted in HR and personnel, strategy and planning by Timothy Platt on December 16, 2017

This is my 45th installment in a series in which I discuss how management activity and responsibilities can be parsed and distributed through a business organization, so as to better meet operational and strategic goals and as a planned intentional process (see Business Strategy and Operations – 3 and its Page 4 continuation, postings 472 and loosely following for Parts 1-44.)

I focused in Part 44 of this on the issues of authority and responsibility in management, and for lower and middle management and the people who hold those positions, and for senior managers and executives. And I did so with particular attention paid to how these professionals have to coordinately address and support the members of their own teams in their areas of the overall table of organization, while simultaneously supporting the business as a whole, and even when that means giving other functional areas and other areas of the business priority access to resources that their own people would need too.

I wrote this for the most part in terms of managers supporting specific functional areas that they are responsible for, and the tasks and processes that fall into their areas of direct concern there, or supporting what might be viewed as competing groups in their business: others competing with them for access to any limited, bottleneck resources that both sides of that might need and at the same time. But while this vision of how a business works is basically valid, it is also limited. And it is also a bit misleading and certainly if it is not fit into a larger and more nuanced context. My goal for this posting is to at least begin to put that narrative into this larger perspective, beginning in-house and then moving outward from there. And that is where consideration of a wider range of stakeholders enters into this.

I begin addressing this set of issues by highlighting a point of fact that is both obvious when explicitly stated, and easy to overlook – and precisely because it can so easily be taken for granted:

• A great deal of, and even the majority of the work that is carried out in essentially any business with a large enough headcount so as to be divided into distinct functional areas, consists of task performance that is carried out in one functional area there that serves the needs of other parts of that same business.
• And most of the rest of it is organized and carried out in support of stakeholders who can be found outside of the business itself, in its marketplace and customer base, and in any supply chain or other business-to-business collaborations that it enters into.

Yes, every functional area of a business also performs at least a measure of work that is directed essentially entirely in terms of supporting its own systems, processes and staff, and internal to itself. But ultimately, the defining value creating measure of such a group within a business is in how it can and does create value outside of itself and for others, both within and outside of the business.

Focusing on inside of a business per se, and outside of that business as a whole for the moment:

• When the (usually financial) value created by a team or other-organized goals-directed group within a business is less than or at most break-even with the value it provides to that organization in return, at least on average, that part of the organization is usually deemed to be a cost center.
• And when that part of the business is seen as offering greater value and particularly outside of the business itself, than it does strictly within itself and for what might be considered its more self-maintenance purposes, then it is considered to be a profit center.
• There, effective value created that reaches outside of the business, drives the revenue flow back into it and creates overall profitability and competitive success for it.

This is, or at least should be obvious to any reader; embedded in it is acknowledgement of what can in fact be a vast and varied network of stakeholders who would be found outside of any given functional area, team or group of any sort that might work together, serving wider ranging needs than just their own. And any business that seeks to function effectively, strives to organize itself so that every such grouping within it does that: provide real and defining value outside of itself and regardless of whether it would conventionally be viewed as a profit or cost center there.

Let’s consider these more abstract points in the context of some real world examples. And I at least somewhat arbitrarily chose two functional areas that can be found in essentially any business of any significant size and scale of complexity here for this purpose: Information Technology, and Finance. Both of these functional arms of a business offer services that reach out in essentially all directions: simultaneously supporting their own teams and their own needs, and all other areas within their own business, and external stakeholders to that business too. And I picked these functional areas of a business and the large and diverse teams that carry out their work as my initial examples here, because they so clearly fit the picture offered in this posting and its discussion.

An Information Technology department help desk, or its server computer and network technology team provide supporting services throughout their business, and both within their own department and beyond. And they at the very least directly support and facilitate processes that connect with and support business transactions that reach outside of the business and to outside stakeholders too. To highlight that, IT help desks might be thought of as only offering support within a business and to its own staff. But they have to be able to help resolve questions, issues and problems that arise in outwardly facing contexts too. Consider all of the information sharing processes that collectively enable business-to-business collaborations between supply chain partners, which for their volume and complexity need to be automated through computer and network based systems and certainly for basic data sharing and related tasks. The people who work in an inwardly facing and supporting help desk are also the people who have the expertise and experience needed for resolving questions and issues that might arise in these larger contexts too. And resolving them has to coordinate with in-house activity too: information systems security and due diligence included. So as soon as a business begins to enter into supply chain systems, and certainly under circumstances where significant volumes of information have to be shared between partner businesses in them, pressure begins to mount to develop those businesses help desks into active participants in them, and supporters of these externally connecting relationships too.

For the Finance department, consider Accounting and Bookkeeping. Every area of a business that such a department functions in, has cash flows to manage. Yes, managers within and throughout the organization have and manage their own budgets. And profit center areas of a business may serve to create revenue streams for the business that would among other things pay their personnel expenses and their functional expenses with more left over for the business as a whole. But their business’ Finance department Accounting and Bookkeeping services support and I add monitor all of this, in accordance with outside standardized generally accepted accounting practice (GAAP) with its standardized accounting and auditing, and just as thoroughly as they do for cost centers there. Cash flows within a business, and those going into and out of it all go through Finance. And Accounting and Bookkeeping also, of course manage client and customer accounts and accounts with wholesales and with retailers and suppliers, and other supply chain partners directly dealt with: all external stakeholders in those systems too.

As a third example that might not be as obvious to some, I would cite the Marketing department, or Marketing and Communications as it is sometimes more broadly labeled. Yes, this type of service reaches out to and seeks to positively connect with the marketplace and its demographics, and increasingly interactively as well as through more traditional central broadcasting means though use of online social media and the interactive online experience. But it is usually one of the core areas of responsibility of this department, to develop a clear and consistent message that all others within their business would use when in any way reaching outside of the business, for that enterprise’s basic branding and related messaging. Marketing manages how all other areas of their business stay on message and consistently so as far as representing that enterprise as a whole. Here, even the most senior executives there tend to follow Marketing lead where their business’ branding is concerned.

So even the services that might not seem at first to follow the pattern laid out here, usually actually do, and certainly in a well run business. When you find a business with functional areas that do not, that indicates severe strategic and operational disconnects and both business inefficiency and vulnerability.

I end this portion of this larger overall line of discussion by noting that it is one of the hallmark shifts of the 21st century business context that more and more of any given enterprise has to be able to more and more effectively connect with and work with a progressively wider and wider range of both internal and external stakeholders and on more and more of a real-time basis and on more and more issues, and with all of this coordinated throughout the business in accordance with what of necessity become more complex and nuanced due diligence and risk remediation standards.

I am going to continue this discussion in a next series installment where I will at least begin delving into how managers at essentially any level or position in an organization can facilitate these processes and systems of them for their business. As a part of that I will further discuss how complexities and constraints can and do arise for managers throughout a business when dealing with the issues that I have been raising here. Then after that, I will reconsider, yet again, ad hoc and special exception practices, and the emergence of the “ad hoc standardized” and its consequences.

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. Also see HR and Personnel and HR and Personnel – 2.

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