Platt Perspective on Business and Technology

Innovation, disruptive innovation and market volatility 38: innovative business development and the tools that drive it 8

Posted in business and convergent technologies, macroeconomics by Timothy Platt on January 5, 2018

This is my 38th posting to a series on the economics of innovation, and on how change and innovation can be defined and analyzed in economic and related risk management terms (see Macroeconomics and Business, posting 173 and loosely following for Parts 1-5 and Macroeconomics and Business 2, posting 203 and loosely following for Parts 6-37.)

I have been working my way through a set of five to-address points, and their issues in this series since its Part 32, that all deal with aspects of how innovation is information and understanding-driven, and communication driven as a mutually creative sharing of that. And my goal for this posting is to finish addressing the fourth of those points and at least begin to address Point 5 from that list too, as repeated here for better continuity of narrative:

4. Information availability serves as an innovation driver, and business systems friction and the resistance to enabling and using available business intelligence that that creates, significantly set the boundaries that would distinguish between innovation per se and disruptively novel innovation as it would be perceived and understood,
5. And in both the likelihood and opportunity for achieving the later, and for determining the likelihood of a true disruptive innovation being developed and refined to value creating fruition if one is attempted.

Then after completing that phase of this overall narrative, at least for purposes of this series, I will reconsider the issues of research financing: in large part from a more accounting and bookkeeping perspective, as promised in Part 37.

Let’s begin addressing Point 4 with the fundamentals:

• Businesses are information and communications driven, and both for defining and shaping their strategies and their operations systems as are put in place to carry out those strategic plans, and for when addressing less routine and more one-off or exception circumstances too.
• Uncertainty and lack of necessary information when and where it is needed in order to make more optimal decisions, and in order to execute upon them effectively: the presence of functionally significant levels of business systems friction, both reduces a business’ efficiency and reduces its overall agility and resiliency.
• Friction, in this, creates due diligence and risk management concerns that limit the range of options that an organization can pursue. And this is exacerbated as the level of uncertainty increases.
• Steady pursuit of a same as usual, unchanging linear path forward, in strategy and in its operational implementation as a routine default, generally presents itself as the path forward that would minimize this uncertainty. And barring change forced upon an organization that this approach cannot prepare it for, that perhaps self-justifying understanding might even be valid.
• Steady pursuit of a same as usual, predictably changing linear evolutionary path forward would, according to the conceptual model that I am offering here, represent at best a second most uncertainty-free possibility here, for how a business would proceed over time. My caveat regarding the imposition of unexpected and unplanned for change of the above bullet point applies here too, where that could arise from outside of the business, from inside of it or from some combination of both possible sources.
• That bullet point addresses simple, step by predictable step forward change and simple innovative change, and particularly where it is more cosmetic and less overall consequential as a result. The more of a break from standard and routine that an innovation would be, and the more ripple effect change it would call for to implement it, accommodate it, or cover for it, the greater the potential uncertainty this engenders. And this is where friction-creating inefficiencies really significantly enter this narrative progression and as a source of influence that cannot be ignored. That is where involved parties cannot predict the types or details of information that they would need to know, that others might or might not have to share with them.
• Truly disruptive, breakaway innovation maximizes the levels of uncertainty faced and exacerbates both the likelihood of realized friction and its consequences as it actually arises.

With that noted, let’s consider the second half of Point 4, where information availability and friction that would limit it: “set the boundaries that would distinguish between innovation per se and disruptively novel innovation as it would be perceived and understood.” And I begin addressing that, by adding in one more possibility that a proposed innovative change might also represent: a dead end that cannot ultimately be turned into a source of increased positive value and either within the business for its more internal value or for its marketplace.

One of the perhaps most important aspects of uncertainty that I write of here, is an at least partial lack of necessary information as to both the degree of change that is being faced, and the significance of that change for the possible levels of cost and value creation that it might lead to. Yes, an innovation or potential innovation might start out looking small and more minor – and then turn out to be more complex and comprehensive if it is actually going to be developed and implemented when all of the details that would have to go into that begin to emerge. And what starts out looking like a more fundamental and disruptive innovation, might in fact turn out upon more detailed analysis be achievable from creative use of more off-the-shelf current resources and capabilities too, and in practice be less disruptive than initially thought and both in-house and to any potential outside marketplace.

• Business systems friction here, can and often does mean at least a notable level of upfront uncertainty as to how disruptive and novel for implementation a proposed innovation would actually be,
• With that source of unknowns presenting itself as uncertainty as to cost of development combined with uncertainty as to possible realized value that an innovative change might bring.

This narrative, I add here, has both addressed Point 4 as stated above and laid a foundation for addressing Point 5 of the above partly repeated to-address list. I am going to more fully address the issues raised in Point 5 in my next series installment. And then as promised above, I will reconsider the issues of research financing: in large part from a more accounting and bookkeeping perspective. Meanwhile, you can find this and related postings at Macroeconomics and Business and its Page 2 continuation. And see also Ubiquitous Computing and Communications – everywhere all the time and its Page 2 continuation.

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