Platt Perspective on Business and Technology

Business planning from the back of a napkin to a formal and detailed presentation 21

Posted in strategy and planning by Timothy Platt on January 21, 2018

This is my 21st 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 1-20.)

I initially offered a to-address list of topic points at the end of Part 19 that I have been discussing since then, so far focusing primarily on the first item of the list:

1. More systematically discuss how business operations would differ for businesses that follow one or the other of two distinctively different business models,
2. How the specific product offering decision-making processes that I have been making note of here would inform the business models pursued by both of these business types, and their overall strategies and operations and their views and understandings of change: linear and predictable and disruptively transitional in nature.
3. And I added that I would discuss how their market facing requirements and approaches as addressed here, would shape the dynamics of any agreement or disagreement among involved stakeholders as to where their business is now and where it should be going, and how.

And in the course of addressing Point 1 there, I have raised the issues of both differences between the two enterprises under consideration, and underlying similarities that would essentially necessarily occur for these two business types too, that would appear in their underlying strategies and in their basic underlying operations.

• One of these businesses is a retail store that has strategically gone through an expansion transition, going from having a single storefront that houses its entire range of product and service offerings, to having two specialized storefronts that collectively cover everything that their original store did – but in greater depth and with greater variety offered to their customers and with more showroom floor space and more effective use of that made possible.
• And the other is a high tech-oriented manufacturer that has to actively pursue the new and different and all of the time, if it is to remain effectively competitive in its industry and in its sector there. I add here that I offered this business scenario as both a familiar, real world one and as a business example in which the Red Queen’s race to go as fast as she can, simply to stay in place of Lewis Carroll’s Through the Looking Glass, is actualized in the real world (see this piece on the Red Queen hypothesis for a discussion of that.)

As part of my Point 1 discussion up to here, I have touched upon how these two businesses differ for their strategy and operations. But I have also at least repeatedly intimated that they have a lot in common too, that would of necessity underlie their particularities and their points of difference. I will begin the core discussion of this posting by completing my discussion of the areas of difference that would be expected in the strategies and operations of these businesses, and then turn to consider their underlying similarities.

And I begin addressing the differences in underlying strategy and operations that would be expected here with the fundamentals, and for both organizations as laid out in their business models. Effective strategy and operations for a business, are of necessity shaped by the basic business model and the basic intent of the business, and by the nature of the markets that they would seek to bring value to. And optimizing their strategy and operations for this means more effectively developing the products and services that a business would bring to market, and optimizing their being brought to market, and as cost-effectively and profitably as possible, and with strategy and operations set to optimize their ability to create value for themselves as well as their customers, for what makes them unique.

Let me step back from that set of points for a second, to clarify that the basic principles that I write of here apply to not-for-profit and nonprofit organizations as much as they do for competitive for profit businesses. It is just that “profitability” as at least implied above, needs to be considered in a wider sense than just the accrual of positive financial returns that could be taken from the business by shareholders and owners for their own use. Market share, and for nonprofits as a special case, more effective effort at working towards achieving stated mission and vision goals constitute “profitability” there. But it is always important to think of not-for-profits and nonprofits as well, as businesses, and certainly when running them or even when simply working at them, and with as strongly held a goal of business efficiency and effectiveness there as would be found in any for profit enterprise.

That point of digression noted in order to clarify the scope of applicability of this narrative across basic business types, I add that:

• When you seek out the more business-specific aspects of a business in its strategy and operations, look for the strategic and operational processes and their resulting outcomes that specifically and directly support what makes that business distinctive as an efficient and competitive venture, and for what it offers to its markets and in how it does that.

I said in Part 20 that I would turn here to at least begin to consider underlying similarities for how these businesses, and businesses in general would shape and manage their underlying strategies and their operational execution of them. Yes, the details of their business models and the differences in what they would offer and their marketplace dynamics would dictate differences in strategy and operations. And I add here that they would lead to differences in corporate cultures too. But what of the similarities that would in effect bind them together as effective business enterprises per se?

• What strategic considerations and operational processes are directly involved in carrying out these organizations’ basic business cycles, and both step-by-step and for their overall review and evaluation processes, that would be expected to arise in both business types under consideration here, and in fact in essentially any business and even regardless of its for profit, not-for-profit or nonprofit status?

Let’s start addressing that with consideration of the life’s blood of any business organization: its cash flow and its capacity to develop and maintain reserves that would allow it flexibility in the face of shifting and even unexpected needs. And let’s begin that with the of-necessity, and usually legally mandated requirements for how the finances of a business would be tracked and recorded and reported, and both internally within the business and externally as for example when addressing tax liability issues. (Note here that these outside reporting requirements arise for nonprofits too, insofar as they have to be able to document that they formally qualify for nonprofit status in most countries and legal jurisdictions. Among other considerations of importance there, this means their verifying what percentage of their overall incoming revenue is directed towards fulfilling their mission and vision statements and their goals if they are to achieve and retain a tax exempt status on incoming revenue generated.)

The documenting and reporting sides to this are well know and I have already touched upon them a number of times in this blog, and at times in at least a measure of depth: generally accepted accounting principles (GAAP) as variously formulated and enforced in different countries, but with the same basic goals regardless of those detail differences. Think of the more standardized (and ultimately of necessity so) aspects of a business’ overall strategy and operations, and particularly of its operations, as the area of a business’ supporting systems where a business explicitly conducts itself so as to be able to meet GAAP and other legally mandated requirements, and in fact and not just in what would be documented and reported. These are the parts of a business and its process systems where a business carries out the basic work needed to function according to accepted and expected standards and according to accepted and expected benchmarks.

Aspects of business strategy and operations that help an organization to realize its specific business plan per se are usually more individualized, and particularly where they would explicitly help it to realize its points of uniqueness in what it can and does offer to its markets as a competitive enterprise and as effectively as possible. These more individualized aspects of a business rest upon a more standardized framework that would inform the enterprise as a stable business per se.

And with that, I turn to consider specific product offerings, and the heart of where businesses would seek to stand out as at least distinctive enough, if not unique, and certainly for their target markets, to be competitively successful. And I turn there, to Point 2 as repeated above. And to set the stage for that, I pose a point of terminology distinction, of a “what I do and not just what I say” type, where I raise a distinction between:

• A business’ formally and officially drafted, idealized business plan: the strategic and operational plan and all supporting material that would clarify it and its expected context, that is laid out in its formally prepared and agreed-to charter documents, starting with its business plan as a written document.
• And that business’ actually realized business plan which can be thought of as a (probably never formally drafted but nevertheless very real) structured and detailed outline of the actual strategic and tactical approaches and the actual operational execution that is carried out, day-to-day and on an ongoing basis.

In the real world, there are always going to be at least some points of discrepancy between these two understandings of what a business plan and its strategic and operational underpinnings actually are, and certainly at points where a business is facing change and a need for it and where the official and expected has to be rethought and updated to meet new and emerging needs. When a business is slipping into trouble, those discrepancies can and do expand out to include wider areas of the operational processes and practices that should be stably consistent across business types, and certainly insofar as any more predictable flow of change in business context is concerned (e.g. adjusting to and accommodating seasonal cycles, and capacity to adjust to fashion changes per se in what a market wants.) And with time this type of discrepancy can expand into areas of business operations that define and execute their core value creating activities too and aspects of the business that more individually define it: operational areas and work process flows that should at least make these enterprises competitively successful.

I am going to cite and use this point of terminology distinction as more formally characterized here, in my discussion of Point 2 from the above list, at least starting that in my next series installment. Then after completing that line of discussion I will continue on to address Point 3. And in anticipation of discussion to come, I will explore the issues of both Points 2 and 3 in terms of business stability.

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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