Platt Perspective on Business and Technology

Pure research, applied research and development, and business models 18

Posted in strategy and planning by Timothy Platt on May 15, 2019

This is my 18th installment to a series in which I discuss contexts and circumstances – and business models and their execution, where it would be cost-effective and prudent for a business to actively participate in applied and even pure research as a means of creating its own next-step future (see Business Strategy and Operations – 4 and its Page 5 continuation, postings 664 and loosely following for Parts 1-17.)

I have been discussing a particular type of disruptively novel business and its business model in this series, that would specifically realize in day-to-day and ongoing practice, the issues raised in this series’ generic title: businesses that would offer research and its informational products as marketable, value creating offerings in a business-to-business context and marketplace (see in particular, Part 15, Part 16 and Part 17 for this.)

In the course of developing that narrative, I offered a basic business analysis tool that can be used in both ongoing strategic planning and when improving and refining the operational processes and practices that are in place, in order to keep them as flexibly effective as possible for the organization. I offered a first, simplest case iteration of this tool in Part 15 and then refined it in Parts 16 and 17, in the context of raising and discussing a set of basic questions that a business leadership team would address and certainly in this type of change-driven context.

• My focus in all of this has been on more effectively developing and creating the disruptively New as a source of defining value for the organization, and on doing so in a strategically considered, organized manner.

Then I concluded Part 17, stating that I would further develop a set of basic due diligence questions that I offered there, in terms of a specific set of business performance-related issues of importance to essentially any business, and how they would be addressed in the context of change and of disruptive change in particular:

• Negative and positive cash flows with their loss and profits considerations,
• Cost and profit centers, and
• Strategically rebalancing and improving risk load.

Then and as a continuation of that line of discussion, I said that I will at least selectively discuss business transitions as they would arise for an enterprise of this type, and the challenge of even just knowing precisely when one business development stage is ending and a next one is beginning. (See the end of Part 17 for a more complete version of this anticipatory note.)

I begin addressing all of this by repeating the basic due diligence questions that I included in Part 17 and that I will at least begin to expand upon and discuss here:

1. What specifically are the work process systems that define this enterprise as a research-as-product enterprise?
2. And what resources: specialized skills personnel definitely included, would be needed to carry this out with whatever necessary levels of what might at times be resource over-capacity allowed for, in order to accommodate at least more readily predictable fluctuations in resource requirement levels needed?

It is important to think about the issues raised in those questions, in terms of how friction and the information and communications limitations that create it, can compel you’re following a more conservatively prudent approach when answering them. And it is important to think of them with an understanding of risk awareness and risk accommodation, with that entering into how you would think these questions through and understand them too. I add this explicitly risk management oriented perspective to this overall due diligence exercise as representing yet another source of impacting factors that have to be taken into account in navigating the issues raised in the above questions. And with this added, let’s consider the above-repeated Question 1. And I do so by in effect dividing it into three parts:

• With one part consisting of what should or at least might be done at the business,
• A second part considering the specific cash flow and other cost/returns valuations of actually carrying out those activities (or of explicitly setting them aside and not doing them),
• And a third part to this that complicates the first two as a matter of practice, arises when adding in limits to how fully and effectively possible resolutions to them can be predicted (proactively) or evaluated (reactively) and certainly in anything like an actionable manner (as a result of business systems friction if from no other causes.)

I begin my discussion of this set of issues by pointing out an assumption that I have built into it, and that I would immediately challenge at this point in this overall discussion. I approached the two here-numbered due diligence questions of above, as a “a set of basic questions that a business leadership team would address.” But noting that as an in-practice possibility and acknowledging that such a leadership team, or even just a single overall leader in it might make all final determinative decisions here, I caution that decisions made as if in a vacuum are rarely good, and certainly long term and as more generally applied across a business as a whole. With that noted, I turn here to set the stage for addressing the bullet numbered questions and pointed issues just cited here, by offering an at least brief discussion of the Who side of carrying all of this out. Certainly in the business planning that is called for here, a wider and more effective inclusiveness of input and insight should be supported and encouraged if nothing else:

• Focusing to start on the first above stated “what should be done” question, I tend to approach that as a hands-on exercise. And I approach it as one that becomes more value-creating when approached and worked through as a team effort, and with that including input and discussion from a widely inclusive range of key involved stakeholders – and with that definitely including people who would have to make buy-in decisions here at a managerial and senior management level, but with that also including at least some direct input from people who would actually carry out this work too. Those potential participants in this type of discussion, I add, would most often be in a best position to actually directly see what does and does not work and in a way that more senior managers would not be. And they are also most likely going to be the people who would be most directly held accountable for that in their performance reviews too. This way, any analyses entered into and any decisions arrived at from this exercise, can at least start out with a better chance of being grounded in the more practical and realistic.
• Positing this in committee terms, bring a large enough group of people into the conversation so as to at least categorically include representatives from a fuller range of the people who will have to face the consequences of any decisions made here, and directly so and as drawn from whatever levels and branches of the table of organization as would make sense. And carry out this type of conversation with all included participants given a real voice. It does not for example do anyone any good to bring directly involved hands-on employees or lower level managers into the room, who would have to directly carry out whatever processes and practices are agreed upon there, if they are only expected to remain silent and if they cannot actually have an unimpeded voice. That would only lead to frustration – and on everyone’s part and certainly if a failure of actual participatory inclusion there leads to what should be avoidable breakdowns and other challenges moving forward. (Note: I have definitely seen that happen where senior management makes binding decisions as to operational processes and practices, that others will have to actually carry out but without the benefit of any real input from them, as to what would and would not work as a practical matter, and how and why. Cutting ahead, think of this as an example of gratuitously self-inflicted business systems friction with all of the possibility for problems that that can create and sustain.)
• A defining goal of this effort is to make this type of committee sufficiently inclusive. At the same time it is also important to keep its size to an overall level that can facilitate easier and more efficient discussion and certainly for any regular members who would be there for most if not all meetings of the group. So start smaller with the initial organizers of this committee and build from there, bringing in members as needed and letting them go from this responsibility when they are not. And be prepared to add in participants who would only be invited in for specific committee sessions in order to help clarify and resolve specific issues as necessary, and on an explicitly as-needed, and as-relevant basis. (For a basic reference of committee best practices, see: Joining, Working On and Leading a Committee as can be found at Guide to Effective Job Search and Career Development – 2 as its postings 206-220.)

Now moving from consideration of the Who of this, let’s consider the What of it as explicitly raised in the first bullet pointed set of issues that I have divided Question 1 into, above. That means thinking through what can and should (and might) go into creating a flexibly sustainable complete research-based innovation development capability, that can be organized for specific use as required to address the needs of specific business clients and then be repurposed from there as new assignments are taken on. But it also means devising the specific processes and supportive systems of them that would be needed in order to make that type of ongoing research system work. Gap-free connectivity is vital there, and a new process or system of them in any given area of a business can have ripple effect impact on other parts of that business, that are now going to have to effectively accommodate and support that New too. And all of this should in turn fit into and actively support complete business-wide process cycles that would among other functional considerations also include client needs capture and analysis on one end and marketing processes and sales-oriented ones on the other, and back office functionalities and more too, to complete this cycle and connect it together as an organized ongoing whole. Let’s at least start addressing all of this in more general business process terms, and in terms of initially developing, and updating and fine tuning such systems.

• And in this, research and sales and marketing and all other necessarily involved functional areas that are not traditionally included in operations per se but that would have to be developed to make this specific type of business work, will be collectively identified in what follows as if fitting into operations per se, as a single categorically labeled, interconnected system of processes and shared (or at least sharable) understandings. Why? I will do that to simplify this discussion in its phrasing if nothing else. To be more explicitly precise here, I will use that more general term: operations, or overall operations when having to discuss all of a business’ activities as fitting into a single categorical whole. But I will continue to identify specific functional areas and areas of specialized business activity by their more usual terms when specifically discussing them in particular.

I assume here that everyone involved in this business development and improvement effort sees value in pursuing at least some level of novelty and New in how their business is run, if it is to develop and offer disruptively New as a source of revenue generating products and services, and particularly when that New is not simply a next step update in an already well known and developed industry or business sector, and as a general pattern for what this business would offer to its business clients:

• Put all of the ideas and possibilities that initial brainstorming session components to this exercise can bring up. And then discuss and refine what has been tossed on the table this way. Clarify and filter and set aside possibilities for inclusion in whatever new or updated processes and practices that would come out of this. And be prepared to bring back possibilities that had been set aside or even seemingly discarded in earlier discussion, as now necessary too, as understandings and perspectives change. The goal here is to start out considering as wide a range of possibilities as can be thought up here, in order to come up with an at-least provisional processes and procedures list that is not simply mired in the “tried and true,” and with that at least provisionally organized as to how combinations of these pieces included here might fit together in meeting larger defined business needs and goals.
• This approach holds value when a business faces change and particularly when it has to change at least aspects of its underlying business model, its strategic vision and approach, and/or its basic operations in order to more effectively address the challenges and opportunities of the disruptively novel and new that it faces – and that it seeks to constructively create too. (And I add parenthetically if nothing else that this approach also holds value in a more change management context too.)

That sort of motivating factor aside, this is where costs and benefits enter this exercise, where overall costs only begin with the more immediately visible up-front fiscal expenses and the more obvious revenue generation possibilities that would come to mind. I will assume in what follows that possible operational level approaches have been proposed and at least conceptually analyzed for how they would work and for how they would fit into larger overall business systems, and into the business model in place. This is where real effort begins in selecting and filtering from among the pile of options and possibilities on the table. And with that noted, I am going to start explicitly addressing the second of the three functional goals parts that I listed above when initially expanding out and starting to analyze Question 1 and its possible answers:

• Considering the specific cash flow and other cost/returns valuations of actually carrying out those activities (or of explicitly setting them aside and not doing them).

I will address that complex of issues in my next installment of this series and will proceed from there to discuss bullet point three of that list and then the above stated Question 2. And I will continue from there as noted above and in Part 17.

Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 5, and also at Page 1, Page 2, Page 3 and Page 4 of that directory.

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